Preliminary Results for the Year Ended 31 December 2021

Cannasouth Limited (NZX: CBD), (“Cannasouth”, the “Group” or the “Company”) today reported its preliminary results (subject to completion of audit) for the year ended 31 December 2021.

Within a COVID-19 environment, Cannasouth made further significant progress in completing the foundations of a sustainable business operating in the emerging and highly regulated medicinal cannabis sector in New Zealand and globally. CEO, Mark Lucas says, “it is pleasing to see Cannasouth achieve its first revenues during the year with (part year) $1.3 million sales of products and services to the pharmaceutical, health and wellness supplement sectors.”

The strategic goals of Cannasouth are to implement short, medium, and long-term revenue streams. In 2022 further revenue streams will commence with exports of cannabis flower and domestic medicinal cannabis products.

The largest early revenue opportunity is the export of premium cannabis flower and Cannasouth is focused on achieving this during 2022. In November 2021 our world-class, next-generation cannabis cultivation and processing facility was fully commissioned, which enables Cannasouth to enter the rapidly growing pharmaceutical cannabis flower market.

Cannasouth remains committed to New Zealand patients and our first three medicinal cannabis products continue to progress through the product assessment approval process with the New Zealand Medicinal Cannabis Agency (MCA). These products are scheduled to launch in 2022.

Medium and longer-term revenue streams are also being developed from our own-formulated finished products to the commercialisation of IP from our research and development activities.

The Group has assembled a highly experienced team, commissioned world-class cultivation and processing facilities, established advanced research and development programmes and revenue streams have begun.

Highlights for 2021 included:

* Granted a commercial cannabis cultivation license by the Medicinal Cannabis Agency.

* Granted a supply activity under its commercial medicinal cannabis Licence by the MCA. This supply activity is additional to the existing cultivation and possession for manufacture activities.

* Cannasouth released a comprehensive Medicinal Cannabis Industry Report to assist investors with understanding the complexities and opportunities of the New Zealand and global medicinal cannabis landscape.

* Added significant healthcare and governance expertise to the Cannasouth Board with the appointments of Juliet Hull and Christine Pears.

* Successfully raised $4.7 million by way of a Share Purchase Plan and Public Offer.

* Acquired the interests held by both joint venture partners: Cannasouth Cultivation Ltd (for cannabis flower production) and Midwest Pharmaceutics NZ Ltd (for diversified revenue streams, future medicines grade production and cannabinoid oil extraction services).

* Added further key talent to the important roles of Head of Quality - Group, and Operations Manager – Cultivation

* Completed commissioning our new state-of-the-art (and unique to New Zealand), sealed controlled-environment greenhouse and processing facility in the Waikato.

Summary of Financial Results:

The Group recorded a loss of $1.6 million (2020 $3.5 million) and operating revenue of $1.3 million (2020 $131,000). The loss was attributable to the planned investment in establishing the Group as a key participant in the emerging medicinal cannabis market in New Zealand.

Net Assets of the Group grew to $15.7 million (2020 $14.1 million). The Group recorded a gain of $2.2 million on its acquisitions held in Cannasouth Cultivation Ltd and Midwest Pharmaceutics NZ Ltd. This gain represents the difference between the carrying value of the investments and the fair value of the assets acquired. Cash on hand at 31 December 2021 for the Group was $5.5 million (2020 $9.2 million).

Group Consolidation

Following a $4.7 million capital raise in August 2021 through a Share Purchase Plan and Public Offer, Cannasouth acquired the interests held by both joint venture partners in Cannasouth Cultivation Ltd and Midwest Pharmaceutics NZ Ltd.

The 100% ownership enabled Cannasouth to accelerate its development to significant revenue generation, to improve operational efficiencies across the Group, and enable future profits and revenues to be consolidated into the Cannasouth Group Profit & Loss Statement.

For further commentary, please read the full market announcement attached.

-ENDS-

For further information visit www.cannasouth.co.nz or contact:

Tony Ho
Chairman, Cannasouth Limited
Email: tony. [email protected]
Mobile: +61 (0)417 345 839

Mark Lucas
CEO, Cannasouth Limited
Email: [email protected]
Mobile: +64 (0)21 484 649

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Announcement PDF