Celadon Pharmaceuticals
plc
("Celadon" or the "Company" or
the
"Group")
Unaudited Interim results for the
six
months ended 30 June
2024
London, 30 September 2024
- Celadon Pharmaceuticals Plc (AIM: CEL),
a UK-based pharmaceutical company focused on the development,
production and sale of breakthrough cannabis-based
medicines, today announces its unaudited
condensed interim results for the six months ended 30 June 2024
(the "Period").
Strategic and operational
highlights
· Entered into strategic collaboration with Valeos Pharma A/S
post Period end to:
o license Celadon's intellectual property in facility design,
cultivation techniques and operating processes;
o license Celadon's genetics; and,
o accelerate Celadon's ability to supply pharmaceutical grade
EU-GMP cannabis cultivated by Valeos to its existing and
prospective European customers.
· Successfully completed 12 harvests from Phase 1 grow
facility. Now anticipate completing 16 harvests in
2024.
· Design
for Heating, Ventilation and Air Conditioning system for Phase 2 of
Celadon's facility now completed.
· First
supply of a small amount of product to customer in the
US.
· Delays
in delivery to two UK customers due to delays in onboarding new
external testing laboratories, which have now been resolved.
Inventory of £0.3m at 30 June 2024.
· Cash
of £2.65m received (gross of fees) in, and subsequent to, the
Period from equity raises. A further £0.4m remains due from a
committed equity subscription in relation to the 10 May equity
fundraising.
Financial highlights for the
Period
·
Revenue of £63k (30 June 2023: £8k)
·
Operating loss of £2.3 million (30 June 2023: £3.2
million)
·
Loss before tax of £2.4 million (30 June 2023:
£4.4 million)
·
Cash balance as at 30 June 2024 of £16k (30 June
2023: £1.6 million). Cash at 27 September 2024 of
£0.5m.
·
As announced on 12 August 2024, there has been a
delay in receiving funds due on a £1m draw down request on the
Group's £7m committed credit facility, with £0.3m received to
date.
·
Ongoing discussions with a small number of
potential institutional investors about entering into substantial
longer term debt facilities.
James Short, CEO of Celadon,
commented:
"The Period has been one of significant
operational and strategic progress against the ambitious targets we
set out at the beginning of 2022 and ahead of the Company's
admission to AIM. Unfortunately, the delays in receiving funding
from a committed shareholder and lender have caused the progress of
the business to slow.
"The Group continues to receive a
significant number of inbound requests to supply the Group's EU-GMP
pharmaceutical products and is confident of being able to make
progress on delivering these when the anticipated funding has been
received.
"The strategic collaboration with
Valeos has the opportunity to accelerate the Group's ability to
supply product to its existing and prospective European customers
and to accelerate the point at which the Group becomes
profitable.
"I am grateful for the continued
support shown by our shareholders as we pursue our primary mission
of improving the quality of life for patients most in
need."
Investor
Presentation: 3:30pm BST, Wednesday 9 October
2024
Management will be hosting a live presentation and Q&A session
relating to the interim results at 3:30pm BST on Wednesday
9th October 2024 via the online platform Investor Meet
Company.
Investors can sign up to Investor Meet Company
for free and attend the presentation via the following link:
https://www.investormeetcompany.com/celadon-pharmaceuticals-plc/register-investor
Questions can be submitted pre-event and at any time during the
live presentation via the Investor Meet Company
platform.
Enquiries:
Celadon
Pharmaceuticals Plc
James Short
Via Sodali & Co
Jonathan Turner
Canaccord Genuity Limited (Nominated
Adviser and Broker)
Bobbie Hilliam / Andrew
Potts
+44 (0)20 7523 8000
Global
Investment Strategy UK Limited (Joint Broker)
James
Sheehan
+44 (0)20 7048 9400
Sodali & Co
Elly Williamson / Sam Austrums / Nick Johnson
/
+44 (0)20 7250
1446
celadon@sodali.com
About Celadon
Pharmaceuticals Plc
Celadon Pharmaceuticals Plc is a UK based
pharmaceutical company focused on the research, cultivation,
manufacturing, and sale of breakthrough cannabis-based medicines.
Its primary focus is on improving quality of life for chronic pain
sufferers, as well as exploring the potential of cannabis-based
medicines for other conditions such as autism. Its 100,000 sq. ft
UK facility is EU-GMP approved and comprises indoor hydroponic
cultivation, proprietary GMP extraction and manufacturing and an
analytical and R&D laboratory. Celadon's Home Office licence
allows for the commercial supply of its GMP pharmaceutical cannabis
product. The Group owns an approved clinical trial using
cannabis-based medicinal products to treat chronic pain in the UK.
Celadon also has a minority interest in early-stage biopharma
Kingdom Therapeutics which is developing a licensed cannabinoid
medicine to treat children with Autism Spectrum
Disorder.
For further information please visit our
website www.celadonpharma.co.uk
This
announcement contains inside information for the purposes of
article 7 of the Market Abuse Regulation (EU) 596/2014 as amended
by regulation 11 of the Market Abuse (Amendment) (EU Exit)
Regulations 2019/310. With the publication of this announcement,
this information is now considered to be in the public
domain.
Chief
Executive Officer's Report
Introduction
& Overview
I am pleased to present Celadon's interim results for the six
months ended 30 June 2024. The Period has been one of significant
operational and strategic progress against the ambitious targets we
set out at the beginning of 2022 and ahead of the Company's
admission to AIM.
At Celadon, our mission is to improve quality
of life for patients most in need by developing breakthrough
cannabis-based medicines. To unlock this opportunity, we are
pursuing a strategy to open up the UK market by combining domestic
production of pharmaceutical-grade medicinal cannabis with the
clinical evidence generation that is required to support
prescribing by doctors, and research into future cannabis-based
medicines. Celadon has also entered into contracts to supply
two UK based customers and an initial customer in Europe and has
shipped a small amount of product to a customer in the US.
Following the recently announced strategic collaboration with
Valeos Pharma A/S ("Valeos") is about to establish a medical
cannabis distribution entity in Denmark.
Celadon's aim is to become a leader in
breakthrough cannabis-based medicines, capitalising on our
early-mover advantage in a highly regulated market as one of only
three UK companies of our kind with the licences to cultivate and
manufacture pharmaceutical-grade cannabis in the UK for commercial
sale.
Operational
Progress
UK
Customers
Following obtaining the full set of regulatory
licences in 2023, Celadon has been cultivating high quality medical
cannabis plants for supply to pharmaceutical companies and medical
cannabis clinics in the UK. Cultivation continues to progress
well with 12 harvests having been completed so far in 2024.
We anticipate being able to complete 16 harvests this year, an
increase from the 15 originally planned. Celadon's
Cultivation team continues to improve the yield generated from its
crops above and beyond the significant yields being
generated.
In the year to 31 December 2023, Celadon won
its first contracts to supply medical cannabis to customers in the
UK. Celadon supplied its first product to these customers in
December 2023, and has continued to service these customers during
the first half of 2024. Legalisation of medical cannabis only
took affect at the end of 2018 and the wider medical cannabis
infrastructure in the UK has taken time to develop. As a
result there have been some initial delays in supplying product due
to onboarding new external testing laboratories causing revenues in
the first half to be lower than anticipated. Now that these
testing facilities are in place, on an annualised basis, these
contracts are anticipated to generate approximately £1.5m of
revenue.
Overseas
Customers
In November 2023, Celadon won a contract with a
leading European medicinal cannabis company that has the potential
to generate revenue of up to £8.7 million annually. The Group
had originally anticipated supplying this contract from Phase 2 of
its 100,000 sq ft Midlands facility. As noted below, the
recently signed strategic collaboration with Valeos will give
Celadon access to a substantial amount of EU-based cultivation
space, thus allowing Celadon to utilise Phase 2 of its facility,
once completed, to supply to the growing UK and international
market.
Celadon's reputation for producing high
quality, high THC medical
cannabis continues to prompt a number of inbound enquiries for
product such as the request for a small shipment of two different
medical cannabis products to a long established American
business.
Phase 2
Facility Fit Out
Having completed the physical build of Phase 2,
the most significant remaining part of the fit out of Phase 2 at
Celadon's facility in terms of both time and cost, is the
installation of Heating, Ventilation and Air Conditioning ("HVAC")
system. Delays in obtaining funding have meant that it has
not been possible to progress the fit out as anticipated, but
subject to funding being received, the fitting of the HVAC system
is expected to commence in Q4 FY2024.
CANPAIN
Trial
Given the limited amount of funds available to
the Group, progress on formally re-launching the CANPAIN Trial has
been slow.
Strategic
Progress
In September 2024, the Group entered into a
strategic collaboration (the "Collaboration") with Valeos to, inter
alia, accelerate the Group's ability to supply product to its
existing European customer. Valeos is a successful Danish
company that specialises in EU-GMP production of medical cannabis.,
with manufacturing facilities in Holeby, Denmark. Valeos'
existing manufacturing facilities are capable of producing an
estimated 1.5 tonnes of pharmaceutical grade medical cannabis
Active Pharmaceutical Ingredients finished to EU-GMP standards per
year.
The Collaboration will see Celadon license the
intellectual property ("IP") it has developed in facility design,
cultivation techniques and operating processes to Valeos. The
aim of licensing this IP to increase the product quality and yield
from Valeos' growing rooms by up to 100% - ie to increase
cultivation capacity to c.3 tonnes per annum.
Celadon will also licence some of its genetics
to Valeos, and Valeos will grow these on behalf of Celadon,
allowing Celadon to eliminate a number of supply chain
inefficiencies in supplying its existing and potential European
customers.
Valeos is expected to commence cultivation for
Celadon's European customer in Q1 2025.
Strategic
Developments
Celadon is working with a number of healthcare
providers and medical cannabis clinics to assist them in evaluating
the potential to improve treatment for existing conditions by using
cannabis-based medicinal products ("CBMPs").
Funding
As announced on 10 May 2024, the Group raised
£2.1 million via a Placing and Subscription in May 2024, with £0.75
million of the proceeds being payable over a three-month period
until August 2024. Receipt of £0.4 million of these funds has
been delayed. The Group has also experienced delays in
receiving amounts due under a draw down from its £7 million
Committed Credit Facility provider following an initial draw down
request of £1 million, of which £0.3 million has been received to
date.
The Company has not received any further cash
from the £0.4 million owed from the Placing and Subscription and
£0.7 million due from the Committed Credit Facility provider (the
"Delayed Funding"), since the last update on its financial position
made on 11 September 2024. Based on the current forecasts of
the Company, the cash resources available to the Company are
expected to finance the working capital requirements of the Company
through to December 2024, with the Company continuing to manage its
cash position and assuming careful creditor management. While
the Directors remain confident of receiving the funds from the
Delayed Funding, and there is a legal requirement on both parties
to make payment, the Board notes the significant delayed timeframe
of payment which raises uncertainty that the funds will be
received.
Given the Group's reliance on the receipt of
the Delayed Funding and its Committed Credit Facility to ensure it
has the ability to continue as a going concern, the Group is in
discussion with both its existing lender about receiving further
amounts on the Committed Credit Facility, but also a small number
of other potential lenders about entering into longer term debt
facilities that would allow refinancing of the Committed Credit
Facility to ensure that the Group continues to have access to
sufficient funds. In the event that it is not possible to
borrow further amounts on the Committed Credit Facility, or to
refinance it, there is a material uncertainty which may cast
significant doubt over the Group's ability to continue as a going
concern.
Outlook
While the UK market for CBMPs is early in its development, the
growing demand for CBMPs internationally indicates the potential
path for the UK market. As such, we are increasingly
optimistic around the medium to long-term sector outlook and the
prospects for Celadon and the wider medicinal cannabis
market. We need to resolve the short term funding challenges
for Celadon, and then we can look forward to finishing the fit out
of our Phase 2 grow facility and building on the Collaboration with
Valeos so that we can both be producing CBMPs that so many patients
will be able to benefit from.
James
Short
CEO
Financial overview
Revenues - in the
six months ended 30 June 2024, the Group recorded revenues of £63k
(six months ended 30 June 2023: £8k, year ended 31 December 2023:
£75k). Revenue from the sale of medical cannabis products is
recognised at the time that the customer has the risks and rewards
of ownership.
Cost of
sales - includes all costs of cultivation and
production for the medical cannabis products sold in the
Period.
Fair value
adjustment - in accordance with IAS41
(Biological Assets), the Group is required to estimate the fair
value of the medical cannabis in cultivation (referred to as
"Biological Assets"). This fair value is based on the
anticipated sales revenue less the anticipated costs to sell the
product.
After the medical cannabis has been harvested,
but before it can be sold it is necessary for the harvested plants
to be dried, trimmed and further processed. Whilst in this
post-cultivation state, the cannabis plants are referred to as
Agricultural Products. The fair value of the Biological
Assets is treated as the carrying value of the Agricultural
Products. As such, the fair value adjustment represents the
anticipated profit from the cultivation activities in the
Period. The fair value adjustment for the six months ended 30
June 2024 was £338k (six months ended 30 June 2023: £nil, year
ended 31 December 2023: £74k).
Gross
profit - for the six months ended 30 June 2024
the Group reported a gross profit of £350k (six months ended 30
June 2023: loss of £26k, year ended 31 December 2023: £75k). The
gross profit represents the realised and unrealised profit from the
cultivation and sale of the Group's medical cannabis
products.
Operating
costs - include all people costs, property
costs (including utilities, repairs and maintenance), marketing,
and legal and professional costs. These totalled £2.3 million in
the six months ended 30 June 2024, and were lower than the
operating costs for the six months to 30 June 2023 of £2.9 million
(year ended 31 December 2023: £5.5 million) as a result of a lower
salary base and reduced spend on consultants.
Operating
loss - is gross margin less operating costs,
depreciation and amortisation. The operating loss for the six
months ended 30 June 2024 was £2.3 million (six months ended 30
June 2023: £3.2 million, year ended 31 December 2023: £5.9
million).
One off and
non-cash items - in this reporting Period, and
the comparator period there were a number of non-recurring and
non-cash items below Operating Profit, which are detailed as
follows:
Transaction related costs in the six
months ended 30 June 2024, six months ended
30 June 2023 and year ended 31
December 2023:
Transaction
related costs - a £0.2 million charge arose in
the Period to 30 June 2024 in respect of an internal reorganisation
of the Group's intellectual property ownership and entry into the
strategic collaboration with Valeos Pharma A/S. The £0.6
million charge in the Period to 30 June 2023 in respect of due
diligence costs for a potential transaction, and on certain
internal reorganisations. Similar transaction related costs
for the year to 31 December 2023 totalled £0.7
million.
Profit on Disposal of Harley Street
(CPC) Limited
On 8 March 2024, the Group disposed of its
investment in Harley Street (CPC) Limited for a consideration of
£0.5 million payable over three years. At the time of the
disposal, the only activity conducted by Harley Street (CPC)
Limited was the operation of a CQC registered clinic. The
assets relating to the CANPAIN Trial had been transferred to
Celadon Property Co Limited during 2023. The Group had
impaired the value associated with the goodwill on its investment
in Harley Street (CPC) Limited in the year to 31 December
2022.
Long term
incentive plans - the Group has two share based
long term incentive plans for certain directors, advisors and
employees; the Subsidiary Incentive Scheme and a separate Long Term
Incentive Plan.
In the six months to 30 June 2024, the total
charge in respect of the long term incentive plans was £54k (six
months ended 30 June 2023: £420k, year ended 31 December 2023
£285k).
Finance
charges on leased assets - Celadon has a Right
of Use lease on its production facility with over 20 years
remaining. There is also a 3 year Right of Use lease on one item of
production equipment, with 1 year left to run. The finance charge
on these leased assets of £296k is a fair valuation charge to
unwind the respective balance sheet lease liabilities (six months
ended 30 June 2023: £289k, year ended 31 December 2023:
£581k).
Loan interest
charges - In the period to 30 June 2024,
Celadon's had drawn on two different external funding lines: a) a
UK Government backed COVID related Bounce Back loan; and b) a
Committed Credit Facility from a High Net Worth
individual.
The external loan interest charged on the
Bounce Back loan in the Period was £0.2k (six months ended 30 June
2023: £0.4k, year ended 31 December 2023: £1k).
The interest charged on the Committed Credit
Facility in the period to 30 June 2024 was £0.5k (six months to 30
June 2023: £nil, year ended 31 December 2023: £0.3k).
Non Current
Assets at 30 June 2024 were £6.8 million, a
reduction of £0.1 million from the position at 30 June 2023 of £6.9
million (31 December 2023: £6.7 million). This
reduction was due to the depreciation of the Group's plant and
machinery and amortisation of the Group's intangible asset
totalling £0.2 million and a reduction in the Right of Use asset of
£0.2 million, offset by the recognition of deferred consideration
due on the sale of Harley Street (CPC) Limited of £0.3m.
Current
Assets at 30 June 2024 were £1.7 million, a
reduction of £0.9 million from the position at 30 June 2023 of £2.6
million (31 December 2023: £2.5 million). The decrease since
June 2023 reflects the utilisation of the cash to fund the
operating expenses for the business and facility expansion by £1.0
million, offset by an increase in trade receivables and the fair
value of the Biological Assets and Agricultural
Products.
Current
Liabilities at 30 June 2024 were £0.9 million,
a reduction of £0.5 million from the position at 30 June 2023 of
£1.4 million (31 December 2023: £1.0 million). The decrease
is due to the reduction in Trade and Other Payables.
Non-current
liabilities at 30 June 2024 were £5.1 million,
an increase of increase by £0.1 million from the position at 30
June 2023 of £5.0 million (31 December 2023: £5.1 million).
The increase compared is as a result of an increase in the lease
liability and the provision in respect of the property
decommissioning costs of £0.1 million.
Net
assets - at 30 June 2024 were £2.5 million (30
June 2023: £3.0 million, 31 December 2022: £3.2
million).
Shareholders'
Equity - Share Capital including Share Premium
and the Merger Relief Reserve total £92.8 million at 30 June 2024
(30 June 2023: £88.3 million and 31 December 2023: £91.2 million),
the increases have been due to share allotments in October and
December 2023, and in May 2024; the Reverse Acquisition Reserve of
£59.2 million (which is the consolidation reserve created on the
reverse acquisition of combining Summerway Capital Plc and Celadon)
remained constant; the Retained losses increased to £32.7 million
(30 June 2023: £27.9 million, 31 December 2023: £30.7
million). The Non-controlling Interest of £23k at 30 June
2024, 30 June 2023 and 31 December 2023 relates to the Subsidiary
Incentive Scheme.
Cash outflows from operating
activities - for the six months ended 30 June 2023 were £2.6
million (six months to 30 June 2023: £3.0 million, year ended 31
December 2023: £6.0 million). The main items of expenditure include
staff, advisers and utility costs.
Investing
activities - in the period ended 30 June 2024
capital expenditure totalled £59k (30 June 2023: £208k, year ended
31 December 2023: £341k). In the period to 30 June 2024, the Group
received the first instalments of the disposal proceeds due on the
sale of Harley Street (CPC) Limited of £33k. The remaining
£467k is due in instalments until March 2027.
Financing
activities - in the six months ended 30 June
2024, the Group raised £1.6 million of new equity financing (net of
allocated issue costs, which were specifically related to the
fundraise process), with a further £0.4 million of subscription
proceeds still anticipated at the date of this
report.
Cash
balance - at 30 June 2024 the Group had £16k in
cash (30 June 2023: £1.6 million, 31 December 2023: £1.3
million).
Post balance
sheet events - on 11 September 2024, the Group
announced that it had raised a further £1.0 million of equity
funding by a placing of 2,625,000 ordinary shares at a placing
price of £0.40 per share.
Going
Concern - the Group has received £2.65m (gross
of fees) of funding via equity raises since May 2024, with a
further £0.4m due.
The Group is selling products to customers and
the strategic collaboration recently entered into with Valeos will
allow the Group to be able to supply products to its European
customer worth up to £8.7m per annum - which should significantly
reduce the Group's cash outflow. Sensitised cashflow
forecasts for the next 12 months indicate that by utilising its £7m
Committed Credit Facility, the Group should have sufficient funds
to be able to continue as a going concern for the next 12
months.
As previously announced the Group has
experienced some delays in receiving amounts requested on its loan
draw downs, although the lender has continued to express their
intention to support the business. The Group is in
discussion, both with the existing lender, but also new potential
lenders about refinancing the Committed Credit Facility to put in
place a longer term funding solution. In the
event that it is not possible to borrow further amounts on the
Committed Credit Facility, or to refinance it, there is a material
uncertainty which may cast significant doubt over the Group's
ability to continue as a going concern.
Jonathan
Turner
CFO
|
CONSOLIDATED
STATEMENT OF COMPREHENSIVE INCOME
|
|
|
|
|
|
For the six
months ended 30 June 2024
|
|
|
|
|
|
|
|
|
|
Six months
ended 30
June 2024
|
|
Six months
ended 30
June 2023
|
|
Year ended
31 December
2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited
|
|
Unaudited
|
|
|
|
|
Notes
|
£'000
|
|
£'000
|
|
£'000
|
|
|
|
|
|
|
|
|
|
Revenue
|
5
|
63
|
|
8
|
|
75
|
|
Cost of sales
|
|
(51)
|
|
(34)
|
|
(74)
|
|
Fair value adjustments
|
|
338
|
|
-
|
|
74
|
|
Gross Profit
|
|
350
|
|
(26)
|
|
75
|
|
|
|
|
|
|
|
|
|
Operating costs
|
|
(2,345)
|
|
(2,902)
|
|
(5,472)
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortisation
|
|
(275)
|
|
(260)
|
|
(534)
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
(2,270)
|
|
(3,188)
|
|
(5,931)
|
|
|
|
|
|
|
|
|
|
Other transaction costs
|
|
(228)
|
|
(556)
|
|
(741)
|
|
Net finance costs
|
6
|
(288)
|
|
(271)
|
|
(566)
|
|
Profit on sale of subsidiary
undertaking
|
7
|
435
|
|
-
|
|
-
|
|
Long term incentive plans
|
|
(54)
|
|
(420)
|
|
(285)
|
|
|
|
(135)
|
|
(1,247)
|
|
(1,592)
|
|
|
|
|
|
|
|
|
|
Loss before taxation
|
|
(2,405)
|
|
(4,435)
|
|
(7,523)
|
|
|
|
|
|
|
|
|
|
Taxation
|
|
12
|
|
12
|
|
261
|
|
|
|
|
|
|
|
|
|
Loss for the
period, being total comprehensive loss for the
period
|
|
|
|
|
|
|
|
|
(2,393)
|
|
(4,423)
|
|
(7,262)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss attributable to:
|
|
|
|
|
|
|
|
Controlling Interest
|
|
(2,393)
|
|
(4,301)
|
|
(7,140)
|
|
Non controlling interest
|
|
-
|
|
(122)
|
|
(122)
|
|
|
|
(2,393)
|
|
(4,423)
|
|
(7,262)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share
|
8
|
(3.7p)
|
|
(7.0p)
|
|
(11.5p)
|
|
CONDENSED
CONSOLDATED STATEMENT OF FINANCIAL POSITION
|
|
|
|
As at 30 June
2024
|
|
|
|
|
|
|
|
|
|
30 June
2024
|
|
30 June
2023
|
|
31 December 2023
|
|
|
|
Unaudited
|
|
Unaudited
|
|
|
|
|
Notes
|
£000
|
|
£000
|
|
£000
|
|
Non-current
assets
|
|
|
|
|
|
|
|
Intangible assets
|
|
278
|
|
378
|
|
328
|
|
Property, plant and equipment
|
|
2,899
|
|
3,001
|
|
2,984
|
|
Right of use assets
|
|
3,109
|
|
3,272
|
|
3,191
|
|
Investments
|
|
218
|
|
218
|
|
218
|
|
Deferred consideration
|
|
272
|
|
-
|
|
-
|
|
Total non-current assets
|
|
6,776
|
|
6,869
|
|
6,721
|
|
Current
assets
|
|
|
|
|
|
|
|
Inventories
|
|
319
|
|
24
|
|
60
|
|
Biological Assets
|
9
|
129
|
|
-
|
|
40
|
|
Trade and other receivables
|
10
|
1,222
|
|
956
|
|
1,141
|
|
Cash and cash equivalents
|
|
16
|
|
1,611
|
|
1,259
|
|
Total current assets
|
|
1,686
|
|
2,591
|
|
2,500
|
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
Trade and other payables
|
|
(768)
|
|
(1,304)
|
|
(856)
|
|
Loans and borrowings
|
11
|
(21)
|
|
(10)
|
|
(20)
|
|
Lease liabilities
|
11
|
(64)
|
|
(56)
|
|
(54)
|
|
Deferred tax liability
|
|
(25)
|
|
(25)
|
|
(25)
|
|
Total current liabilities
|
|
(878)
|
|
(1,395)
|
|
(955)
|
|
|
|
|
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
|
|
|
Loans and borrowings
|
11
|
(10)
|
|
(19)
|
|
(14)
|
|
Lease liabilities
|
11
|
(4,684)
|
|
(4,565)
|
|
(4,629)
|
|
Provisions
|
|
(412)
|
|
(397)
|
|
(405)
|
|
Deferred tax liability
|
|
(25)
|
|
(50)
|
|
(37)
|
|
Total non-current liabilities
|
|
(5,131)
|
|
(5,031)
|
|
(5,085)
|
|
|
|
|
|
|
|
|
|
Net
assets
|
|
2,453
|
|
3,034
|
|
3,181
|
|
Shareholders'
funds
|
|
|
|
|
|
|
|
Share capital
|
|
660
|
|
617
|
|
642
|
|
Share premium
|
|
27,073
|
|
22,553
|
|
25,504
|
|
Merger Reserve
|
|
65,082
|
|
65,082
|
|
65,082
|
|
Reverse Acquisition Reserve
|
|
(59,200)
|
|
(59,200)
|
|
(59,200)
|
|
Warrant Reserve
|
|
395
|
|
566
|
|
617
|
|
Capital Redemption Reserve
|
|
49
|
|
49
|
|
49
|
|
Share Based Payment Reserve
|
|
1,118
|
|
1,235
|
|
1,195
|
|
Retained earnings
|
|
(32,747)
|
|
(27,891)
|
|
(30,731)
|
|
Equity attributable to owners of the Group
|
|
2,430
|
|
3,011
|
|
3,158
|
|
Non-controlling interest
|
|
23
|
|
23
|
|
23
|
|
Total Equity
|
|
2,453
|
|
3,034
|
|
3,181
|
NOTES TO THE
INTERIM RESULTS
For the
six-months ended 30 June 2024
1.
About Celadon Pharmaceuticals Plc
Celadon Pharmaceuticals Plc (the "Company") and
its subsidiaries (together "the Group") are a UK based
pharmaceutical group with a primary focus on growing indoor
hydroponic high-quality cannabis initially for use within the
chronic pain market.
The Company is a public limited company
incorporated in England and Wales and domiciled in the United
Kingdom (company number: 11545912). It is a public company listed
on the AIM market of the London Stock Exchange. The registered
address is 32-33 Cowcross Street, London, EC1M 6DF.
2.
Basis of preparation
These interim Condensed Consolidated Financial
Statements and accompanying notes have neither been audited nor
reviewed by the auditor, do not constitute statutory accounts
within the meaning of Section 434 of the Companies Act 2006 and do
not include all the information and disclosures required in annual
statutory financial statements. They should be read in conjunction
with the Group's Annual Report and Accounts for the year ended 31
December 2023 which are available on the Group's website. Those
statutory accounts were approved by the Board of Directors on 13
May 2024 and have been filed with Companies House. The report of
the auditors in those accounts was unqualified and also did
not contain a statement under section 498(2) or (3) of the
Act.
The interim financial information has been prepared
under the historical cost convention except for certain items that
are shown at fair value as disclosed in the accounting
policies.
The financial statements are presented in Sterling
which is the functional currency of the group and all values are
rounded to the nearest Pound Sterling Thousand (£000s).
The accounting policies applied by the Group in these
interim condensed consolidated financial statements are the same as
those applied by the Group in the audited consolidated financial
statements for the year ended 31 December 2023 and those which will
form the basis of the 2024 Annual Report.
These interim Condensed Consolidated Financial
Statements were approved by the Board of Directors on 27 September
2024.
a.
Basis of consolidation
The interim condensed consolidated financial
statements incorporate the financial statements of the Company and
entities controlled by the Company (its subsidiary
undertakings). Where necessary, adjustments are made to the
financial statements of the subsidiaries to bring their accounting
policies in line with those of the Group. All intra-Group
transactions, balances, income and expenses are eliminated on
consolidation.
Subsidiaries are entities controlled by the Group.
The Group "controls" an entity when it is exposed to, or has rights
to, variable returns from its involvement with the entity and has
the ability to affect those returns through its power over the
entity. The financial statements of subsidiaries are included in
the consolidated financial statements from the date on which
control commences until the date on which control ceases.
Non-controlling interests are measured initially at
their proportionate share of the acquiree's identifiable net assets
at the date of acquisition.
The Group was formed when the Company acquired the
shares of Celadon Property Co Limited in March 2022. This
transaction was accounted for as a reverse takeover. For
further detail of this transaction, and the accounting for it,
please see the financial statements for the year ended 31 December
2022.
b.
Going concern
These interim condensed consolidated financial
statements have been prepared on a going concern basis, which
assumes that the Group will continue in operational existence for
the foreseeable future.
The Group currently consumes cash resources and will
continue to do so as it completes the construction of its growing
facilities and until sales revenues are sufficiently high enough to
generate net cash inflows and cover ongoing operating costs.
In assessing whether the going concern assumption is
appropriate, the Directors have taken into account all relevant
information about the current and future position of the Group and
including the current level of resources.
At 30 June 2024 the Group had £16k of cash and net
assets of £2.5 million.
The Group is expected to produce c.£1.5m worth of
medicinal cannabis per year from Phase 1 of its facility in the
UK. The Group has recently entered into a strategic
collaboration with Valeos that is anticipated to allow it to supply
product to its existing European customer which could generate up
to £8.7m of revenue per annum. Valeos is expected to commence
cultivation for Celadon's European customer in Q1 2025.
The Group has received £2.65m of cash (gross of fees)
from equity subscriptions made between May and September 2024 with
a further £0.4m due to the Group. In addition, the Group
currently has access to a £7m Committed Credit Facility which is
due to expire at the end of November 2025.
Based on the current forecasts of the Company,
the cash resources available to the Company are expected to finance
the working capital requirements of the Company through to December
2024, with the Company continuing to manage its cash position and
assuming careful creditor management.
Having prepared budgets and cash flow forecast
covering the going concern period until September 2025, which have
been stress tested by creating a number of different scenarios in
which a number of the assumptions were adversely tweaked down -
such as to assume: a) no revenues being generated from the European
customer until September 2025, b) cost increases of 10%, and c) a
combination of the two, the Directors believe that with the
Committed Credit Facility, the Group has sufficient resources to
meet its obligation for a period of at least 12 months from the
date of approval of these interim condensed consolidated financial
statements.
As noted, however, this going concern assumption is
dependent on access to funds under the Group's Committed Credit
Facility. As publicly disclosed on 12 August 2024, the Group
has experienced delays in receiving funds requested under the
Committed Credit Facility. The provider of the Committed
Credit Facility has reaffirmed his commitment and intention to
provide funds to the Group.
Given the risks of continued delay in receiving funds
drawn down under the Committed Credit Facility, the Group is in
discussion with a number of potential lenders about refinancing the
Group's Committed Credit Facility.
Taking these matters into consideration, the
Directors consider that the continued adoption of the going concern
basis is appropriate, having prepared cash flow forecasts for the
coming 12 months, but note that if the group is unable to access
funds under the Committed Credit Facility, or from refinancing this
facility, it would represent a material uncertainty which may cast
a significant doubt on the Group's ability to continue as a going
concern.
3. Accounting
policies
Details of significant accounting
policies are set out below.
a.
Revenue Recognition
Revenues relate to the supply of dried cannabis
flower and cannabis-based products.
Revenue from the supply of cannabis flower and
cannabis-based products is recognised at the point in time when the
performance conditions in the contract with the customer are met,
which is when the products have been shipped or made available to
the customer.
b.
Biological Assets and Agricultural Products
The Group cultivates high-THC cannabis in a highly
controlled indoor environment to a Good Agricultural and Collection
Practices standard. When harvested the plants need to be
dried before cannabinoid oils can be extracted following Medicines
and Healthcare products Regulatory Agency ("MHRA") approved Good
Manufacturing Practices.
The Group sells the cannabinoid products to
pharmaceutical companies engaged in research and development and to
medical cannabis companies. It is recognised that accounting
for biological assets is an area which includes key sources of
estimation uncertainty.
Given the relatively short lifecycle of cannabis
plants with plants, with plants growing from cuttings to mature
plants ready for harvesting typically within 14-16 weeks, none of
the Group's biological assts is considered to be a non-current
asset. Drying plants and extracting cannabinoid oils are
production processes rather than a biological process.
Until the point of harvest, plants are categorised as
Biological Assets, and are valued on the basis of the cashflows
that are expected to arise from the sale of the finished products
less the anticipated cost of getting the plants to be finished
products. After harvest, the plants are categorised as
Agricultural Products.
Plants are therefore transferred to inventory at
their fair value at the point of harvest. This fair value
becomes the deemed cost of the inventory under IAS 2.
Inventories are stated at the lower of this deemed cost and net
realisable value.
c.
New and amended accounting standards
New and amended
standards and interpretations applied
The following accounting standards and updates were
applicable in the reporting period but did not have a material
impact on the Company:
·
Amendments to IFRS 16: Leases (effective 1 January 2024)
·
Amendments to IAS 1: Presentation of Financial Statements
(effective 1 January 2024)
The Company has considered the IFRS's in issue but
not yet effective and do not consider any to have a material impact
on the Company, though IFRS 18 (which is to be effective for annual
reporting periods beginning on or after 1 January 2027) may impact
on how the Company's results are presented.
4. Use of
critical judgements and key accounting estimates
In preparing the financial statements, management has
made judgements and estimates that affect the application of the
Group's accounting policies and the reported amounts of assets,
liabilities, income, expenses, shareholders' equity and
reserves. Actual results may differ from these
estimates. Estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to estimates are recognised
prospectively. In the process of applying the Group's accounting
policies, management has made the following judgements and
estimates, which have the most significant effect on the amounts
recognised in the financial statements:
Critical
Judgements
a.
Biological Assets and Agricultural Products
The Group undertakes agricultural activities and is
required to recognize the fair value of its biological
assets. Judgement is required in determining this fair
value. In the absence of an appropriate comparator in the
market for the Group's biological assets, the Board has used its
judgement in determining the fair value of the biological assets
based on the anticipated cashflows arising from those biological
assets. This judgement requires a judgement to be exercised
of the anticipated yield from the biological assets being
cultivated at the balance sheet date, less the costs that would be
required to get those biological assets to their saleable
state.
b.
Tax Losses
The Group has significant tax losses and has incurred
significant capital expenditure on leasehold improvements and plant
and machinery. The corporation tax treatment of these items
and the potential recognition of deferred tax assets requires
management judgement. The Group has decided not to recognise
a deferred tax asset at the balance sheet date, given the
uncertainty of when profits will arise.
Key Accounting
Estimates
c.
Research & Development Tax Credits
The Group has submitted its first R&D tax credit
application to HMRC totalling £269k relating to 2021
activities. Elements of the R&D claims required judgement
by management. At the date of these financial statements
£269k had been received by the Company in respect of the year to 31
December 2021. Using the same methodology, the estimated
R&D claim for the years to 31 December 2023 and 2022 are £236k
and £412k respectively.
5.
Revenue
The Group recorded revenue in the 6 months
ended 30 June 2024 of £63k (6 months ended 30 June 2023: £8k; year
ended 31 December 2023: £75k) from the sale of cannabis-based
products to pharmaceutical companies and medical cannabis
companies.
6. Net finance
costs
|
|
June 2024
|
|
June 2023
|
|
31 December
2023
|
|
|
Unaudited
|
|
Unaudited
|
|
|
|
|
£'000
|
|
£'000
|
|
£'000
|
|
|
|
|
|
|
|
|
Finance (charge) on leased assets
|
(296)
|
|
(289)
|
|
(581)
|
|
Finance (charge) on external loans
|
(1)
|
|
(0)
|
|
(1)
|
|
Unwind of discount on Site Restoration
Obligation
|
(8)
|
|
(8)
|
|
(16)
|
|
Unwind of Interest on Harley St
Debtor
|
13
|
|
-
|
|
-
|
|
Finance income on bank deposits
|
4
|
|
26
|
|
32
|
|
|
(288)
|
|
(271)
|
|
(566)
|
7. Profit on
Disposal of Harley Street (CPC) Limited
On 8 March 2024, the Group disposed of its
investment in Harley Street (CPC) Limited for a consideration of
£500,000 payable over three years. At the time of the
disposal, the only activity conducted by Harley Street (CPC)
Limited was the operation of a CQC registered clinic. The
assets relating to the CANPAIN Trial had been transferred to
Celadon Property Co Limited during 2023.
|
Effect of the
disposal of Harley Street (CPC) Limited on the financial position
of the Group
|
|
June 24
|
|
|
|
|
|
|
£'000
|
|
Trade and other receivables
|
|
|
|
|
13
|
|
Trade and other payables
|
|
|
|
|
(23)
|
|
|
|
|
|
|
|
|
Net
(liabilities) divested
|
|
|
|
|
(10)
|
|
|
|
|
|
|
|
|
Fair value of consideration
receivable
|
|
|
|
|
425
|
|
Carrying value of net liabilities disposed
of
|
|
|
|
|
10
|
|
|
|
|
|
|
|
|
Gain on
disposal
|
|
|
|
|
435
|
8. Loss per
share
Basic loss per ordinary share is calculated by
dividing the loss attributable to equity holders of the Company by
the weighted average number of ordinary shares in issue during the
Period.
|
|
June 2024
|
|
June 2023
|
|
31 December
2023
|
|
|
Unaudited
|
|
Unaudited
|
|
|
|
|
£'000
|
|
£'000
|
|
£'000
|
|
|
|
|
|
|
|
|
Loss attributable to the owners of the
Company
|
(2,393)
|
|
(4,301)
|
|
(7,140)
|
|
Weighted average number of ordinary shares in
issue
|
64,619,650
|
|
61,669,773
|
|
61,893,906
|
|
Basic and diluted loss per share
|
(3.7p)
|
|
(7.0p)
|
|
(11.5p)
|
9. Fair value of
biological assets and agricultural products
|
Fair value of biological
assets
|
£'000
|
|
At
30 June 2023
|
-
|
|
Changes in fair value less estimated
sale costs
|
108
|
|
Decreases attributable to
harvest
|
(68)
|
|
At
31 December 2023
|
40
|
|
Changes in fair value less estimated
sale costs
|
375
|
|
Decreases attributable to
harvest
|
(286)
|
|
At
30 June 2024
|
129
|
|
|
|
|
|
|
|
|
|
|
|
£'000
|
|
Changes in fair value of biological
assets
|
375
|
|
Inventory transferred to cost of
sales at fair value
|
(37)
|
|
Biological assets transferred to
agricultural products at fair value
|
(249)
|
|
Net
IAS 41 valuation movement on biological assets
|
89
|
10. Trade and other
receivables
|
|
June 2024
|
|
June 2023
|
|
31 December
2023
|
|
|
£'000
|
|
£'000
|
|
£'000
|
|
|
|
|
|
|
|
|
Gross Trade receivables
|
73
|
|
-
|
|
75
|
|
Less: Expected Credit
Allowance
|
-
|
|
-
|
|
-
|
|
Net Trade
Receivables
|
73
|
|
-
|
|
75
|
|
|
|
|
|
|
|
|
Deferred consideration
|
133
|
|
-
|
|
-
|
|
Prepayments
|
230
|
|
390
|
|
300
|
|
VAT receivable
|
138
|
|
154
|
|
118
|
|
R&D tax recoverable
|
648
|
|
412
|
|
648
|
|
|
|
|
|
|
|
|
|
1,222
|
|
956
|
|
1,141
|
11. Loans and
borrowings
|
|
June 2024
|
|
June 2023
|
|
31 December
2023
|
|
|
Unaudited
|
|
Unaudited
|
|
|
|
|
£'000
|
|
£'000
|
|
£'000
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
Bounce back bank loan
|
(10)
|
|
(10)
|
|
(10)
|
|
Revolving credit facility
|
(11)
|
|
-
|
|
(10)
|
|
Loans and
borrowings
|
(21)
|
|
(10)
|
|
(20)
|
|
Lease liabilities
|
(64)
|
|
(56)
|
|
(54)
|
|
|
(85)
|
|
(66)
|
|
(74)
|
|
|
|
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
|
|
Bounce back bank loan
|
(10)
|
|
(19)
|
|
(14)
|
|
Lease liabilities
|
(4,684)
|
|
(4,565)
|
|
(4,629)
|
|
|
(4,694)
|
|
(4,584)
|
|
(4,643)
|
1- Celadon Pharma
Limited has a 6 year £50,000 Bounce Back Loan with Barclays Bank
plc with interest fixed at 2.5% pa.
12. Subsequent
Events
On 11 September 2024, the Group announced that it had
entered into a Strategic Collaboration with Valeos Pharma A/S
("Valeos"). Under the terms of the agreements, the Group will
licence certain of its genetics for cultivation by Valeos.
This will enable Valeos to support the Group through the
manufacture of cultivated medicinal cannabis which will accelerate
Celadon's supply of pharmaceutical grade EU-GMP cannabis Active
Pharmaceutical Ingredients to its existing and prospective European
customers. The Group had also entered into a know-how licence
agreement whereby the Group will use its knowledge and expertise in
facility design, cultivation techniques and operating processes to
seek to increase the yield and quality of cannabis grown by
Valeos.
On 11 September 2024, the Group announced that it had
raised a further £1.05 million of equity through a placing of
2,625,000 new ordinary shares of 1p each at a placing price of
£0.40 per share.