
31 March 2021
Love Hemp Group PLC / Market: AQSE
LOVE HEMP GROUP PLC
("Love Hemp Group" or the "Company")
Interim Results
Love Hemp Group PLC, the AQSE listed investment company with a focus on developing business opportunities in the regulated cannabis industry in
Chairman's Statement
I am very happy to provide shareholders with this update on the progress which Love Hemp Group PLC has made, and continues to make, this year, especially given the many challenges that we have all experienced through 2020 and into 2021.
Being able to adapt and pivot the business to mitigate the impact of Covid-19 and the pandemic has demonstrated the Company's ability to be agile and resilient with an ability to move forward, even in adversity.
During the six months ending 31 December 2020 the Company undertook a strategic review that culminated in a set of corporate activities in early 2021 which included the appointment of a new Chief Executive and a change of name.
In the first half of 2020, the primary focus of World High Life (as we were then known) was to support the efforts and operations of our wholly owned subsidiary and operational company, Love Hemp Ltd (together the "Group"). This resulted in steady growth of both high street and online sales.
Our plans to roll out a global brand and begin accessing wider markets began to gather momentum as the year progressed. In line with our plans, the Company completed small financings in late 2020 and early 2021 that supported our operations. This was combined with the conversion of Convertible Loan Notes that were originally used to finance the Company from inception. Alongside this, was the issuance of the balance of equity for the completion of the acquisition of Love Hemp Ltd. These actions resulted in approximately
In February 2021, we announced that Tony Calamita, who had been one of the Founders of Love Hemp Ltd, had agreed to become Chief Executive of World High Life and in March we changed the company name to Love Hemp Group PLC. Furthermore, James Mahony was engaged as a non-board chief financial officer in February 2021.
While most of these events occurred in the early part of 2021, they were well underway through the last half of 2020. Our plans achieved a significant landmark on 15 March 2021 when Love Hemp signed a multiyear, category exclusive marketing relationship with Ultimate Fighting Championship (UFC), the world's premier mixed martial arts organisation and the largest Pay-Per-View event provider in the world. The profile that this relationship brings to the Love Hemp Group will provide access to a global marketplace.
Combining the UFC exposure opportunities alongside our existing strategies and an ever-growing retail presence should result in continued growth of the Company's sales.
Love Hemp Ltd also acquired new premises which are presently being fitted out for production, distribution and head office. It anticipated these facilities will be available from mid-2021.
We have continued with relentless focus on our strategy to deliver one of the most recognised and award winning cannabidiol (CBD) brands in the
When we move into our new facilities in
We continue to make additions to our team and build out the infrastructure needed for our expansion aspirations. However, overall, I am incredibly pleased with the effort and dedication from the entire team, who continue to demonstrate their passion and desire to grow this business. Being well positioned for growth is imperative and we continue to review and analyse our needs on an ongoing basis.
I would also like to thank our shareholders for their support and continued investment with Love Hemp Group. Looking ahead, the opportunities to continue our growth are significant, and we are well placed to capitalise on them.
Financials
Gross revenue for the six-month period ended 31 December 2020 was
Responsibility Statement
We confirm that to the best of our knowledge:
· the interim financial statements have been prepared in accordance with International Accounting Standards 34, Interim Financial Reporting, as adopted by the EU;
· the interim financial statements give a true and fair view of the assets, liabilities, financial position and loss of the Group;
· the Interim report includes a fair review of the information required by DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the set of interim financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and
· The Interim report includes a fair review of the information required by DTR 4.2.8R of the Disclosure and Transparency Rules, being the information required on related party transactions.
The interim report was approved by the Board of Directors and the above responsibility statement was signed on its behalf by:
Andrew Male
Chairman and Director
31 March 2021
For further information please contact:
Andrew Male
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AQSE Corporate Adviser Mark Anwyl/Allie Feuerlein Peterhouse Capital Limited +44 (0) 20 7469 0930 |
Financial PR Tim Blythe Alice McLaren Madeleine Gordon-Foxwell +44 (0) 207 138 3205 |
Financial Advisor
Rupert Fane
H&P Advisory Limited
+44 (0) 20 7907 8500
For more information on Love Hemp Group please visit: www.lovehempgroup.com
LOVE HEMP GROUP PLC CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
UNAUDITED
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AS AT |
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31 December 2020 |
30 June 2020 |
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Note |
£ |
£ |
|
|
|
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ASSETS |
|
|
|
Current |
|
|
|
Cash |
|
78,977 |
200,546 |
Trade receivables and other |
5 |
628,980 |
282,295 |
Inventory |
|
520,717 |
281,351 |
|
|
1,228,674 |
764,192 |
Non-current |
|
|
|
Property and equipment |
|
260,235 |
224,707 |
Right of use assets |
9 |
1,246,419 |
1,246,419 |
Goodwill and intangible assets |
6 |
2,700,000 |
2,700,000 |
|
|
4,206,654 |
4,171,126 |
Total assets |
|
5,435,328 |
4,935,318 |
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
Current |
|
|
|
Accounts payable and accrued liabilities |
7 |
1,020,011 |
573,660 |
Lease liability |
9 |
180,930 |
180,918 |
Deferred consideration |
6 |
2,000,000 |
4,000,000 |
Loans payable |
8 |
269,659 |
172,843 |
Derivative financial instrument |
10 |
1,356 |
451,187 |
|
|
3,471,956 |
5,378,608 |
Non-current |
|
|
|
Lease liability |
9 |
892,762 |
962,807 |
Loans payable |
8 |
321,002 |
272,662 |
Convertible debentures |
10 |
1,869,132 |
1,734,304 |
|
|
3,082,896 |
2,969,773 |
Total liabilities |
|
6,554,852 |
8,348,381 |
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|
|
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Equity |
|
|
|
Share capital |
|
2,301,198 |
1,456,007 |
Share premium |
|
8,436,692 |
4,661,576 |
Shares to be issued |
|
- |
2,251,845 |
Other reserves |
11 |
1,855,816 |
968,568 |
Retained losses |
|
(13,713,230) |
(12,751,059) |
Total equity |
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(1,119,524) |
(3,413,063) |
Total liabilities and equity |
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5,435,328 |
4,935,318 |
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|
|
The accompanying notes are an integral part of these consolidated interim financial statements.
LOVE HEMP GROUP PLC CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME
UNAUDITED
|
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|
|
|
Six months ended |
Six months ended |
|
|
31 December 2020 |
31 December 2019 |
|
Note |
£ |
£ |
|
|
|
|
Revenue |
|
2,379,144 |
426,465 |
Cost of goods sold |
|
1,228,502 |
216,861 |
Gross profit |
|
1,150,642 |
209,604 |
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|
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Expenses |
|
|
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Selling, general, and administrative |
|
692,145 |
772,121 |
Salaries and wages |
|
208,521 |
142,417 |
Consulting |
|
379,444 |
228,848 |
Professional fees |
|
253,921 |
404,428 |
Transaction costs |
|
- |
201,407 |
Depreciation |
|
22,731 |
5,227 |
Share-based compensation |
11 |
887,248 |
23,044 |
Interest and accretion |
9,10 |
196,360 |
65,527 |
Foreign exchange |
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(4,335) |
46,346 |
Total expenses |
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2,636,035 |
1,889,365 |
Loss before other items |
|
(1,485,393) |
(1,679,761) |
Impairment - intangible assets |
|
- |
(7,473,831) |
Derivative fair value adjustment |
|
449,831 |
(681,959) |
Other gains/(losses) |
|
73,391 |
- |
Net and comprehensive loss for the period |
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(962,171) |
(9,835,551) |
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|
|
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Loss per share |
|
|
|
Basic and diluted |
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(0.50) |
(0.14) |
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Weighted average number of ordinary shares |
|
|
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Basic and diluted |
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192,822,435 |
11,789,186 |
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The accompanying notes are an integral part of these consolidated interim financial statements.
LOVE HEMP GROUP PLC CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY
PERIOD ENDED 31 DECEMBER 2020
UNAUDITED
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Number of ordinary shares |
Share Capital |
Share Premium |
Share subscriptions received |
Reserves |
Deficit |
Total equity |
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£ |
£ |
£ |
£ |
£ |
£ |
Balance, 30 June 2019 |
88,641,363 |
886,413 |
291,233 |
175,493 |
- |
(79,128) |
1,274,011 |
Ordinary shares issued at |
8,100,000 |
81,000 |
- |
- |
- |
- |
81,000 |
Ordinary shares issued at |
675,000 |
6,750 |
33,750 |
- |
- |
- |
40,500 |
Ordinary shares issued at |
10,991,737 |
109,917 |
989,257 |
(175,493) |
- |
- |
923,681 |
Ordinary shares issued for services |
4,960,980 |
49,610 |
446,488 |
- |
- |
- |
496,098 |
Ordinary shares to be issued - debt settlements |
2,231,650 |
22,317 |
200,848 |
- |
- |
- |
223,165 |
Ordinary shares issued to acquire Love Hemp Ltd. |
30,000,000 |
300,000 |
2,700,000 |
- |
- |
- |
3,000,000 |
Ordinary shares to be issued - conversion of debenture |
- |
- |
- |
2,251,845 |
- |
- |
2,251,845 |
Share-based compensation |
- |
- |
- |
- |
968,568 |
- |
968,568 |
Net loss for the period |
- |
- |
- |
- |
- |
(12,671,931) |
(12,671,931) |
Balance, 30 June 2020 |
145,600,730 |
1,456,007 |
4,661,576 |
2,251,845 |
968,568 |
(12,751,059) |
(3,413,063) |
Ordinary shares issued at |
6,787,870 |
67,879 |
610,908 |
- |
- |
- |
678,787 |
Ordinary shares issued at |
38,918,279 |
389,183 |
3,120,425 |
(2,251,845) |
- |
- |
1,257,763 |
Ordinary shares issued at |
17,877 |
179 |
894 |
- |
- |
- |
1,073 |
Ordinary shares issued for services at |
680,778 |
6,808 |
42,889 |
- |
- |
- |
49,697 |
Ordinary shares issued at |
38,114,285 |
381,142 |
- |
- |
- |
- |
381,142 |
Share-based compensation |
- |
- |
- |
- |
887,248 |
- |
887,248 |
Net loss for the period |
- |
- |
- |
- |
- |
(962,171) |
(962,171) |
Balance, 31 December 2020 |
230,119,819 |
2,301,198 |
8,436,692 |
- |
1,855,816 |
(13,713,230) |
(1,119,524) |
The accompanying notes are an integral part of these consolidated interim financial statements.
LOVE HEMP GROUP PLC STATEMENT OF CASH FLOWS
SIX MONTHS ENDED 31 DECEMBER 2020
UNAUDITED
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31 December 2020 |
31 December 2019 |
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£ |
£ |
|
|
|
Operating activities |
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Net loss for the period |
(962,171) |
(9,835,551) |
Adjusted for: |
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Depreciation |
22,731 |
5,227 |
Other losses |
8,465 |
- |
Other gains |
(82,534) |
- |
Share based payments |
887,248 |
23,044 |
Accretion and interest |
180,716 |
59,215 |
Shares issued for services |
49,697 |
330,468 |
Accrued interest |
- |
5,434 |
Impairment - intangible assets |
- |
7,473,831 |
Derivative fair value adjustment |
(449,831) |
681,959 |
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|
Changes in non-cash working capital: |
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Receivables and other |
(346,685) |
17,964 |
Inventory |
446,340 |
116,780 |
Accounts payable and accrued liabilities |
(239,366) |
(111,970) |
Cash flows from operating activities |
(485,390) |
(1,233,599) |
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|
|
Investing activities |
|
|
Acquisition of Love Hemp Limited, net |
- |
(2,915,651) |
Property and equipment |
(58,259) |
(13,946) |
Cash flows from investing activities |
(58,259) |
(2,929,597) |
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|
|
Financing activities |
|
|
Ordinary shares issued for cash |
381,143 |
1,045,181 |
Convertible debentures |
- |
2,355,782 |
Convertible debentures - transaction costs |
- |
(45,883) |
Lease payments |
(90,460) |
(15,663) |
Loans received |
178,687 |
- |
Loan repayments |
(47,290) |
(270,139) |
Cash flows from financing activities |
422,080 |
3,069,278 |
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Change in cash |
(121,569) |
(1,093,918) |
Cash, beginning of period |
200,546 |
1,307,456 |
Cash, end of period |
78,977 |
213,538 |
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The accompanying notes are an integral part of these consolidated interim financial statements.
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. NATURE AND CONTINUANCE OF OPERATIONS
Love Hemp Group PLC (formerly World High Life plc) was incorporated by in England and Wales on 30 January 2019 with registration number 11797850 under the Companies Act 2006. The limited company reregistered as a public company on 6 August 2019, and thus became World High Life PLC (the "Company") on the same date. The Company changed its name to Love Hemp Group PLC on 27 February 2021. The Company's head office and registered and records office address is 7-9 Swallow Street, 2nd Floor, London, United Kingdom, W1B 4DE.
The Company is an investment issuer with a focus on developing business opportunities in the CBD Health and Wellness market, as well as the Regulated Medicinal Cannabis in the UK and Europe. The Company's focus is on building and facilitating the growth of a diversified portfolio of companies, assets and opportunities within its focus mandate.
2. BASIS OF PRESENTATION
The condensed consolidated interim financial statements for the six-month period ended 31 December 2020 have been prepared in accordance with the requirements of the relevant AQSE regulations. As permitted, the Group has chosen not to adopt IAS 34 "Interim Financial Statements" in preparing this interim financial information. The condensed consolidated interim financial statements should be read in conjunction with the annual consolidated financial statements for the year ended 30 June 2020, which were been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. The condensed annual consolidated financial statements have been prepared under the historical cost convention.
The condensed consolidated interim financial statements of Love Hemp Group PLC are unaudited, condensed consolidated financial statements for the six months to 31 December 2020. These include unaudited comparatives for the six-month period to 31 December 2019 together with audited comparatives for the year to 30 June 2020. The condensed consolidated financial statements do not constitute statutory accounts.
The condensed consolidated interim financial statements for the six-month period ended 31 December 2020 were approved by the Board of Directors on 31 March 2021.
3. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies applied in preparing these financial statements are in terms of IFRS and are consistent with those applied in the previous annual consolidated financial statements for the year ended 30 June 2020.
It has been prepared assuming that the Group will continue as a going concern in accordance with the recognition and measurement criteria of IFRS as adopted by the European Union.
Under this assumption, an entity is ordinarily viewed as continuing in business for the foreseeable future with neither the intention nor necessity of liquidation, ceasing trading or seeking protection from creditors for at least 12 months from the date of the signing of the financial statements.
An assessment of going concern is made by the Directors at the date the Directors approve the interim financial statements, taking into account the relevant facts and circumstances at that date including:
• Review of profit and cash flow forecasts;
• Review of actual results against forecast;
• Timing of cash flows;
• Financial or operational risks; and
• The impact of COVID-19
The Directors have a reasonable expectation that the Group has or will have adequate resources to continue in operational existence for the foreseeable future, and have therefore adopted the going concern basis of preparation in the interim financial statements.
The statutory consolidated financial statements for the period to 30 June 2020, approved by the Board of Directors on 7 December 2020, have been reported on by the Group's auditors and delivered to Companies House. The report of the auditors on those financial statements was unqualified. The auditors made reference to the existence of a material uncertainty in relation to going concern within that audit report, to which we draw your attention.
4. ADOPTION OF RECENT ACCOUNTING PRONOUCEMENTS
(a) New and amended standards mandatory for the first time for the financial periods beginning on or after 1 January 2020
As of 1 January 2020, the Company adopted IAS 1 (amendments) definition of material, IAS 8 (amendments) definition of material, IFRS 3 (amendments) definition of material and Amendments to References to the Conceptual Framework in IFRS Standards.
Of the other IFRSs and IFRICs, none are expected to have a material effect on future Company Financial Information.
b) New standards, amendments and interpretations in issue but not yet effective or not yet endorsed and not early adopted
Standards, amendments and interpretations that are not yet effective and have not been early adopted are as follows:
Standard |
Impact on initial application |
Effective date |
IFRS 17 |
Insurance contracts |
*1 January 2021 |
IAS 1 (Amendments) |
Classification of Liabilities as Current or Non-Current. |
1 January 2022 |
* Subject to EU endorsement
The Group is evaluating the impact of the new and amended standards above which are not expected to have a material impact on future Group financial statements.
5. TRADE RECEIVABLES AND OTHER CURRENT ASSETS
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31 December |
30 June |
|
2020 |
2020 |
|
£ |
£ |
Trade receivables |
498,570 |
75,641 |
Other receivables |
38,545 |
- |
Prepaid expenses and deposits |
91,865 |
206,654 |
Total |
628,980 |
282,295 |
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|
6. ACQUISITION OF LOVE HEMP LIMITED
On 18 October 2019 the Company acquired 100% of Love Hemp Ltd. ("Love Hemp") for consideration of between
·
·
A further earn out of up to a maximum of
·
·
Subsequent to 30 June 2020 the Company entered a Deed of Variation with the Sellers of Love Hemp Ltd. whereby the purchase consideration was amended as follows:
· On 25 September 2020 the Company issued 22,222,222 Ordinary shares at a deemed price of
·
The continuity of goodwill arising on acquisition is as follows:
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|
|
|
£ |
1 July 2019 |
|
- |
Acquisition of Love Hemp |
|
10,173,831 |
Impairment |
|
(7,473,831) |
30 June 2020 |
|
2,700,000 |
31 December 2020 |
|
2,700,000 |
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|
|
The valuation of goodwill is reviewed by the Directors once a year with the last review taking place upon preparation of the 30 June 2020 consolidated financial statements. Nothing has come to the Company's attention since the last review and the date of issue of these accounts, to indicate that the assets are potentially impaired since the last review.
7. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
|
|
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31 December |
30 June |
|
2020 |
2020 |
|
£ |
£ |
Accounts payable |
425,832 |
506,308 |
VAT payable |
86,812 |
|
Accrued liabilities and other |
507,367 |
67,352 |
Total |
1,020,011 |
573,660 |
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|
|
8. LOANS PAYABLE
A continuity of the loan balance is as follows:
|
|
|
|
|
|
31 December |
30 June |
|
|
2020 |
2020 |
|
|
£ |
£ |
Opening balance |
|
445,505 |
- |
Balance acquired - Love Hemp acquisition |
|
- |
586,627 |
Accrued interest |
|
13,770 |
29,885 |
Loans issued |
|
178,685 |
659,415 |
Shares to be issued for debt settlement |
|
- |
(308,636) |
Shares issued |
|
- |
(223,165) |
Re-payments |
|
(47,299) |
(298,621) |
Total |
|
590,661 |
445,505 |
Current portion |
|
(269,659) |
(172,843) |
Non-current portion |
|
321,002 |
272,662 |
|
|
|
|
a) During April 2019, Love Hemp entered a loan agreement for a principal amount of up to £360,343 bearing interest at 9.90%. The loan matures in sixty months and requires monthly repayments of £7,638. Upon maturity, Love Hemp is required to pay a completion fee of £10,495. The loan is secured by the assets of Love Hemp.
b) Love Hemp issued a 12% promissory note of
c) During the period, the Company entered into loans totalling
9. LEASES
The follow lease liabilities arose in respect of the recognition of right of use assets with a net book value of
|
|
|
|
|
Total |
|
|
£ |
Balance, 30 June 2019 |
|
- |
Acquired in Love Hemp transaction (Note 9) |
|
1,246,419 |
Principal reduction |
|
(102,694) |
Balance, 30 June 2020 |
|
1,143,725 |
Principal reduction |
|
(90,460) |
Finance costs |
|
20,427 |
Balance, 31 December 2020 |
|
1,073,692 |
Less: Current portion |
|
(180,930) |
Non-current portion |
|
892,762 |
|
|
|
No property and equipment was held by the Company at the period end.
10. CONVERTIBLE DEBENTURES
|
|
|
|
|
October |
November |
|
|
2019 |
2019 |
Total |
|
£ |
£ |
£ |
Balance, 30 June 2019 |
- |
- |
- |
Convertible debentures issued (a,b) |
2,338,554 |
17,228 |
2,355,782 |
Transaction costs - cash |
(48,459) |
- |
(48,459) |
Conversion feature |
(250,452) |
(1,884) |
(252,336) |
Accretion expense |
120,385 |
681 |
121,066 |
Interest expense |
169,836 |
1,292 |
171,128 |
Converted to Ordinary Shares |
(612,877) |
- |
(612,877) |
Balance, 30 June 2020 |
1,716,987 |
17,317 |
1,734,304 |
Accretion expense |
61,997 |
471 |
62,468 |
Interest expense |
83,190 |
861 |
84,051 |
Converted to Ordinary Shares |
(11,691) |
- |
(11,691) |
Balance, 31 December 2020 |
1,850,483 |
18,649 |
1,869,132 |
|
|
|
|
In October and November of 2019, the Company issued 2,355,782
The debentures accrue interest of 10% annually and are subject to the Company's right to force conversion upon 30 days' notice in the event that the Ordinary Shares trade at
In connection with the above the Company paid cash transaction costs of
A continuity of the derivative liability related to the debenture conversion feature is as follows
|
|
|
|
|
October |
November |
|
|
2019 |
2019 |
Total |
|
£ |
£ |
£ |
Balance, 30 June 2019 |
- |
- |
- |
Conversion feature - initial recognition |
250,452 |
1,884 |
252,336 |
Fair value adjustment |
380,285 |
2,854 |
383,139 |
Allocated to equity |
(184,288) |
- |
(184,288) |
Balance, 30 June 2020 |
446,449 |
4,738 |
451,187 |
Fair value adjustment |
(445,110) |
(4,721) |
(449,831) |
Balance, 30 June 2020 |
1,339 |
17 |
1,356 |
The conversion feature was valued at 31 December, 2019 using the Black-Scholes valuation model with the following assumptions: Expected life 1.8 years, volatility 75%, discount rate 2.25%, dividend yield 0%.
11. SHARE CAPITAL AND RESERVES
Authorised
Unlimited ordinary shares with
Share Option Reserve
As at 30 June 2020 there were existing share options in issue of 66,914,285. The subscription price for these options were 12.8p and they expired on 27 February 2025. During the period, 6,352,381 options were granted with a subscription price of 1p and an expiry date of 3 November 2022. The options were valued using the Black Scholes method at a price of 0.7p per option. The total share option expense for the period was
12. SUBSEQUENT EVENTS
Subsequent to 31 December 2020, the Company completed the following transactions:
a) On 27 January 2021 the Company issued 56,620,600 Ordinary shares of
b) On 3 February 2021 the Company issued 68,000,000 Ordinary shares of
c) On 3 February 2021 the Company issued 46,700,000 Ordinary shares of
d) On 11 March 2021, a deed of variation was entered into to convert the outstanding convertible loan notes into a total of 77,220,315 Ordinary Shares at a price of 2.5p per share. Each Convertible Debenture Share was issued with 1 Share Purchase Warrant exercisable at 5p per share, vesting on 15 March 2021 and expiring on 14 March 2023.
e) On 11 March 2021, the Company also agreed to issue 8,876,040 Ordinary Shares at a price of 2.5p per share in exchange for debt with an aggregate amount of
f) On 11 March 2021 the Company issued 229,415 Ordinary Shares at a price of 2.5p per share for settlement of fees in lieu of cash.
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