SEED Innovations Limited Announces Interim Results

SEED Innovations Ltd, the AIM quoted company investing in fast growing and industry leading businesses with a focus on the medical cannabis, health, and wellness space, is pleased to announce its interim results for the six months ended 30 September 2021. A copy of this announcement and the Interim Results will be available on the Company’s website,  www.seedinnovations.co.

HIGHLIGHTS

RESULTS

The net asset value of the Company at 30 September 2021 was £23,353,000 (31 March 2021: £24,939,000), equal to net assets of 10.98p per Ordinary Share (31 March 2021: 11.72p per Ordinary Share).

As one of the only London listed vehicles that provides exposure to opportunities in the health, wellness and medical cannabis spaces, and with a strong balance sheet, I am confident of SEED’s continually evolving future and look forward to reporting on further progress over the coming months.

CHAIRMAN’S STATEMENT

I am pleased to report on another progressive period, which saw the Company renamed and rebranded as SEED Innovations Limited (‘SEED’) to reflect its evolving portfolio and core objective – providing investors with exposure to disruptive growth opportunities that have significant potential and would normally be inaccessible to private investors.

We have made two investments into new companies during the period under review, both of which align with our focus to invest in disruptive technologies, but with a focus on investing within the medical cannabis, health and wellness space. Alongside these new investments, we have continued to support our existing portfolio companies, and collectively expand and balance out the liquidity of our portfolio.

Following regulatory guidance at the end of 2020, the UK stock market saw a flurry of activity from cannabis focussed companies during the calendar year. Frustratingly, market sentiment has not remained favourable across sectors in general with a number failing to deliver on the expectations of early investors, and particularly for the cannabis focussed stocks. Whilst the publicly listed cannabis stocks across the globe have seen some price pressure over recent months negatively impacting our net asset value, we continue to be a firm believer in investing in the medical cannabis, health and wellness space.  With our access and network in the sector, we are well positioned to capitalise on this growth in the short, medium and long term, whilst continuing to seek investments in other disruptive technologies that we believe will create significant shareholder value.

We have previously reported on the sale of our stake in cannabis business EMMAC Life Sciences as part of a takeover by North American cannabis consumer products group Curaleaf Holdings Inc., but this formally completed in this period realising a gain for your company of £1.9 million, a 1.86 times return on the original investment, and one which demonstrated our ability to seek and deliver positive returns on investment from the international cannabis sector. While most of the global cannabis sales are represented by more mature U.S. and Canadian markets, such as in the recent EMMAC deal, international medical cannabis markets have also been evolving positively in the past years and are expected to continue that trend, representing a potentially huge growth opportunity judging by the North American experiences. Global cannabis sales mirror this predicted trend with an expected surge of 41% year-on-year in 2021, totalling $31 billion, according to a recent report by Colorado-based cannabis market research firm BDSA. The report also notes global cannabis sales will surpass $62 billion by 2026 (source: BDSA).

We are evaluating a large number of potential investment opportunities, many of which we are seeing via Alfredo Pascual, who joined our team in April as Vice President of Investment Analysis. Alfredo’s focus on sourcing and evaluating investment opportunities in the burgeoning European medical cannabis industry, as well as supporting the growth of our portfolio companies in the sector, is a true asset to SEED.  

Reflecting on the opportunity in Europe, we invested €3 million in Eurox Group, a revenue generating, German based European vertically integrated medical cannabis company, which is providing us direct access into the largest cannabis market in Europe today. Already well positioned in Germany, Eurox also has operations in Portugal and the UK and long-term manufacturing agreements in place with an EU GMP certified German pharmaceutical company. Since making our investment, Eurox has exceeded expectations by launching its own brand of ‘made in Germany’ full-spectrum medical cannabis extracts ahead of schedule, along with entering into supply agreements with leading medical cannabis distributors in Germany, securing sales of dronabinol for the next quarters.

Also reflecting our progress in Europe, investee company, ASX listed Little Green Pharma, a vertically integrated, medicinal cannabis business with operations from cultivation and production through to manufacturing and distribution, has also made significant progress on the continent.  This following on from its June acquisition of a fully operational GACP cultivation and GMP licensed medicinal cannabis asset in Denmark. This facility has the capacity to produce in excess of 20 tonnes of biomass per annum including 12 tonnes per annum of dried cannabis flower. The Company recently announced the first product shipment of its own branded cannabis flower medicines to the Australian market from the Danish Facility. Little Green Pharma has demonstrated its ability to show positive growth, both revenue and strategic, and in September 2021 experienced its highest sales month to date. We were therefore pleased to further support it with the purchase of shares both in the market and as part of a placing. Little Green Pharma has been ambitious in its growth strategy and is delivering beyond our expectations. With the Australian medical cannabis market experiencing high levels of growth, which is expected to have doubled from 2020’s figures by the end of 2021 to A$200m, we look forward to further positive news.

The second investment was in to CiiTECH Limited, an established research-led cannabis healthcare company. A brand building, consumer focused company dedicated to ongoing cannabis research and the commercialisation of cannabis products, CiiTECH is revenue generating and is growing its partnerships with leading institutions and scientists to create niche consumer brands.

A number of our existing portfolio companies have made positive progress over the period under review including South West Brands, which we have supported with further investment.  This female led, multi-brand consumer goods group developed specifically for the CBD industry, has launched two consumer brands, LoveMeMeMe and FEWE, both of which are receiving a positive reception from experts and users to date.

Yooma Wellness Inc, a company whose strategy is to build a vertically-integrated global leader in the manufacturing, marketing, distribution, and sale of wellness products including hemp seed oil and hemp-derived and cannabinoid ingredients, has had a busy period, particularly post its dual listing and $9.7 million fundraise on the AQSE Growth Market. We invested in this round of funding and are pleased to report that, although the share price has been somewhat volatile, Yooma is delivering on its expansion strategy having made three acquisitions since August, including two of the largest cannabis deals globally in the last few years.

We have seen some positive developments in our investments outside of the cannabis sector. NASDAQ quoted Portage Biotech Inc. continues to advance a pipeline of products that are targeted for clinical testing, and we took the opportunity to realise a trading gain of £396,000 in June. We remain an investor in Portage and anticipate further progress in the near term.

Another portfolio company, online gaming group Leap Gaming, is looking at a stock market listing in 2022 having continued its successful run with a number of new partnerships announced; amongst others, EuroLeague Instant Legends extended its partnership with leading Greek GameTech company Kaizen Gaming.

We also announced the completion of the sale of the assets of Factom Inc. to Invenium Capital Partners Inc. in September following Factom being placed in Chapter 11 bankruptcy. Whilst the investment into Factom was highly disappointing, and we wrote our investment down to £nil in April 2020, the agreement with Invenium closed the chapter and with the issue of a number of Invenium preferred shares to us, there is the possibility of some recouping of losses in the future.

Finally, Juvenescence, a longevity biotech and life sciences company, has also made some notable advances and is very well funded for future development having raised $50 million in a convertible loan note which, when added to the return on investment made post the sale of its stake in Insilico Medicine, leaves the company with a large cash position while they look at possible stock market listing in London. In April, Juvenescence launched Metabolic Switch as a drink, and is subsequently launching Metabolic Switch Powder, which provides the power of extra ketones to keep your body in deep nutritional ketosis for several hours.

Ian Burns

Non-Executive Chairman