Australian medical cannabis company ECS Botanics Holdings Ltd (ASX: ECS) says it is seeing the benefits of a “capital light” business approach and its ability to scale up effectively.
Announcing ECS results for the six months ended 31 December 2023, the company says it delivered record revenue and cash receipts, with receipts from customers reaching $10.5 million – up 69% on H1 FY23’s result of $6.2 million. Trading revenue for the half came to $11.3 million, up 66% on H1 FY23’s $6.8 million.
The results were driven by increased sales of oils and flower from existing customers said the firm, along with a boost from the addition of new key customers. In relation to oils, ECS saw a significant rise in orders during H1 FY23, with 148,325 units ordered and bettering the previous highest half by 86%.
“Recent capacity upgrades to our pharmaceutical-grade production facility are allowing us to service our offtake agreements, increase volumes to white label supply partners as demand for ECS medicinal cannabis builds,” said ECS Managing Director, Nan-Maree Schoerie.
Among the offtake agreements inked during the period was a $24 million deal to supply dried flower over five years to Perth-based MediCann Health, which was to start in January this year.
During the H1 FY24 period, ECS expanded its outdoor cultivation space by 60%, and established a dedicated zone for cannabidiol (CBD) crops. Despite the significant investment in the establishment, planting and irrigation of additional outdoor fields, ECS reported a positive net operating cash flow for the half of $0.4 million.
Additionally, an R&D project identified optimal lighting and heating conditions needed for consistent year-round cultivation of cannabis flowers and led to the development of seven new cultivars, which commenced commercial production in December last year.
“ECS is focused on continuing to build scale in its operations and broadening our customer base globally,” said Ms. Schoerie. “The expansion of our outdoor cultivation space, coupled with the commercial integration of our successful R&D, positions us well to increase production and optimise quality of our EU-GMP standard products.”
ECS Botanics once had its fingers in a bunch of cannabis pies – from hemp foods to wellness through to medicinal applications – but in mid-2022 announced its intentions to focus on medicinal cannabis.
