SATIVA Wellness has posted a record quarter which saw it bank revenues of £3.48m – up by over £3m on the same period the previous year.
In candid interview with BusinessCann company founder and Executive Chairman Geremy Thomas, said its pivot to Covid-19 testing work was the reason for this success.
He said it had had to diversify from its core CBD business to make money – adding that this is a ‘reflection of where the CBD industry is at at this moment in time’.
“We have put a lot of effort into our CBD products, which we make ourselves. We have a full application into the FSA for the Novel Food process and we fully expect that the CBD market will continue to shake-out.
‘Will Not Put Shareholders At Risk‘
“But, I am not prepared to put our shareholders at risk by continuing to make huge losses. We will keep our presence in the CBD space, and we will be making some major moves in September, but I’m not going to lose a fortune doing it,” he said.
Mr Thomas returned to a hands-on role in the business in January this year and has since appointed a new management team which includes CEO Marc Howells and Chief Financial Officer Anne Tew.
He continued: “We are a wellness business with three business units and one of these is CBD products – and basically that is where the company lost most of its money last year.
“When I returned to the business I put a stop to that and we are now sorting out that division with new offerings and new pricing.
“I read a piece last week which showed 1,000 brands have gone to the wall in CBD and we are now at a point of change for the industry – and Sativa Wellness does not want to play the game of spending £4 to get £1.”
The company, which was established in 2018, now employs over 30 people and for the first half of the year, to June 30, it has banked total revenues of £4.86m compared to £4.12m for the whole of 2020.
Its gross profit is 804% higher at £1.92m, which is £1.7m more than the equivalent period the previous year.
Company’s First Net Profit
It has also posted its first net profit of £46,218 for the quarter – helped by £252,000 of positive currency adjustments – compared to £1.43m loss in the same period the previous year.
Sativa now has 57 COVID testing clinics and says it is actively looking at different tests to expand the clinic portfolio and opportunities to grow the testing business.
Mr Thomas went on to say that with the boost from Covid testing work total revenues should exceed £8m this year.
Nevertheless, he believes CBD’s time will come, saying: “CBD products are fantastic, they work, but they’re too expensive, there are too many small players.
“We will wait and watch and when time is right we will expand fast and furiously but the time isn’t right, at the moment we are still waiting for regulator to clarify market conditions and there are too many people buying business, which is essentially unprofitable.”
‘Not In A Rush To Lose Money’
He said the company has £3.5m in the bank, following a recent £1.8m fundraise and with the business now generating cash. It will deploy this firepower back in to CBD ‘when time is right’, adding it is ‘not in a rush to lose money’.
Sativa’s CBD products are marketed under the Goodbody Botanical brand it all own and operates PhytoVista Laboratories.
In a market press release issued with its results Mr Thomas said:“I am absolutely delighted by the fantastic revenues driven by strong growth following the changes made in Q1.
“The changes I laid out in my last announcements have started to impact the overall business performance and this profit is the result we have worked very hard to achieve.
“Cash flow remains strong and positive and the strengthened management team continue to focus on implementing the strategy laid out for the three business units to deliver even more success.”
Sativa is listed on the Aquis Exchange in the UK, the Canadian Securities Exchange, the Frankfurt Exchange and the OTC Markets Group in the US. It has a market cap of £16m.