Glance at BPH Energy’s Operational Performance in 1H FY20

Just a few days after announcing its proposal to implement a 1 for 10 share consolidation, Australia’s diversified player BPH Energy Limited (ASX:BPH) has now declared its half-year results for the period ended 31^st December 2019. With a focus on growth capacity and value creation, the Company continued to tap opportunities in diverse sectors during the period.

Key Highlights of 1H FY20

• Marked entry in the medical cannabis sector.
• Investee Cortical progressed with the development of Brain Anaesthesia Response Monitoring (BARM) System.
• Investee Advent progressed well at its key permits.
• Raised capital under a Share Purchase Plan.

Let’s scroll through each of these developments in some detail below:

Acquired 10% Stake in Patagonia Genetics Pty Ltd

During the half-year, BPH Energy pursued a complementary strategy of investing in the rapidly evolving medical cannabis sector by acquiring a 10 per cent stake in Patagonia Genetics Pty Ltd, which owns 100 per cent interest in a Chilean entity, Patagonia Genetics SPA.

The Company agreed acquired a stake in PG Aust for a subscription amount of $50k in cash into the entity, along with the issue of 150 million BPH shares and payment of $50k by equal instalments over 6 months to the shareholders of PG Aust.

BPH Energy was also granted an option to acquire an additional interest in PG Aust (to 49%), in consideration for a subscription amount of $700k into the entity and the issue of 450 million shares in the capital of BPH.

Following the acquisition of 10 per cent interest by BPH Energy, Patagonia reported:

• Purchased Wonderland Product ranges, including “Algae Based Biostimulants” and “Home Grow” exceeding 1,300 litres to send samples to major global grow shops and licensed producers in September 2019.
• An addition of 24 CBD and Hemp strains to its already strong collection of over 260 strains in November 2019.
• Acquisition of Carmagnola’s 18.4% CBD Phenotype in December.
• Execution of a JV agreement with Bio-Sciences Pharma Ltd.

Investee Cortical Continued Development of BARM

BPH’s investee, Cortical Dynamics Ltd announced the following developments during the half-year with regards to its BARM system:

• LiDCO Ltd UK continued trialling the BARM at Southampton University Hospital in the UK. LiDCO Group enjoys a leading market share in the UK, with more than 50 per cent of NHS acute care hospitals using its technology.
• Certification process is progressing in South Korea to allow distribution and sales of the BARM via the South Korean distributor Globaluck.
  • Globaluck received the KGMP certificate of approval for BARM from the KGMP (Korea Good Manufacturing Practice) in September 2019.

Investee Advent Energy Progressed Well Across Key Permits

BPH’s investee, Advent Energy announced the following developments during the half-year:

On 17 September 2019, Advent Energy terminated the RL Energy Joint Venture Agreement with RL Energy for the PEP11 permit (by mutual consent), thereby holding 85% interest as the operator and Bounty Oil and Gas NL (ASX:BUY) retaining the remaining stake.

• The PEP11 JV reviewed the work program and proposed to proceed with the drilling of a well at Baleen drill target, subject to approvals from NOPTA and other regulatory authorities and financing. It further made application to NOPTA to change the current Permit conditions (extension of the permit title for up to two years to enable the drilling and removal of the requirement for a 500 sq. km 3D seismic program).
• On 19 September 2019, Advent obtained a renewal of its 100% owned RL1 (Retention Licence 1) by the NT Department of Primary Industry and Resources for a five-year term.
• An application was made to the Department of Mines, Industry Regulation and Safety (DMIRS) for a two year suspension and extension of the permit commitment terms in 100% owned EP386 in the onshore Bonaparte Basin in Western Australia.

Raised Capital Under a Share Purchase Plan

BPH Energy issued about 215 million shares under a Share Purchase Plan during the period, at an issue price of $0.00140056 per share, of which $90k got satisfied by debt set-off and ~$211k was received in cash

Moreover, the Company raised $282k cash from the issue of 282 million placement shares, issued shares for following purposes:

• 150 million shares as partial consideration for 10 per cent of Patagonia Genetics
• 15 million shares as an introductory fee for a business transaction
• 20 million shares as part of director remuneration
• 7 million shares in lieu of consultants’ fees.

Review of Financial Performance

The Company reported a 23.7 per cent rise in revenue to $171.7k for the period ended 31^st December 2019, as it continued to accrue interest on secured loans to its investee companies. In addition, the Company’s net assets rose by 5.2 per cent from 30^th June 2019 to $2.1 million at 31^st December 2019.

The Company recorded a loss of $~755k for the period, after recognising a share of Advent’s profit net of impairment of $552.7k. Subsequent to the half-year, the Company’s direct shareholding in Advent increased from 22.6 per cent to 22.7 per cent following a debt conversion.

Also Read BPH Energy Announced 1 for 10 Share Consolidation for Effective Capital Structure

In a nutshell, BPH Energy delivered a remarkable performance during the half-year period in line with its growth-driven strategy. The Company seems to be ideally placed to progress with its strategic goals across diversified investments, backed by a robust management team.

BPH last traded on 26^th February 2020 at $0.001.

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