THC Global Group Limited (ASX: THC) operates in the pharmaceutical business. The company is primarily focused on developing cannabis. Also, the company focuses on the manufacturing and distribution of hydroponics equipment and nutrients. THC Global Group serves customers mainly in Australia.
The company, today on 25 March 2019, has reported that its securities shall be placed in a trading halt at its request until it releases further announcement.
The securities of the company are expected to remain in a trading halt until the earlier of the commencement of regular trading on Wednesday, 27 March 2019 or when the announcement is provided to the market unless the exchange decides otherwise.
As per the ASX Listing Rules, the company had requested a trading halt in its securities as there was a pending announcement with regard to the completion of purchase in Nova Scotia, Canada reflecting time differences between the two jurisdictions. The company expects this trading halt shall be elevated on Tuesday, 26 March 2019, by the provision of an announcement to the stock exchange with regard to the completion of the acquisition.
The company as per its financial report for the period, which ended on 31st of December 2018 has two main operating segments. The first is manufacturing and distribution of hydroponics equipment, materials and nutrients; and the second is developing and delivering medicinal cannabis. The company mainly earn its income from the distribution of hydroponics materials and nutrients.
Coming to the cash flow. The company’s cash outflow from investing activities rose from $759,000 to $3.06 million for the period. This rise in outflows was witnessed as the company purchased a biopharmaceutical manufacturing facility and established a cannabis raising facility. The cost of goods has also risen uniformly to the revenues produced, which has led to falling gross margins on sales as compared to pcp. Substantial professional and consulting spending were done during the year, as the group undertook the due diligence procedures and acquisition of new facilities and projects.
With regard to the financial position of the company, it acquired a biopharmaceutical manufacturing installation on 1st May 2018 for a sum of $2.55 million. After the reappraisal is done on the valuation front of the facility by the valuers, these assets are now valued in the company’s financial statements at a value, which is more than $16 million. Also, the company has booked a loss of $1.2 million on account of impairment of intangibles i.e. goodwill. This has been recognised in the financials on performance shares, which were allotted to the vendors of CMDV and Canndeo. These shares have either lapsed without conversion, or it is the directors’ estimation that they will expire without any further conversion.
On the price-performance front, the stock has posted the YTD return of 15.96%. The company also has posted returns of 5.83% over the past six months. At the time of closing (on 25 March 2019), the stock of the company traded at a price of $0.545, with a market capitalisation of ~A$ 69.37 million. It had a 52-week high price of $ 0.790, with an average volume of 126,381 approximately.