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Medicinal cannabis company ECS Botanics more than quadrupled its net profit after tax (NPAT) to $2 million in FY24, aided by a record harvest, long-term supply agreements in Australia and overseas, and diversification into new products like gummies and vapes.
ECS is a leading business-to-business (B2B) grower and manufacturer of medicinal cannabis that was founded in 2018 by Alex Keach, but in FY24 it ventured not just into new products but also the world of direct-to-consumer sales.
The foray into business-to-consumer (B2C) came about through a one-year agreement with Elite Medical Solutions to retail ECS's soft gel capsules and oral liquids under the 'RAP' brand – ECS’ military veteran’s brand.
From a B2B standpoint, the company executed more than $33 million in binding, long term dried flower supply contracts with Australian and international customers during FY24, including the commencement of supply to German pharmaceutical cannabis company Ilios Santé.
The 6.6-tonne crop from Victoria was up 57 per cent year-on-year, and higher volume could be in the pipeline with the commencement of construction on nine new protected crop enclosures (PCEs) during the year.
The profit result was supported by an almost doubling of gross margins to 35 per cent, thanks to an ongoing focus on productivity, a change in the customer mix and a strategic emphasis on increasing exports.
"FY24 has been an extremely productive year for ECS Botanics, as we continue to deliver on our strategic plan to grow our export business and launch our B2C business," says ECS Botanics managing director Nan-Maree Schoerie.
"Our record outdoor harvest of 6.6 tonnes surpassed expectations for both quantity and quality through our leading expertise in organic cannabis agriculture.
"Recent feedback from German customer Ilios Santé states our first shipment sold out within 10 days – a testament to the quality of our organic, pharmaceutical-grade cannabis."
Following on from recent genetic improvement programs at ECS, Schoerie also highlights the recent launch of six new exclusive strains, which will be coming to market in the next quarter, two of which are destined for Germany.
"To meet rising demand for lower priced product, we have invested in outdoor crop expansions and commenced procurement for the construction of nine additional PCEs and enhanced four existing PCEs with heating and lighting to support our rapidly growing premium export market," she says.
"Launching our direct-to-consumer Avani brand is another critical step in capturing additional market share and increasing our revenue streams and I am pleased with the early progress we have achieved.
"Evolving our intellectual property remains pivotal in our pursuit of a differentiated strategy. Our 10-year license for VESIsorb grants us access to leading technology that increases the bioavailability of cannabinoids by 400%, making it substantially more cost-effective, and is uniquely absorbed by the user three-times faster than current methods.
"The delays associated with identifying a suitable manufacturer are behind us and we expect VESIsorb to be available during 2024."
ECS shares are up 23 per cent at the time of publication at 1.6 cents per share (cps).
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