Little Green Pharma Ltd (LGP) Earnings Call Transcript & Summary

Good morning, everyone, and thank you for joining us on today's investor webinar for Little Green Pharma. My name is David Tasker, and I'll be your host as we walk through the company's full year 2025 performance and strategic outlook. We're pleased to welcome Paul Long, Managing Director and CEO of Little Green Pharma, who will shortly present the full year 2025 highlights and provide a business and operational update. [Operator Instructions] We'll address as many of those as we can after the main presentation. With that, I'll now hand over to Paul Long who will run through the operational and financial highlights and provide a snapshot into what's ahead for Little Green Pharma. Paul, thanks for your time.

Good morning or afternoon, everyone. Thanks, David, for the introduction, and thank you to everyone for joining us. It looks like we've got a really good turnout to today's presentation. So we really appreciate your time. Looking forward to sharing this year's summary from our annual report and our financial performance. And so yes, it's been a really solid year. I think for us, there's certainly been some challenges in the market with some really significant number of players really inside the Australian market. So to deliver what we have delivered both here and into our European growth is really exciting. So I'm looking forward to sharing a bit more information with you today. David, if we could just jump forward a couple of slides, please. Okay. So this first slide just gives a quick snapshot to those who are not overly familiar with the company. Hopefully, most of you are that are on the call today, but we continue to head down a house of brand strategy. So top left there, you'll see that we currently have 5. In the coming quarters, you'll see that we'll build on that portfolio of brands. There's a number of others that we're working on. So that's been a successful strategy for us in the last 12 months, and we'll continue to expand on that. That sees us increase our number of products, number of facilities now at 4, including the Health House manufacturing facility here in Western Australia. And the big one that is the moving target for us is the production capacity as we shift from production into -- from capacity, sorry, into actual production. So as reported, we recently expanded inside this year into another 2 tonne of our capacity out of our Danish site. We'll continue to do that as we see demand. We've been very -- we always have been and we continue to be very, very cautious on any capital spend and a small amount of capital is required to fit out some of the rooms in Denmark with LED lighting and things, and so we've been pretty cautious around how we spend capital there, but demand has got to a point where we continue to expand into that side, and I'll talk a little bit more about that today. Thanks, David. So as I mentioned, off the start, really, I think FY '25 for us is really a significant year. And probably, I would say, our best performance year-to-date from an operational level, I think, headlined by a really significant revenue growth of over -- of 43% from the previous year. And if we look at that over the 4 consecutive years, we've had a compound annual growth rate of over 52%. So a really significant top line result for us. Really importantly and excited to announce and show the market our adjusted EBITDA of $2.9 million, up from a negative $1.6 million last year and a net profit after tax of $3.3 million of a loss from last year of $8.2 million. Importantly, what we've been able to do is to maintain our NTA. So our assets largely, as I've mentioned before, driven by property assets. And so we've been able to achieve the performance we have whilst maintaining the assets that we have. So NTA remaining steady at $0.24 per share. And obviously, when we look at that as a valuation metric compared to our share price represents what we think is continuing to really good value for business that's backed by hard assets as we are. Long-term debt has also remained really low for the year. We believe we're really well funded with both some cash at bank, but also about $5 million of unused finance facilities to date. And for the year, one of the big, big stories for us was the successful integration of our Health House distribution business and the expansion of our Danish capacity, as I mentioned before, and we'll continue to look at that as well. And it was really great to see a clean audit opinion for this year, which will assist us as a company in particularly any debt conversations that we choose to have in the coming year, having that clean order opinion makes a significant difference. Thanks, David. So we'll jump into a little bit more detail. This slide really spells out the story from FY '22 through to FY '25. For the last 4 years, we can see that compound annual growth rate of 52% across those 4 years. But for the financial year, a $36.8 million top line revenue, which was a 43% growth on the year before. It's important to note that the Health House revenue pathway, normally the way that the industry works, the sales is at a gross level. So gross distribution sales is actually captured inside top line revenue for other wholesalers in this space. For us, the revenue recognition is actually on the net. So even -- so we would argue that our performance when compared to others that are actually accounting for the gross distributor sales is even more significant. Thanks, David. What's really good to see and important to see for us is the diversification of the revenue as well. So if we look at that graph on the right-hand side, they're the top 1 by product, we can see there that we continue to grow across a number of other products. Inside those products, we've a number of brands under the House of Brands strategy that are successfully creating the top line growth. What we can see is a regrowth of the oil market in FY '25, which is really encouraging to see. If we go back to 2022 and before, we were very much in the market in Australia, it was very much driven by oil-based products, but we've seen a rapid growth in flower-based products. So that still represents a big percentage now of our products that we're selling. And the bottom graph there just shows you the Australia to Europe growth. So what's really exciting is the blue bar on the right-hand side, FY '25, $6.7 million of European sales, up from $3.2 million the year before. So a significant increase in European sales. We really expect that growth to be a big part of our future. I've said that a number of times in our presentations, but also really exciting to see the $30.1 million inside the Australian market's continued growth here and certainly, credit to our strategy and to the team for that execution. In Germany, I'll touch on this perhaps a little bit later on, but we can see -- what we see here on the slide is that we -- the growth is actually continuing. Even in the last most recent reported information, which is calendar year '24, the final quarter, there was 31.7 tonnes of a total 72 tonnes for the year at the back end of the calendar year. So the final quarter. So we can see that there's a continued rapid growth, and we're certainly seeing that on the demand forecast that we're seeing outside of particularly from flower from our Danish site. The U.K. side of our business continues to grow nicely as well. We've got some really solid partnerships in there with both white label and Little Green Pharma brands. And then as we've been talking about for a long time, the French expansion opportunity is now getting closer and closer, and we expect that to kick off from early next year. Thanks, David. So the graph here will show that we did have a record adjusted EBITDA for the year. So off a minus $1.6 million from -- as an adjusted EBITDA for FY '24 into a $2.9 million adjusted EBITDA for FY '25. So just a fantastic result. Obviously, we've had some adjustment factors. And we do have noncash charges remained outside -- outsized for our business and mainly to do with the Canopy -- the site in Denmark. Obviously, Canopy spent $120 million on that site. We acquired it for $20 million and own that debt free now. And -- but the depreciated fair value in the PPE of $46 million but also the noncash charges relating to the performance rights and milestones that are now unable or more unlikely to be achieved as well. But importantly, what we're seeing here is the economies of scale inside the business. So we've managed to stabilize our cost base now for a long period of time. And we've overlaid that with the revenue growth, which is delivering these results. So it's really, really great outcome. Net income there on the bottom -- sorry, yes, net income there, just to point out, which we did at the start of $3.3 million positive of a negative $8.2 million from the year before. Thanks. Thanks, David. Back one, yes. Okay. So our net profit after tax of $3.3 million of a loss of $8.2 million from the year before. This is really -- the underlying support of this is, of course, the revenue growth and the operational leverage with the adjusted EBITDA of $2.9 million. It's just reflecting the underlying strength of the business. It is important to note that the net profit after tax actually does include a historic income tax loss of $8.1 million now that, that utilization is probable. So the foundations of this result, driven by the top line revenue, driven by a really hard line in managing our cost base has delivered this result, which is really exciting for the company. Thanks, David. This is a slide we've seen before, and one in which we continue to talk about. Obviously, with the net tangible asset of $73 million, which equates to a price per share of $0.24 and a trading share price well under that. We believe represents really solid value. The enterprise value at the date of this presentation of $39 million, which gives us a rough EV to revenue ratio of 1 but the ratio of our enterprise value to our net tangible assets of 0.5. And so we do that, as I mentioned, with a really low debt position, and part of that was actually extended through to June 30, 2027, earlier this year. And as I mentioned, the really solid cash position for the business with -- finishing the year with $2.4 million in cash but $5 million in unused financing to really support the business through growth and to enable us to not look at any dilution. So we feel like the business is well positioned from a cash position, growth position. And the great thing is we've been able to do that all year without affecting our underlying asset position as well, which represents even better value. Thanks, David. The next few slides will give you just a bit of a snapshot and an update. For those who have seen images of our site before, this image on the bottom left, the big glass houses, each of those glass houses represents a large room in which we cultivate. So we're currently producing about 7 tonnes out of that out of that site, but it has a capacity of up to 30 tonne biomass or about 21 tonne in sellable final finished flower, and we're producing 7 tonne -- roughly 7 tonne from the 21 tonne. So we have a significant amount of volume growth capable out of that site. And we do expect to be talking to the market about growing into that as we did this year. It's logical for us. We're in the enviable position where we didn't pay for the capital expenditure to build this incredible site. And the small amount of capital required, really, as I mentioned before, is just some internal fit-outs to scale up into the demand that we're seeing. Most of that demand is inside the European market at the moment, and most of that is inside the German market. We'll be talking pretty soon about some plans inside that German market, which we think will continue to drive our growth and margin into this financial year. But also through our white label partnerships, we're seeing unprecedented demand and on that market. And obviously, that site, as I've said before, since 2 hours from the German border. So it's just incredibly well positioned and Canopy is spending $120 million on that site. It's very, very unlikely that a site like this will be built again in the foreseeable future. It's a fantastic site. The gray building you see there is the GMP and laboratory side, where we do all the post production and final packaging before it's delivered straight down into the German market and U.K. market and of course, delivered across into the Australian market at the moment as well. The picture on the right there is our indoor site down in Busselton. So we have -- we're now working with a third party down there who has pivoted that site for us, and we have a full offtake from the site to pivot that site into a Craft facility. So it's now producing a product which is only got a capacity of just over 1 tonne, but it's producing product, which is of really high-level Craft facility. And what that means for those that are not familiar with finished product in the Craft space in this country, it's slowly cured. It's hand-trimmed. It's certain size. It's scaled to a certain size flower into [ jazz ]. It enables us to maintain a higher retail sale price for a higher-quality product. And therefore, really maximize margin from that site. So that's working really well for us. Thanks, David. Globally, since 2019, we've had a really strong focus into the European market. So as we've spoken about a lot, the key drivers of those markets, the fast-mover markets for our strategy obviously, Australia but also then into the European market, it's Germany and the U.K. But what really excites us as well is some of these emerging markets, we are very, very well positioned. I would argue, probably the best position European company to deliver on some of these new emerging markets as well. So we've spoken about France. We've spoken about Poland, Italy in the past, 1 of only 2 in Italy, 1 of only 2 in the French market, one of a handful into the Polish market, one of only a few to deliver into the Danish market, our home market there and obviously, early movers into those fast-moving markets. So we will see in the coming year, a real drive in some of those emerging markets. And the beauty of some of those markets, and I'll use the example of the French market is they are dossier-driven markets, which means to submit a product in that country, there's a huge amount of GMP quality work required and like submitting for a drug registration. There's Part 3 CTT dossiers, and they are very, very technical documents that you need to submit to sell inside those countries. And we have the competitive advantage of being a supplier in the trial in France. We have the competitive advantage of submitting our dossiers and the connection to the regulator in that market. And so we believe that will be one of the only products to begin with inside the French market. And that French market, we believe, will be fully funded for patients as well. So not only -- we've spoken a lot about those markets, there's some other emerging markets that we think are going to have a really similar level of quality expectation and dossier-driven submission. So the likes of Spain, we've spoken about and some of the other Nordic regions we're really taking closer look at. So competitive landscape, very, very different in those markets. Typically, margins also very different for us and a nice combination for us and really sticks to our strategy of let's -- part of our business is to focus on fast-moving markets, and there's a slightly different strategy to do that. And then, the other part of our market is to target those markets that are more difficult for most companies, fewer competitors inside those markets. But we're now starting to see -- particularly if you look at the German market and we look at the total size of the market and potential size, we're now starting to see some of those numbers become a reality as we sort of look at some of the volume. So as we extrapolate that into some of the other European countries in years ahead, it's a pretty exciting time for us. Thanks, David. A few other updates from our end. We're really, really excited and pleased to have won an award. The Cannabiz Awards recently Best Place to Work. It was a great award to win that really highlights the culture we've been able to build. We have an incredible team and have had an incredible team since day 1 here at Little Green Pharma. We've actually been able to retain almost all of our key staff for a long period of time. And that's not an easy thing to do in an industry that has struggled for -- that is in growth phase and struggle to raise capital. When you're doing that, when you're having to talk to a business and say we need to maintain or cut costs over a long period of time, that is a really difficult thing to do. So to be highlighted and to win that award was just huge. And I think all the recognition goes to our team and the incredible team we've been able to retain inside Little Green Pharma, who really truly believe in our strategy and are really committed to the industry more broadly. A few Board changes recently, you may have seen in our announcements. So I joined the Board as Managing Director and David Fenlon joined a very well-experienced and astute executive and Board member across other businesses in this country based on the East Coast of Australia and has just recently joined the Board and just a fantastic addition. So we're looking forward to continuing to work with him and bring his knowledge and know-how and connections to the benefit, particularly on the East Coast of Australia. On the Reset Mind Sciences front, we continue to be really well positioned as a company there. We're spending a limited amount of capital inside Reset. However, we continue to progress. We've always said we don't think this is going to deliver short-term, large returns for the company. But for the amount of capital, which is really small that we're investing into Reset and the opportunity and the -- where we're positioned globally, we think it's a really good small investment as to where we're heading. So the update there is that obviously, we're part of a clinical trial, which we've really scaled to an affordable amount, but that's -- the lion's share of that's now actually progressed, and we're just in the follow-up strategy over the next 12 months with UWA and Harry Perkins. And more recently, there were some really interesting announcements from the Department of Veterans Affairs federally to support funding for veterans, for MDMA and psilocybin treatment. So to begin to see that sort of positive news from federal departments shows that there is some really good progress happening in that space. Thanks, David. Our corporate overview slides. I think a couple of important things here would be proportion of ownership. So inside is the 16% on the bottom right-hand side there, we can see that between Board and key executive, there's a large part of the business. That ensures that we have an aligned view on shareholder value and shareholder return inside this market. Obviously, we are fully aware with the share price not being at a level where shareholders want that to be. We're all 100% aligned to driving that price. We do believe there's a big market sentiment at play. We have been really busy executing this year to deliver the results we have. Yes, we're certainly driving the message and really looking to drive that share price. But we take -- we do take, as I've said many times, we do take a longer term view that we're in markets that are growing, the Australian market has been strong. The growth for us in the coming years is significant. And I think the results that we've shown shows that we can continue to build and grow. And yes, that looks like really underpriced share price at the moment. And certainly, I don't shy away from my job as MD to promote that, and that will certainly be a big, big part of what we're trying to do whilst continuing to just put our head down and focus on executing on the strategy. Thanks, David. So I think this is, I think, one of our last slides just in terms of what is and just a bit of a snapshot and summary of our value proposition across the business. But I think having a 43% top line revenue growth in any industry for any business is a great result. And obviously, to see that over the last 4 years shows that we're really trending in the positive direction. Our low asset base is another really important and significant part of the business and our net tangible assets, as I mentioned on an earlier slide, it's a significant element of the business to focus on. Our strategy really hasn't changed in terms of our value. We'll continue to drive into the growth markets, and we'll also continue to look at those more difficult early-mover markets, which gives us a competitive advantage. What's important is we are now probably past that inflection point where we're seeing the economies of scale, particularly in Denmark. I think we had a fixed -- we have a fixed cost base in that site where we need quality managers. We need site managers. We need all the operational support and backup that we need with an IT manager, everything that we need in terms of our labor and our hard assets are there and largely fixed. So every time we scale up into one of those new 2-tonne rooms, the cost per gram scalable is insignificant. If we look at the additional cost to scale into those rooms, and it brings our average cost down. So as we continue to scale, as we move past that inflection point, those economies of scale continue to work for us for every new gram we produce out of that site. We actually think that we are probably one of the best positions to -- as a company when the market does have a global re-rating. I've spoken a lot about the sort of market sentiment. It's not -- if you track and trend the share prices of global cannabis companies from the last year, it's not a pretty sight. We have probably overperformed compared to the lion's share of listed companies globally. But having said that, we're not comfortable. We need to continue to drive that share price, and we're fully aware of that. We do believe, at some point, there will be more of a global re-rating in movements. And we do believe that a lot of that will be driven out of some big regulatory change around the world, Europe, U.S. And so -- and when that does happen, we believe we're in a fantastic position to capture some of the big upside we expect inside that re-rating. And then, of course, funding has been an issue for us as a business, but we've worked really hard to secure a bit of extra funding. So with $5 million of unused financing, and obviously, the positive adjusted EBITDA, we think that really solves for that part of our business at the moment that we know there has been perhaps a question over the business previously as well. Thanks, David. That was the last slide. Good. Thank you. Happy to jump in, David, if we got any Q&As on the way through.

Thanks, Paul, for that detailed and insight presentation. We have had a number of questions come through from attendees. So let's dive straight into the Q&A. [Operator Instructions] Firstly, how sustainable is LGP's recent profitability given the one-off impacts?

Yes. Look, obviously, one-off impact in this financial year had a positive influence on our net profit position. But I think if you look at the adjusted EBITDA, $2.9 million, it really does demonstrate the operating improvements that we've seen. And we're certainly seeing, as I mentioned, those scalable economies now, and the stable overheads I've spoken about in the past and margin growth across multiple markets is important. So we certainly expect to see a continuing sustainable profitability.

Probably an obvious question. You touched on it a little bit towards the end of the presentation. Why has the company's share price continue to trade below NTA per share of $0.25 per share versus $0.12? And what is being done to bridge this value gap?

Yes. I did touch on this one, David. But certainly, the market sentiment in the sector remains pretty challenging globally. Look, for us, we've had 4 consecutive years of positive revenue growth. We've just had positive adjusted EBITDA. We've got a strong asset base, which we've spoken about. It's actually backed by property. We believe that, that re-rating will come. We'll keep executing operationally and delivering the results we have in growing on those results. We still -- we'll get out there and talk to the market and talk to institutions and retail shareholders about the value that this represents. And we also believe for the reasons I just mentioned that when there is this re-rating, we're going to be incredibly well positioned.

There's a lot of talk around mergers and acquisitions, are you actively talking to companies in regards to M&A opportunities?

We've certainly been on the record to say that we believe consolidation through the shakeout period. So we believe the market is following a pretty normal trend. If we zoom back out of cannabis and so we go from start-up into this sort of consolidation phase, I think we take the view that within the next 12 to 24 months, there will be fewer -- there will be a number of large players in this space and fewer -- the tail will be a lot shorter. And so yes, we obviously had, we acquired the Health House site. We've got runs on the board on that being successful. We acquired the Danish side a number of years ago, runs on the board for that being successful. We think we have the right team in place to actually execute properly. I mean the level of opportunity out there is very significant at the moment. So yes, there's a number of conversations always, having, I think, the real challenge for us is to ensure that we've got a clear strategy on M&A and a really clear focus to ensure our time is well spent on certain pathways. But yes, we're certainly on record as saying that consolidation is and will continue to happen, and we do want to be part of those conversations, absolutely.

In regards to Australia, is it your intention to grow locally or import dried flower to meet demand? And will there be any change to margin growth?

Yes. So the Australian side, I mentioned on, during the presentation, is now pivoted more towards a Craft site. So that site eventually will just deliver product into the Craft part of our business. And the reason why I sort of that's distinctly important is because it costs more to deliver Craft because you slowly cure and dry the product for a number of weeks as opposed to those you hand trim the product, which adds time and labor cost to developing the final product. But the net result of that, if you got the right genetics, the right strain, the right finished product at the right moisture level, the right bag appeal, then you end up getting a much better final retail price to patients but also then a better margin on the way through. So that site will largely deliver into Australia. Out of Australia, we've historically also delivered 1 strain into German -- one of our German partners, and we continue to do that. It's actually one of the legacy strains inside the German market, and it just continues to sell the same volume almost a month -- every single month, which is -- and it's also one of those products in the market that gets fully reimbursed or almost fully reimbursed for patients in the German market, which is now quite unusual for that market. So yes, the Busselton site will continue to primarily produce for Australia with a little bit into the German market through that 1 partner. The Danish site, over time, will, is still delivering quite a bit of product into the Australian market. The cost to deliver down here is actually quite small given it's quite a light product. But over time, we see that, that will serve more and more into the European market as that begins to expand.

And can that site in WA be expanded beyond its existing capacity?

It's definitely doable. It would be a question of whether it made sense to do that. It's got space to potentially do so, but it would be a significant capital expense to do that. It may -- the reality is for us, it may make more sense to look at other sites to bring on board and work with or partner with or acquire or whatever that may look like if we wanted to scale out of that site. But we don't -- given that that's focused on Craft, we've intentionally done it that way so that we believe there's still a pretty good runway to be honest, from that site without any need for capital expenditure. And we've still got, as I said before, 7 tonne out of 21 tonne finished product out of Denmark, there's a significant growth opportunity for us to bring products in from there, too.

And given the significant valuation gap between build cost and carrying cost of the Denmark facility, how confident are you in realizing assets full value?

Well, the facility was obviously acquired at a really substantial discount towards build cost. I think you mentioned before that we purchased it off Canopy and they spent $120 million on that side, and we purchased it for CAD 20 million that we own now debt free. It actually is a really significant strategic advantage for us now. And we've certainly had our doubts on that side over the years, but we certainly are now very 100% comfortable and why I mentioned at the start, we think there's been a bit of a breakout year. And this is probably one of the key reasons is because that site now is really probably the crown jewels of our operation, and we're now seeing a real pivot towards some of the power in the negotiation go back to growers, which we haven't seen for a long period of time. So yes, we're seeing improved utilization following the recent increase of a 2-tonne room, and we're looking at, we are looking at the further expansion inside that side as well. So yes, I think the, realizing the full asset value, if we're not there now, we're pretty close, and we're trending very, very heavily towards further growth inside that site. And if we continue on the same growth and it's going to be going to be a really, really positive story to be talking about in the coming quarters and years.

And what are the key drivers for growth in full year 2026 and beyond?

Yes. Look, I think our strategy will largely remain unchanged. The demand, we -- whilst demand in Germany is unprecedented, we -- it's not going to be like that forever. We fully understand and recognize that, and we're doing things at the moment to position our own brand and kind of manage the level of white label we have into the German market to ensure that we can control that when the demand turns off. I think the reality at the moment the white label side of the business could probably fill up a lot more of those rooms, but we're managing that carefully to make sure that we have growth for our own brands and focus on those when that top line demand really scales back a bit. So for us, though, if the question is FY '26, we see, yes, just that demand continuing to the German, U.K. market, which those early moving ones. Market entry, of course, I spoke about into the French market, some of the other European markets, we're looking at dossiers at the moment. So you'll hear about that. I think that the true benefit of Health House, we've managed to really now successfully integrate that business, and we've seen month-on-month growth inside the top line of Health House, and it's really found its position in the market. And so we see more growth opportunity at a wholesale level. Consolidation in this market in FY 2026 is going to be really important as we've spoken about. We'll diversify through other brands. And then on top of all of that, I think we're going to see more regulatory reform inside the market this year as well. So we've seen in Denmark from 1 Jan, the regulatory pathway moves from the trial pathway to a full regulated market. And that's going to open up some really, really interesting opportunities for us to do more than just our own products. That huge manufacturing site. We have there in Odense is really underutilized at the manufacturing level. So what more could we do to expand our service offering into the European market. We're looking at all of those things at the moment. And that's one. But there's other markets like the Spanish market, we expect in that same time scope that there'd be some changes inside that market and early understanding of what that may look like is perhaps similar to the French market. So there's going to be more and more of those that give us growth opportunities into this next financial year and beyond.

More an industry question here. The Australian Medical Association and others are constantly raising concerns about the industry. Is there concern that regulators could be close to imposing stricter rules on accessing medicinal cannabis in Australia or at least limiting the strength of THC products?

Yes, there certainly has. There was a 7:30 report a couple of weeks ago. For those that missed it, you could probably still get it on catch-up. And it certainly was very pointed at some of the poor actors in this industry. I mean what I personally find really interesting is that they constantly refer to 3 or 4 or 5 a handful of doctors often junior doctors that are either being coerced or just paid exorbitant money or just choosing to go down this pathway to write huge amount of high THC scripts. So that is an issue. I would agree with that. And I think that calling that out for the growth, the long-term growth of our industry is actually an important thing to do. I think like everything in these sort of investigations is often very one side. It's not telling the story of the hundreds of thousands of patients that have tried -- that haven't -- that have tried this medication when they've got a chronic condition where nothing else has worked and there has been success stories. It's calling out those views. So yes, look, we're supported. Let's, let's clean up the industry. Let's make sure that there are clinics and doctors out there that are performing in that way. Will that have -- will that really impact us at Little Green Pharma. Look, maybe there's bit of a broader industry kind of pull down if there's some regulatory changes. We don't -- we actually don't take the view that those are likely. It's possible. But even if they are, we think they're going to be really focused on parts of the market that we're not really heavily pushing into. Our goal and our focus from a patient level is to work with patients, with products for -- that are servicing them for conditions that are not just -- they're not just jumping in to try the next high THC flower. They're using a product. Often, it's a CBD product, no THC. That's actually working for them over a long period of time. So we've built a long term for the last 8.5 years, 9 years, that's exactly what we've been doing, building a broad base of stakeholders that includes patients that are really focused on this as a medicine. So we're not too phased. We're watching it closely. In some ways, I think there's some positivity in other ways, yes, there could be some impact on the industry for sure.

Coming back to the company. How has the company been able to improve EBITDA while maintaining a relatively stable cost base?

I think we're just starting to see the benefits of that operating leverage, revenues growing. We've kept costs really tight as you can -- as we've shown in our quarterlies, and this is translating into margin performance. So as we expand and as we expand and integrate new lines and grow the business, we continue to see that. So it's just been, I think, smart financial and tight financial management that's been a real focus for the business that's been able to deliver that. To be able to do that and then have a 43% top line growth is the exciting part. And then for that to roll into the EBITDA is obviously the really positive part. So yes, look, we think we've probably got that part of the business, right? It's always a bit of a trade-off to maintain that sort of growth, you need to make sure you're investing in the business to enable the growth. So we're always looking at that. We've got some very, very clever people on the finance side of the business and on the Board and through the executive and through our management team. So in a difficult market where we knew that it wasn't really an option to just go back and find more capital for a long period of time, those that have succeeded have had to be really smart financially and really tight in how they manage their operations. And so we've -- this result is probably a credit to that from our side, but that won't change for us moving forward at all.

Well, thanks, Paul. And that does bring to an end today's session. Thank you to everyone who joined us and to Paul for the presentation and thoughtful responses during the Q&A. So thanks, Paul.

Thank you, David. Thanks, everyone, for joining.

Thanks, everybody. A recording of today's webinar will be made available shortly. And if your question wasn't addressed today, feel free to follow up with the team directly. Thanks again for being with us and for your continued interest in Little Green Pharma. Have a great day. Thanks, everybody.