Broo Limited has provided a bullish update on its multifaceted expansion plans, but the company’s financial position is looking increasingly precarious.
Last quarter, the company spent $1.05 million on administration and corporate costs, $995,000 on product manufacturing and operating costs, $446,000 on staff costs and $49,000 on advertising and marketing.
Its receipts from customers for the quarter amounted to $726,000, meaning the company fell $1.8 million short of covering its costs on cash flow.
After raising $10.5 million in an IPO late last year, Broo Limited had cash and cash equivalents of $736,000 as at June 30, 2017.
The company estimates it will have cash outflows of $1.9 million in the current quarter.
Loans for Mildura and Ballarat
Broo has agreed terms with a specialist property financier for a 12 month loan of approximately $1.01 million to fund costs associated the development of the $100 million Ballarat brewery project, it told the ASX.
German supplier Krones has completed the design specifications for the Ballarat plant, while preliminary concept designs for the brewery and entertainment complex have been completed.
The company said it is “pursuing opportunities to secure government incentives and grants that will be available for the purpose of the development of the project”.
Broo also revealed it has entered into an $845,000 equipment finance facility for plant upgrades at the Mildura brewery.
It said new automation equipment at the brewery is nearing completion and will provide additional production capacity for the company to start contract brewing for external beer companies.
The Mildura Brewery Pub has achieved significant increases in beer sales since it was re-opened by Broo in April, the company said.
China, ALM, brewpubs
The first production of Broo beers by Chinese contract partner Jinxing Beer Group has been completed, the company revealed.
The milestone occasioned the release of the following promotional video containing narrative from Jinxing director Zhang Feng.
Back home again and the company has entered into a national distribution agreement with Metcash subsidiary, Australian Liquor Marketers (ALM), to offer Broo beers to liquor wholesalers in its network.
“The company is planning to roll out an aggressive national sales and marketing strategy to optimise this new national distribution channel,” said Broo.
Its other hospitality venues – Brew Burger in Delacombe and Sorrento Brewery – are also progressing.
Trading as Brew & Burgers, the Delacombe venue will open in 2018, while Sorrento Brewery will start trading in September/October 2017, said Broo.
“A micro-brewery is planned to be installed by Sorrento Brewery to offer patrons the company’s beer product range,” it said.