Broo touts distribution success

Struggling ASX-listed contract brewer Broo has touted distribution growth, saying it had seen “unprecedented” sales in the Australian Liquor Marketers (ALM) network.

In its latest quarterly report published at the end of January to the ASX, Broo said it sold more than 50,000 cases of Broo beer in February to December 2021, and that the company will continue the expansion model for packaged beer as it expands to other states and territories.

Its 12 month target is to “realise 80 per cent store availability” across the ALM network.

Broo said it remains a “leader” in ALM owned and exclusive brand portfolio, and is working with Independent Beverage Partners to a “multi-faceted engagement program” across the Independent network.

According to its quarterly cash flow report for the three months to 31st December 2021, receipts from customers for the period reached $627,000, on par with the previous quarter.

Product manufacturing and operating costs totalled $564,000 according to its report, but the same results published in its presentation suggested it was closer to $640,000. It has been focusing on contract brewing since signing a deal with Carlton & United Breweries in 2020, and it announced plans to sell its Mildura brewery last year.

Overall, it finished in a negative cash position, using $914,000 in its operating activities, with $58,000 in cash at the end of the quarter.

During the three-month period, the company said it had secured $3.6 million before costs via a secured convertible note financing “from a group of sophisticated and professional investors”.

The ongoing situation with Broo’s Ballarat property was conspicuously absent from the presentation. In its cash flow report, it disclosed it has a $1.95 million loan facility, with interest payable at 14 per cent per annum, which is fully drawn down and secured against the Ballarat property.

Broo had entered into an agreement to sell the Ballarat site for $7.5 million in June 2021 – marking the end of its ambitions to build the “world’s greenest brewery” costing $100 million – but that the sale is conditional upon approval from Development Victoria.

“The board remain confident that this transaction will be approved,” it said in its latest update.

This is despite the fact that the struggling contract brewer has reported on the property sale six times since the deal was first announced, and each time it has extended the amount of time required to obtain relevant approvals from Development Victoria.

At the time of writing, Broo’s share price sat at $0.01 and it had a market capitalisation of $10.5 million.

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