The directors of listed brewer Broo have remained bullish despite another year of losses, saying they will offload their Mildura Brewery after just two years of ownership and move into contract brewing.

The company is currently in negotiations to outsource its brewing operations, which it said would provide Broo with an “efficient and cost effective supply chain” with “opportunity for expansion into further distribution channels”.

Broo has only owned the Mildura Brewery and Pub businesses since February 2017. Upon acquiring the brewing and hospitality site, Broo invested in upgrades, refurbishment and installation of new automation equipment.

At the time, Broo said it was “thrilled” by the acquisition which would allow it to commence brewing in-house immediately and “increase profitability across sales of existing brands”.

It has also placed its Sorrento Brewhouse in Victoria up for sale. The 1,500-square-metre site is located in the beachside destination of Sorrento, and Broo invested in a full refurbishment of the premises upon its acquisition, also in 2017.

Sorrento Brewhouse was acquired by Broo in 2017.

Broo is selling off assets in its most profitable business section – hospitality. Broo reportedly made $1.4 million from its Australian brewing operations, but $2.3 million from the hospitality side of the business this year – an increase from $952,727 and $1.6 million respectively the year before.

In the report released on Monday, the company confirmed that in the year to 30 June 2019 losses after income tax reached $3.2 million – a slight improvement on the $4.4 million loss made the previous year. The company indicated that this would be the case in a preliminary reportback in August.

It also revealed that the group’s liabilities exceed its current assets by $3.0 million. The company acknowledged that there is uncertainty about the group’s ability to continue as a going concern as a result.

Despite this, executive director Kent Grogan paid himself a total of $384,764 for the year, including $24,764 in superannuation – up slightly from $380,047 (including $20,047 superannuation payments) the year before.

No dividends were recommended by the board.

The directors said they want to focus on “significant” Australian expansion over the next 12 months – and dangled “additional opportunities” including “further penetration of products that have been tested and proven in the market place across several categories”.

In an additional corporate governance statement, Broo said that a full review of the board’s performance is expected to take place in 2020. It said that due to the current size of the board and the company, a remuneration committee has not been established, and the board is currently responsible for evaluating its own performance.

The board said the results were “expected” and it is continuing to reduce operational costs across the group, insisting that continued sales growth and the 2 million-litre Queensland distribution deal signed earlier this year enabled it to be “confident” of the company’s future financial performance.

In the same year as its Sorrento and Mildura acquisitions, Broo acquired a 15 hectare landholding located in Ballarat for a reported $100 million new ‘eco-brewery’ – but latest reports say the project is on ice.

The Ballarat brewery land is valued at $2.1 million according to this week’s report, and is subject to a buy back clause which will allow the seller to buy back the land if Broo defaults on its obligations to develop a brewery on the land and employ at least 100 people on the site within five years of settlement.

It is not clear whether Broo will take this option, as it has also extended the loan facility of $1.2 million secured against the Ballarat property until October 2020.

Kent Grogan founded the business in 2009 and it was listed on the ASX in October 2016, raising $10.5 million. At the time, it placed 52.5 million shares at 20 cents each. Broo’s share price in recent months has been hovering around the 2 cents mark.

Since its debut on the ASX, cumulative losses since 2016 have reached $11.1 million, meaning it has lost more than it raised in the initial placing.

Company representatives were unavailable for comment.