Craft accelerator and hospitality business Founders First is bullish about its prospects and says the business is “well-placed” to execute its growth strategy despite the impacts of COVID-19 restrictions.

It lodged its third quarter statements for its financial year which ends 30th June to the ASX today and reported that cash and cash equivalents at the end of the quarter reached $14.7 million.

“Short term cash preservation initiatives enable the company to navigate business interruptions caused by COVID 19 and emerge on the other side ready to scale and capitalise on future growth opportunities,” it said.

During the quarter it acquired a number of businesses “which are expected to return significant value to FFL shareholders over the coming years” including Kangaroo Island Distillery, and completion of its Potters Brewery and Moonee Ponds sites as part of its venue strategy.

It reported that majority-owned entities Foghorn and Jetty Road grew by 215 per cent compared to the same quarter in 2019, whilst non-controlled entities such as Slipstream, Sparkke, Sauce and Ballistic grew 62 per cent.

On COVID-19, Founders First said it was “difficult to predict the duration or extent of future impacts of COVID-19 on business performance” but said that from 23rd March all its venues had essentially closed with skeleton staff managing home deliveries and takeaway.

This had minimal financial impact in Q3 but it impacted the business in April and will do so until venues reopen, it said, prompting it to look at JobKeeper, payroll tax relief and various tax deferrals as part of the government’s business survival packages.

Executive pay cuts of 20 per cent also came into force from 23rd March, whilst small-batch production of hand sanitisers has begun at Kangaroo Island and Brogans Way.

With pub and venue closures wholesale has seen higher than normal demand and sales growth in off premise and online channels, and it said that its retail trade carried the business through April, although it expects some slowing in growth as consumer demand resumes to more normalised levels – much in line with reports from Alcohol Beverages Australia using CommBank data.

In addition Founders First said it has seen sales recovery in exports, with orders from China and Japan later in the quarter reflecting a return to international trade, it said, including its first shipment of Green Ant Gin to Japan, following its acquisition earlier this month.

CEO Mark Haysman said that Founders First had been investing for growth in the most recent quarter, building scale and its venue channels.

“Performance in our beer portfolio remains strong,” he said.“We continue to outperform the craft category and add mutual value to our retail customers.

“COVID-19 has of course presented challenges. However the team remains focused on the right things – driving short- and long-term performance, preserving our strong cash position wherever possible and building our capabilities so we are ready when opportunity presents.”