ECS Botanics Achieves Positive Cash Flow Breakthrough in September Quarter

ECS Botanics Holdings (ASX: ECS) has delivered a positive net operating cash flow of $140,000 for the three months to end September, representing an improvement of $1.6 million on the June quarter and $900,000 on the same time last year.

The company’s direct-to-consumer (B2C) strategy generated strong results to complement its established business-to-business (B2B) and export channels.

Higher sales, disciplined cost optimisation, and reduced labour costs associated with capital works also underpinned the rebound.

Broad Revenue Growth

B2C revenue increased 21% on the June quarter to $3.2m, with growth recorded across all product lines, enabling the division to represent 56% of total revenue.

This B2C growth plus an expansion in business-to-business (B2B) sales resulted in total unaudited revenue for the period of $5.7m (up 19% on June and 15% on the previous year).

The improved performance was consistent across all product categories, highlighting the strength of the ECS branded portfolio and the success of its multi-channel sales strategy.

ECS said growth momentum remained strong as brand loyalty deepens and new products are introduced.

Australian-Grown Product

Imported medicinal cannabis flower continued to dominate the Australian market during the reporting period and ECS worked to counter this dynamic by promoting its Australian-grown, organically-certified, and GMP-accredited credentials in domestic and European markets.

The strategy has supported further growth in the B2B offering and strengthened relationships with prescribers who seek out trusted Australian products manufactured in line with frameworks offered by the Therapeutic Goods Administration (TGA), the Office of Drug Control (ODC) and the Australian Certified Organic (ACO).

ECS completed routine ODC and ACO audits during the quarter, while the TGA confirmed its intention to extend the company’s GMP (good manufacturing practices) licence.

Driving Operational Efficiencies

ECS remains focused on driving further operating efficiencies and expanding the growth of product lines in the B2C and B2B divisions.

The company commenced Australian distribution of the Terphogz medicinal cannabis range in June and has prioritised a European launch following an agreement with a German distributor.

Work on new and upgraded protective cropping enclosures (PCEs) is due for completion this month with a focus on enhanced lighting and heating to improve quality and enable year-round cultivation.

The first harvest from the PCEs produced 656 kilograms wet weight of medicinal cannabis flower, marking a 50% increase on the previous highest harvest of 437kg from the old-style enclosures.