Guys, apologies for the delayed response. ERG operates from 8...

Guys, apologies for the delayed response.

ERG operates from 8 properties, 6 of these are leased. We only own 2 properties - the factory in Darwin, which is our biggest and sits on 6,250 m2 land. The other is our own spring also in Darwin, sitting on 77,000 m2 of land with a licence to draw 23 million litres of water per year. Our spring produces a natural ph8 alkaline water which is in demand in east Asia. Our Darwin business is geared for export but when COVID hit, supply chains got disrupted and international freight rates are now up to 5 times pre-COVID levels. We are awaiting freight rates to stabilise before we pursue exports. Most bottled water companies in Australia do not own their spring but rely on purchases from third parties,

While co-packing provides the volume, it is usually secured by tender. At such low margins, there is always a risk because one enters into a fixed price contract but in turbulent times, the rising cost of materials, freight, rent and labour could swing against the producer. One recent case is Quench, a contract packer that has gone into liquidation - https://publishednotices.asic.gov.au/browsesearch-notices/notice-details/QUENCH-NATURAL-SPRING-WATER-PTY-LTD-ATF-QUENCH-NATURAL-SPRING-WATER-TRUST-126119186/9f2b36d5-290e-4b3f-b1ca-3bc94893a2ff.

Our biggest business is in the home and business delivery of 15-litre bulk water. The only national companies in this sector are Refresh and Neverfail (100% owned by Coca-Cola). Despite being severely hit during the many lockdowns, Refresh continues to thrive and grow in the other sectors we're in. Refresh's market share might be small but we believe in building brand equity. Our biggest customer is Woolworths who sells our Refresh brand 5-litre in the drinking water aisle and 2-litre in the laundry aisle.

Thank you.