Moa widens full-year loss, gets letter of support from Business Bakery, Pioneer

Moa Group [NZX: MOA], the boutique beer maker which raised $16 million when it went public in 2012, posted a wider full-year loss and said major shareholders Pioneer Capital and the Business Bakery have committed to providing enough financial support to allow the company to keep operating for at least the year ahead.

The net loss was $5.8 million, or 19.2 cents a share, in the 12 months ended March 31, from $1.9 million, or 7.3 cents a year earlier, the Auckland-based company said in a statement. Sales jumped 88 percent to $4.6 million but was outpaced by a 137 percent jump in cost of sales, trimming gross profit to $792,000 from $848,000. Expenses soared 135 percent to $6.5 million, as costs of distribution, administration, and sales and marketing all rose.

Moa warned in November that the full-year loss would be between $5 million and $6 million, bigger than was projected in the prospectus, with lower-than-expected sales blamed on problems with its distributor, which it has now replaced with a more direct distribution deal. At the time the company said it was embarking on a strategic review to improve performance.

Yesterday, Moa said it signed a long-term contract to have much of its beer manufactured by McCashin's Brewery in Nelson, while higher-margin specialty brews would be made at its Blenheim site, where expansion has been bogged down by a protracted resource consent process. While it initially gained consent top expand its brewery at Jackson Road, Blenheim, it was subsequently appealed by a number of parties and Moa has opted to try to resolve the issues by mediation rather than what it calls "an expensive appeal process."

Moa had $4.1 million of cash reserves as at March 31, down from $11.5 million a year earlier and in a note to its accounts say it is "looking at a range of financing alternatives and timing to ensure adequate capital resources are available to support the group's growth plans and capitalise on opportunities."

Pioneer Capital, which owns 24 percent of the company, and The Business Bakery, on 23 percent, have provided Moa with "a letter of commitment to provide financial support that the directors believe is sufficient to allow the group to continue to operate and meet its obligations for at least the next year," the company says in its accounts. "The details are still being determined."

Chief executive Geoff Ross, who is also a director of The Business Bakery and drove the creation of both 42 Below and Ecoya, now renamed Trilogy International, said contract brewing at McCashin's adds "significant brewing capability" for high volume brands.

"In short this gets us the efficiencies of scale without significant capital investment," Ross said.

Moa shares last traded at 62 cents, valuing the company at $18.7 million, about half the $1.25 sale price in its 2012 initial public offering.

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(BusinessDesk)