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Moa to brief shareholders on capital management plans

Listed brewer Moa Group [NZX: MOA] has issued a trading update and chief executive Geoff Ross says shareholders will be briefed on “capital management plans” at this Thursday's AGM.

There has been speculation in the market that Moa may need to raise capital given is cash position, however the company was unspecific in its latest update.

In a stock exchange announcement this morning Moa says it continues to have support from its major shareholders Pioneer Capital and The Business Bakery.

Moa reiterated the two cornerstone shareholders have given their commitment to the company to support the growth plans and capitalise on opportunities.

“In addition to a trading update, the company expects to brief shareholders on its capital management plans at the Annual Shareholders' Meeting on 24 July,” Mr Ross says.

In May, broker Forsyth Barr suggested Moa may need to raise capital given the company’s shrinking cash pile.

And in a recent Ask Me Anything interview hosted by NBR ONLINE, Mr Ross responded to a question on whether a capital raise might be needed. 

“As with any growth company, the capital structure is always being reviewed. With a company investing in growth, shareholders will want to know the company has sufficient capital to execute it's growth plans. The Bakery and Pioneer have written a note which says they will stand behind the company if needed and we hope this gives shareholders the confidence we will continue our growth.

“In any plan we make, we will ensure all shareholders are given equal opportunity.”

While the boutique beer maker says it increased sales volumes by 95% in the first quarter to 264,000 litres, it does not reveal sales values. It does say that it lifted gross margin slightly from 14% to 19% during the June quarter.

Moa has been under pressure, after ousting distributor Treasury Wine Estates last August as it cut full-year sales targets by 30%.

While Moa achieved its revised, full-year sales target, its half year results to March 31 – with a net loss of $5.8 million – laid bare the cost of doing so.

At the end of its financial year on March 31, the company had $4.1 million of cash reserves, down from $11.5 million a year earlier.

Moa’s reported revenue, at $4.6 million, was almost 50% below prospectus forecasts of $8.6 million with gross margins squeezed to an average of 17%, albeit with recent improvement.

Shares in Moa climbed 3c or 7.14% to 45c in early trading this morning. Overall they are down 64% in the past 12 months, a far cry from the $1.25 offer price in a $16 million IPO in November 2012.

In its trading update this morning, Moa said it is has doubled its market share in supermarkets to 7.2% since changing its sales and distribution structure in October, and is now the fourth-biggest craft beer behind rival brands Monteiths, Macs and Boundary Road, which are owned by DB Breweries, Lion and Independent Liquor respectively.

The company says it expects to boost its gross margin in the current financial year, without providing a target. 

"We are confident that by year end the margin the business delivers will be substantially greater," the company said. "This will considerably improve the timeframe to achieve profitability."

(With reporting from BusinessDesk)

Comments and questions

Will be interesting to see the form of this "capital raising". Will it be shareholder loans (and thus not diluting existing shareholders) from Bakery/Pioneer? Will it be placements from only its two big shareholders? A full blown rights issue available to all shareholders?

I just hope its fair

A rights issue at a massive discount, partially underwritten by the BB/Pioneer

Trev loves Moas. Maybe he could give them tax relief to move to Wainui?

Pioneer hasn't done well on this investment. Hopefully their other investments are doing better for the taxpayer - funded by NZVIF and NZ Super Fund.

Pioneer are heavily invested in Rakon, Moa and SLI Systems - all struggling at the moment.

and Waikato Milking Systems, a new one, a good company, but wonder how it is going with the collapse in milk prices (if anything, not helpful)

Agh Doctor, there you go again.  Again, you will see from Public information that Waikato has grown into a domanant force and exporter to over 20 countries at much much lower payout levels.  And from Pioneer presents I can tell you Waikatio is going really well, in NZ and the rest of the world. Sore throats Doctor.

Hey Doctor. How would you know? Pioneer is a "Private" Equity investor. However if you look at Public sources, you'll see from their website that Rakon is a "Past" investment. I have seen their presentation material and can tell you Rakon was an amaizing return realised in 2007 - 7 years ago. And, as for the fund with SLI (another stellar return) and Moa in it, this would be the vintage leader in NZ PE and top-quartile in US PE ... and well ahead of the NZX.  So the tax payer is doing really well. If as the piece assumes Pioneer is buying more Moa they must think its a pretty good investment. So Doctor, best keep your opinions to sore throats, or whatever it is you know something about.

It looks like their investment model only works during tech / early stage driven euphoria, relying on bubble conditions (which now appears to be crashing down as quickly as it went up - worrying). I prefer if my taxpayer money didn't rely on irrational exuberance of naive retail investors.

Nah, they also make money from later stage and non tech and also in more subdued markets

I may have missed it in the release or article but was there any commentary about current revenue/volumes relative to prospectus forecasts for the quarter?

I read on another website an article titled "revenues up 95%" and on another website "sales nearly double." While good to see some traction both articles failed to note that its easy to grow sales off an extremely low base, as was the case in Q1 last year! if sales are back on track to what the directors said the company would be doing then that is great and cause to open a beer or two, but if not, then the 8% jump in share price and good news articles is premature.

none the less they are building a business and creating jobs, which is good, but still has been a poor investment IMHO

Good marketing beer is average

According to international judges the beer is very good

None of the beers mentioned - Boundary road, macs and Montieths could be considered craft beers. These are all industrial brews that have taken over a formerly craft beer label. the only investment is in the hype not the product.