Moa drops to record low on cash flow woes

Geoff Ross, Moa Group Chief Executive Officer
Grant Baker
Moa Group 12-month price history (NZX.com)

Shares in Moa Group [NZX: MOA], which raised $16 million when it went public in 2012, plunged to almost a third of its listing price after the boutique beer maker 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 NZX-listed stock touched a record low of 40 cents, well below its $1.25 listing price.

The stock is the worst performer on the NZX today, dropping 23.1% to 40c, valuing the company at $12.1 million. 

The stock has declined 56% over the last 12 months.

Earlier this week the Auckland-based company reported an annual net loss of $5.8 million, or 19.2 cents a share, for the year ended March 31, wider than the year earlier loss of $1.9 million, or 7.3 cents. 

Sales had jumped 88 percent to $4.6 million but were 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 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 said 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."

"They do have some cash generation challenges," said Matthew Goodson, who helps manage $650 million of equities for Salt Funds Management, which doesn't hold Moa stock. "If you look at their cashflow statement they appear to be some way away from generating positive cashflow."

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 said in its accounts, adding the details are still being determined.

"The key shareholders, Business Bakery and Pioneer, have committed to supporting them but if you were another shareholder and further support was needed than that could be dilutive to your interests in the company," said Salt's Goodson.

What do you think? What will it take to turn Moa around?  Click here to vote in our subscriber-only business pulse poll.

(BusinessDesk)

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