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)