Lower than expected trade at its flagship Mad Monk brewery in Fremantle has seen Oz Brewing Ltd post a net loss after tax for the half-year to December 2007 of $702,923, up from a $154,054 loss in the previous half year.
According to its interim report, Mad Monk contributed to approximately $220,000 of losses, as well as a net operating cash outflow of $263,873
Mt Pleasant-based Oz Brewing said trading activity at the Fremantle venue was below management expectations and the directors had engaged consultants with experience in the industry to review operations, and implement changes where necessary.
Other contributing factors to the latest interim result were trading activity occurring for less than half the reporting period, and an investment in start up consumables and trading stock, the company said.
Trading commenced during October 2007 and resulted in income received from customers of $827,072.
At the end of the half-year the group had $861,953 in cash and at call deposits (June 2007: $1,591,505).
Capitalised leasehold improvements, kitchen and brewery equipment expenditure was $2,890,034 (June 2007: $1,078,271).
Cash was raised during the half year by the issue of convertible notes for $1 million, and a commercial loan
of $500,000 secured over various chattels.
The funds were used to complete the development of the group's Fremantle venue, and to provide initial trading working capital.
Oz Brewing said expenditure during the period was principally focussed on capital works.
Highlights of the period include the company entering into a heads of agreement to purchase an 80 per cent share of a business owned by one of the directors, David Ah Chee.
The business has demonstrated (unaudited) historical profitability and positive operating cash flows, and is currently in the process of a due diligence review.
Under the deal, Oz Brewing Ltd must raise approximately $3.7 million via a rights issue, the proceeds of which will be used to pay the vendor of the business and provide working capital for the existing operations and further development of the Mad Monk Café in Fremantle and other venues.
The acquisition is subject to shareholder approval.
Oz Brewing shares fell 2 cents, or 25.57 per cent, to 5 cents each at the close.
