Beleaguered Endeavour Brewing has announced that it has taken full ownership of the Endeavour Tap Rooms and brew pub located in Sydney’s The Rocks, despite being unable to secure current financial accounts for the venue.

Endeavour had previously operated the venue as a 50/50 joint venture with Applejack Hospitality.

In an announcement to shareholders the company said it had “carefully weighed up” its options and believed it “will be able to maximise returns to our members and strengthen our home in The Rocks by moving to full ownership of the venue as Endeavour.”

The company, the first to raise funding under equity crowdfunding changes in 2018, has not submitted its 2020/21 accounts to ASIC or shareholders as it is required under the CSF legislation. The company has previously advised Brews News that it was not meet its requirement to provide a current financial report to shareholders because it was awaiting accounts from its joint venture partner.

The company advised it still has not received these accounts.

In response to questions from Brews News about how it was able to assess a value for the purchase without financial accounts, director Ken Bromley advised that the purchase value was assessed “based on management accounts and enquiries made”. He said the company’s overdue report would be made available to shareholders “as and when the financial accounts are available”.

Bromley did not reply to further requests for information about the sale.

In May last year, Bromley and his fellow new directors told an Extraordinary General Meeting of shareholders that the joint venture partner’s delays in providing accounts had delayed the preparation the 2019/20 financial statements and that Endeavour then had outstanding invoices with its partner and had received no profit share, dividends or interest paid on a loan of $436,000.

The company’s announcement about the purchase was followed by a scathing email to shareholders from founder and former director Dan Hastings. Hastings was ousted from the board in a secretive shareholder push in November 2020.

In his email, Hastings accused the current board of sending an update “of little detail” and “more smoke and mirrors”.

“And just wondering how this acquisition was paid for? In May last year you advised the company had $1.7M left and had lost some $800K in the previous 8 months,” he wrote.

“So on average it seems you were losing $100K a month in cash. It’s now been 10 months since that update so at that rate that would mean a further decline of at least $1M in cash.

“And you have made no mention of any other funding inflows, so I’m guessing that leaves perhaps $700K at best, less the ~$500K you paid for the pub (but correct me if I’m wrong), leaving $200K.”

Embattled Endeavour

Since launching its crowdfunding campaign the company has struggled, blaming its misfortunes on the decision by Woolworths Group to combine the Woolworths Drinks Business and ALH Group to create the Endeavour Group, creating significant brand confusion with the brewer which generated significant income from the sale of its beer through Endeavour Group stores.

As a result of confusion with the retailer’s brand, Endeavour Brewing negotiated a sale of part of its IP for $5 million. Even with this cash injection the company’s last available accounts, published in September last year, showed retained earnings of just $1.4 million.

The company was due to report its 2020/21 financials in October last year.

In 2018 the company was able to raise just $558,000 of a planned $2.3 million through its crowdfunding campaign. At the time it launched its campaign, then Executive Chair Ben Kooyman, described the company as being ‘capital light’.

In the two years prior to its crowdfunding campaign it reported losses totalling $650,000. In its crowdfunding prospectus the company said it anticipated making a profit in that year, but subsequently reported a loss of $278,753, with a futher loss of $593,797 for the 2018/19 financial year.

New Breakers brand

The company’s announcement also included details of the soft launch of a new brand, Breakers, Good Beer for Good People that the company said it was market testing.

“Breakers is an easy drinking refreshing ale, brewed with Galaxy Hops, perfect for the Australian summer chilling by the beach.”

“While it is still early days, Breakers has already won its first Medal; judged second-in-class and awarded a Bronze Medal at The Sydney Royal Beer Show in the Pale Ales – Australian Style category and is on tap with a number of Sydney pubs.”