Mighty Craft Chair slams previous Board's 'terrible performance'
The recently installed Chair of ASX-listed drinks group, Mighty Craft, has used his first investor briefing to slam the company’s previous board, saying its strategy, governance and oversight were ‘terrible’ while declaring many of the company’s once-celebrated investments were ‘poor’.
Speaking at the investor’s briefing after the company revealed an underlying EBITDA of -$6.2 million for the year, Chair Chris Malcolm said that the company’s difficulties lay “fairly and squarely with the previous board and its directors”.
“It is the strategy, it is the governance, it is the overseeing of the business that has had terrible performance,” he told investors after the company’s share value had fallen more than 80 per cent this year.
“But in changing the board, we have arrested that decision-making process.”
He said that he put the company’s problems into two buckets.
“The first bucket I would describe is just flawed strategy, flawed business implementation, poor decisions,” Malcom said.
“The engagement of Catalyst, Mark Haysman’s…consulting company, the purchase of Momentum Wine as an export business from John Hood were not the best of decisions.”
Malcolm, who in 2021 described Mighty Craft as a ‘sleeping giant’, went on to outline what he regarded as the second ‘bucket’ of problems, the company’s cost base.
“We have an extremely large cost base that has been built at head office, and it is simply unsustainable,” he said.
“Just to make it very simple…if you consider the last financial year we had a 48 per cent increase in sales and yet we can’t make a profit shows you how high our cost base is.’
He said that the strategic review launched in May had focused on how to reduce the company’s costs, and had seen a cost reduction of almost $5 million, including through the loss of twenty staff.
Divestments and Better Beer valuation
The briefing was told that as a result of the growth of Better Beer, 60 per cent of the company’s revenue was now generated by the influencer-led brand, up from 40 per cent in the previous year.
As a result of change in the ownership structure, Mighty Craft’s third share in Better Beer has added $30 million value to the company’s balance sheet.
This valuation gives the brand a valuation of approximately $95 million, less than the $200-$250 million figure hinted at in March.
Mighty Craft said that the brand, only founded in 2021, had sold more than ten million litres for the financial year, and was projected to sell seventeen million in the coming year.
Acting CEO Jess Lyons also confirmed to the briefing that the company had a binding agreement for the sale of Jetty Road at “around the 3 million mark”, expecting the sale to be effected in the next eight weeks.
“In terms of Foghorn, we are in discussions with a number of interested parties,” Lyons said. “That is one asset that we’re looking to divest. So we don’t have any update on that at the moment but expect to have an update in the coming weeks.”
Lyons said there had also been interest from a purchaser in Hills cider.
Mighty Craft’s shares closed on the day at $0.03.