Ocho rallying after loss: chairman

Dr Jim O'Malley. Photo: ODT files
Dr Jim O'Malley. Photo: ODT files
Ocho chocolate company chairman and Dunedin mayoral candidate Jim O'Malley says the craft chocolate manufacturer is on track for a "modest profit'' this month on the strength of its new rescue strategy.

The company's financial performance to date will likely leave a sour taste for the 3500 Ocho shareholders who have seen Ocho plunge to a loss of $445,000 for the last financial year, with total equity crashing from $2.1million to $1.45million since its 2017 PledgeMe campaign.

Total product sales of $501,996 for the year were overwhelmed by total expenses of $534,248, including wages of $214,372 and rent and occupancy costs of $100,619.

In the company's annual report for the year to the end of March, Mr O'Malley said both production and sales had failed to materialise after moving to the new factory, at a combined cost of $1.4million for new equipment and fit-out.

He said delays in moving into the Roberts St factory had also impacted the company during the important Christmas period.

"The result was that the company continued to post losses and due to the extra overheads associated with the new factory, these losses were greater than those posted in the months earlier.

"The situation did not improve for the remainder of the financial year,'' he said.

M

Results have not been so sweet for shareholders. PHOTO: ODT FILES
Results have not been so sweet for shareholders. PHOTO: ODT FILES

r O'Malley, a Dunedin city councillor, took a hands-on role at Ocho earlier this year, coinciding with the departure of founder and general manager Liz Rowe, who left at the end of June.

Ms Rowe, who received 2286 shares in Ocho following its capital raise, remains the largest single shareholder with about 10% of the company.

She was unavailable for comment yesterday.

Independent candidate for Dunedin City Council Russell Lund, who is an Ocho shareholder, said the results reflected "mismanagement and commercial naivete''.

"The $2million raised is all gone and a company with $500,000 in income had directors fees of $48,000,'' he said.

Mr O'Malley said it was important to note these directors fees, for the four directors at the time, had been during the pre-December period, when results were tracking "according to original plan.''

"Neither I nor any members of the board have taken any fees for this financial year as we work to turn the company around.''

Acknowledging that managing Ocho had taken a lot of his time and was "extremely distracting'' to his campaigning, he said the appointment of a new general manager for the company in mid-October would allow him to refocus on his bid for the mayoralty.

However, Mr Lund called on Mr O'Malley to withdraw from the mayoral contest and "continue to focus his efforts on Ocho to do his very best for the thousands of shareholders who funded Ocho on his promises.''

Mr O'Malley said outside of the new appointments, the company had made "significant progress'' to ramp up production and consumer goods merchandising.

"Cash flow has improved over the past several months and order books were looking healthier.

"It is my opinion that the company is on target to reach Christmas sales figures that we predict will reverse the negative position we are currently in,'' Mr O'Malley said.

He said further details of the turnaround plan will be the key focus of the company annual meeting, to be held at the factory on September 28.

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