Ann: Appendix 4C - quarterly, page-21

It doesn't necessarily mean anything except that generally in the past supporting quarterly commentary was provided which informed shareholders of current progress, buoyed their understanding of what was happening with the Company, and generally provided +ve, reinforcing comments (operationally, currently and future trending). The absence of any commentary, particularly in the light of some of the other announcements /thought bubbles that have issued in the last 12 months suggests however that in the real business (that which they are doing, now), things aren't going much to plan.

Consider, for example, this, in the last 5 reported quarterlies, supporting commentary was provided with 3, but not with 2. With the last 3 quarterlies, however, supporting commentary has been provided with one, but not with two of them. So, more in the dark regarding what is actually happening which then calls into question whether the myriad of announcements since last July are all properly grounded and so therefore will be executed (both transformative as well as contradictory and, in relation to milk supply utilisation, mutually exclusive - can service one but not the other, etc unless one is upended now then replaced with the other).

For example:
* Jersey replacing various other breeds (ASX 25/8) + shifting direction to Jersey milk.

* shifting to independent retailer /milk bar, etc direct distribution (ASX 24/10).

* commenced packing a value add milk product for a sizable new customer in August (ASX 24/10) - unnamed.

* "Additional new customers of value added packing are expected to start progressively of the period February to April 2018" (ASX 24/10) - did not occur. Earliest now is a possible Aug18 start for one of them. The others (unnamed, still in the works).


* "The expanded ranging of Camperdown Dairy brands is anticipated to be part of a range review in the mainstream supermarket channel (ASX 24/10)". Hasn't occurred to date, or if it has, then CDC's sales have actualy gone backwards not upwards. If however +ve, this could well have benefited from some MarQ supporting commentary.

* In relation to the Camperdown Dairy Park (ASX 8/11), " To progress this project rapidly the AHF board is assembling a compact group of industry experts to develop the detailed structural and financial Business Plan for the Camperdown Dairy Park and the Group’s further development into specialty products for domestic and export sale where the emphasis will be on specialised markets with high value ‘Own Brand’ products. Target delivery of the first version of the Business Plan is end February 2018. The Business Plan will include more detailed estimates of expected capital costs." Nothing has happened yet, with target delivery >2 months overdue, already.

But how is this also going to fit in with the (*) shift to organics (ASX Mar18), and (*) the new August customer who seems likely to completely overwhelm the CDC capacity settings if everything is to be believed (ie: so what then happens to organics, to Jersey, to high end, high value Own Brand products, etc).

This is the point, the existing 17M/litres of available production (and that was before the swap over to Jersey in H18 which, with their smaller yields, likely then means that production will be trending back towards 14 - 15M/litres), just how will any of this go into all of the different projects, events and outcomes announced in the last 12 months.

There is only just so much in-house supply that can be arranged for, bearing also in mind ASX 25/8 where it was stated that farm EBITDA was going to improve significantly:
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"Directors are pleased to confirm the positive EBITDA performance of the Group’s dairy farms in FY 2017 of approximately $700,000, with operational budgets for FY 2018 on track for a material increase to a range of $1,750,000 to $2,200,000."

So, for all that is meant to be happening, very quickly, they will run into supply constraints which, in turn, will likely severely impact against margin, profitability, etc.

This, then, is the point - so many announcements but very little in the way of detail provided including especially getting from A to B, or in how any of this will impact on their currently existing operations.

That is probably the reason why supporting commentary wasn't provided this time round. There is actually not a lot of +ve detail that can actually be provided. certainly, not without many more other questions being asked. But having said that, if they did have something +ve to say, then certainly this would have been borne out in the provision of supporting commentary. Instead of this however, there is an operational, functioning vaccuum out of which little is escaping, except for deteriorating cash, ongoing operational losses and unanswered questions as to how the many different projects now having been suggested, will be funded. Camperdown Dairy Park, for starters, is $50M over 2-3 years.

Organics is completely separate again and could well be a 3+ transition, with a supporting $20-30M cost (plus disruption to and dislocation of existing business activity). Then, there is everything else. But, as at 31/3/18, cash was down to $4.05M with a near on immediate CAPEX spend required of $750,000 (more likely, with overruns, probably closer to $1.0M) and continuing operational and financial outflows for at least the next three quarters (absolute minimum), of $660K+ (based on MarQ). So, that suggests, further outward net cash of upwards of $3.0M through to Dec18. That's just looking at the direct MarQ figures in relative isolation (ie: nil consideration of JunQ outflow forecasts provided, etc). If so, then ending cash by Dec18 could well be down to near /sub $1.0M. Nowhere near enough to even springboard all of what they need to do, next.

So, yes, supporting commentary would have been good. It might even have been +ve, to reinforcing, but instead, presently it is feeding into a vaccuum - of the Company's own making. That's why many of the announcements (given their paucity of detail) of the last 12 months actually strike more as thought bubbles as opposed to seriously contended, viable or executable future options. They may be, but that's not what the tea leaves, the announcements or the supporting coverage announcements (or lack thereof) are suggesting at the moment.