I figured it made sense to ask the questions raised on this...

I figured it made sense to ask the questions raised on this forum with CLV CEO & MD Mr Ian Brown. So I rang him on Tuesday and he was kind enough to spare about 15 minutes of his time to discuss the company with me.
Of course nothing we discussed was directly news or new info about the company but it was interesting to talk with him and get more of a feel for things within CLV and I thought others on this forum may also find his responses interesting.
DISCLAIMER: What follows are only my memories of what he said and none of them are direct quotes. I did not record any of the conversation and it was a wide range chat during which we covered many topics.
I am a fairly small share holder in CLV and have not bought or sold any shares since my discussion with Ian.
I started by asking him about the two new products which the company hopes to have sales of in FY14 and if they were sales to new clients or existing clients that may swap to a new product. He said they were both and that there were a number of clients looking at the 2 new products. 1 of them the timeline had slipped as a result of the impacts of the New Zealand powdered milk scare.
Which brought us on to discussing that scare. He said there will be a negative impact. The scale of which CLV aren’t yet aware but are talking to clients to get a feel for the size and length of the impact and that they were; as you would expect keen to inform the market as soon as possible.

There was talk of the possibility of acquisitions in the annual report. He said that, they like most companies are always looking at and for new opportunities so you would read that in the report every year.

My main question was about the predicted increase in R&D spend by 67% over last years expense to fund the Phase 3 trials. Ian’s figure was $1.2ml extra. I wanted some feel for how they had done a risk/benefit on such an increase. (Now it is important you remember that all of this is from memory - not quotes). He said they decided on the basis of the first two phases of the project and the encouraging results to spend on phase 3. I asked about the structures they would use going forward to limit risk and monitor results. He said there were milestones throughout and continual decisions on how and if to proceed. (example CSIRO “work” which was stopped because it didn’t achieve milestones. Interesting aside here. He said that one of the CSIRO projects had not been completed shelved – it had been taken in house).
He said part of the R&D spend was being used on the work on the business, marketing, distribution and regulatory plan for the Preterm trial products. So that if and when they come to market they could reduce the time lag. At this point in time all possibilities for how to proceed with any new products and how to fund from here are on the table. From partnerships, separate business units etc.

He said they would attempt to keep updating if and when milestones were achieved and there could be some of this type of info for the AGM. There are two separate business groups on this. One on the trials and one on the business, marketing, distribution and regulatory plan for the Preterm trial products.

I asked him (knowing he could really tell me) about how the spend will impact the div payout. Would they keep the div at its current level by dipping into cash reserves or let it dip in line with above expenses. He said there is no particular div policy and it would be discussed at the appropriate time. However he is aware how much shareholders have enjoyed the dividends.

I said – you are leaving us. Any particular reason? He said he had other things to move on to and felt this was a good time. With a major trial beginning he felt it was best someone new came in now to be along for most of the decisions and the journey of this opportunity rather than walking in half way through.

I decided 6 months ago that it was time I became a better informed investor and chose CLV as the company I would initially spend my time to get to know. This had nothing to do with my level of belief in CLV or was the time spent proportional to the percentage of my share portfolio that was in CLV shares. As I have stated before; I have only a small parcel of CLV shares. I have not bought or sold any since I began to look in more depth at CLV. I decided to choose CLV to research because 1: I owned some shares 2: It seemed of a size that I could get my head around what they do 3: It had an “interesting” history 4: the financial statements weren’t too complex.
It has been an interesting process and the phone call to Ian Brown was just another small step in getting to know the business. I also hope to attend the AGM.

I hope someone else will find the above of use or interest. I have tried very hard not to put my own slant on the précis of the conversation. As of stated before: I am not trying to convince anyone to buy, sell or hold CLV shares. Just hoping to spread a better understanding and hope others will join in with there views and knowledge so we can all make better informed investment decisions.