AHF dairy farm sell down, page-38

This is a good question. They have previously impaired /reduced the farm valuations but never, ever touched the CDC values despite the falling turnover, profitability and capacity utilisation. Their resistance to doing so appears hinged to various statements that they have made along the way regarding new contracts, etc. This was arguably the reason why they didn't impair this time last year, nor at the 1/2 F18 mark as proximate to the time of doing so, out came various change in strategy (July last year), shift to organic (ditto), new distribution arrangements (remember Lencia and Lian He), major new distribution contracts even whilst Aussie farmers Direct collapsed (remember late last year through earlier this year, yet the most recent announcement points broadly to one, not 3, of them happening), and so the list goes on.

To impair, you either have to have incurred losses, suffered from a revaluation, or the anticipated /expected future net profit calculations do not support the underlying profitability required to broadly justify the existing valuations set out in the balance sheet. So, here, the argument goes that announcements (future dated, future based, vague or uncertain timing or delayed timing in some instances) have all been used to justify maintaining an unchanged business valuation (so therefore, no impairment of goodwill, etc). Trouble is, sooner or later, all of those announcements need to become time and matter certain as otherwise the alternative risk to impairment is an auditor's qualification. More seasoned businesses would likely have conducted impairment testing of CDC's valuation well before now. less seasoned businesses, perhaps less likely to have done so. But, the elephant in the room, namely the Bank and the April 2019 term date are both such that, if the Company hasn't been sharpening its valuation position then, almost certainly, the Bank will have done so (or soon will likely be in the process of doing so).

The $6.6M in goodwill standing is therefore perched quite precariously, particularly in light of where the CDC business has come from to where it is now and the extent to which that deterioration has occurred in the interim. Perhaps, they can arrest this, but to date nothing definitive (beyond vague sounding statements) has occurred. Mind you, if they had something really strong and positive to say, then arguably, they would have said it by now (or very nearly to now). In more recent times (including from this time last year and since then, at several intervals), they have talked clearly about the farms and how the results have (or might have) fared there, but not so, CDC. So, yes, the goodwill position and its continued standing is (or should be) arguably in question.