AHF - TAU holding, page-14

TAU have failed, yet again, in issuing their long adjourned off NOM for the required transformational XGM to be held. Last time round, they issued on 22/11/16 in order to hold the corresponding XGM on 22/12/16. This however was adjourned when technical irregularities showed up.

The subsequent adjournment off to January quickly passed by, then February, and before long the H17 results were issued trumpeting that the NOM would be issued in March for a March XGM. This however didn’t happen.

Now, with 6^th April rapidly closing, then, at a minimum, an XGM will not be able to be held until 28/4/17 but otherwise, by 8/5/17 ^{(given that the 7th is a Sunday)}.

This is rapidly descending into a relative farrago of silence, ineptitude and incompetence when instead of this the clarions of success were all being trumpeted about last October. If however this is the way by which management and the Board are conducting themselves, just to what extent are they not over any of their other portfolio, associated or invested opportunities.

In this regard, AHF springs well to mind except that the long heralded strategic updated ^{(first promised in Jul16)} is yet to actually materialise.

Now, heading well into April, it still hasn’t been produced although the logical view would be that it will be provided as part of the quarterly cash flow report on /by 28 April.

The upcoming cash flow report will be all the more interesting for the following reason ^{à what it actually shows occurred during Q1 as well as what it is suggesting will occur (expenditure wise) during Q4.}

In the most recent QCF reports, some very interesting pieces of information have arisen, but with none of it considered particularly complementary in circumstances where the board, management and executive have all been seized by inertia ^{(as seems to have been either contracted from TAU or is also the mainstay of TAU’s own operating ritual)}.

The QCF analysis has for example shown up the following:

	Column 1	Column 2	Column 3	Column 4	Column 5	Column 6	Column 7	Column 8	Column 9
1		Q1	Q2 Est	Q2	Q2 Vary	Q3 Est	9M ++Est	Q4 ave of 9M	12M stab
2	Receipts
3	- received	7,779		7,277
4	- interest	3		3
5	- total	7,782		7,280
6	Expenditure
7	- R&D	0	0	0	-
8	- Product manf + operating	6,477	5,681	5,405	-276	5,932	17,814	5,938	23,752
9	- Advertising	2	2	3	+1	3	8	3	11
10	- Leased	4	4	4	-	4	12	4	16
11	- Staff	1,084	1,035	1,105	+80	1,112	3,301	1,100	4,401
12	- admin	171	130	340	+210	340	851	340**	1,191
13	- interest (paid)	121	131	112	-19	116	349	116	465
14	- total	7,859	6,983	6,969	-14	7,507	22,335	7,501	29,836
15	Operating cash	(77)		311
16
17	- Payments to Directors /Associates	27		149
18	- Payments to related entities			169

^{**/ Repeating Q2 (act) and Q3 (est). All other estimates being 9M average.}

Basically, it looks like that AHF will cost $30M in operating cash for F17, with a sizeable chunk of this going to TAU, etc. Yet, in return for all this, no strategic review /directions have been delivered, no new agreements announced, no new businesses unfurled or processing optimisation, efficiency and productivity, enhanced.

Instead, costs appear to have busted out of control NWS the >$3M recently spent on farm CAPEX improvements and staff costs have exploded exponentially. Mind you, the Admin costs ^{(largely, all to TAU)} have grown so significantly that it seems that AHF’s connection to TAU is now considered material to TAU’s future viability, profitability ^{(or at least, minimisation of ongoing losses which seems to have been par for the course)}.

So, if AHF is so critical, important and indispensable to TAU’s continued functioning and viability, why is it then that, with all these costs being incurred and fees taken out, that management, board and executive engagement is so sparse, inert and non-existent? Or is this a bit like history repeating itself judging by how TAU actually manages its own direct affairs?

Time will very soon tell on this because whilst a second strike doesn’t beckon for TAU, it is looming up as a very real, very apparent, and very in your face type of threat over at AHF which, if then carried would spell almost certain curtains for TAU in going forward ^{(vis-à-vis its AHF relationship)}.

As it is, if TAU had to report its financial position quarterly ^{(as do most US companies)}, then it would have had to have written down its AHF shareholding by a fairly hefty $380,000 ^{(based on a 17.5c H17 closing SP vs the current 15c SP)}. If however a 14.5c SP is used ^{(as seems to be the near on repeating closing SP these days)}, then the corresponding write off would be $455,000.

Imagine, then, this having to be pulled through TAU’s F17 P&L, as loss constrained as it already is à ^{($668K) @H17, so potentially, anything up to ($1.5M)} è _{based on 668 HY + 455 AHF W/D + 378 repeating OPEX.}

Not a good sign for the business going forward, or is this why the Admin cost extraction has been ramped up in AHF à _{in order to shore up TAU in the second half?}