When you buy these securities you get one ordinary share and one unit in the Unit Trust, referred to as a stapled security. ADFL is the company and ADFT is the unit trust and the ASX code 'AHF' represents the combined two. It was done in the early days of relisting the old APA Financials for capital gains reasons but is essentially a redundant structure now and needs reviewing however it is retained as it affords the Board members of the various entities a means of deriving fees that would not otherwise be so attainable. Sounds simple and in concept it is but it is not so simple in reality and has some fascinating representatives on the various Board of these subsidiaries, Responsible Entities and the Trust themselves.
In a nutshell the ADFT trust owns the dairy farm assets and leases them to the ADFL company who in turn has another company SW Dairy Farms Pty Ltd that operates them on behalf of the company. The company also owns Camperdown Dairy Company Pty Ltd which processes the milk supplied from the farms (and others) and turns it in to a range of low capital consumer products with some being on behalf of other companies (contract processors) and some for its own brand products. How the flow of funds goes across theses entities is interesting but that's not the point here, it is about the corporate structure. So then we also have a new trust created by the board with an associated responsible entity and this is called the Camperdown Dairy Park Trust and the trustee is Dairy Farm Management Limited (noting a Limited company rather than a Pty Limited so more invisible fees and costs to the naked to the eye of the average mum and dad
shareholders).
Try this link to give you something to read whilst eating Easter Eggs over the coming weekend.
http://adfl.com.au/2017-2/ and in this link take a look at 11th July 2017 - AHF Strategy Overview Presentation as it is worth a careful read but there is so much more to print from 2017 and the 2016 announcements to cover your dining table with and then remap it so you can get a clearer picture of what is really going on.
After taking a good look at this link and the underlying documents so you can get your head around who is who and who is feeding off who and then make your own decision as to what is right and what is not.
Also the CBA holds a flexible mortgage over the farm titles that are in the ADFT trust for lending purposes to the ADFT company so it can operate (another discussion in itself) and this is around the $10m but try figuring out who pays the mortgage, who lends the farms to who, who pays this cost, who pays the operators, SW Dairy Farms Pty Ltd, who pays the responsible entity for the trust and by the way it is all pretty much the same people on all these various entities - the Board of Directors and their family members....ho ho ho who's bending over now.
It was indicated by the Chairman some time ago that possibly part of an previous incarnation of the strategy was to divest themselves of the farms and focus solely on processing but with the advent of a new strategy with the farms going organic this has been shelved, or may be not.
So whether the ADFT trust is still the actual owner (i.e. title holder) of the dairy farms in SW Victoria and who now owns the stock (bio-assets) and who owns the milk production on the farms and whether the actual milk produced does actually go to the company's current plant at Camperdown or whether one of the intervening companies actually sells the milk in to the wholesale market but then buys back milk from that same market but a lesser volume just to keep the Camperdown Dairy Company running at the lowest possible levels and how the flow of funds works through these entities is fun to track down as well.
So who is who and who owns what and what owns what and where does the shareholder fit? That's the puzzle for the long weekend.
(20min delay)
