Hi Wooky, I consider this whenever I post. yes, my sentiment is "Buy". What management and the board have failed to achieve or more importantly, to screw up, has not changed my view regarding the dynamics of the business or of what it is capable of achieving. but the current crew are and forever now will be considered as either lightweights or dead weights in the context of how to drive this business forward.
More the point, if you read carefully some of the posts made, they are very critical of where the cost profiles /modelling of same should be. In other words, what is presented masks some of what else is going on whether it be through a combination of poor management, limited controls, eyes off the main game /target, or something else altogether. But there are also reasons why management, the Board, Adrian, the Secretary (et al) are all seemingly MIA. They all know that either this has become all too big, too hard and too remote for them to manage, or perhaps that the gig is up.
The reality for them is that they keep on mouthing about "happy cows" with "full bellies" yet tell us nothing about what;'s happening with milk production, CDC throughput, etc. Several of my posts (including this afternoon), have extrapolated their otherwise lame information to present the thesis that (all being equal), production for F17 should exceed 16.6ML or +3.9ML (by their own H16 estimation). Now, if it doesn't, then "full bellies" or "happy cows" aside, their time will well and truly be up because something will have gone awry, and it's not the rotten cheese from Denmark.
Inept, lazy, remote, uncontrolled or helicopter scoped management /oversight does not necessarily make for a tight ship or for tight and effective controls.
Michael should know this. After all, he's a CPA himself. But if not, perhaps he should also be asking himself why things have not yet turned out the way that they should have and then, perhaps he should take a look around the board table. This might well provide some clues.
So, yes, my sentiment is still "Buy" which is in spite of Michael, not because of him. But that said, what should have been a strong, secure, transformational C17 has, along the way, lost something in its translation to the present day and so, therefore, will require different management, a different board, with a different attitude and a different approach, in order to make things right. This is, after all, still a $26 - $28M+ revenue company in its current form, and by every possible metric, objective assessment or structured analysis, should be profitable, except that it isn't, but primarily because of:
* H17 --> expensing of so called one off performance shares ($871,000)
* F16 --> impairing the farm /property holdings by $1,800,000)
* F15 --> impairing the farm /property holdings by $638,000)
So far, the reported losses have been:
* F14 = ($423,000)
* F15 = ($2,051,000)
* F16 = ($3,700,000) * H17 = ($1,035,000)
To date = ($7,209,000)
Now, whilst $3.3M of this relates to some silly decisions such as the property impairments, others relatee to business costs being way out of kilter with what the business should actually be incurring. For example, in F15, revenue was $2.7M against dairy costs of $2.0M (not counting salaries, etc). So, who was milking what? Perhaps the cows were even smiling way back then!!!
All things being equal, however, the properties should have been revalued upwards by >$2,000,000 in the H17 period but were not. Only Michael knows the real reason why this wasn't done and now, his failure to have acted any earlier than this is fast catching up on him, as his 2nd tranche TSR performance shares are all but gone (they'll have to rise from here by 135%) which isn't likely. Not on his watch.
So, yes, I'm still a BUY sentiment based on all of what I have researched, assembled, profiled, and modeled myself, but (and again I emphasise this) it is in spite of, not because of, Michael. Broadly speaking, executive chairs, shared services, overlording and management control do not make for a good mix, especially for external shareholders. But then again, executive chairs are not managing directors and so therefore are only ever one real vote away from being swiped off the Board. Even in a Second Strike scenario, only a managing director is potentially immune from being swatted down by a protest vote. In Skene's case, he has been presented to the market as Group CEO. He has not however been made Managing Director. So arguably, he is also not immune from being struck down as part of a Second Strike.
So, there it is - a good business done down (but not out) by a management, an executive and by a board that is average, to say the least. Now, imagine what it could do and achieve if it was kicking on all cylinders and did not have remote management in place from half a continent away?
I should also point out that I am also down, with an average in the low 20s.
