Tomorrow (28/2), likely after market close, not before market open.
Based on H18/CF, the financial results will very likely produce another significant operating loss excluding any one-off actions (for example):
* impairments, to CDC (sub-performing, nil impairment to date);
* write downs on farm holding values /revaluations of farming properties (not certain which way this will go - previous 3 adjustments have been downwards yet the most logical time for an upwards revision was as part of Jun17 outcomes, not now, as the weather /seasonal outlook has turned against them);
* share based payments re: KMPs (although this appears more likely set for H2 given the recent XGM outcome);
* biological asset values (hard to determine this one, as little has been said regarding herd composition, size or behaviour).
Operational depreciation however will also now be starting to kick in (CDC wise and farm improvement wise).
The EBITDA forecast of 25/8/17 was before the -ve operational CF performance became pronounced (as it did during DecQ17). At H18, it was -ve $845K of which -ve $719K was attributable to DecQ alone. This therefore casts some doubt on the EBITDA forecasts of 25/8/17, where the following was said:
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"Directors are pleased to confirm the positive EBITDA performance of the Group’s dairy farms in FY 2017 of approximately $700,000, with operational budgets for FY 2018 on track for a material increase to a range of $1,750,000 to $2,200,000."
The EBITDA forecast of 25/8/17 (also, repeated in AR17 @P5) however appears confined to the dairy farms. So, if OpCF is running -ve and farm EBITDA is at or near to its Aug17 forecasts, then the CDC position qould be considered quite problematic.
It may therefore be then that:
* farm values will actually go up /be revalued upwards; but
* CDC carrying value will be impaired>
It is near on impossible however to see how CDC can retain an unimpacted impairment assessment although quite possibly the BOD may attempt to rely on their "new" customer comments as justification for retaining the value intact. Those comments were last made on 1/2/18 (as part of DecQ17 commentary) and appeared designed more towards reinforcing existing values than in actually presenting anything new (yet - so, watch this space???):
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"In this area, the AHF Board expects in the coming three months, to announce three such separate contracts with established other industry customers. These announcements will likely coincide with product and market launches in major retailers at State and National levels. The details are commercially sensitive for the customers and are currently restricted by confidentiality agreements as is general practice.
Revenues / Margins from these projects are expected to more than replace those lost from the recent declines in bottled white milk sales with the first of the three due to commence February 2018 and the third due to progressively roll out from July this year. The sales which are at this stage expected to commence rollout in July and be nationally distributed, have the potential to exceed current factory capacity within the first 12 months and may necessitate some expansion of sections of the relevant processing areas."
So far though there has been little (if any) detail attaching to the projections being made (including in reference to new customers obtained). Indeed, some of the 1/2/18 commentary appears to be at odds with the earlier market update of 24/10/17 where, for example, the following was stated:
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"Camperdown Dairy commenced packing a value add milk product for a sizable new customer in August.
Additional new customers of value added packing are expected to start progressively of the period February to April 2018."
For example:
* nothing of substance stated re: the Feb18 start;
* the progressive add on of new customers has since pushed out from Apr18 to Jul18;
* nothing of substance has been said of the "sizable new (August) customer; and
* the loss of Aussie Farmers Direct has been quite significant judging for example by the significant operational CF deterioration during DecQ17 (perhaps, then, tomorrow, the market will find out just how significant the AFD impact has been).
Beyond this, nothing much good usually comes of those companies who leave it to the last day of the reporting season in order to report their results. Will AHF be the exception to this, as Costa (for example) was today? Time will soon tell.
AHF Price at posting:
12.0¢ Sentiment: Hold Disclosure: Not Held
