Ann: Preliminary Final Report, page-9

Farm Milk Sales
* H17 - $3.105M
* 2H17 - $3.496M (up 12.6% on H17, with a H2H split of 47 / 53)
* F17 - $6.601M

Dairy Processing Sales
* H17 - $9.062M
* 2H17 - $7.075M (down 22% on H17, with a H/H split of H1 = 56.2% vs H2 = 43.8%)
* F17 - $16.137M

Livestock sales went from $609K to $706K, meaning +$103K in 2H17.

They are trying to now say that the herd size increased to 3504 at 30Jun from 3302 in Jun16. Yet, for the year, they sold 1597 units compared to 1760 in F16. Trouble is, sales revenue for F17 was $706,00, or $442 per cow /beast sold in F17, vs $456 in F16. Prices apparently have been falling or quite possibly more the point , don't seem to be what they should have been (not compared with the sale yard auction and muster prices that have been reported).

With F17 dairy processing sales of $16.137M, and dairy processing costs of $12.7M, plus wages and salaries (not separately broken out, of $3.955M), CDC barely paid its way.

In the end however N24 explains this on an inter segment basis, with CDC making a full year profit (before tax) of $26,920, vs the Dairy Farm segment which made a full year profit (before tax) of $224,570.

The overall business loss of $2,179,348 is then accounted for by:
* CORPORATE CHARGES = $2,015,978
* FINANCE COSTS - BANK FACILITY = $414,860

So, corporate charges accounted for almost 8.55% of ordinary revenue making the Company very highly geared on a corporate cost basis.

On impairment, this was covered off against in Notes 10 and 11 as well as with a separate disclosure made by the auditors.

In essence, impairment testing was carried out but because their budgets and forecast for F18 are apparently so good, no impairment was required for F17.

In essence, they:
* changed their approach in and towards how impairment testing was to be carried out;
* provided so called forecasts (which are yet to ring true judging by how F17 actually performed), and
concluded that they were doing such a good job that impairment for F17 was neither necessary, required or warranted.


Note 10 explains this in further detail.

They will need to be very right on this however as H18 will present as the risk date by which further impairment testing may well be required (particularly in the CDC sales /orders don't stack up, which they don't seem to be doing at the moment).

No wonder then that Peter was talking up about increasing /revaluing the farm properties at H18. In essence, what's being set up is:
* an increase in farm valuations;
* to offset any possible H18 risk of a near term /future CDC impairment.

That said, I'm also not quite certain how one can value a business at close to $11M in the books in circumstances where it is only making a $27K profit for the whole year as against a greater $37K profit in F16, for just 10 weeks of business ownership.

Less profit, over 5x greater the operating period, yet the impairment risk is not there? Sounds strange to me. Or, is Michael trying to set a trap just in case he ends up getting turfed off at the upcoming 2017 AGM?

Leaving all that aside, the clearest message of all is that feed costs for the whole year came to $3.086M. At the H17 mark, feed costs were $1.498M. So, during 2H17, feed costs actually increased by $90K to $1.598M. Yet, according to peter's announcement of 25/6/17, Farm profit is meant to be going up in F18 to between $1.75M - $2.25M with considerable mitigation happening on account of the dams being full, the grass being greener and the pastures fuller. Yet, what has otherwise been happening throughout much of F17 - dry pastures, or lots of loose feed? Something's not quite right here, or in the impairment testing.

More however to assess.