Ann: Trading Halt, page-38

Corsair,
several other points come to mind:

* Private placements (where not underwritten or moved through brokers) can only occur to sophisticated investors. These have to be certified by an accountant who knows the investor and his or her affairs. I wonder therefore who the accountant was who gave clearance in this regard (particularly given that since mid July, ASIC has started cracking down on this area of abuse occurring elsewhere)?

* The ability to certify in relation to a corporate entity which was only formed on 4/9/17.

* The possible linkage existing between Morrell and Hackett increases particularly given the following (unattributed) comment from yesterday's announcement:
----
Ironbark-Vest Pty Ltd is a recently formed company associated with private investor Mr Paul Morrell who is the company’s sole director. As part of the agreed terms, Mr Morrell will be offered a position on the board of Australian Dairy Farms Limited on or before 31 October 2017.

* 5 points here:

1. This will be just after the 2017 AGM NOM has issued. So, therefore, Hackett is concerned about not being re-elected himself (he is up for re-election this year).

2. By delaying the Board appointment until then, one conveniently skirts the issue of having to put Morrell up for election confirmation this year (at the AGM).

3. By also delaying till then, Morrell is not captured in as part of the 2nd strike argument. Even with a 2nd strike and subsequent board spill, it is entirely arguable that Morrell will be spared all this, so therefore, the Board's existing control mechanisms remain intact.

4. Given the materiality of the new shareholder (new on 16% expanded shareholder, but almost 19% of the current share capital base upon which the calculation had to be performed (so, very, very near to the takeover threshold limit), more details should have been disclosed. This is not like someone doing a market raid, on market. It is a cosy, quiet, private placement which seismically shifted almost 20% of the existing capital base and will now represent 15.78% of the new expanded capital base.

5. There is an agreement in place between Morrell and the Board (and /or others) so it could now very well be argued that they are collectively acting in concert with each other. As such, the agreement which was referenced in yesterday's unattributed announcement should be released to the ASX under continuous disclosure. The market needs to be satisfied that the rights, interests and concerns of shareholders have been safeguarded, so therefore not compromised as a result of yesterday's announcement. For as long as yesterday's agreement remains undisclosed, confidential and /or not released to the market, then the concerns as to both (*) the true source of the funds raised, and (*) whether or not Morrell and any member of the Board /other substantive shareholders are associated or related from a takeovers compliance perspective.

6. The existence of an agreement and of a possible working association (so therefore possibly considered as associates, etc) is reinforced according to the following unattributed statement from yesterday's announcement:
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The primary purpose of this substantial placement to a single investor is to significantly strengthen the Group’s position in prospective negotiations regarding acquisition of or participation in synergistic value adding businesses.

Note that the announcement had this reference bolded. Given then the lack of attribution, it is fair to conclude that the Board was unanimous in what was done yesterday meaning that each of Rowley and Skene were also on board with it.

The clearest thing that should now be done is for the placement agreement to be released to the ASX (including what was promised, disclosed, or shared, but not otherwise disclosed more generally to shareholders). Mind you, it is doubtful that this company or its board will do so as, to date, they have made a mockery of:
* shareholder comms,
* adherence to the continuous disclosure requirements, crafting of the financials (including costs accrued into one year with payments thereon passed to the next year so as to artificially boost their cash position; and
* adherence to the corporate governance guidelines.

This is a company which has never made a proper profit in its listed life and certainly not since Hackett came on board. It does however have significant accumulated losses:
* at 30Jun17
- accumulated losses = $10.42M
+
- accumulated losses (trust structure) = $5.65M
=
- total accumulated losses = $16.07M

Since the "dairy project" commenced in October 2014, the revitalised entity (under Hackett & Co) has generated accumulated losses (according to the balance sheet disclosures) of $8.59M. At Jun14, the accumulated losses in the balance sheet had stood at $7.58M.

Losses according to the P&L were:
* F15 - $2.05M
* F16 - $3.70M
* F17 - $2.18M
Total - $7.93M
Average $2.64M

I am not certain of the reason for there being a $660,000 difference between the 2014-17 balance sheet loss profile vs the P&L loss profile, with the P&L understating the comparative position. Presumably, Morrell, in making his investment, is all over this. After all, there are not many people out there with a lazy $5M sitting there in cash just waiting to then invest it in a micro-cap which is yet to crack a profit.

Equally, where is the cleansing notice (if this is considered required) under section 708A(5)(E)?