Given the release of the JunQ CF a short time ago, with a $1.7M...

Given the release of the JunQ CF a short time ago, with a $1.7M net outflow for the quarter, and with ending cash at $2.332M, I would say that the answer is "no".

The story is simply words, not actions, and at the moment, AHF needs action, execution and delivery on all that it has promised, as presently, if JunQ is repeated for SepQ, they will run out of cash by early November. Cushioning this however is the ODFC injection of c$700K in early July but, again, this is a one-off.

That said, the investing cashflows of $423K for the quarter ($1.489M for the year) do not support any serious investment on account of new customer contracts that are worth (or intended to be worth) $30M or more over the next 3-4 years, or indeed various high margin new products. Reason: Investing CF in F17 was $1.011M whilst for F18, it has been $1.489M of which $423K was spent during Q4. A year ago, the corresponding spend was $83K. So, take out the upkeep, maintenance and repair related costs (just in order to maintain the status quo) and the underlying suggestion is that the spend on dedicated new PEQ is quite small in comparison to the uplift otherwise being talked about.

Certainly, without more, the net operating outflow of $1.217M (and the annual operating outflow of $2.619M) points to a serious financial loss being reported for the year sans the farms being revalued up and not further impaired, CDC not being impaired at all and herd values being retained /up (none of which is likely). The curiosity therefore is with the article coming out now at literally the same point in time as the operating CF has turned very negative.

Last year, the net operating outflow for the year was $1.217M and the full year financial /operating loss was $2.18M. So, to have a $2.619M operating outflow for F18 points, all things being equal to a $3.5M or higher net financial loss for the year.

I get to this figure by simply adding together the operating loss and the depreciation amounts for the year which gets us quite close to the mark. For example:

F2017
Operating CF $1.217M
Depreciation $0.975M
Total $2.192M

Actual F2017 loss = $2.179M

Correlation = 99.4%

F2018
Operating CF $2.619M
Depreciation $0.914M est ($451K @H18 vs $481K @H17, adjusted in alignment)
Total $3.533M


This then is without any of the following being factored for:
* Award of shares for bonus achievement by Skene (announced 2/7 but likely booked in as part of F18);
* Impairment of CDC opertaions;
* Revluation /Impairment of Farms;
* Adjustment on herd values.

So, quite easily, the final outcome could be even higher than this but otherwise at a 99.4% correlation, would likely come in at close to $3.51M. But call it, $3.5M.

Now, as for the outflows for the quarter compared to forecast, the following results are instructive:

	Column 1	Column 2	Column 3	Column 4	Column 5
0	Item	Forecast JunQ	JunQ actual	Variance $	Variance %
1	Product manufacturing and operating costs	4.177M	4.650M	$473K	+11.3%
2	Advertising and marketing	10K	11K	1K	+10%
3	Leased assets	4K	4K	0
4	Staff costs	897K	907K	10K	+1.1%
5	Administration and corporate costs	270K	291K	21K	+7.8%
6	Other	113K	107K (net) – gross = 112K	-6K	-5.4%
7	Total	5.471M	5.970M	499K	+9.1%

On present indications, this doesn't point to any increase in staffing (ie: ordinarily associated with the operating platform being more heavily utilised) but rather to significant input costs (raw materials, milk, feed, etc) all occurring.

More the point however is that the admin & corporate costs have rounded out the year at $1.488M (not yet counting the cost of the shares awarded to Skene, etc). Conversely, the receipts for the year have totaled $21.496M.

Last year, the cash received in on account of operations totaled $26.047M whilst the admin & corporate costs for the year totaled $709,000.

So, in <12 months, collections have dropped by $4.551M but admin and corporate have more than doubled to $1.488M (an increase, YoY of $779,000).

Collections, down YoY by 17.5%.

Admin & corporate, up YoY by 110%.

Staff costs, down YoY by 18.5%, from $4.295M down to $3.497M (down, by $798,000 in $ terms).

Admin & corporate now account for 7% of the direct cash collections for the business, as against 2.7%, this time last year.

So, far from the article datelined 1 August 2018 being a positive, it appears to be more and more words served up as a distraction, as the real story, not being spoken about is a business which (judging by its real, boots on the ground results, has fallen deeply into the ravine with no overhanging vines from which to climb out with).