Ann: Appendix 4C - AHF, page-29

Incredibly rushed. Even more fluff than usual. Compared to all previous quarterlies, this has been thrown together at the lats moment. Explains nothing. More the point, it demonstrates that they have lost control of the business and quite likely have lost some customer contracts (or portions of same) as well. For example, lats year, they reported about going to Woolowrths, Victoria-wide. By mid-year however, it was down to regional areas, the outer areas of Geelong and the western edges of Melbourne.

As for the commentary itself, what's this about "maintaining a neutral cash balance quarter on quarter"? Now, if they had also done away with the upcoming accruals, then perhaps they might have been saying something.

They have however suggested that CDC sales are up 9% year on year, but not then explained why capacity utilisation is back down to below 50% and, on some assessment of this (by others), trending below 45%, back towards 40%.

The significant new business for them (in July, so in reference to the STP 11/7) was securing three "significant new direct customers while several distributor negotiations are currently in train".

This all points to the primary focus of last year having gone awry except that it seems to have adversely impacted not only WOW, but also Aussie Farmers and the one by one independents through IGA (direct franchisees) rather than via Metcash. It also seems that Lencia (on their language) has stalled whilst clearly all the hype regarding Lian He was just that - hype.

As for the farms, apparently they have "good soil moisture levels and better than average levels of harvested fodder". If so, then why are the feed costs still upwards of $3M a year? At H17, they were $1.5M (H16 = $1M) with a second half estimate similar in value advised at the time.

Mind you, they are also putting themselves first, particularly with the following concluding comment from the commentary:
---- "This has been achieved in what is a highly competitive market in “white milk” at the same time as the directors and senior management are devoting considerable time and effort to the rapid implementation of strategic growth plans as announced in the recently released Strategic Overview, while also keeping overheads to a minimum."

If this is so, then why the $413,000 expenditure on Directors according to the cashflow reports which is well above the group wide, shareholder endorsed limit of $350,000.

And as for a favourable F17 outcome, based on this slapped together commentary, as if because someone was reminded late on Sunday night that they had a school assignment due first thing on the Monday morning, they have simply thrown together the first words that they could think of, thereby hoping that they would resonate. Poor, sloppy, amateurish work, to say the least. Not up to ADMIN standards costing >$340,000 per annum on a shared services basis. Not up to the corporate standards required of a CEO, particularly where that CEO was also given a signing on share bonus, which when fully bulked up, has already cost shareholders >$1M in direct P&L erosion through to H17, with more of this yet to come.