Ann: Consolidation/Split - LON, page-9

And I guess I am the one. It is just my opinion and I may be wrong. However this company was pumped up unrealistically and the shareholders have been dealt a poor hand in terms of the consolidation for reasons I outlined. The share price will never go to 3cents again was the call and I was ridiculed for pointing out how ridiculous it was to have the number of shares on offer and that it would. It keeps dropping, this isn't down ramping. It is fact.
Look at some of the points from the H1 2018 presentation:
Key initiatives to drive growth include:

• Expanding distribution and penetration into the Eastern seaboard cities, given 75% of Paris Creek’s current sales are in South Australia - it is an opportunity but it's not like the eastern seaboard doesn't drink milk or organic milk now. They will have to break into the market with an expensive marketing campaign to get people to swap from their current milk to Paris Creek.
• Optimising the existing product mix with greater focus on value-added higher margin yogurt and cheese products - So the focus isn't solely milk but again these markets are saturated with competitors who have huge resources
• Growing the Company’s pool of organic milk in Australia As they say themselves it takes time to grow pool of organic milk, can't just be done and will be expensive. And competition is coming with companies like AHF entering the market
• Utilising manufacturing capacity from current 12 million litres per annum up to 30 million litres That capacity is there but where are the cows? it will take time to build the herd up...
• Investing in marketing to build brand and underpin growing sales. Ahh look "investing in marketing" they know that they are going to need money. They have 7 million in cash and are Paris creek is turning about 1.7 million in profit but that is not going to go far in terms of marketing and growing pool of organic milk and yogurt and cheese.....
Maggie Beer continuing to evolve
The last six months have been a challenging period for this business, with lower gross profit margins caused by the slower than expected rollout of Metcash distribution, sales product mix being skewed towards products with lower margins, and increased spend in promotions. The team at Maggie Beer are undertaking multiple initiatives which is expected to lead into an improvement in its performance.
Key priorities for H2 FY18
Commenting on Longtable’s key priorities for H2 FY18, Mrs McBain said:

“We are in the middle of building the leadership team at Longtable, having appointed a head of sales and more recently a CFO. Having the right team in place is critical to ensure we can build the infrastructure necessary to enable the business to leverage the exciting growth opportunities we see.
So here is more money - they are in the middle of building leadership team - this is going to be costs with salaries etc. Then there is the second point "build the infrastructure necessary" So MORE money.
“We are in the process of transitioning Paris Creek from its family owned roots to a sophisticated business model and expect to see the benefits from our initiatives start to flow towards the latter part of the second half, and certainly in FY19. At the same time, we are monitoring and assessing our investment in Maggie Beer Products as that company evolves.
So there isn't expected to be much change this half. That means not much of a revenue increase which also means that they will burn cash. It is interesting that they use the phrase "monitoring and assessing" in reference to maggie beer. It wouldn't surprise me if they sold this off.
“We continue to explore new opportunities to expand the Longtable portfolio of products and brands. We have no intention of slowing down and are very focused on ensuring we successfully integrate Paris Creek into Longtable. The focused strategy we are executing on should deliver attractive, growing long-term shareholder returns.” \
Explore new opportunites" pretty clear that they are looking to acquire. They will need capital to do this. Or alternatively they will offer shares. If they offer shares expect dilution. Interesting phrase "long-term" shareholders returns. If you search through these posts you will find a discussion between myself and another poster who said in six months watch the share price rocket. I would suggest that this is not going to rocket but rather stay stagnant. this is a business that will take time.
What about China? There has been no mention about china from longtable. Even if they did they will need regulatory approval and cash to get it going.
So skinny, I'm not downramping at all. I am being realistic. I bought in and sold out with the consolidation announcement. Anyone wanting investments in the milk side of things is better off researching both AHF and JAT and BXN.