Any Appendices or SSN's tonight or tomorrow?, page-20

A couple of things to think about...

1. The production of the current 17m litres of milk cannot be re-applied and processed as organic milk when the farm is ready, there will need to be a complete herd transition to have organic compliant cows for milkers. In the mean time they have to figure out what to do and how to manage the transition and there will be costs involved, significant cost and potential duplication.

2. If they divest the current 17m litres of milk then there is no self generated income for the business and they will be having to buy milk on the wholesale market....and dont think they can just whip down the road and get some organic milk either, maybe get conventional milk from the wholesales milk market as they have done that before I believe but that squeezes margins even further especially if the price to buy milk moves north of about $5.50 kg/ms.

3. That estimate of $55m revenue, whether accurate or not, is in terms of 3+ years time so what happens between now and then and would that be an estimated PV or NPV?

4. Your second to last sentence is spot on and is the nub of the risk and could inspire great debate well in to next year. The uninformed fresh arrivals versus the chagrined long term loafers who stuck around. Rest assured the current company incumbents have successfully blown up all shareholder trust, hosed away any confidence shareholders had in regards their ability to stick to plan or actually delivery, and denied shareholder communications of relevance and accuracy to the extent that this place was possibly the only source of reality for many.

Other than that the new idea sounds plausible, let us see an actual strategy, share the broad details and a time-lined plan to get to where from where they are to day to where they say they want to be and who will be holding the reins during the trip to get there and perhaps this time round they might want to consider some form of shareholder communications that offers performance based tracking of their progress.

Perhaps some reshaping of the share register would not go amiss either and get some serious local active institutional investment on the books as well, even if it does mean some brutal dilution for current holders including Jimmy Crow and a change of the Board to boot.

Then I might start to get excited about it, again. Until then I would probably stick to the ASX listers like of A2M, BAL (now that it has had its very own pasting and clean out) and even BGA since it has taken a liking to ODFC lately and possibly WHA as it wanders down the same path. AHF has already lost its early adopter lead on one strategy and is now a clearly behind and is a me-too follow the pack company. Maybe there is still opportunity in the market they now choose to chase but by the time they get there it will have matured, margins will have come off and it will have become more regulated both domestically and in the near proximity export markets as well as being more cost-intensive to participate in. The word "scale" comes to yet mind again to get real earnings with a good positive cash-flow to spring board into new markets/products or technologies and currently they dont have it nor are they appearing to pursue it either so boutique and niche they seem to want to stay.

Am I harsh? Yes, being a realist often is. Am I a burnt long term shareholder? Nope. Am I disappointed they failed on many fronts to create something that could have seriously differentiated them in the dairy space in this country? Yup.

Maybe this is the one for them. Most ex-longterm holders don't think so as they have the benefit of hindsight and perhaps some insights that new holders don't have but new holders do have a fresh unhurt investment naive view of the generic market opportunity and believe otherwise.

Time will tell...but your second to last sentence is very insightful as to where the greatest risk lies.