It seems that we both jumped ship for the same reasons - a lack of straight answers to some very valid questions. I'm a great believer in the hemp industry, and I think that it has huge potential to become a leading income earner for Australia's primary producers. And QBL has the potential to be a successful part of that growth industry.
One of the main things which I found very disturbing was the lack of a satisfactory response to the numerous questions about the hemp crop, until the weight of questions finally produced an admission that the results were very disappointing. And even then, I was not convinced by the suggestion that they had harvested 80 tonnes, because the announcement said that they had "secured" 80t of seed, which I suspect could equally have meant that they had managed to buy 80t in a market where seed was in short supply. If they had harvested 80t, why not say so?
There has been far too much fluff about the lack of information and knowledge about hemp growing because it is a "new industry". As part of my research into hemp growing, before I invested in the two main ASX listed hemp growers (QBL and EXL), I read reports about hemp growing (including in Australia) dating back many years. One of the reports which I found interesting was a New South Wales Department of Primary Industries Fact Sheet dated July 2008.
It was from that and other reports that I found out that hemp grows either tall, for industrial use, or short, for seed production, depending on day length when the seed is planted. As far as I can recall, to harvest seed you need to plant when day length is shortening, and I think that I've read somewhere that January to June is the best time to plant in Australia for seed production, as the plant will only grow to about 2 metres in height. If you plant too early or too late, the plants will grow to about 5 metres, and you can't harvest the seed.
As QBL have people on board with knowledge of growing techniques, they would have far greater knowledge than I have, but armed with that knowledge I would expect that they would plant at the most advantageous times to produce the best returns.
With regard to the suggestion that there has been an Australia-wide problem with hemp production, I have not found evidence of that with regard to other hemp growers. While Red Tractor were unable to source hemp seed from QBL, I was still able to buy Thompsons Australian hemp seed from Chemist Warehouse. I believe that Thompsons seed is supplied by a QBL competitor.
I had been looking forward to seeing a good investor presentation which clearly set out the QBL structure, so that we could see what it actually owned, and I was particularly interested in the ownership percentages of HHC and Waltanna Hemp Group. Although MCL 'bought' 55% of HHC, the purchase price was to be 5% of Vitahemp shares and "$1.5million in MCL shares when MCL listed on the ASX". As MCL did not list on the ASX, was this purchase of 55% of HHC completed? If so, how was the $1.5M paid? If it was not paid, do MCL actually own part of HHC? That information might have already been hidden away somewhere in the 131 page announcement, but I don't recall seeing it.
If I read the situation correctly, the 55% of HHC would have given MCL a 27.5% interest in Waltanna Hemp Group. It was my understanding that there was an intention for MCL to acquire a further 30% of HHC, which in turn would have increased their interest in Waltanna Hemp group to 42.5%, but I don't know what happened to that proposal.
A good, professional investor presentation would have clarified these and other points. I find it quite disturbing that management are only now having an investor presentation prepared because shareholders have been pressing for one. The job of management is to be proactive, and get these things done without the need for pressure from the market. A reasonably savvy manager or company director would have foreseen that after the long suspension and the complex announcement which was finally released, a good investor presentation was essential to inform and reassure the market, and give a clear picture of the company's structure, what had been achieved in recent months, and a clear path forward, including objectives and the plans to achieve those objectives.
I found it hard to believe that the whole management team and board members had failed to understand the need for such a presentation, and I came to the conclusion that the failure to produce one was a reluctance to disclose certain information which investors and the market would have been expecting to see. And as I believe that trust, transparency and openness are important, I decided to sell my QBL shares.
For the sake of the shareholders, and for the future of QBL and the Australian hemp and MM industries, I hope that QBL can somehow overcome the own goals which have caused it to lose so much ground in these exciting industries.
QBL Price at posting:
4.0¢ Sentiment: Sell Disclosure: Not Held
