You have to hand it to the folk at Duxton Broadacre Farms (ASX code DBF) for confidence and sheer belief in their business.
The latest quarterly report was enough to make your average investor frown ever so slightly.
Despite only slightly lower sales, DBF's operations burned through $3.17m in the first three months of the calendar year, against an average operating cash outflow over the last nine months of $1.7m a quarter.
At the end of March, it had nothing in the bank except a $3.4m overdraft. It had drawn $24.7m of its $26m loan facility with Westpac.
Operating and manufacturing costs are expected to drop by $1m to $3.7m in the current three months, but that is still above average quarterly sales of $2.75m. "Operating" does not include $763,000 in staff and corporate costs.
In these circumstances, you would expect the company to be scrambling to raise more money, possibly by selling more shares to investors at a cut rate. Yet the directors expect to spend up to $300,000 over the current three months buying DBF shares on the stock market.
The figures made the stock exchange frown too. It sent the company one of those letters that politely asks if the company thinks it can keep going, and if so, how?
The Punter has yet to see any company reply along the lines of "we are praying daily to the great God of financial miracles, and actively seeking job opportunities elsewhere", although in some cases it becomes very clear later that that is pretty much what has actually been going on.
In DBF's case, however, the company has replied that being an agricultural company its cash flow is highly seasonal, which is fair enough.
The directors' belief that the shares are worth buying at the current price around $1.40 has persuaded the Punter to hold DBF a bit longer, but the shares are high on his "sell" watch list.
- The Punter has no financial qualifications and no links to the financial services industry. He owns shares in a number of companies featured in this column.