Why do we do this to ourselves?, page-18

So take this all with a grain of salt please

I will. Partly because you seem to have built your calculations from the "cash out" or pure guess work on the cash in.

There are a range of scenarios though.

• We may or may not have had to continue to build raw materials inventory in anticipation of order fulfilment, and even if we did continue that might have been at a greater or lesser rate then before.
• We may have cut costs disproportionately to revenue by eliminating unprofitable customers
• We may be selling proportionately more high margin product
• We may have changed terms of business and have less lag
• We may have found other ways of changing the balance between cash in and cash out that we can't even imagine. Who knows the impact of Gavin stepping back and Nick leaving for the future balancing act. (For the next quarter).
• We may have had a bigger order one month than the next.
• We may have sped up our order fulfilment process over time

It's too early in the morning to keep going but you probably get my drift.

I long ago did a calculation based on the number of customers in the pipeline and the length of time it takes for them to flow through x average sale per customer over time. That produced growth that was modest but with which I was happy and it matched reasonably well with what happened. While I always felt the numbers were flakey because of the constantly shifting ground in announcements I was conservative enough to not be too far off the mark. As the year unfolded I would go back over those calculations to try to better match reality over fiction and adjust two key inputs - number of customers and average sale per customer. Mmmmmmm is all I can say.

I also suspect that your growth rate - recurring revenue of $4 million in June and $3.5 mill in May - is rather generous but I have no basis for that sense other than gut.

With adjustments in the pipeline that were highlighted in the Petra report and retaining a conservative interpretation of this year's announcements I can't get anywhere near your figure.

As an example of why you need to be cautious still - over the last four or five months there have been a few announcements that made no real sense eg that one about growth rates, some contradictions on whether and when we hit the $2 mill per month and similar. (Forgive me for not extracting the detail ). These sort of announcements are designed to appeal to the market - most probably retail. But they aren't clean enough to use as the basis for predictions.

As someone said earlier once you have destroyed trust you have to earn it back and you can't earn it back by repeating the behaviour that got you into trouble in the first place.

In Alexium's case you won't now get potential built into the price because no one can confidently judge how and when the potential, that is clearly there, will actually fall into place.

There's a reason why I am happy with comparative silence - eventually the numbers will speak for themselves and trust will be restored. I do feel confident that will happen.

It's a shame that Dirk has to live with the consequences of last year but when the share price starts to climb again at least we can probably be a bit more confident that it is solidly based

Parsifal.