ann out, page-14

re: ann out-less than expected? Hi Phil,

Very quickly:
1)
your 322.4M shares on issue needs to be adjusted to take account of SENOA and the unlisted options (ie: total share on issue, fully diluted, is 490M) - that affects the numbers somewhat;
2)
FY04 eliminated ~40% of CTAM profit of ~$800K which should already be factored into FY05 (ie: starting point for FY05 should be $4.0M, not the reported $3.2M);
3)
why use EBIT as the basis of the profit comparison (especially if there is little current interest expense, and ~$3.0M in accumulated FTB) - EBIT is not a proxy for profit;
4)
the announcement of 6th September referred to "in excess of $5 million net profit" (ie: after interest and tax, etc); and
5)
today's announcement refers to "projected earnings before interest and tax (EBIT) for the year ended 30 June 2005 are in excess of $7 million".

EBIT of $7.0M comes before net profit of $5.0M.

So, what does this mean?

Given the beenfit of those FTB amounts sitting on the Balance Sheet, this suggests an increase in the Company's gearing in 2005.

Also, the re-investment language is of some concern as this suggests an increase in either OPEX or CAPEX going forward.

This is why the market may not be reacting as postitively as what you had sought.

A possible re-rating, therefore, is unlikely until well into 2005.