announcement funding cap rising, page-38

Reiner001

Unlike more modern society's where Venture capital is around 1 - 2% of GDP Australia ONLY uses bricks & mortar for seed capital. It's our greatest shame. It also explains why so many great Australian companies seek funds offshore although I must admit currently the greater Capital markets have the lowest interest rates/available funds hence why companies like FMG are looking o/s for $4bil to fund their expansion. We have on the otherhand offered access to cheap real estate. The real estate ballgame has changed.

Halcion will most definitely require more funding if I read correctly from DMC Ltd website about their business and how STI can and I believe will be able to add significant value to that business through the STI purchase of the Halcion group. Have a view I don't think should be expressed online in the interest that I hold STI shares.

Telemed is way before their time, however we are the testing ground, because using NBN (National Broadband Network for those unaware) will allow E-Health to become a long term solution to immediate chronic problems with hospitals. These problems are response times, size, staffing, shortages and building health (incumbent diseases like golden staph, etc) notwithstanding the cost of the real estate. Telemed however has along way to go before becoming the norm as it has to move existing infrastructure investments (landlords, REITS investors) away from the traditional investment mix ( read above regarding investment in real estate).

Regarding the plant, that is a level playing field BECAUSE all plants are faced with regulations. However our plant is BRAND NEW. Again a positive because any changes can be done cost effective because the plant machinery has multiple immediate suppliers with available parts ready to update to latest standards rather than calling in specialised manufacturers to retool or make adaptions, which is a costly business. The Plant makes money because it operates at FULL capacity rather than allowing for compliance in machinery in first place or then downtime for slow production/maintenance by old equipment. You have to give the Board at STI a LOT of credit here because they have done the sums on buying either a new business or buying an older machinery shed outback that would require unlimited finance to bring up to regulation. The Board is focused on presenting the company as being "cost effective", "compliant" and "reliable". The Board "purchased" the best available during the GFC. Smart move IMHO.

With the HDA the company has to "sell" the idea to the big pharmas that they can remarket their expiring drugs using the HDA. I don't believe that is going to be an easy task actually. Their are many aspects that I wont go into here for the sake of boring the reader but I'm sure based on hindsight about the vision that has been shown by the Board they would have put on the table the pros and cons already.

Finally until the investment grade changes in Australia I dont think it would be in the best interests of STI that they disengage themselves from holding real estate until the Board has all the available options open to itself to make a decision otherwise.

Regards