Ann: $12m Institutional Placement and Announcement of $3m SPP, page-85

Well, its good to have an extra $15M in the bank, and I think management credibility remains intact. The oversubscription and other information provided also is very encouraging. The need for the CR indicates growth is about to move up a notch.

Considering the timing, it becomes obvious that the need for the upcoming CR was known at the time of the AGM. Presentations to institutions over the preceding few days will have been used to gauge enthusiasm for the placement, which clearly was sufficiently positive. Until it was arranged, a statement could hardly have been made at the meeting along the lines: “Oh, by the way, it looks like we will need to call a trading halt some time in the next few weeks to manage a placement – but don’t tell anyone.” So it could not have been disclosed at that time.

The announced reason for the CR, to demonstrate the capacity to supply impending large orders from military and/or bedding, is fully consistent with what was stated at the AGM and previously. It was disappointing that the associated announcement didn’t give a better indication of how close management believes those orders might be, and explain the timing by doing so.

With regards to director involvement, the more the merrier as far as I’m concerned. I have no objection to those making the decisions having the most to loose by getting them wrong. It also would mean that those shares could not be sold without triggering an Appendix 3Y announcement, which is generally frowned upon, meaning that to a large extent they would be effectively escrowed.

Hopefully the rest of the Institutional Placement was just to institutions. They are much more likely to be long term holders than sophs.

The ‘up to a further $3M’ to be raised via the SPP is a sop intended to allow retail shareholders to feel comfortable that they haven’t been excluded from the 5% bargain. Considering the SP fluctuates by 5% or more almost every trading day I don't think it is necessary. A limit of $15,000 with 5,574 ordinary shareholders means a potential application total of $83.6M. The $3M ceiling is a minor fraction of this and means allocations likely will need to be heavily trimmed back. I would have preferred just a larger placement, thereby avoiding the expense and arbitrage effects of the SPP.