Ann: Appendix 4C & Quarterly Activities Report 30 September 2017, page-12

Share your frustration to a degree Permabear but still think there is value here at this price.

First off I think most of the result was priced in already with the lower revenue being flagged for a while (albeit being a bit lower than I was expecting). Fortunately it seems that from the price action today the market has a similar sentiment this (ie. slightly negative surprise, which led to a bit of a sell off with some reconsideration throughout the day).

I am hoping that some of the other issues that you mention have to do with the expansions into Asia and establishing US presence. Although I agree the numbers seem slightly high as they seem to have only relocated a couple of senior sales staff at this stage and havent seemed to secured a premisis yet. However you could expect that costs for temporary work and living accomodation in San Fran would have a bit of a price tag to it.

I agree that the miss in terms of forecasted expenditure (and in effect revenue) does add some cause for concern for future forecasts however they have been very accurate with this in the past and this one off could be possibly explained by the fact that they did not know the depth of low quality traffic will be removed as traffic guard got into full swing. I am taking them on their word that going forward revenues have bottomed and will increase in the coming quarters. Also by the timing of the forecasts (making forecast end of July and now start of October) I assume that they saw the declining revenue toward the end of FY17 and start of July and made an assumption that it was at its low at the time of forecast when in fact traffic continued to remove and revenue decline for several weeks before recovering in September as noted. But I definately agree that there is a need to pause and consider if this is really the case. At this stage I am assuming this is the case given their record of accuracy and the fact that they did signal the fall in revenue just got the magnitude wrong but I would be more comfortable if I heard this from someone at the company rather than just my own speculative post rationalisation.

So yeah thats my thoughts at this stage. Think that they probably still deserve trust for now but another significant miss would be hard to take.