Ann: Appendix 4C - quarterly and commentary , page-3

Production rates:
The company has delivered 1000 square meters to Egypt since the AGM last November. Over the four months to March, this gives a production rate of 250 square meters a month (62 sq M a week, or 12.5 sq m a day). Not exactly a stellar performance. This is despite Ramy Azer saying at the recent SGM that the factory was producing 1000 Sq M a week. He was questioned at the time about the accuracy of this comment, as the maths didn?t add up. He answered the question with comments about production delays.

Based on the veneering speed from the Landline video, the Walkamin factory?s veneering machine should be able to handle (if fully operational) around 900 billets per day, which should equate to around 900 Sq M of usable product. The current rate of 12.5 Sq M per day seems minuscule. I wonder what the problem is.


Patent infringement:
It seems that PPY does not yet have a patent granted in the EU. Therefore, even if PPY had the cash needed to pursue infringements (a few million dollars), they do not yet have a patent to protect! I wonder what the delay is. It has been almost 8 years since the provisional patent was first lodged and patents only last (I think) for 18 years. Unless someone can correct me, it seems there is only 10 years left on the original patent!

Finances:
No receipts from customers from the Walkamin factory this quarter. If the current rate of production continues (1000 Sq M per quarter), we will not see another receipt from sale of material from the Walkamin factory until June of 2013!

The two new machines are due in Quarter 4. The Alpha Machine cost around $1.4 million and the Beta machine cost around $800,000. Even if the new machines cost less than either of the two previous models, one would still assume that producing them will dry up any remaining funds available to PPY. The machines are not presold, so unless buyers are found, PPY will presumably soon be in financial trouble.

Research and Development:
It seems to me they need to go back and research and develop an improved system for producing banana stem veneer. 12.5 square meters a day seems to demonstrate that the process they have doesn?t work!

Also, they have been working on developing a banana fibre board for at least 2 years now. I wonder what kind of resources they are putting into their research and development.

International Strategy:
It always seems to be ?jam tomorrow? with this company. With an ?aim? of negotiating an outcome in Quarter 4, success is (again) just around the corner!