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

PPY Interest said: ?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 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. The current rate of 12.5 Sq M per day seems minuscule. I wonder what the problem is.?

To put 1000 sq metres production in perspective, it is the same surface area as 32 reams of office paper (albeit banana ply is thicker than office paper) still you get the picture?. Imagine producing the equivalent of just 6.5 cartons of office paper in a 3 months, or even 1 week- the floor of the office where I work alone would use that much office paper in a week!! (ok I know they aren't producing paper any more, but the comparison is still valid.)

I always harken back to the prospectus story- The "Alpha" machine was claimed to have ACTUALLY trialled at 0.8 metres per second production rate of ?raw paper?, so at that rate a metre wide 1000 sq metres should take 1250 seconds i.e. 21 MINUTES to produce. Now, recall that the plan for the "Beta" machine was to ramp production speed up to 2.6 metres per second, so that would be 384 seconds or 6 and a half minutes! Also recall that it was stated that this speed was achievable because compared to conventional pulp mill line feeds, at commonly 8 metres per second, the PPY machine was pretty slow! That competitor 8 metres per second line would spit out our 1000 sq metres in 2 minutes.

It doesn?t take a rocket scientist to work out that the current machine is not really working to expectations! We seem to have gone from a goal production of 2.6 metres per SECOND to actual production of something like 2.6 metres per HOUR. Phew, 3600 seconds in an hour: so the machine is a lazy 3600 times or more slower than expected?

I still expect a capital raising at maximum 6 cents per share by end of July to keep them afloat. Otherwise perhaps the Egytians can just wait for PPY to fall over and then pick up the carcass from the administrators.