Ann: Business Activity Statement & Appendix 4C - Dec-2023 Qtr, page-15

"It calls out a clear kryptonite amongst other weaknesses of EOS. In fact, when you look at the net profit surplus during 2017 and 2018 - one could argue they only achieved this due to the significant capital raising the company did during those years."

Im not sure why you think profitability was due to cap raises- a cap raise shouldnt have any impact on the profit result. The cap raises were there for the Company at the time to fund capex investment in increase manufacturing capacity to $300m output including US manufacturing build out. You can say based on what the Company is doing now in terms of revenue that BG successfully executed this.

Spending on consumables and materials is in line with what you expect for a company like this- EOS builds complex machinery with a large supply chain of suppliers. It doenst make sense for EOS to make each and every part. The issue imo wasnt the net spend on materials it was the cash management of having to fund manufacturing opex up front and then waiting often years during COVID to supply the goods and then receive cash from the customer. A contract asset of over $100m was testament to the working capital strain on the company. Analysts were focusing on this as a key weakness in the EOS business model. Contract structures now with the ME customer as well as the Ukraine, RAN EM Solutions and NATO customer where cash is received upfront should alleviate the funding burden. Seeing positive cashflow from operating activities last Appendix 4C was a testament to the efforts of new management.

In terms of profitability, BG was able to maintain a good rate of operating margin even where production was ramped up. Spacelink and COVID impacts our ability to see this in the historical numbers. But new management are touting a 15-20% EBITDA margin target and that is not an unhealthy operating margin one would think. Management are also touting expanding the manufacturing footprint re US and Europe to drive economies of scale and cost efficiencies from supply chain flexibility.

The Appendix 4E is due by the 28th so we will see a full year picture of the operating result for the Company hitting a $230m revenue number. Im hoping this is enough for a positive EBIT result. It then would give us a good idea for extrapolating what the result could be for a $300m revenue number if sales opps are turned into revenue in FY24. In any case the most optimistc the company has looked for a while.