Ann: Ceasing to be a substantial holder, page-21

Let's try to look forward on two fronts:

1. The share buyback - I think they had huge shareholder unhappiness when the overhang was there in full force. I suspect that the pressure got too much and they put it in place when the share was at its weakest. The real low point was 22 July at 16.5c but I think the pressure all built up a lot later after they had issued results showing the turnaround in the second half to profits ( share price 23c after results) and then everyone was looking at the price in shock and horror as the relentless selling pressure took it to 18c from 16 October all the way to 25 October. Then the buyback was announced but just after the announcement, it moved up to 20c. I suspect but have no evidence that that was a tipping point - do you buyback shares when there are acquisition targets that add far more value than buying back shares. Remember that one of the limitations in acquisitions is share price and if too low its a disincentive so you need cash. Since those dark days, the buy-side has almost always exceeded the sell-side. At times even at a 2 to 1 ratio. So no I don't think the catalyst is there for a buyback I think they will use the cash for acquisitions which I think can add many multiples to this company. I think they will keep renewing it and if madness sets in they will buyback but if the market stays at or above a base price (which will keep moving upwards as they improve) they will keep the powder dry.

2. As regards the half-year I looked backwards and these companies tend to make more when the customer is focused upon tax and tax issues which is the second half. So the first half is always weaker. If the first half actually breaks even we would have done well as there was only $531k impairment in the first half of last year. So they lost around $900 k without the impairment. There was however depreciation that bumped by around $600K and has since settled back but still about $80K higher than the base. So all in all the result that would show no improvement would be around $300 k Loss but I would expect that to be improved. My best case would be around breakeven. The acquisitions cost money and take time to integrate so I don't expect them to provide any profits this half.

So my base case would be breakeven first-half profit second half - 2020 to be overall profitable. If I am being optimistic a small profit would be nice in the first half. 2021 to show much more improvement.

Just to caution, I have been involved in quite a few turnarounds and don't expect too much in the first 12 months - if a business needed fixing there are shocks and then more shocks as you go along. The shocks get smaller as you work through them and thus the impact of these gets smaller and remember any elimination of a negative actually amplifies the next years' result. So my larger expectations are for 2021. This industry is trying to find a sustainable and ethical way forward = that adds a dimension of risk and reward. I think all the players are investing in compliance to make sure they are not the next shock to the system. Some will exit rather than try and find a way forward.