Ann: June 2016 Quarterly Report and Appendix 4C-YOW.AX, page-16

Disappointing quarterly report in some regards, more so with the return to increased opaqueness in communication. Maybe with the new CEO, this will be fixed up from the next quarterly onwards.

QoQ recipes down is mixed bag, can excuse for Easter impact but this is an early stage growth product that is adding accounts regularly so you’d expect a little less sensitivity. However, market must have been factoring another 25%+ QoQ thus if tis not exponential, it’s getting punished so the SP reaction is not that surprising from that regard. It takes time fill out the distribution channel to stock new accounts so the second half of this year will be a litmus test of that ability and how much new accounts they have added in the last 3 to 9 months will drive sales. If they fail to pick up sales rates again from here there will be some serious questions to ask, particularly if marketing and the like is being ramped up too. Maybe they should spend less time on the books, media and tracking youtube views and pushing through channels.

Working capital is up which was expected, inflated by the recruitment costs, but that is one off. In my view the last two CF+ quarters were an aberration and YOW should be burning cash on working capital (materials/inputs) if sales are really growing or expected to do so in the next quarter.

Still too early to throw the baby out with the bathwater, however, I suspect the SP will stagnate or drift down form here until new news states otherwise, but great scrutiny and caution is advised at this point. However, for those with a more positive outlook/expectations, I suspect it will be a decent buying opportunity in the next few months. For me, it is a hold, now that I have had time to digest, and need to see some catalysts that show this quarter was a hiccup in growth and meeting potential.