Ann: Managing Directors Address to Shareholders, page-3

I went to the AGM last Friday and came away impressed by the quiet confidence of management going forward in particular in relation to composites sales from the machine which is expected to start production in Adelaide in February.

Also I suggest everyone look at page 20 of the MD's Address. It shows Gross Margins improving markedly. In FY19 'Other products' ie low margin agency sales including SUAS was more than three quarters of revenues ie less than a quarter of revenues last year came from proprietary products or repairs and maintenance which typically have margins up to 40%. The 'Near term revenue mix' shows the split between low and higher margins including HighCom at about 50-50. In answer to a question from the floor shareholders were told the 'near term' was now ie the mix this FY is about 50-50.

We will not have actual numbers until the half yearly result comes out but last FY revenue was about $40m three quarters of which were low margin sales and there was a small profit. Assuming this FY revenues are about $50m (or more) with a 50--50 split between low and higher margins then profit should be better provided the cost control of recent years is maintained. I stress we do not yet have the half year numbers but I hope they confirm this theory.