Ann: Prospectus, page-16

Thanks Donnyvale.

Look, there is some good news on the horizon.

At the IPO the Directors (James Garton, Mark Nagy & Guy Burnett) inserted into the Prospectus a potential ward to themselves of 25,000,000 performance rights each, so 75,000,000 in total. This was very unusual to see performance rights awarded to executive directors. So unusual in fact that they had to commission Grant Thorton to issue a 50 plus page report stating that the performance rights allocation was "fair and reasonable to non-participating shareholders". See Annexure C.

These performance rights were to compensate the directors for their contribution of Mid Coast Exco - a company that held an export certificate for seafood to China & Japan), for founding the company and to reward them for their brilliant management skills in growing the East 33 business. These performance shares vest over a four-year period.

The first tranche (22.2% of the performance rights) had performance targets of EBIT +$7.3m and cash generated from operations of +$6.8m.

Actual results were EBIT -$9m (really -$13m without accounting trickery [see previous post]) and cash generated from operations of -$3m.

So, a miss of the EBIT target of -$16m [-$20m] and a miss on cash generated from operations of -$10m.

Now, I am not being critical, but I would class these results as somewhat below "brilliant management skills" - I would probably rate them as abysmal.

So, you see where I am going here.....the likelihood of the existing shareholders suffering further dilution if the performance rights were met is virtually zero.

Of course, it would have been great for all shareholders if the directors had the management skills to earn these performance rights, but they have clearly shown that they do not.

With Mr Anthony Hall effectively underwriting this rights issue, which, I will point out again, the three directors (James Garton, Mark Nagy & Guy Burnett) are not participating in, you would expect some form of adult board representation that will pull these directors into line.

From my limited experience you would expect a board of directors to appoint a full-time management team (CEO, CFO, COO) to operate the company in the interests of the shareholders and then reward this management team for delivering on their performance targets. Seems weird to have set the company up to reward a small subset of shareholders (i.e. the directors) for managing the company on a part-time basis and existing on those lowly salary packages of $330k a year.

As Les Grossman from Tropic Thunder would say - a nutless monkey could have done a better job.