annual report, page-15

I believe the sell off due to 2 factors:

1. Market expections - an update on financial/ cash position post balance date was expected but none given,

2. The surprise allocation of nearly all revenue to China. The malaysian contract was supposed to earn AUD$60m-$80m p.a. What has happened to the Malaysian contract? Once again a complete lack of explanation from the company. This has created a lack of confidence & confusion amongst investors.

Other negative points in the report:

1. Amortisation charge of $3.8m was only for 3 months - this year it will be approx. $15m, so profit will be reduced $15m, albeit a non-cash expense.
2. Significant bonuses paid to the directors.

On the plus side:
1. the accounts have been audited without change / qualification.
2. Intangibles value has been independently tested.
3. Chinese govt. must be paying as the receivables balance is less than the revenue figure.

I continue to hold but we need '010 guidance, explanation of Malaysian position & also a new contract to instill confidence in the product & management (almost a year since last contract win).