Ann: Full Year Statutory Accounts , page-5

PPY on life support, although a few sold at higher proiecs- good luck if you still hold:

Not much has happened again this year. Despite the grand statement that: “EBFC continues to process the veneer produced and sold from the Walkamin Demonstration Factory for the making of floorboards (the veneer being applied to MDF/HDF substrate, skins for doors and decorative panels for sale in Egypt and Europe. Additionally EBFC has been supplying a company located in Holland, Steward Design Panels, with banana veneer laminate on bagasse MDF panel board. Steward has designed and engineered this product to create decorative acoustic ceiling panels, which has attracted the architectural profession and now being installed in major projects in Holland.”

This sounds like a real business!! How is it then that sales to PPY have been ZERO (all revenue from operating activities consists of bank interest on the diminishing cash balance). It appears that EBFC are still palming off the original 3 lots of 1000 sq metres of veneer they were supplied with from Walkamin over a year ago. I see no evidence that the remaining 7,000 sq m of the original 10,000 sq m order was ever supplied (– see nil sales, above)

The ‘additions to plant and equipment’ over the full F/Y were just $72,657 (Ann Report p. 38). At least some of that must have gone towards the “alternative drying process using pressure”, there seems to be no evidence of ANY spending on the veneer machines for Egypt. Given that PPY is chasing a company experienced in machinery development to construct the proprietary machines, it is safe to say that not only are there no machines for Egypt there is not yet even a confirmed manufacturer to build them, even if EBFC came up with a loan.

On Egypt it would seem that the land has been secured and a factory has been proposed. The only progress seems to be that the necessary “operating infrastructure has been connected”- got a meter box for the power and a water tap…... There doesn’t seem to be a building yet!!

Yellow Pallet is still surviving on the original less than 100k Euro and hasn’t even finished a business case for funding let alone got anything concrete so nothing there for a year or two. Wageningen University are still testing the fibre strength and utility of the pallets so we don’t even know if the process is viable. The NAG-HAMADY panel board idea is still being tested by the Fraunhofer Institute so we don’t know if that idea works….. Given that the Beta Walkamin veneering unit doesn’t work that well either, and the Egyptian’s don’t even have a machine to test, does PPY have ANY viable products???

So, no factory, no ability to build the machinery required, and no finance yet to do these things anyway, it looks like no income for at least a year probably longer. I don’t know how PPY can claim that they have a “comprehensive cash budget for the next 13 months demonstrating a positive cash position in each monthly period based on expected cash inflows from the activities of Papyrus Egypt and Yellow Pallet project and known expenditures.” Cash 172k a month ago now nil- Ramy’s 250k to the rescue- what then???

I found the following extracts I compiled a year or so ago. It still makes depressing but fascinating reading!!! Graba coffee....

PPY and particularly Ramy have made many statements of imminent commercial success none of which have come to pass:

12 July 2010 ASX ann: “Papyrus conforms market demand for products at premium pricing” “Technology innovator PPY has achieved another milestone of its project to take its banana ply technology to commercial fruition. The company has signed Heads of Agreement with 4 partners from diverse market sectors. The agreements formalise long standing working relationships and cover product and market development, sales and distribution activities. In total Papyrus market partners have indicated demand for over 7,500 tonne per annum of paper and board, as well as 150,000 square metres per annum of veneer and ply for the first full year of production. The prices vary widely for products in different market sectors with the average weighted price expected to exceed the prospectus estimates of $1,000 per metric tonne” The 4 companies were: Elton Group trading as Eveneer (building and furniture market); DaiEi (printing and stationary); Guise Group (general packaging); and a ‘specialist food packaging company’.

Dec 2007 (PKN Packaging Report): Grant Pigot said: “ Papyrus has been working closely with a number of companies, most notably DaiEi Australasia to develop a range of products that will be used to demonstrate the technology to the world”

25 Sept 2008: ASX ann: “PPY has signed an eagreement with 3W Tout Bois, based in Monaco, to distribute and sell Papyrus products to their existing customers for applications such as furniture, commercial fitouts, major building projects and interior fitout for super yachts and ferries”

12 June 2009 ASX ann “As a consequence of the delays with commissioning the BVU and therefore the production line, the company was not in a position to fulfil its production timetable with its partners namely: World Future Fibre; Hayot; 3W Tout Bois. The company is pleased to inform the market that 3W Tout Bois recently concluded a visit to Australia and the Walkamin factory by signing an extension to its existing agreement to facilitate the possibility to market and sell the Company’s products in the EU. Papyrus management has finalised a production and engineering plan to enable the commencement of production at the Walkamin factory once the independent experts’ work is completed. It ia anticipated that continuous production should commence in September 2009 with revenue to follow soon thereafter.”

2009 Annual Report: (Ted Byrt) “We now have a functioning factory at Walkamin, comprising a BVU, a veneer drying process, and a fibre production line, all of which validate the Papyrus banana veneer and banana fibre manufacturing process. The banana veneer production is being assembled in batches and despatched to our European agent 3W Tout Bois who are responding to orders following our successful exhibition at the Monaco Yacht Show. These veneer product orders are not substantial but they are essential to assist in the validation of the commercial opportunity”

30 Nov 2009 ASX ann: Ted Byrt: “ Since October 2009 the Company has announced that ‘its team of engineers has completed a major milestone and is producing increasing quantities of products for the European distributor 3W Tout Bois. The factory is in continuous production of fibre and veneer with a limited labour force. The next stage of the Company’s Production Plan is the scale up of production by increasing labour resources at the factory and investing in more materials handling equipment….. It is a fact that we cannot today produce the quantity of veneer and fibreboard which our research demonstrates the market requires

3 Dec 2009 Manufacturer’s Monthly: Ted Byrt said: “Papyrus Australia has reached a major milestone in its development. We are now in continuous production of fibre and veneer and have identified Europe as our first market for our products. We have signed an export agreement with European veneer company 3W Tout Bois”

26 Feb 2010: (The Australian) “The company has found a ready export market to Europe through a distribution agreement with Monaco-based 3W Tout Bois. The company’s factory started processing last November and has the capacity to process 20,000 tonnes of raw material a year. Papyrus has a second factory in Brisbane which is being modified to produce chipboard and medium density fibreboard and is expected to be in production in June. Azer says Papyrus has offshore orders for the full capacity of both factories for the next twelve months”

and ditto “ The company, through 3W Tout Bois, is in discussions to supply raw veneer to luxury car maker Jaguar for use in wooden dashboards and other trimmings. Papyrus also hopes to supply veneer to luxury European boat builders”

HY Report 26 Feb 2010: “Now that the complete production system is in place and has been commissioned the company is focused on ramping up production to meet the demand for our products and fulfil the orders it has from local and international customers. Veneer and fibreboard production from Walkamin has been shipped to our customers in Europe in ever increasing quantities. Customers in Australia will also receive products from existing stock at Walkamin. The first commercial size shipment of veneer arrived in Milan in January 2010 received by our European agent Mr Mario Cassin from 3W Tout Bois. A second shipment twice as big is scheduled to leave Walkamin early March 2010.”

early 2010 Ted Bryt in mag article: “The commercial manufacturing line was completed in April 2009, and independent tests were undertaken in November 2009 with all machinery operating to standards. Papyrus successfully started continuous production.
ENews July 2010: “Papyrus in negotiation with a membrane pressing manufacturer and supplier of finished flexible door and panel surfaces and specialised timber veneer products. This company is currently undertaking trials…”

ASX qtly 29 Oct 2010: “Our Australian distributor Five Star Finishers has received significant quantities of banana veneer fro trialling and responded to market demand to produce furniture. Our European distributor Tout Bois, has recently reaffirmed their demand for large quantities of our veneer to be supplied to certain specifications.”

11 Aug 2010 Ted Byrt said: “The interest [at the Monaco Boat Show] was exceptional, particularly from the Netherlands and other northern European countries, and revealed strong demand for two product lines, veneer sheets for furniture and a panelboard substitute for particle board, chipboard and other timber based materials. However at the time we were not able to produce particle board in commercial quantities. That has been our focus for the past year and we are now close to commissioning and trialling a panelboard machine at our Walkamin factory.”