firsthalf net profit up 44pc to 18.6m, page-9

here is his response
The business financing decisions made by Namoi are potentially more complicated than a vanilla manufacturer in that we operate a seasonal business with a heavy emphasis (as indicated throughout the annual accounts) on our risk management strategies. These strategies include the use of cotton futures and FEC's. Cotton futures require margin calls to be made or received in light of movements in the market relative to when the contracts were entered into. These movements partly relate to inventory and also to forward purchase and sale contracts. The use of a structured inventory financing product that provides greater borrowing capacity when required from either higher physical stock levels or higher cotton futures price levels allows adequate liquidity for Namoi's seasonal operations. This is why you will see higher debt levels in August as opposed to February ie as cotton is ginned April through July it is brought into inventory with shipping to mills progressively over the full 12 months.

In terms of our banking facilities renewal you will have noted the current seasonal facilities were put in place on 1 August 2008 and are due to expire on 30 April 2009 (this is a usual expiry for a February balancer such as Namoi) while the term debt line (currently only partly drawn) is available until February 2012.

Naturally we have regular communication with our bankers throughout the year, current turmoil in markets has not changed this communication. The performance of Namoi achieved through the volatile markets (as demonstrated through recent releases to the ASX) places Namoi in as good a position as possible for a successful renewal of facilities in April 2009.

Trusting the above answers your queries.

Regards,

Stuart Greenwood