Ann: Response to ASX Query - Half Year Accounts, page-24

In reading AASB 9 in conjunction with PNC's reply to the ASX query I find it difficult to find fault in PNC's interpretation particularly as laid out in the last half of their reply on P2. PDP or PDL's cannot be treated in the same way as the predictable cash flow streams of principal and interest loans which are amortised. I feel that the auditor is covering his position in todays litigious society and the ASX have had to pick the issue up as an anomaly. Having been a collection manager of a portfolio of provisioned debts for a finance company (albeit 30 years ago) I found that the repayments were highly unpredictable and largely reflected changes in the overall economy and unemployment rates - particularly in the blue collar industries. In economic downturns much of the return had to be spread over longer terms than originally arranged causing the percentages to appear erratic but overall losses did not increase as a result if collection repayments were sensible and sympathetic to a clients financial position - it is my understanding that this would be part of PNC's DNA.

Purchasing PDPs and PDLs is a capital intensive business and if you intend to grow quickly borrowings need to be increased regularly. If you intend to grow organically and pay dividends to shareholders it is a much slower process. I am not sure which way Keith John is heading at this reasonably early point in time but we should not be expecting miracles until the company reaches critical mass.