awfull half yearly, page-4

Hi Plough,

I think the extra borrowings compared to this time last year relate to the extra inventory they are carrying, which has to be expected at this time of year and if they are to market extra product. The upside is that they are also holding $20M more cash or cash equivalent assets than last year.

You are right that on the surface it looks like they are carrying more ginning capacity than they need, but there has not been a decent season for years to get a decent crop and increase the production. In a normal season, when there was reasonable water around and to grow a crop, the ginning capacity was barely enough. I expect that one day we will get back to a reasonable throughput and NAM can fire up all the gins.

Because I expect that things will get back to normal one day, I don't mind if NAM holds onto their gins. The other alternative is allowing one of your competitors, or a new competitor, to gain a market advantage. When the good seasons return they will just have to either buy them back or try to build more to re-establish their position in the market.

I think as long as they can keep turning profits they should not sell any of these valuable assets, it would be different if they had massive debt and needed the cash though. Just look at the land and machinery assets that they have and work out what it would cost to replace them.

The divi is going to cost them about $2M, that leaves a wad of money in the bank. I hope that they keep paying only about 4-5c a share divi each year and keep the sp down, then use about $5-8M to continue the share buy back until they get the shares down to about 50M.

All in all while they can keep turning profits on such low turnover I think the company are doing very well. I am sad to hear that you have dropped your holdings as I enjoyed your commentary, I hope you continue that at least. Good luck for the future purchases. Mop.