Ann: 2015 AGM Chairman and Managing Directors Address, page-17

Adam
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Thanks for you reply. I always appreciate your intelligence and considered commentary.

Ok, that's enough sugary niceness.

I fully understand that the business is having to be "right sized", to deal with the reality that the mining boom is possibly not going to be "stronger for longer" after all (what a surprise). I am fully cognizant of the fact that it is not only carrying capital that was earmarked for the "longer" thesis, but it is also carrying operating costs that are a hangover from the party days.

Now that everyone is starting to think that the downturn might end up being "stronger for longer", it appears that the trough in mining capex is going from bad to worse. What's more, engineering infrastructure investment does not appear to be doing what Boom management would like it to do.

On this basis, it appears prudent to assume, in the medium term at least (say for the next year, or perhaps two) to assume that EBITDA may drop substantially, before it recovers. This may actually provide a more attractive share price (perhaps).

I am not overly concerned about this (especially as I'm not a shareholder, ha ha), as the business is doing well in recovering cash from its fixed assets and from its working capital (as you have well commented on).

My question, and one I have little expertise in, is what will the bankers do, if EBITDA drops (though temporarily) to breach the debt servicing cost coverage covenant. That is the sum total of my query.

Though there is a related question, which I have also commented on before, and that is, can this also trigger a capital raising, possibly at a substantial discount to prevailing prices (a la a right issue), with the consequential dilution.

Happy travels

Mars