Ann: Appendix 4C - quarterly , page-3

Dear Donald (you are the only name on this announcement so you must have written it),

- "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 all 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". At the risk of sounding like a broken record "where are the revenues from these sales to EBFC and Steward Design Panels"?

If the Walkamin facility was seriously making veneers at a reasonable rate and the customers you mention above were paying a fair price for the product you should have been able to gradually increase production hours at Walkamin to suit and become at the very least self funding. That's how manufacturing works. Is there a problem with quality or price of product?

Now you've indicated that you are entering (apart from low value add pallets) the "insulation" game. Have you done your research on this? It is another market sector of extremely high volume miniscule profit margin product. You cannot possibly compete against glass and rockwool and/or cellulose insulation.

With respect to your statements on retting (product development), retting does not increase the amount of virgin fibre in anything. What it does do is remove dross which in turn reduces overall yield which in turn means you had better be getting an even higher price for your product as you now have less to sell for your efforts!!

PPY have closed AAMC! This alledgedly was making money. But more importantly PPY said in previous announcements that AAMC were making the machines for Egypt. Who is making the machines now?

If you are sub contracting (again) have you learned nothing? Everytime you did this subbies were publicly blamed for your failures to get a machine/system to market. And, how can the job be done economically as a subcontractor will be wanting to make at least 30% on the job?

Despite the positive spin you have tried to put through this announcement there is no escaping the fact that you have no money left. You have no money left because you have no revenue stream from licences or products to match the massive drain on funds that you have presided over the past many years.

I wish you (PPY) well for the future how ever long that may be.

Yours,
Keeting