Ann: Appendix 4C - quarterly, page-2

Some improvement, but I find it hard to judge whether we are moving into clear profitability. We generated cash inflows of  $201,000 and paid off a loan of $120,000. Receivables also rose $100000 compared with the end of the last quarter. So in effect the quarter had a surplus of $300000 before paying down debt. Good, but what about the future?

What is less clear is whether that can be continued. Receipts jumped to $6.9 million last quarter from only $4.7 million the previous quarter, which I thought was worryingly low given the new contracts we had won. It could be revenue was just delayed into last quarter and will now run at a higher rate.

On the other hand this quarter's revenue may be partly seasonal due to Christmas, though last year it was the third quarter that seemed to benefit. Can we expect revenue to run at $23 million annualised with new contracts on top based on the last half year's revenue? If that is the case then we will be cash flow positive and new contracts will start boosting the bottom line substantially. By next year we could be paying dividends again.

However, the cost estimates for the current quarter in Appendix 4C seem very low at only $5 million, compared with $6.7 million last quarter and $4.8 million the previous quarter so maybe revenue will fall back this quarter as well.

We still need more evidence the ship has been righted. Hopefully the half yearly will provide more of an outlook on expected performance in the second half.