Ann: Govt response to final report of the review of the SACC laws, page-4

I've been in MNY for a while now, buying in at 1.20 and seeing the lows of .80, board turnmoil and government review of SACC. Always seen value in this stock, and continues to trade under intrinsic value. Return on equity is growing, can reinvest its profits at good returns, improving margins, has regulatory approval to charge high interest rates on loans, is in a market with declining competitors, and can cross sell secured finance to compliant SACC clients.

Current management are showing inproved shareholder wealth creation by reducing dividends and reinvesting profits. Made a sensible decision to stay in SACC lending, and reduced expenses by closing stores.

I expect to see the following initiatives implemented to drive further value:
•borrowings at lower rates
•no further dilutive share placements
•focus on cost control - reduce stores
•focus on minimising bad loans
•consolidation in the SACC market
•continue to focus on gaining market share in secured lending
•increasing online penetration
•downturn in construction employment driving an increase in credit impaired customers
•new products or markets

These initiatives will no doubt contribute significantly to EPS growth and ROE growth over the coming two years. FY 17 guidance of $26 NPAT will bring 20% EPS growth and 20% ROE. Focus on the above initiatives will see this upgraded and double digit EPS growth in FY 18

The market under estimates these drivers, which is reflected in the current share price. A FY 17 PE of 10 is not reflective of a double digit growth company.

There are obvious threats:
•25 million options on issue. 23 million are under the current share price. 2.5 million will trigger late next year. This will obviously be dilutive to current shareholders.
•increased debt to $60 million. $60/$128 or 47% debt to equity ratio. I would like the boards view on what ratio they are comfortable with.