Ann: Quarterly Business Update, page-4

My take on this is we have work under way worth $7 million in the China wetland and we have $2 million in new contracts in Brazil and $1.5 million in China. So the total of firm contacts is $10.5 million after 4 months, roughly in line with the forecast revenue of $27-30 million this year which has been re-iterated.

We have submitted proposals in Europe for 2000 tonnes of Phoslock and 2000 tonnes in North America (first applications would not be until spring). Using the value attributed in the half year report of $3000 per tonne (plant capacity of 15000 tonnes pa was given a sales value of $40-50 million) this implies these potential contracts are worth $12 million, but they are not of course certain.

We are also told there are several large projects we are tendering for in South China, but no indication is given of size. As they are in south rather than north China I assume there is at least a chance work would not be too much delayed by winter.

The lags in getting orders, doing the work, invoicing and getting paid means more new projects need to be announced soon to get the revenue in this year.

On the downside, cash used in operations last quarter was $3.1 million (expenses exceeded sales revenue received) and cash outflows are expected to be $4.4 million this quarter (before any sales revenue).Receivables at 30 September were $8.5 million, but that is presumably mainly the lagged payment for work done last year on Beijing canals. We needed the cash injections from shares issued to tide us over given the long lags in being paid.

My conclusion would be we are broadly on track, but need more contracts soon to get the revenue forecasts for this year. The problem for investors is the lack of an extended order book (which most companies I invest in would have, with a current order book near expected revenue for this year). We seem to have to live with no certainty about the timing of orders and rely on Company forecasts which have been too high in history.