prelim report, page-23

Hi Forrest, no problems I enjoy the discussion as well.

Firstly the PBT margin is not just plucked out of the air. I have taken a look at overheads as well but at the end of the day we are just making best guesses and my best guess is influenced heavily by management's comments of increased marketing expenditure.

Whether that warrants a 50% increase in overhead or as you suggest 20% remains to be seen. My feeling is that I am on the high side but I don't mind being there as I would rather be surprised to the upside than disappointed to the downside.

Lopez,

What is the basis for assuming $3m overhead fixed for each quarter?

On the question of value, assuming $6m NPAT for FY09, I estimate CST shares at about $1.70 per share, that's not to say I expect it to get back to those levels.

Also I never cling to just one estimate. My forecasts are what you could call a 'base case'. Generally what I do is run a variety of scenarios, So for examply if NPAT for FY09 were $7m the valuation jumps to around $2.40 at $8m it jumps to over $3. If it does what Forrest suggests then the value is significantly higher.