CHAIRMAN'S INTERIM REPORT TO SHAREHOLDERS HALF YEAR RESULTS I am pleased to report that Crevet Limited has recorded an after tax profit of $1.056 million for the six months ended December 31st, 1999. This result was 72.8% higher than the result for the corresponding period last year ($0.611 million) despite a once-off abnormal tax charge of $0.168 million required to reflect the lower value of deferred income tax balances when company tax rates fall from 36% to 30% by July 1st, 2001. The pre-tax profit of $2.018 million was 63.4% higher than the $1.235 million recorded in the same period last year. These results were achieved on slightly lower sales revenue of $49.871 million ($50.032 million last year). Although trading conditions were stronger this year, the restructure initiatives implemented in the past 12 months allowed management to shed unprofitable products and revenue. Sales of our core products were higher than last year. Earnings per share for the six months was 2.9 cents and the Directors have declared a fully franked (36%) interim dividend of 2.0 cents payable on April 28th, 2000 to shareholders registered on April 18th, 2000. REVIEW OF OPERATIONS The substantial restructuring implemented during the past 3 years has resulted in fewer, but more efficient, manufacturing sites and lower costs. This has enabled Crevet to return to profitability despite a highly competitive market and continuing pressure on sales margins. The last major restructure took place in July 1999 when the Charmac manufacturing plant, located in Sale (Victoria) was closed. The transfer of much of the Charmac production to our NIBF manufacturing plant in Innisfail (North Queensland) has facilitated lower cost structures within the Innisfail plant. The Thor pipe business at Wacol Brisbane also recorded an improved performance with the factory operating at high utilisation levels for most of the period under review. Whilst we can be pleased with the recent improved performance of the company we must achieve significantly more to enable Crevet to compete in the globalised trading environment of the 21st century. Initiatives that will be undertaken in the next twelve months include: - capital investment of $1.5 million on new plant and facilities at the Thor Wacol plant to reduce manual handling, alleviate "bottlenecks", reduce rejects, and enable the production of larger diameter pipes. This expenditure was approved by the Board in December 1999 the continued rationalisation of manufactured products a significant capital expenditure commitment to upgrade equipment at the NIBF Innisfail plant to further reduce costs and improve efficiencies. Management and the Board are reviewing new plant options and a decision will be made by June 2000. OTHER MATTERS The shareholder approved share buy back has resulted in 1,883,231 shares being purchased in the period December 1st 1999 to January 17th 2000. The acquisition cost of these shares was $0.941 million. Negotiations with the ACCC over alleged price fixing arrangements between Crevet and several major competitors during the period from late 1992 to around April 1995 are expected to be finalised by June and may impact upon our ability to pay a final dividend. OUTLOOK The market for our products is expected to remain strong for the next six months with some GST "pull forward" in May and June 2000. Forward order enquiries for post June 2000 are also strong. Ian Fraser Executive Chairman Further Information: Mr Ian Fraser Executive Chairman Crevet Limited Ph: (07) 3868 2084