management, page-19

Last time CND was back at these levels was in '02-04 when EPS was in the 8-10c range.

I make the CMP as approx. 4 x EV/EBITDA.

There is no doubt that the forward looking environment looks less than favourable and the market is obviously looking to '08-09 now.

But the 'pendulum always swings too far' and I agree that the share price has fallen far further than the value of the business and future earnings.

Looking at first half '07-08, between the one-off payment (worth circa 1.3c EPS) and the significant problems with Lloyd Morgan (contributed circa 1.3c 1st half '07, then proceeded to underperform and earned just $0.5m in 2nd half '07 and 1st half '08 as we know saw a loss of $0.5m....so even getting LM back to a '50%' performance level vs underperforming/losing money the way it has been there is upside in EPS of 1.3c++

Then the 800k annual cost save from Project Refresh was to kick in from 2nd half '08 so we see some benefit from that this half (but not in the first half) and ongoing from here. Obviously all of this won't go to the bottom line but you'd think another 0.8c or so will.

So going forward there a a few cents in EPS here to help buffer the potentially reduced earnings opportunities.

Ordinarily I am not a fan or acquisitions but CND has a history of successfully integrating these and the current environment might also provide opportunity to acquire good businesses at cheap prices...if they meet the strict CND criteria.

In regards to Diana Eilert...I have to say I was very impressed that when I ask if she can send me a copy of a recruitment article, she did not just send one that painted a more positive view on Lloyd Morgan but she also sent another in regards to the turnaround of Clarius 'possibly' taking a bit longer than expected.

I can think of other MD's I have dealt with that might have tried to hide that from me, and the fact that she forwarded that article gets my respect.

Digressing...I had theh privilege of speaking to one of the 'deep value' investors in the book "Masters of the Market" (I & II) just one month ago.

This guy is an absolute investment legend to my mind and I asked "what if you find something with a great history and great management that has been sold off so far that, 'even with a flat or slightly compromised view of forward earnings',...on a host of valuation metrics the stock/business is being priced at levels signficantly below your estimation of intrinsic value....do you still consider these?" He thought that was a 'great question'.

We then proceeded to discuss some areas he was looking at that had 'gone too far' and much was 'priced in'.

One area that he mentioned was...'Recruiters'. It also came with the 'patience' caveat.

This is starting to sound like a sales pitch so time to wrap it up.

Things can and do go wrong in investing.

But these are some of my reasons for continuing to hold, and recently adding to, my CND holding.

My average buy price is still another 30% north of current prices.

But then my valuation of CND as a business is still well north of this.

Best,

Matt