re: Ann: Appendix 4E & Full Year Statutory Ac... Joe Great to...

re: Ann: Appendix 4E & Full Year Statutory Ac... Joe

Great to see so much due diligence undertaken Ihave not personally spoekn to management but my husband has , and my broker has , I will attempt to comment on your comments

Firsova

Hi I did a sweep of the websites and further analysis and noted the following.

1. There was a lot of overlap between the companies and I suppose that they will now seek to reduce that overlap and standardise the offering or try and keep each operation separate to satisfy the suppliers and keep all the agencies.

MY comment on them spending to save money was all about this issue , I understand they have moved all of the sales business in to nunawading and kept GM at lilydale , the sales teams re structured and savings should be about 700k per annum

2. Interested that they put all these companies together. having worked in the industry the one threat to that is that overseas suppliers get a bit uncomfortable if you have too many competing products within one stable and whilst you can say they are all run independently very often they just look for someone else. Having looked at the offering there is a lot of duplication in the basic beds , tables , and other simple stuff from the catalogues. Not sure that they warrant 4 different identities or whether as yet they have redefined the identities into specific sectors so that they can be more focused.


My understanding is they shared your perception at the outset of the industry and this is why they saw the opportunity and focussed on this area of business , the whole sector is a cottage industry with 50s maybe 100s of very small businsses making good money , PGC focussed on consolidating and then providing the bigger clients with total tender capability , from what I hear this is working really well now


3. They say they have links to a manufacturer - I presume they are referring to an outside manufacturer other than the their own which I would presume is the GM medical unit. Maybe that is just a throw back statement from prior to acquiring GM. What is interesting is Rapini being distributors for Fallshaw castors who actually promote (what seems to be their own ) Liftmaster's easy steer trolleys on their website and not any of PGC's. Bit of a conflict and I would have thought that Fallshaw was a target given that castors are a life blood of the service environment and a critical service area - In addition Liftmaster looks good and it looks like a logical addition to the stable with its manufacturing capability also looking like a complimentary unit to GM.


I think they have their own manafacturer in GM but are looking at additioinal options


4. The big question is whether all these acquisitions will fit and staff will remain - Firsova have you spoken to management recently? The medical supply and tender business is normally a very small and connected group of people. Often its the people that are relied upon to deliver and not what they supply (other than if you have invested in one range often you may not want to change as it creates its own complications. Its critical to know whether they have created their own opposition by loss of key staff. all their documents seem to suggest that this is still early days - perhaps a good sign. On a lighter note Mark Simari pops up as an actor in a desktop research and also suggests he came from the financial services industry before - age looks similar so is he an actor or the CEO or is the CEO just acting?

LOL Mark simari does come up as an actor opn a google search , but I can assure you he is a very serious person from what I can gather and was on the board of DKN , quite a big business sold to IFL last year

5. The Brr (only ever) presentation in 2010 suggested they wanted to do $30 million in two years. Its two years and they are way off that - so it does not seem the route originally taken has worked out and they are changing to get there.

I think they have had a set back on 30m revenue or even saw 50m in 5 years somewhere , however I do expect to see 20m at stronger margins this year

6. Management even Chair have skin in game - I personally like that. Too much IMO is made of independence in small companies - You need the guy to be involved not just collect the cheque.

agreed and they bought the shares wernt gifted them like many small caps

7. Are you not worried about the departure of Timothy Blanche? He seemed to be the special projects and key account manager. that could hurt. He had not as at end august sold his shares but I cannot see him holding if he has gone somewhere else. He is only 46 years old. Needs more research - Does not look like any abnormal selling but maybe thats what is capping the price. No 46 year old that I know of leaves the business and keeps his $500,000 invested unless he is wealthy and has no need to divert this investment IMO. This is my big question and one I would like to resolve before investing a lot into this.

I am told tim B is looking to continue working with them in some other product initiatives and wasnt needed in the management structure , the selling i was told was a large holder in nominee company in the top 20 they had about 2m shares and now are down to under 500k


Will stop there as this is what I need to resolve.

have taken a small position.
5.

I saw someone buy 100k last week was that you ?