Ann: Trading Update-COO.AX, page-28

"take a longer look"

Share price is probably about where you expect it to be given the decline in revenue, recent one off additional tax liability and illiquidity of this stock. There really hasn't been any encouraging signs for at least three years. Surely the management of the company over past years have to take some responsibility for not being able to find growth drivers but they have been like many other businesses with declining revenue been operating in an tough environment. Maintaining any profitability at all is perhaps seen as a positive. On analysis of what is occurring currently within retail pharmacy in particular it does not give me much optimism for any significant organic growth.

On a longer look though, shareholders still have a company with no debt, $12 million in cash, an underlying profit (before the recent tax bill shock) of about $2m and a current market capitalisation of $20m. This alone is perhaps probably not enough incentive to invest in Corum. I think to see demand driving up the share price it will need more than just a boring old balance sheet that most companies would die for. The spark that is needed is the long awaited synergistic acquisition.

I still favour the acquisition of another pharmacy software company. If Corum are finding it tough given their scale/market share so are the others. It is also their area of expertise. Which company should they target. Many years ago they acquired Amfac from Symbion and perhaps then paid too much at a time when it was seemingly all blue sky. Perhaps it is time to have discussions with Symbion again and take a close look at their MINFOS software business (number 3 in the terms of market share behind FRED and LOTS). Certainly no harm in talking to them as they could very well be close to being marginal given their smaller market share and they may be happy to divest and have their IT department focussed on other core areas.

Tough times often create opportunity!