2012 half year result, page-14

Micky78

So you dont invest in WOW I presume. They have a very high intangible asset position low margins and if you look closely high debt (But that's in the form of accounts payable)Most retailers have low equity as they are supplier financed. They generate really great returns on shareholder funds - That is the one real good comment you make 8.1% is far too low and in reality this industry has to shift if that is all you make. That in my opinion is the biggest arrow right back at the DHL/Pfizer idea. Its not built out of a great business opportunity its built out of Pfiser needing to have significant influence at the P.O.S. Tell me about 8% return and I would be running away.

I presume you run a very successful business as you state and if I had your margins and growth I would be timing my listing.

In reality retail is very low margins but its a whole different business model. Pfizer and their patent position generics etc would like the direct to market approach as they want to use a whole stream of marketing techniques to influence the point of sale process. I have seen it in other countries - where the pharmacist is offered 4 for 3 deals and once totally in the channel has to keep their T/over up to keep the level of pharma company funding. Great model will create a huge problem long term for all of us. There is no benefit once they gain traction - However I think you will find that PBS has read this and whilst still offering free choice will influence the future.

Then there is the whole Priceline business model. I dont see that as insignificant and I suggest that we are seeing pharmacies having to change their product mix. I go to mine and see that they are hugely inefficient in floor space usage and dont track their returns per sq metre

The Priceline model of focusing on beauty and building a different mix has merit - whether it wins I dont know but in reality they have a strong loyalty card following that is focused on the young shopper as well.

There is a lot of good going on both here and at Sigma but it is early days.

They survived the changeover and I think they will slowly climb out of the position they got themselves in.

They intend to payout 40% of underlying NPAT. That will slowly build your value and pay down debt.

I think they are a higher risk but have the backstop of a great cornerstone investor in SOL.

I think one has to say it has a place in your portfolio in the risk category. I think they have spent the money and it is working - It will have to continue to keep working and the margins on non pharma has to get better to make this a really good investment.

If you dont like low margin highly geared assets dont look at the infrastructure funds either.

I by the way only invested recently after doing a lot of in-store research of my own on two of their branches - Its amazing what staff tell you. I also suggest you look at how much they are still to receive on what seems to be an insurance claim that will go well over $75million after the loss of profits is determined.

Nothing can compete with you own business however so I applaud your success its great to hear of such businesses we need more like that - if you do list I would love a crack at the IPO.