Financials, what new management will bring?, page-22

Lazy and bloated previous management thought the super margins/profits would last forever. Did not deal with competitor and technology risks.

There will be plenty of fat here to take out once they automate many aspects of the service/product, reduce labor costs significantly and keep renegotiating copyright deals to fit new business model. They own most of the business in AUS and these relationships and reputation have intangible value. There is still a window here to address these issues.

The new management team have significant change management experience. One of the key skills required at this time. The product development model moved to Agile (welcome to the 21st century!) and active value investors still with company (probably pulling some of the strings with their nominated directors on Board).

At $55M MC, its almost priced to go bust which will not be the case. Debt covenants can still be addresses with a relatively small CR, if ever required. Otherwise its a straight TO target with the value in contracts it has. A competitor buying out all those contracts and relationships would have significant EPS accretion for them in this type of business. Plenty more fat could be cut out after a TO.