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$0.088
Average Intrinsic Value
105.4%
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#Bear Case
Last edited 2 months ago

Feb 6, 2013:  https://www.fnarena.com/index.php/2013/02/06/corum-ltd-why-we-will-not-be-investing-anytime-soon/

That bear case ("Why we will not be investing anytime soon") was penned back in early 2013.  Seven years later, it's no longer "soon" really, and as @tmitchelhill explains in his #Business Model/Strategy straw, Corum (COO) now have a new Chairman, Nick England (who joined the board in November 2019) and Nick owns 20 million COO shares himself.  Now at 4.6 cps, that is actually only worth $920 K ($920,000), but it's still skin in the game. 

The company is still 54.67% owned by Lujeta Pty Ltd, the private company that Shuo Yang (Investment Analyst) and Carlos Gil (CIO) from Microequities Asset Management mentioned in that FNArena article (link above) and Lujeta is controlled by Bill Paterson, a Civil Engineer and co-founder of WorleyParsons (ASX:WOR) (they changed their name to just Worley last year when they made the $4.6 billion acquisition of Jacobs Engineering Group's energy, resources and chemicals business).  Although Lujeta retain their controlling stake, meaning that Corum are effectively a subsidiary of Lujeta, Bill Paterson has now retired from the Corum board - on Feb 20 this year (he was their Chairman for the past 5 years) and he was quickly followed out the door by fellow directors Matthew Bottrell on 24-Feb-20 and Greg Aschoff on 3-Apr-20.

COO's CEO, David Clarke also joined the board as MD in Feb. Then, Jon Newbery joined the COO board a few days later (also in Feb).  Their announcement at the time said:

"Jon brings to Corum over 30 years’ experience in senior executive and board roles for ASX listed companies in the technology, telecommunications, engineering and facilities management sectors.  Primary areas of expertise span mergers and acquisitions, corporate finance, financial and strategic direction and the implementation and oversight of reporting and corporate governance structures.  Jon is currently Head of Corporate Finance and Projects for ASX listed Downer EDI Limited (ASX:DOW), with responsibility for strategic acquisitions and disposals for the group.  Previously Jon held roles as Chief Executive Officer of ASX listed Clarity OSS Limited which developed operational support systems for global telecommunications service providers and as Non-Executive Chairman of UK-based banknote trading platform developer IMX Software."

Jon Newbery said, “I am delighted to join the Corum Board.  I believe significant opportunity exists to enhance Corum’s business both within the core pharmacy software market and related technologies.”

Corum Group Chairman Nick England added, “We are excited about Jon’s appointment.  His broad-ranging experience will assist Corum in pursuing and achieving its growth aspirations with strengthened capabilities and solid corporate governance.”

Then on April 16, they announced that Julian Sallabank had joined the Corum Board:

"Julian brings to Corum vast experience in senior executive and Board roles for both private and ASX listed companies operating in the medical technology and recruitment sectors.  Primary areas of expertise are strategic planning, commercialisation and organisational development of both domestic and international businesses.  Julian is currently Managing Director of a privately owned early stage medical research impact and innovation Fund.  The Fund collaborates with the Murdoch Children’s Research Institute and has developed a varied portfolio including Therapeutics, Diagnostics and Digital Health.  Previously Julian held roles as Chief Executive Officer of ASX listed Ignite Limited (ASX:IGN) which provides specialist recruitment and on demand information technology services and Student Edge, Australia’s largest student membership organisation."

Julian Sallabank said, “I am delighted to join the Corum Board at this exciting time for the Company.  I look forward to contributing to Corum’s growth in its core pharmacy software market and creating new opportunities in related technologies.”

So, of the 4 current board members, you've got the CEO who joined the board as MD in Feb this year, Nick England (more about him in a #Management straw shortly) who joined the board in Nov and became Chairman in Feb, and you've got two others who have been appointed in Feb and April 2020.  It's been a clean sweep.  I see that as a positive.

On the negative side, they're fueding with their main and only serious competitor, Fred IT Group, which is controlled by Telstra (ASX:TLS) - see these 23-Dec-19 and 24-Mar-20 announcements - and they may soon go broke.

Their December Quarterly Report (Appendix 4C) does NOT paint a pretty picture.  They had $4m at Dec 31, but they estimated their cash outflows for the March quarter would be ~$3.36m.

Hopefully, they'll lodge their A4C for the March 2020 quarter soon and we'll get a better idea of where they're at.

I see another capital raising coming soon.

However, they are looking like an interesting turnaround, IF they turn around.

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#Quarterly Reports
Added a month ago

26-May-2020:  7:18pm:  Appendix 4C Activity Report - quarterly

Almost one month after COO released their Appendix 4C Quarterly Cash Flow Report for the March 2020 quarter, they've now released their 4C Activity Report for the same March 2020 quarter.  A little strange.  I have no fresh comments on COO as a result of this latest report.  My comments on their Cash Flow Report still apply I think.  They seem to be making sensible moves to turn their fortunes around (they've had a bad run of late), but they've haven't managed to turn it around yet - they're still burning through cash and losing money.  They also have a market cap of just $20 million, so they're not a microcap stock, they're a tiny nanocap stock.  High risk.  Could provide a good return if they survive and become profitable again, but plenty of risk with that.  I don't own it.

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#Management
Last edited 2 months ago

21-Nov-2019:  Nick England Joins Corum Board

Corum Group Limited (ASX:COO) is pleased to announce that Nick England has been appointed to the Corum Group Board as a Non-executive Director. 
 
Nick has over 35 years of experience and high level global relationships formed through his consulting and senior management roles in Australia, the UK and Europe. Prior to migrating to Australia, Nick held senior management roles with leading global health and beauty company Alliance UniChem PLC (now Walgreens Boots Alliance), which operates 18,000 pharmacies across multiple countries. As Group Director for Alliance UniChem, Nick was responsible for developing opportunities with key global network partners. 
 
Previously, Nick was also CEO of Alliance UniChem Retail International with responsibility for 300 pharmacies across Europe. 
 
Nick is experienced in Australia in many areas of technology relevant to Corum’s business. He also has previous experience in managing marketing, sales and contracts with major retail customers and suppliers. Nick is an Executive Director of healthcare technology specialist Alchemy Healthcare.  
 
Nick England said, “I am excited to join the Corum Board at a time of significant potential opportunity and change in the pharmacy software market and broader healthcare industry.” 
 
Corum Group Chairman Bill Paterson said, “We are delighted with Nick’s appointment to the Board. His broad ranging pharmacy and healthcare experience and relationships are an asset to the Company.” 
 
Bill Paterson, Chairman.

--- ends ---

 

30-Apr-2020:  Bill Paterson, who controls Lujeta Pty Ltd - which owns almost 55% of COO - retired from the Corum board in February (a couple of months ago), and was replaced as Chairman by Nick England.  

Corum's CEO is David Clarke, who has been their CEO for a few years now but was appointed to the COO board in February as their Managing Director (MD).  David has longterm familiarity with the company and he also has previous experience in the retail and health sectors. David has had prior executive financial and operational roles in companies including Fisher and Paykel Appliances Ltd, Nick Scali Furniture Ltd (ASX: NCK), Medtronic plc, and the TI Group plc. He is also a Board Member of Gymnastics New South Wales.

The board only has 4 directors including the Chairman, and the other two (other than Nick and David) were both appointed this year, so there has been a clean sweep of the board.  All of the previous directors have now left.  New management, new direction, ...hopefully!!  They needed to do something different because they've been struggling.

[Disclosure:  I don't hold COO shares, but I'm watching them to see if they can turn themselves around.  In the meantime, I am anticipating another capital raising shortly because I think they would probably be running very low on cash by now.]

 

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#Quarterly Reports
Last edited 2 months ago

30-Apr-2020:  In the 2 straws that I posted last night on Corum Group (COO), I said that I expected them to release their March 2020 Quarterly Report (Appendix 4C) shortly.  I did not have to wait long.  Here 'tis:  Appendix 4C - March 2020 Quarterly Report

They still look cum-capital-raise again to me.  Their cash balance has reduced from $4.025m at 31-Dec-19 down to $2.569m at 31-Mar-20, so they're still operating at a loss and burning through cash.  They anticipate that they've got enough cash to last for another 4.75 quarters (just over 1 year) from March 31, but that is based on a cash burn of just over half a million dollars per quarter, and that's just their cash burn from operating activities and makes no allowance for "Cash flows from investing activities", which includes PPE (property, plant & equipment), investments and IP (intellectual property).  That "investing activities" cash burn was an additional $1.635 million (loss) in the March quarter and has averaged -$1.1 million per quarter for the past 3 quarters.  It is twice the amount they are losing in "net cash from operating activities" each quarter.  When you add the two together, you get their real cash burn rate, which is ~$1.5 million/quarter, hence their cash balance reducing by $1.5m in the March quarter down to less than $2.6m at 31-Mar-2020.  If they continue to burn through cash at $1.5m/quarter, as they have been, they have NOT got enough left to last until the end of September this year (i.e. 5 months) without raising more money, hence I still think we're looking at another imminent raising.  

There are signs of a turnaround - not so much in this report, but in the board renewal and new management focus, and other announcements they have made.  However, it's early days, and many turnarounds never do.  Smaller companies are however generally easier to turn around, and Corum has a market cap of only $18.5m at their current SP of only 4.6 cps, so they are a tiny nanocap company.  I think it can be done, but they're still too risky at this point for me to be investing any of my hard earned into them just yet.  They're on my watchlist, and I'll keep an eye on their progress.

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