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| Subject: Re: NTA 100% of unlisted noteholders convert NRMA---j/v NTA Toll roads | |
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Author: anonymous |
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Date Posted: 02:15:52 10/14/02 Mon In reply to: anonymous 's message, "Re: NTA for ERGProton-immediate sense ITS consortium--re Sydney" on 01:52:21 10/14/02 Mon 100% of the unlisted convertible noteholders have agreed to convert by November the 15th--or the face value on the notes will be redeemed--unless by agreement (could go past this date.) NRMA is an unlisted convertible note holder--it has a j/v with ERG called Ecard---it has among other assets---23 million dollars cash in it---last time the entity reported----(the report before last) it's true value though is way beyond cash--it opens up--the assets and growth of potentially all the toll roads (just one thing) of Australia--starting with Melbourne--and ofcourse Sydney---by the exercise of notes NRMA would also become a shareholder in ERG--and this may have implications for legal distinctions re--j/v verses equity partnership. It will definitely improve NTA and revenues. Telstra comse into as well. ERG LIMITED 2002-09-12 ASX-SIGNAL-G HOMEX - Perth +++++++++++++++++++++++++ IMPROVED SECOND HALF RESULT FOR ERG The Directors of ERG Group today announced an improvement in the second half performance on the back of better than expected cost savings achieved in the half and second half trading in the supply and installation segment. The Group recorded full-year revenue of $301.6 million (an increase of 1% on the prior year) and a loss of $243.9 million, which included $165.3 million in one-off write-downs and provisions, $38.2 million in depreciation and amortisation, and $22.1 million in interest costs. HIGHLIGHTS OF THE RESULTS * revenue on a normalised basis (removing the telecoms revenue from the 2001 year - as the business was sold in 2001 - and non-trading revenue) grew by more than 25% from $223.0 million to $280.3 million; * recurring revenue from infrastructure (long-term fare collection and smart card projects) jumped 173% from $51.3 million to $140.0 million; * excluding the one-off write-downs, EBITDA for the second half was positive $2.3 million compared with a loss of $17.0 million in the first half; * cash flow from operations improved in the second half due primarily to a reduction in employee costs of $21.1 million; * major projects generating recurring revenue, ie Melbourne and Rome, are now EBITDA and cash flow positive; * total R&D costs dropped from $42.3 million in 2001 to $23.2 million in 2002; and * operating costs have been slashed by over $30 million on an annualised basis. Tough market conditions, significant delays in contract awards by customers and the impact of September 11 on the insurance and bonding market all impacted the Group's performance in the full-year. These delays impacted revenue in the full-year by more than $40 million and led to the high level of staff cuts across the Group. Furthermore, costs associated with the major Rome infrastructure project were incurred and the commencement of the Lazio phase of the project was delayed, resulting in reduced revenue. Directors elected not to declare a dividend, compared to a 1 cent unfranked dividend in 2001. A summary explanation of the result is included as Attachment 1. REDUCTION OF OPERATING COSTS Major structural changes were implemented in the second half as part of an aggressive cost reduction program. The Group's focus remains on cash flow generation, with expected ongoing annual savings of $30 million resulting from cost cutting initiatives. Since the half-year, management's priority has been on: * achieving aggressive cost cutting targets; * rationalising the Proton business acquired in March 2002 and integrating it with ERG's business; * reducing the cash outflow from the business; and * restructuring the Group's finance and strengthening the balance sheet. All of these objectives have been achieved or are ongoing. ONE-OFF CHARGES The Group made provisions, write-downs and accelerated depreciation totalling $165.3 million for the year ($155.4 million in the first half and $9.9 million in the second half). The Directors are hopeful that the write-downs are not permanent reductions in value but represent a conservative approach to carrying values. The provisions are substantially due to the accounting treatment of equity historically received in exchange for the license of ERG's technology. Although the Directors are confident of the business plans of each of these entities, they believe it is difficult to precisely measure the future returns these investments will generate. Accordingly, provisions were raised against these investments and other amounts related to these entities. The breakdown of these items is included as Attachment 2. GROUP FUNDING The Group has focused considerable attention on restructuring its financing and balance sheet to ensure all new projects can be supported. ERG has extended its relationship with the ANZ Bank which has provided facilities for Melbourne and terms for funding of the Sydney project. In addition, funding arrangements have been put in place and others are being negotiated with major banks, and a major infrastructure group. The total of these arrangements is over $100 million. This is in addition to the existing $60 million facility for Melbourne. The unlisted convertible notes, due in October 2002, will be converted under the terms of agreements reached with the holders of 100% of those notes, resulting in payments by the Group being reduced from $22.8 million to an estimated $5-10 million. Shares held by the Group in Downer EDI have been sold over the past two months generating approximately $16 million. The proceeds were used to pay out the Commonwealth Bank. The Directors are confident the Group has ample funding available to meet all its commitments and growth prospects. PROJECT UPDATE The maturing status of major projects is reflected in the nature of revenues reported for the year. The infrastructure or recurring revenue grew 173% to a level comparable with that of system supply and installation. This growth trend is expected to continue in future years driver primarily by the large city projects for which ERG holds long-term outsourcing contracts. The status of the Group's major projects is as follows: * The Singapore system - one of the world's most advanced - is fully operational and a great success, processing more than 1.5 million transactions per day. The customer has entered a three-year maintenance contract with ERG. * Rome is now EBITDA and cash flow positive, despite continued delays in the Lazio area joining the system. The Group has significant compensation claims lodged in respect to these delays which are outside the Group's control. Refinancing of the Rome project has been deferred due to these delays. * Melbourne is EBITDA and cash flow positive and the revised contract arrangements are due to be finalised this month. Further payments of approximately $20 million are due from the customer in September. ERG will receive an additional $3 million per annum for management of the system. Overall performance of the system has improved significantly with improved cooperation between both the operators and Government lowering the impact of vandalism on the system. * San Francisco Phase 1 has been extremely successful. Phase 1 is continuing with the large operator, MUNI, extending the system to its entire rail network during Phase 1. A decision to move to Phase 2 is due before year-end. * TKE - a new contract in Hong Kong - was delivered ahead of time and with better profit than budgeted. DEPRECIATION AND AMORTISATION Depreciation and amortisation increased from $17.1 million in 2001 to $38.2 million in 2002. The increase reflects the first full year of depreciation of the infrastructure owned by the Group in the Rome project, amortisation of the Proton goodwill and amortisation of the Group's investment in the MASS (multi-application smart card solution) technology. REVIEW OF OPERATING SEGMENTS * Supply and installation. Revenue of $140.4 million was recorded for the supply and installation of automated fare collection (AFC) systems throughout the world. Before one-off items, an operating profit of $3.7 million was recorded. Revenue was the previous year figure of $171.7 million. The reduction in revenue was caused by the delay in commencement of certain major projects which are now due to commence in the current financial year. * Infrastructure and cards business. The infrastructure segment of the business represents the source of long-term recurringrevenue for the Group derived primarily from the outsourced operation of AFC systems once installed. Revenue from these sources increased significantly to $140.0 million up from $51.3 million in the previous year. Currently the Melbourne and Rome projects are the largest individual contributors to this segment; however their accounting profitability is impacted by the sizeable depreciation charges against the large-scale capital equipment infrastructure cost. It should be noted however, both projects are currently EBITDA and cash flow positive. Future infrastructure projects, such as Sydney, will not follow this format as the AFC system will be owned and paid for by the customer. Accordingly the operating phase of these projects will not be burdened with depreciation charges for the infrastructure. * R&D and Corporate support. This segment of the business provides the technology, financing and administrative support to the two operational segments outlined above. With the Group's technology at a level of maturity where standardised modules can be successfully deployed in cities throughout the world, the necessary level of R&D activities can be reduced significantly. Total expenditure on R&D in the current year was $23.2 million compared with $42.3 million in the 2001 financial year. OUTLOOK * The Group is hopeful that signing of contracts in Sydney and Seattle will be finalised during the coming months. Finalisation of these contracts has been delayed by as much as 2-3 years. Both are supply and long-term operating contracts. In both cases the Infrastructure equipment is being acquired by the customer and its operation outsourced to ERG. ERG is the preferred proponent in both cases. Project financing is being arranged for Sydney and all other projects are forecast to be cash flow positive. San Francisco is expected to move to Phase 2 by the end of the year. The total value of these new projects is expected to exceed $750 million. The Group is involved in large tenders in Canada, the Netherlands, Sweden and the United States (Maryland, Virginia and Washington DC). Decisions are expected during the current financial year. * Today we have also announced that we have been awarded an important new contact in Las Vegas, which further strengthens our business in the United States. The contract has been awarded by the large Canadian group, Bombardier Inc, with whom we will bid for the Montreal project. The new contract is initially worth US$6 million. * Due to delays experienced in the finalisation of the contracts in Sydney, Seattle and elsewhere, the operating revenue from supply contracts will build towards the end of the current half-year. Revenue in the second half is expected to be stronger than the first half as the major projects ramp up. Overall revenue should grow in 2003 with a much stronger growth in 2004. * Depreciation and amortisation, mainly arising from the major infrastructure investments, will continue to run at approximately $35 million (before amortisation of the Proton World goodwill of $11 million each year). * EBITDA and operating cash flow is budgeted to improve in 2003 as the cost cutting initiated in the second half of 2002 has full impact and new projects commence. Profitability at the EBITDA level in the 2003 year will be, to a large extent, dependent upon both the timing of signing and commencement of new projects. MORE TO FOLLOW http://stocknessmonster.com/news-item?S=ERG&E=ASX&N=200496 ERG LIMITED 2001-08-16 ASX-SIGNAL-G HOMEX - Perth +++++++++++++++++++++++++ The National Roads & Motorists' Association (NRMA) and ERG Group today announced they will form a jointly owned company to market and deliver smartcards and other smart devices for a range of applications. The move follows the recent announcement by the NSW Department of Transport that a consortium led by th e ERG Group has been chosen as the preferred proponent to design and build Australia's first mass-market smartcard system for public transport. NRMA Member Services CEO, Rob Carter, said the new, jointly owned company will provide the vehicle to deliver smartcards for a range of applications including public transport from 2003 assuming contract negotiations between Department of Transport and ERG Group are successful. NRMA's membership card will be replaced by a smartcard f rom July 2002. "NRMA formed a strategic alliance with ERG in May with the view to developing smartcard technology to support current and future services for NRMA's two million members," Mr Carter said. "Smartcard applications for NRMA members will co-exist with other applications. For example, we envisage NRMA members will be able to use their NRMA card to access NRMA's range of products and services as well as pay for public transport, parking, and motorway tolls once the Government's transport system comes on line. "NRMA welcomes the State Government's intended move to smartcards for public transport ticketing and will work closely with ERG when appropriate to ensure there is interconnectivity of cards across all applications including public transport when they come on line. "The formation of the NRMA and ERG company and the planned consolidation of applications will ensure that the economies of scale in the issuance and management of smar tcards are present, popularising them and making them a viable option for a range of different initiatives in Australia. "The new NRMA and ERG company will issue and manage smartcards. The joint venture will negotiate third party applications for inclusion on the smartcard so that NRMA members have access to an enormous range of services through their membership card. It is envisaged that use of the card will be included in NRMA's new membership rewards program. "The use of smartcard technology for our members will ensure continued high levels of customer satisfaction but also enable us to expand our range of products and services to meet the changing needs of current members and attract new members. "ERG is a highly successful leader in smartcard applications having the expertise in smartcard technology to provide the kind of solutions and enhancements we are seeking for our members," Mr Carter said. FOR NRMA MEDIA ENQUIRIES: Contact: Shan e McClelland, NRMA Corporate Affairs on 02 9292 8418, 0411 012 023 or shane.mcclelland@nrma.com.au. FOR ERG GROUP ENQUIRIES: Contact Colin Simpson, ERG Group on 08 9273 1400 or csimpsons@erg.com. ERG LIMITED 2001-05-30 ASX-SIGNAL-G HOMEX - Perth +++++++++++++++++++++++++ Australia's largest membership organisation, NRMA Member Services, and smart card developer ERG Group, today announced the alliance of their companies. ERG Group and NRMA Member Services announced the formation of a joint venture to develop smart card technology to support current and future services for NR MA's 2 million members. In making the announcement, Mr Rob Carter, Chief Executive Officer of NRMA Member Services, said: "The alliance will greatly enhance and build on our traditional services to members. Not only will we ensure our continued high levels of customer satisfaction but we also want to expand our range of products and services to meet the changing needs of current members and their families and attract new members. "To achieve this we have a clear need to uti lise the best available technology. ERG is a highly successful leader in smart card applications. We believe ERG, with its expertise in smart card technology, will be able to provide the kind of solutions and enhancements we are seeking. "We are proud to be associated with this dynamic, globally oriented Australian company." The alliance with ERG will provide extensive and innovative product offerings to NRMA members. Applications for NRMA will in the future, co-exist with certain other applications which operate on systems built and managed by ERG. Mr Peter Fogarty, Chief Executive Officer of ERG Group, said: "NRMA is one of Australia's most respected brands, with a history of excellent customer service. We are delighted to be involved in a joint venture which plays to the strengths of both companies. "ERG is more than ready to utilise its infrastructure to support NRMA's growth and development of products and services." Mr Fogarty said tha t the alliance with NRMA was a continuation of ERG's strategy of forming strategic alliances to extend the application of ERG's smart card technology and would complement its existing ECard joint venture as well as initiatives in the transport sector. Last week, ERG announced that it had formed an alliance with the owner and operator of Melbourne's $2 billion CityLink project to develop the use of smart cards in tolling., Mr Carter added: "Following separation from NRMA Insu rance Group, NRMA Member Services has developed a new strategic direction to provide a wide range of products and service for our members. "The alliance with ERG coincides with the commencement of this strategy and of the new direction we will be taking." BACKGROUND INFORMATION ERG GROUP ERG Group is a world leader in the development and supply of integrated fare management and software systems for the transit industry and technologically advanced smart card systems and s ervices. It has installed or is in the process of installing and operating smart card based systems in France, Hong Kong, New Zealand, Rome, San Francisco, Singapore and the United Kingdom and other countries. These systems utilise the smart card not only for transit, but increasingly for diverse applications such as membership, payphones, parking, tolling, vending machines, electronic purse, security access and loyalty schemes. It is anticipated that additional applications such as health, venue ticketing etc will continue to be added. In 1999/2000, ERG's revenue totalled A$416.7 million. ERG has achieved a compound annual sales growth of 40 per cent for the past ten years and has established market leadership for its integrated multi-application smart card management technology. ERG, an Australian-based company, is listed on the Australian Stock Exchange and is ranked in the Standard & Poors-Australian Stock Exchange Top 50 index. NRMA MEMBE R SERVICES NRMA Member Services has been established for more than 80 years and now provides road-related and travel services to almost 2 million members in NSW and ACT, making it by far the largest organisation of its kind in Australia. NRMA Member Services remains a mutual, owned by its members and is now independent from NRMA Insurance Group which demutualised on 24 July 2000. Beyond its expanding range of products and services, NRMA Member Services continues to have a high profile on public advocacy in relation to petrol pricing, tolls, and road funding. NRMA is also one of the leading road safety advocates in NSW running a number of education campaigns specifically targeted at road users of all ages. It is also engaged with the community through its sponsorships of the NRMA Careflight helicopter, Clean Up Australia, Cars for Causes, and Handbrake turn. For further information, contact NRMA Member Services: Shane McClelland, NRMA Corporat e Affairs on 02 9292 8418, 0411 012 023 or shane.mcclelland@nrma.com.au [ Next Thread | Previous Thread | Next Message | Previous Message ] |