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| Subject: Victoria considering smartcards Sydney Melbourne 300 mill recurring rev 3 years | |
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Author: anonymous |
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Date Posted: 01:07:56 10/19/02 Sat http://www.theage.com.au/articles/2002/02/28/1014704971254.html ------------------------------------------------------------ ERG stock dumped after licence writedownsBy Ian Porter February 28 2002The Age ------------------------------------------------------------  ----------------------------------------------------------- ERG has retro-FItted smartcards to many fare-collection systems and may do so here with the Melbourne transport operators. ----------------------------------------------------------- Investors took fright yesterday when the world's leading fare-collection technology company, ERG - which supplied the technology for Melbourne's OneLink ticketing system - revealed $195 million in writedowns. ----------------------------------------------------------- Shareholders dumped ERG shares, driving the price down 11.5cents, a massive 28 per cent, to a close of 29 cents. ----------------------------------------------------------- This was almost $4 a share below the peak price of $4.26 hit in July 2000, three months after the tech-wreck stockmarket collapse, and means approximately $2 billion of ERG's market capitalisation has evaporated. ----------------------------------------------------------- ERG managing director Peter Fogarty said yesterday directors had decided to write down to nil the values in companies that hold ERG licences around the world in order to avoid another run-in with the company's auditor, PricewaterhouseCoopers, which objected to the inclusion of the values for the first time last year. ----------------------------------------------------------- Mr Fogarty stressed that the writedowns did not affect the company's operating viability. ----------------------------------------------------------- "Bad news to me is when you really lose money. This is an accounting exercise to make our accounts a little easier for people to understand." ----------------------------------------------------------- Mr Fogarty said the remainder of the shares in the companies were held by some very large companies that had agreed to the values placed on the technology. ----------------------------------------------------------- "In Card.etc in Germany, we have Deutsche Telekom and also VDV, the company that controls transport in Germany." ----------------------------------------------------------- He said the technology licence Card.etc held was valued at $35 million and all the other shareholders had bought in at that valuation. ----------------------------------------------------------- All the licence-holding companies have won significant fare-collection contracts in their regions and countries, he said. ----------------------------------------------------------- One analyst said investors' violent reaction reflected long-standing complaints about the transparency of ERG's accounts. ----------------------------------------------------------- "ERG continues to disappoint and what made it worse was the comment yesterday by the Victorian Transport Minister that he wanted to introduce a new system using smartcards," said the analyst, who did not want to be named. ----------------------------------------------------------- However, Mr Fogarty said he had been assured yesterday that the minister, Peter Batchelor, did not mean that the OneLink contract would be terminated. "They are considering smartcards. They are not considering getting rid of us." ----------------------------------------------------------- Mr Fogarty said ERG had retro-fitted smartcards to many existing fare-collection systems and was discussing the possibility with the Melbourne transport operators. ----------------------------------------------------------- He said in the interests of simplicity ERG would be divided into three: research and development, infrastructure, and projects and delivery. ----------------------------------------------------------- "The infrastructure part is the one that will grow because it will include projects in Melbourne, Sydney, the UK and elsewhere." ----------------------------------------------------------- Recurring income would reach $300 million from these projects within three years, he said. ----------------------------------------------------------- The reporter owns ERG shares. ----------------------------------------------------------- [ Next Thread | Previous Thread | Next Message | Previous Message ] |