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| Subject: Equity accounting rules.PCL 47.1% 30/6/2001 to 30/6/2002 reported 12/9 audited 1/10 | |
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Author: If more than 50% is owned credit is taken for all the profits |
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Date Posted: Tuesday, December 31, 10:57:28pm Topic 5 Securities Institute of Oz. 6.2 "Identifying associated entities" ------------------------------------------------------------ 6.2 Identifying associated entities. ------------------------------------------------------------ Signifcant influence is defined by AASB 1016 (paragraph 9) as: ------------------------------------------------------------ i) The capacity of an entity to ii)...affect subtantially but not control iii)....the financial and/or operating policies of an investee. ------------------------------------------------------------ Determination of whether or not significant influence exists, depends upong substance rather than form. Significant influence normally stems from the investors voting power in the investee. In deciding whether the investors voting power gives rise to significant influence over the investee, it is necessary to consider the distribution of the balance of voting power. ------------------------------------------------------------ The influence of the investor will usually vary if the balance of the voting power is held by a few relatively large shareholders compared with being distributed over a large number of relatively small holdings. In the latter there is more likiehood of significant influence over the former. However if the few relatively large shareholders are working co--operatively, each might have significant influence. ------------------------------------------------------------ Some of the factors which would normally indicate the existence of significant influence by one entity over another entity include (paragraph 9.16) a) 'reprsentation on the investee's board of directors' b) 'participation in decisions on the distribution or retention of the investee's profits' c) 'participation, in other ways, in policy making decisions of the investee'. ------------------------------------------------------------ Where an investor owns from 20% to 50% of the voting power in an associated company, this will lead to a presumption that the investor has significant influence to the absence of the contrary. If an investor owns more than 50%, then control is presumed is presumed to exist and consolidation is required. If an investor owns less than 20%, then it is presumed significant influence does not exist unless there is evidence to the contrary. ------------------------------------------------------------ However, the 20% is a guideline. Significant influence might not exist when owning more than 20% or might exist when owning less than 20% ------------------------------------------------------------ Securities Institute Oz--Assessing Company performance. pages 4 to 6 2.2 Operating profit before tax. ------------------------------------------------------------ To assess the earning power of the business, independently of how it is financed, analysts will add back the interest expense to the operating profit. ------------------------------------------------------------ With the listed convertible notes the proposal is at the AGM at 2pm on the 28/11/2002 in Perth Western Australia is for shareholders to refresh the ASX listing rule allowing the entity to issue more than 15% of shares in one year, if shareholders say yes and the listed note holders convert some or all of their holdings on a staggered basis everytime they do that ERG will add to it's profitability--as the rules are if the shareholders say yes---not only will the above occur--the new shares issued by the notes won't be counted---it is a little tautologous anyway--for when ERG is analysed all the notes are included now---it is a positive (authors opinion)---think of it this way--if they are counted now--when they are turned into shares they won't be. Then ofcourse add the above to the savings in interest costs the resulting improvements to free cash flow and the added profitability. Should just put the correction in there---the new shares---in accordance with ASX listing rules--won't be counted---that lasts for 12 months--as stated if the notes are counted now---it only improves profitability--at any rate they are staggered---once 12 months will have gone by--with various contracts that are beginning to show results now growing and getting even bigger--so therin that would not be a concern either. Author opinion. http://www.erg.com.au/invst_relations/reports/annrept/2002_financials.pdf ============================================================ ERG Holdings Ltd Australia Ordinary 100 100 which has the controlled entities: ERG Transit Systems (HK) Limited Hong Kong Ordinary 100 100 ERG IP Pty Ltd Australia Ordinary 100 100 ERG R&D Pty Ltd Australia Ordinary 100 100 ERG Transit Systems (Sing) Pte Ltd Singapore Ordinary 100 100 ERG Transit Systems (USA) Inc USA Ordinary 100 100 ERG Transit Systems (Ger) GmbH Germany Ordinary 100 100 Integrated Transit Solutions Ltd 44(c) Australia Ordinary 50 50 Integrated Transit Solutions(Sing) Pte Ltd Singapore Ordinary 100 100 ============================================================ http://www.erg.com.au/invst_relations/reports/annrept/2002_financials.pdf ------------------------------------------------------------ Non-traded Shares in Other Corporations Investments in other corporations represent interests in card.etc AG and the Cooperative Research Centre for Broadband Telecommunications and Networking Trust. At 30 June 2001, these investments also included a 10% interest in Proton World International SA (PWI), an entity wholly owned by the consolidated entity since 15 March 2002 (refer to note 44). At 30 June 2002, ERG held 19.997% of the share capital of card.etc AG at a carrying value of $7,496,795. These enterprises are involved in the development and marketing of smart card technology and provide strategic alliances for the commercialisation of the consolidated entitys own smart card and electronic ticketing solutions, further details of which are set out in note 1(k). The carrying value of the consolidated entitys investment in PWI at 30 June 2001 was $25,904,576. ------------------------------------------------------------ NTA for ERG will rise in the immediate sense once the acquisition of Proton is legal. It will not be reflected--untill the entity reports in March 2003--for the half year 30/6/2002 to 31/12/2002. Asumming it is formalised by then.The carrying value given above for Proton is for ten percent of the investment the ERG Group had in it on the 30/6/2001---The Group currently has 100% of it and it is generating much more revenue now than it did then. ------------------------------------------------------------ http://www.stockhouse.com.au/bullboards/viewmessage.asp?no=5596523 ------------------------------------------------------------ http://www.stockhouse.com.au/bullboards/viewmessage.asp?no=5586086 ------------------------------------------------------------ http://www.erg.com.au/invst_relations/prospectus/prospectus_for_lodgement.pdf ------------------------------------------------------------ PWI was formed in 1998 and its current shareholders are Banksys (60%), Amex (10%), Interpay (10%), Visa (10%) and ERG Card Systems Ltd (10%). Following completion of the acquisition ERG will own 100% of PWI. ------------------------------------------------------------ 4.1.8 PWI Financial Information The financial performance of PWI to date has been based largely on licence fees from the licensing of its core technology to customers globally. ------------------------------------------------------------ Over the past 12 to 18 months those customers have provided PWI with specific details of the functionality and products they require. As a result, PWI set out to develop Proton Prisma and the Proton Conquesta range of products. These products will only become available to the market at the end of this year and the beginning of next year. ------------------------------------------------------------ At that time PWI will move from a basic technology developer to a commercial organisation capable of exploiting its technology and providing a range of services to its customer base. Many of the licences taken up will only see cards issued for the first time in 2002. ------------------------------------------------------------ Based upon its own estimates and estimates provided by the existing licensees, PWI expects to see the number of cards issued globally incorporating its technology grow from 36 million today to over 100 million within two to three years. That card base should generate increasing revenue for PWI.ERG LIMITED ABN 23 009 112 ------------------------------------------------------------ RE: ERG owns 19.997% Card Etc AG. The 31.2 million dollar payment deferred but not lost. ------------------------------------------------------------ N.E. Renton "Understanding The Stock Exchange Chapter 823 page 157. ------------------------------------------------------------ 1) Where less than 20% of another company is owned, then the shareholding is treated as an investment and credit is taken only for the dividends actually received or receivable. ------------------------------------------------------------ 2) If between 20 and 50 percent is owned then "equity accounting" can be used, meaning that credit can be taken for all the profits, less the proportion belonging to the outside minority shareholders. (if any) ------------------------------------------------------------ 3) If more than 50% is owned, then the company becomes a subsidiary and this latter principle again applies: credit is taken for all the profits, less the proportion belonging to the outside minority shareholders. (if any) ------------------------------------------------------------ http://www.xrefer.com/entry/163281 ------------------------------------------------------------ equity accounting ------------------------------------------------------------ The practice of showing in a company's accounts a share of the undistributed profits of another company in which it holds a share of the equity (usually a share of between 20% and 50%). The share of profit shown by the equity-holding company is usually equal to its share of the equity in the other company. Although none of the profit may actually be paid over, the company has a right to this share of the undistributed profit. ------------------------------------------------------------ http://www.xrefer.com/entry/163281 ------------------------------------------------------------ equity accounting ------------------------------------------------------------ The practice of showing in a company's accounts a share of the undistributed profits of another company in which it holds a share of the equity (usually a share of between 20% and 50%). The share of profit shown by the equity-holding company is usually equal to its share of the equity in the other company. Although none of the profit may actually be paid over, the company has a right to this share of the undistributed profit. ------------------------------------------------------------ [ Next Thread | Previous Thread | Next Message | Previous Message ] |
| Subject | Author | Date |
| Re: Equity accounting rules.PCL 47.1% 30/6/2001 to 30/6/2002 reported 12/9 audited 1/10 | Dated article--PCL awarded ESP Systex print personalising, encoding and distributing | Friday, February 14, 05:22:11am |
| Re: Equity accounting rules.PCL 47.1% 30/6/2001 to 30/6/2002 reported 12/9 audited 1/10 | card.etc AG | Saturday, May 26, 08:06:49pm |