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| Subject: Re: Shares on issue ERG | |
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Author: ERG,PWI--deferred consideration--made non current/goodwill. |
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Date Posted: Monday, March 03, 12:15:38pm In reply to: Pre consolidation post consolidation. 24/1/03 's message, "Shares on issue ERG" on Thursday, January 23, 09:16:54am Thank you for using the forum, Wonder Woman Your entry has now been added to the forum as follows... Name: Wonder Woman Location: Sydney, NSW Australia Date: Tuesday, March 4, 2003 at 7:13:52 AM Subject: Hi ERG,PWI--deferred consideration--made non current/goodwill. Comments: Attachment 4 12/9/2002 states (this is aside from the writedowns) in inverted comma's "net operating cash outgoing of 54.7m in the year." when ERG reported in September it was reporting the period 30/6/2001 to 30/6/2002 in the half year report dated the 11/3/2002 ERG made one off non cash entries writing down the carrying values of various unlisted ventures, some of whom are the subject of the deferred but not disallowed licence fee's (55m) of 155.4m the after tax loss though was 199.4m this left even after the writedowns a real cash loss of 199.4 minus 155.4 equals 44m. ---------------- Looking at it, most of the real cash loss occurred in the first half for examining the 2nd half net cash outgoing was just 54.7m minus 44m equals 10.7m. ----------------- Previously some itemised cost savings that ERG instituted that effect June 30th 2002 onwards were listed, the entity stated in The Annual Review 28/11/2002 being an update on progress that "net cash from operating activities" was less than 500,000.("due to our focus on cost reduction and cash flow management")(Important point--2 different terms one states "net operating cash outgoing" the other "net cash from operating activities"--they look to be similar but are not.)(one statement pertains to operating activities and one to the Group as a whole.) ------------------- P Fogarty stresses though that the major cash utilisation of the Group has not been operating cash flow drain but debt reduction, ie over a nine month period the entiity repaid 60m to CBA for instance. On the 30/5/2002 the entity confirmed that 27 million worth of annualised cost savings had been achieved and then by the 28/11/02 that had become 30 million annualised. (21 million of that were employee costs.) On the 1/10/2002 the directors stated they had turned the deferred consideration for the Proton acquisition March 15th 2002 into a non current liability, so instead of it being due and payable in one year, which would have affected the 2003 year negatively it was added to the goodwill in relation to PWI, the amount in question is linked to performance of American Express Banksys and Visa International, by doing it this way it can be amortised then expensed through the profit and loss over a period of time.Peter Fogarty states amortisation of Proton goodwill will continue to run at 11 mill per year, so this is a fairly "painless" way of getting rid of that. On the 10/10/2002 and the 16/10/2002 interest payments the Group were making to the unlisted convertible note holders began to reduce with Special Utilities and Utilico deciding to convert, then announced in this financial year on the 14/1/2003 ERG advised it had paid out all monies owing to Motorola, the amount paid being approximately 10m. The remainder of the unlisted noteholders agreed in principle to another proposal to convert the monies owed to them to a secured term loan which, subject to shareholder approval, may be converted to ordinary shares or preference shares.(formal documentation to give effect being finalised) 12/9/02"The effect of the conversion is to reduce ERG's liability on maturity of these notes from the $22.8 million face value to the extent that the notes are converted." So in other words ERG paid Motorola 10 million out of existing funds rolled over some other unlisted noteholders into different arrangements and at the same time have reduced the amount of interest thay would have paid, till maturity and additionally eliminated a non current liability that would have been due when the unlisted notes came of age. ------------------- The entity has had to borrow money in to do this, including arranging a revolving loan facilty with Babcock and Brown, it has however received money from the Melbourne Settlement which was announced on the 30/5/2002, 25m having been paid immediately falling into last financial year and with the second stage falling into the first half of the 03 year, this result coming up and the third stage falling into the 2nd half and further as stated above turned a deffered consideration for Proton into a non current liability and the added it to the goodwill for the acquisition so this may have helped in reducing the debit side. Some of the interest savings from the unlisted notes will be reflected on March 6th coming up, the saving are stronger though in the second half, one point of note is the elimination of non current liabilty, ie the face value of the notes to Special Utilities Utilico and perhaps Motorola even though MOT was announced on the 14/1/2003 the debt could still have been eliminated prior to the 31/12/2002. ------------------- Regards,--WW. [ Next Thread | Previous Thread | Next Message | Previous Message ] |