Show your support by donating any amount. (Note: We are still technically a for-profit company, so your
contribution is not tax-deductible.)
PayPal Acct: 
Feedback: 
Donate to VoyForums (PayPal):
| Sunday, May 17, 01:14:20am | [ Login ] [ Contact Forum Admin ] [ Main index ] [ Post a new message ] [ Search | Check update time | Archives: 1, 2, 3, 4, 5, 6, 7, 8, [9], 10 ] |
| Subject: probably something substantial, which now does not reflect in the balance sheet. | |
|
Author: HUNTLEYS' VIEW POINT PUBLICATION DATE: 28/02/2002 |
[
Next Thread |
Previous Thread |
Next Message |
Previous Message
]
Date Posted: Sunday, March 02, 03:52:39am In reply to: recognised through the profit and loss statement.". 's message, ""A revaluation to the extent it is a reversal of a previous devaluation" on Saturday, March 01, 11:40:16pm HUNTLEYS' VIEW POINT PUBLICATION DATE: 28/02/2002 Recommendation: Spec Accumulate (conservative investors avoid) COMPANY FINANCIALS & FORECASTS F/Y NPAT EPS % Chg DPS Fr.% Yield Per 6/92(a) 2 0.7 n/a 0 - 0 34 6/93(a) 6.1 1.8 172.8 0 - 0 19.3 6/94(a) 13.4 1.9 7.1 0 - 0 47.7 6/95(a) 13.4 3.1 60.2 0.8 - 1.2 22 6/96(a) 6.5 1.7 -43.1 0.8 - 1.6 28.4 6/97(a) -59.3 -4.4 n/a 0.3 - 0.7 n/a 6/98(a) 13.8 2.3 n/a 0.3 - 0.8 17.3 6/99(a) 20.3 3 31 0.5 - 1 16.8 6/00(a) 35.2 4.9 64.5 0.6 - 0.2 53.4 6/01(a) 6.1 2.7 -45.1 1 - 0.4 86.1 6/02(e) -46.2 1.9 -30.8 1.3 - 3.9 18.1 6/03(e) 16.2 2.9 55.7 1.4 - 4.2 11.6 Source: Aspect financials/Multex estimates as at 6/3/2002. ERG has found another way to shock the market - this time by substantially increasing the visibility of its earnings. Taking heed of analysts concerns after the share price collapse when the Card Etc license fee could not be brought to account, ERG has decided to write the value of all its investments in unlisted companies which have taken up licenses of ERG's technology back to zero. That will result in a write down for the first half of between $140m and $160m. Licensing fees foregone in the December half alone are thought to be around $25m with a total $55m taken in accounts to date. That brings into question what underlying profits have actually been earned by the operating activities in the past. The loss being taken is mainly non-cash although there will be an operating loss reported for the half of around $35m. We assume that excludes an unspecified level of capitalised R&D. The changed accounting paves the way for the interim result due on March 11 where we expect substantially greater visibility. The profit report is expected to essentially be split into three elements: · Infrastructure and building of systems. · Operation of systems. · Research and Development. The company stressed that there have been no significant adverse developments and that it appears to be on track to deliver on its promises which include being cash flow positive for the full year. With Rome, San Francisco and Singapore all becoming operational early this half we expect an increasing cash flow during the period although time will tell if that is sufficient to offset the anticipated first half deficit. Management has previously stressed that the company is on target to deliver the $200m to $265m cash inflow mentioned in November. At that stage over $100m had already been received and the Rome equipment renegotiations worth upwards of $80m were proceeding favourably. At balance date on June 30 net interest bearing debt stood at $268m with gearing at 98.2%. Allowing for the write-off and first half trading loss offset by the net cash raising after paying for Proton plus cash received to date after Rome, San Francisco and Singapore payments are received, we feel debt will have fallen from last balance date (remember the write-offs are non-cash items) but gearing ratios will be impacted by the reduced asset base leaving gearing at a guesstimate around 120%. We do not believe the company will go broke! In fact this latest accounting is very conservative particularly because the UK license holding company is earning revenue and must be worth something, probably something substantial, which now does not reflect in the balance sheet. Investors will not become comfortable with ERG until after the interim report at the earliest and as conventional earnings this year are impossible to determine with any certainty on the information we have to date conservative investors should continue to stay clear. ERG has proven itself to have the best automated fare collection technology in the world. The business model where costs are incurred up front and the benefits take up to two years to fully reflect in profitability is not understood by the market but will gradually become so with this increased disclosure. We regard the stock as a speculative punt of a high risk nature because of price volatility and questions over when conventional earnings will emerge. For those who hold stock at higher levels we would hold and await further disclosure in the interim. © Copyright Aspect Financial Pty. Ltd. 28 February, 2003 - All rights reserved. No material may be reproduced, except as allowed by the Copyright Act, without the prior written approval of Aspect Financial. Some of the material provided through the Aspect Equity Review is copyright and is published under licence from ASX Operations Pty. Limited ACN 004 523 782 ("ASXO"). Aspect's beta information is calculated from information supplied by the Centre for Research in Finance, AGSM Limited. Consensus Forecast data is copyright Multex Global Estimates. [ Next Thread | Previous Thread | Next Message | Previous Message ] |
| Subject | Author | Date |
| The reason it may not happen this time is that my understanding from reading different accountancy literature (NT) | is that the carrying value is reviewed annually--so this would make PCL the next report after this. | Sunday, March 02, 03:59:48am |