ERG-Facts UBSW value ERG<b>15 cents for its smart-cards.</b> -- ERG smartcard stuff2

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Subject: ERG-Facts UBSW value ERG15 cents for its smart-cards.

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Are you gsan Francisco with flowers in your hair---14/8/01

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Date Posted: 17:35:27 02/02/03 Sun

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Blue1 (ID#: 253289) ERG 14/8/01 11:36:22 AM 4003398
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http://www.thewest.com.au/20010814/business/tw-business-home-sto19925.html

ERG surges as Sydney finally nods

By Neale Prior

ERG had a return yesterday to its former status as a hot stock in the wake of the NSW Transport Department announcing the Balcatta-based company was the preferred tenderer for the automation of fare collection on the giant Sydney public transport network.
More than 43 million ERG shares changed hands yesterday as the company regained some of its recent losses to finish 24� higher at $1.06 on expectation the transit ticketing group would be able to turn its preferred status into a $400 million-plus installation and outsourcing deal.

The decision by the NSW Transport Department comes after a year-long delay in the decision on whether ERG or a venture involving its major ticketing rival Cubic would get pole position for Australia's biggest ticketing contract.

But ERG bulls face further tests of their resolve in coming weeks amid speculation that major shareholder Motorola would attempt to sell its remaining 54 million ERG shares when they come out of a self-imposed escrow later this month.

The Motorola overhang, a lack of news on Sydney and delays in decisions on other major ticketing deals had undermined market confidence in the former glamour stock. It has fallen from a high of $4.48 in July last year.

ERG chief executive Peter Fogarty said yesterday he was confident ERG would secure a full deal with the NSW Government and have it signed by Christmas.

Mr Fogarty said the contract would give momentum to ERG's Australian smart cards joint venture with Telstra and ANZ and its development of a smart card system for NSW motoring group NRMA.

He said the group was expecting decisions soon on a big contract in Germany's heavily populated Rhine-Ruhr economic heartland, as well as in Seattle, Brisbane, Stockholm and Bangkok.

Euroz Securities analyst Steve Suleski said the preferred bidder status made NSW a one-horse race but the size of the prize, if any, remained unclear.

He said ERG still had to establish if it could maintain profit growth.

ERG is to release its full year result next Monday. When asked if there would be any surprises, Mr Fogarty said: "If there is, it will be a surprise for me."

4.48 divided by 2 equals 2.24 divided 2 equals 1.12 divided 2 equals 56 divided by equals 28 divided 2 equals 14

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IamPeaking (ID#: 363183) ERG-Facts 14/8/01 3:03:22 PM 4004119
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ERG will announce its results on 22 August.
They will not make a profit warning.
Expected profit will be over 42 million.
Expexted 2002 forecast's are 50 to 54 million.
A forecast PER of 10 times is very cheap for a company that is expected to average EPS growth of 50% p.a. from 1999 to 2002.
The rumour that Motorola is dumping its convertable notes is not true.
Transit contracts are still being won, with recent wins being Gothenburg ($40m), Bordeux ($30m), Christchurch, Hong Kong Extension. There have been delays in tenders including Brisbane, Montreal and Seattle, but no losses for contracts they've tendered. New tenders have been submited for Bangkok, Paris RATP and Belgium.Next year the whole of Netherlands, Berlin and Rhine Ruhr region.
Valuation: On the basis of existing contracts in hand and expectation that ERG only wins an average of 1 contract in every 4 contracts it tenders for, UBSW value ERG at $1.47 plus 15 cents for its smart-cards. ERG has yet to lose out on a single significant tender so this is a very conservative estimate. In addition, the Interpay deal and Sydney transit win provide a very substantial boost to smart-card revenue. Base valuation of $1.62 for ERG is conservative.

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