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| Subject: Retrospective -- report re ERG Sep 2000 | |
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Author: electronics manufacturer, US Alabama based SCI, |
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Date Posted: 08:56:38 01/26/03 Sun salus (ID#: 106324) Retrospective -- report re ERG Sep 2000 9/11/02 4:49:51 AM 5693701 « Prev Msg Thread Next Msg Thread » How has ERG changed over the past coupla years? Have its primary goals from back then been achieved? Glancing over this news report concerning it from Sep 2000 may give us some clues..... Smartcard, chip-based application and electronic fare system favourite ERG has continued its core consolidation program by selling two manufacturing operations slightly above book. The units are telecom-based production operations operating out of both Perth and Belgium. Worldwide contract electronics manufacturer, US Alabama based SCI, will purchase the units for around A$75 million in total - thence supply and support ERG's applicable requirements under an "ongoing alliance". SCI can deliver to ERG a 17 country network of manufacturing capacity and engineering expertise. 200 ERG plant staff will simply transfer employment commitments over to SCI, effective as of October 2000. Savings from applicable employment considerations will in themselves be significant. The divestment follows Western Australian based ERG's decision to concentrate further on gaining and fulfilling global automated fare ticketing and collection system contracts. CEO Peter Fogarty said the sale would free-up personnel and capital in pursuit of the "exploitation of ERG's leading edge technology". He had previously held that ERG could enter a new growth phase this financial year - pending the realignment of internal concentration. "Importantly, we have ample cash reserves to fund the major projects we hope to win over the coming 12 months," he said. "We aim to increase revenue and profit through continued organic growth and also strategic acquisitions." Bank debt has been quoted as "minimal", with open credit lines additionally available should they be needed. New concessions are now being sought in Turkey (Ankara), India (Delhi) and Australia (Sydney). If gained, the contracts would add to ERG's already impressive contractual hit list including operations in Australia, Hong Kong, the UK, France, Germany, Italy, Canada, Brazil and New Zealand. ERG has further slated the creation of two major global card-making interests during 2000-2001, along with attempts to increase relationships with major banks and global telcos. The company's already performing though - its latest net profit up to the end of June 2000 delivering a handy 73% lift to A$35.2 million. The number was described by Fogerty as "… an excellent result given that it included minimal revenue from any (of ERG's) major transit projects." Sales were up 35.8% from A$265.03m to A$360.34m; with total revenues up 54.2% from A$269.20m to A$415.74m. Just one indication of ERG's tangents lies in the recent sale of a 10% stake in Prepayment Cards Ltd - a public transport ticketing system interest domiciled in Britain. The divestment equalises "three of the largest public transport groups in the UK" as other 20% shareholders respectively. ERG currently retains another 30% (valued at circa A$35m), of which 10% may be forfeited under options owned by the Sema Group (IT and services). The conglomerate is working to build a UK and later Europe-based universally accepted transport ticketing network. ERG itself had previously enjoyed the full effects of the tech boom, experiencing an early 1999 stellar share price rise through to early 2000. The stock climbed from around A$1.00 to A$13.50 - only a few mild corrections apparent along the way. The 2000 meltdown subsequently saw the stock plummet to $7.15, claw its way back to A$12.45, to be now ranging somewhat unconvincingly at around A$9.85. Offshore fund managers however like the story. Barrett Sides from the US$171m AIM Asian Growth Fund says he searches for the simple notion of strong consecutive earnings growth. He reckons "(ERG's) technology transport system is arguably the best in the world." A 2c unfranked final dividend, ex on October 27th 2000, is 33.3% up from 1.5c a year previously. The payment on a historical yield of circa just 0.2% is applicable to 212 million issued ordinary securities. ERG's PE at the time of writing was hovering around 60.2 times. A proposed 3:1 share split will be put to stakeholders at an October 2000 annual shareholders' meeting in Perth. ERG has 18.518 million February 2000 issued convertible notes listed on the ASX suffering a coupon payment per annum of 7.5%. Maturity is 5 years and 7 months from the date of issue. The Commonwealth Bank of Australia [X.CBA] ceased to be a substantial ERG shareholder on August 31st, 2000. « Prev Msg Thread Next Msg Thread » This message has been viewed 63 times Report a BullBoards Violation Ignore salus Post Non-Threaded View [ Next Thread | Previous Thread | Next Message | Previous Message ] |