| Subject: Re: The 31.2 million payment explained--recurring. |
Author:
Steve Bonkers.
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Date Posted: 22:54:17 02/09/02 Sat
In reply to:
Steve Bonkers.
's message, "The 31.2 million payment explained--recurring." on 14:02:44 02/05/02 Tue
Date Of Media Release 22/08/2001
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DeTeCard (100% owned by Deutsche Telekom); VDV (the Association of Public Transport in Germany), ERG, ACG and others.
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Website address.-http://www.detecardservice.de/
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As the media release states----The DeTeCard Service--is 100% owned by Deutsche Telekom (German phone company--LOL)
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The DeTeCard company 100% owned by Deutsche Telekom is a part owner in a joint venture with ERG and a number of other companies including ACG and VDV (transport Germany) in---Card .etc AG
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ACG http://www.acg.de/Page/corporate/Welcome/Start
Neuzugang bei ACG Identification Technologies Publically listed--currently trading at 5.76 Euros.
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VDV's website address.- http://www.vdv.de/
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It is this joint venture consortium that won a contract on the 20/9/2001.
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Date of Media Release---20/09/2001 card.etc AG Awarded Key Transit Smart Card Project in Germany.
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Erg has licensed it's technology into the joint venture consortium that is made up of the above companies itself and others for a period of 20 years for a consideration.
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The consideration may be cash or shares and was due to be paid by no later than December 31st 2001. It equates to 31.2 million dollars. Which if it is paid before that date makes it eligible for this half yearly due for reporting March 11th 2002.
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If the payment is in shares, the difficulty the auditors expressed at the last profit report was how to value the J/V known as Card.etc AGfor it's shares are not publically traded they are held by the companies listed above (which as stated include ERG) privately in the recent press release Mr Fogarty stated, extract down below.
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http://www.erg.com.au/invst_relations/news/index.cfm Date Of Media Release 06/02/2002
"You should note that in the case of card.etc, the new parties have invested in the company at EU91 per share, which is higher than the value we sought to take up the transaction in last year’s accounts."
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http://www.currencycalculator.com/
91 Euro converted to Australian dollars is----Sunday, February 10, 2002 1 Euro = 1.70995 Australian Dollar
1 Australian Dollar (AUD) = 0.58481 Euro (EUR) Median price = 1.70696 / 1.70995 (bid/ask)
Estimated price based on daily US dollar rates.
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Erg have incurred expenses in establishing the J/V with Card etc AG in order for the 31.2 million payment (deferred but not disallowed) to be included as recurring ERG has to demonstrate to the auditors, that the business it has with it's other joint venture partners in Germany is going to yield income for it well into the future.
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J.P. Morgan analysis that was done on the 24/8/2001 which was before ERG with it's other joint venture partners won this.
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Date of Media Release---20/09/2001 card.etc AG Awarded Key Transit Smart Card Project in Germany.
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24/8/2001.
The below Morning Meeting notes translated into my own words so I haven't breached copyright.
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They have finalised FY02 and 3 estimates--they retain buy rec a number of positives came out of a meeting with management--research and development has peaked--management expect to get in net cash flow between 150 million and 200 million financial year 2002---in the current enviroment they are saying the share price is unlikely to get a significant boost (re Wall Street)they have downgraded profits for FY2 to 39.9 million and for FY3 to 48.5 mill (down 12%)--they like the recurring revenues and say the company basically looks good over the longer term--a mention is made of the importance of German licences.
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I can only express a view, it is apparent to me the auditors will accept, if they don't, I don't believe it will actually matter anyway, for if you note, even without this ERG will have a good profit based on calculations gathered. The main concern is getting earnings per share up to a respectable level, (currently 0.72c) so as long as the profit report manages to do that, that danger will be gone.
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Once ERG receives the payment of 31.2 million either in shares or cash, that is not the end of the payments for ERG is receiving this off a joint venture to which it is a partie too--so as it earns profits down through the years from now ERG along with it's partners will receive payments.
Cheers,--BK.
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