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Subject: Press article 12/2/2002. Author: Steve Bonkers. [ Next Thread | Previous Thread | Next Message | Previous Message ] Date Posted: 23:22:50 02/11/02 Mon Ticketing tussle rubs more of the gloss from ERG By Jan Eakin Peter Fogarty's ERG is expected to come under further sharemarket pressure as a court case against the Carr Government defers indefinitely the smart-card operator's plans to overhaul Sydney's public transport ticketing system. ----------------------------------------------------------- ERG is part of the Integrated Transit Solutions consortium that won preferred tender status for the $110 million contract last August. ----------------------------------------------------------- A rival consortium, Cubic Transportation Systems, has taken action against the State Government and the NSW Department of Transport alleging that the committee responsible for awarding the contract had been improperly influenced. ----------------------------------------------------------- Investment analysts said that while ERG was not directly involved in the court case, the possibility that it may lose the Sydney contract would further harm investor sentiment towards the stock, which has already fallen more than 20 per cent this year. ---------------------------------------------------------- "If the court finds in favour of Cubic, the State Government has two options," an analyst said. ---------------------------------------------------------- "One is to open up a new tender process; the other is to compensate Cubic. At the moment it's not clear which path they would take." ---------------------------------------------------------- If ERG were to end up losing the contract, the impact would be greater on investor sentiment than the group's revenue stream because there are other more lucrative contracts at stake overseas. --------------------------------------------------------- But with analysts already complaining about the group's earnings forecasts, the prospect of losing another source of revenue would further dent ERG's standing in the investment community. --------------------------------------------------------- One analyst who preferred not to be named said: "The issue for the market is the visibility of earnings and the time frame between reported revenue lines and the actual cash received. This is a major concern for the market and a very difficult situation for the company to be in." --------------------------------------------------------- Asked what his forecasts were for ERG, the analyst replied: "I have absolutely no idea." --------------------------------------------------------- ERG and its one-time shareholder Motorola were meant to sign the Sydney contract this Friday. But because the court hearing does not start until Tuesday next week, the deadline is expected to lapse. -------------------------------------------------------- With fresh allegations raised at a preliminary hearing yesterday, analysts expect it to be a lengthy court case with little clarity at this stage over the outcome. -------------------------------------------------------- Last week, ERG's chief executive Mr Fogarty hit back at market speculation concerning the company's financial health and the departure of Michael Slater, the second finance director to leave in five months. ---------------------------------------------------------- "It has been speculated that Michael left due to a disagreement on accounting treatment," Mr Fogarty said. "The speculation and damaging market gossip is totally false." -----------------------------------------------------------Such comments have done little to reassure investors. The share price dropped 1c to 43c yesterday on fresh concerns about a United States patent awarded to rival Catuity. ERG has said the patent will not affect earnings. [ Next Thread | Previous Thread | Next Message | Previous Message ]

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Subject Author Date Re: Press article 12/2/2002. (Daily Telegraph page 10) Steve Bonkers. 23:36:31 02/11/02 Mon Re: Press article 12/2/2002. (Daily Telegraph page 10) -- Steve Bonkers., 00:51:31 02/12/02 Tue Re: Press article 13/2/2002 AFR Feb 13th 2002. -- Steve Bonkers., 03:30:52 02/13/02 Wed