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The 31.2 million payment explained Subject: The 31.2 million payment explained--recurring.


Author:
Steve Bonkers.
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Date Posted: 14:02:44 02/05/02 Tue

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In June of 2000 Erg bought an equity stake in a company called Card Etc AG. the entity bought approximately 10% June 2000 a stake in card.etc AG, a smartcard operating company.
http://www.cardetc.de/de/unternehmen/team/docs/index.html
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ERG Limited (ERG) has announced an investment in “card.etc AG”, a smart card operating co with Deutsche Telecom, Lanys & Gyr, ACG & VDV (the Association of German Transport cos). With further investments by other German cos, ERG will hold around 10%.
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http://heraldsun.news.com.au/printpage/0,5481,2904009,00.html
In September of 2001 ERG would receive either further shares or cash payments within six months for the rights to its smart card technology, however ERG's auditors ruled it could not be deemed as profit in its 2000-01 accounts.
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Payment due December 30th 2001.--31.2 million.(cash or shares)(falling into this years accounts.)
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Summary--Erg hold 10% in private consortium with the above named companies, the holding was bought in June of 2000, ERG have received back either further shares or cash payments to the value of 31.2 million by no later than December 30th 2001.Erg still own 10% of the consortium even after receiving the payment, for the payment is for the licensing of it's technology---- Mass.31.2 million is received back from Card AG ETC with ERG even after receiving the payment still owning ten percent of Card AG ETC.The stake has to be retained as if it were not, you could not then describe the transaction as recurring, it would be one off and non recurring.
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In other words the company "Card AG etc" that pays ERG 31.2 million in either shares or cash is 10% owned by ERG itself, for they had bought this prior to September 2001, the original stake was bought in June of 2000, thus even after the payment is made ERG still have an equity stake and a right to recurring revenues for the length of the agreement which is 20 years.
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Friday 30 June 2000 Global smartcard leader ERG has joined a powerful German alliance, buying a stake in card.etc AG, a smartcard operating company.
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Smart card buy pays off 21 Sep 2001 ERG said yesterday it was vindicated in its decision to take equity in a German company after it won a $15 million to $20 million contract to deliver a smart card system in the Rhein Ruhr region of Germany.
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http://www.smartloyalty.de/smart_referenzen_kuka.html
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