ERG 7/5/2002 (Address to Aust Shareholers)., page-4

PessimistI'm over/Stockhouse/on CAT thread--BK. http://www.ozestock.com.au/MessageView.asp?PostID=116820&Symbol=ERG

PessimistI'm over/Stockhouse/on CAT thread--BK.
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http://www.stockhouse.com.au/bullboards/viewmessage.asp?no=5099808
Ive done a lot of research on ERG over the last few months Geoffo, yes it is loaded down in the traditional sense with debt, primarily because of the different accountancy procedures that came in re Enron.
(Incidentally on June 30th--Austrlalia gets a new of accountancy--see ERG thread)(which may have ramifications there) what I see within the entity is a creative concept that they have thought up in order to expand---simply stated selling their technology into j/v consortiums, in stockmarket terms (re share price--it has been devastating) nevertheless these consortiums they have begun all around the world are growing and can be valued higher---for instance the one in Germany has already had (not listed publically) shares in it sold to another bidder for a higher price. Erg can anytime it wishes sell it's holding at a higher price and bring in physical cash, even after they do that they are still entitled to revenue coming from the consortiums--for twenty years.
I t has fallen in share price for a number of reasons, the prime reason being perceived bad financials--surely this howver is one of perception, it is merely the way you do the accounts.
Everything has been written down to zero for instance---to give an example relating to that the JV with ANZ has 23 million dollars in cash in it---this is officially zero, the reality however is different, basically I feel the bad share price is market judgement based in the traditional sense.
P Fogarty has stated that he expects to be profitabel in the second half and by 2003 certainly so---Huntley's state conservative investors should avoid, that it is in speculative territory---I wouldn't write ERG off---and I wouldn't necessaril;y judge it by it's share price---lets not forget just two weeks ago---in the papers "loyalty points were on their way out" and Catuity had sunk to an all time low since March 29th 2000 of Fibbonaci retracement 3.25.
With newspapers and stockmarket I find and I'm sure you would agree it is not necessarily the truth they write--they write to sell papers--if you look for example at a recent cutting Ive posted on the Erg thread--called loving dotcoms.
It has labelled Davnet and Erg together as stocks people should give eup on them.
The reality of it is if you have recently bought DVT at 3c you are 0.6c in front--with 13 to 15 million in the bank and no debt---and a possible takeover by Farook's Bigshop.
If you have bought ERG recently as a speculator---everything has been written down to zero and P. Fogarty has stated he expects to get a profit second half and certainly so by 2003 20 million dollars of cost savings have been implemented---EDI Downer shares have largely been sold, still some ERG hasn't sold that are valuable and they get dividends-payable on the 30/4/2002--and while they hold the remainder of EDI Downer in terms of capital gain, the company is outperforming--see recent landing of 470 mill contract by Downer.
Based on research Ive done, I believe ERG will prosper in the end, they need to manage their growth very carefully, get the cash back to book from various contracts, eliminate debt while still growing worldwide (sounds easy lol) and ofcourse of immediate concern is a resolution to the legal situation pertaing to Sydney and ofcourse the dispute with Downer--One Link---ERG can do it-acknowleged it is either all the way down or all the way up for the entity--high risk speculative in my book--for the above reasons stated, but if P. Fogarty maanges to turn the ship around, it will be the cheapest ERG currently trading that I believe you'll ever get (allowing 5c either way)

(Voluntary Disclosure:No Position Short Term rating: Long Term Rating:)

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