THE announcements are flying from ERG.
The company has started work on the SmarTrip Regional Customer Service Centre.
That centre is part of the Northrop Grumman Corporation.
The project will allow Washington DC, Maryland and Northern Virginia residents to carry one card to pay fares across multiple transit system.
ERG is working on the Washington DC Metro Area Transit Fare Collection Project with the Northrop Grumman Corporation.
The smart cards systems provider has also teamed up with Deutsche Telekom division T-Systems International for forthcoming transit fare collections tenders in Germany.
The new consortium is actively working on the anticipated tender in Berlin where the two companies successfully completed a smart card trial in 1999.
They have agreed to work together on all opportunities in the German market and be preferred partners for any large contracts in Austria and Switzerland.
ERG has announced that contracts for the restructure of its Rome-ATAC project have now been signed.
A total of $50.8 million is payable to ERG on the following schedule:
$27.9 million as the first instalment of the purchase for the ticketing hardware, payable within 15 days of signing. $10.2 million has already been paid and a further $7.8 million is due within six months;
$10 million for the rights to use ERG’s software, payable within one month; and
$5.1 million for additional software and training services payable within a maximum of 12 months.
ERG and ATAC, the Rome public transport agency, have agreed to the process for establishing a new company to operate the Rome system.
The joint venture company, to be owned 30 per cent by ERG will have an eight year contract to operate the ticketing system and is expected to earn annual revenues of between $35 million and $40 million.
The new company will also pay ERG an annual licence and software maintenance fee of $1.9 million.
It is understood the immediate profit and loss impact of the restructure to ERG will be neutral.
However, the removal of annual depreciation charges of about $7 million is expected to have a positive impact.
ERG general manager investor relations Shaun Duffy said the transaction left the group with substantial cash reserves.
The Rome restructure contract has brought a bright spot to what has been a disappointing year for ERG.
The company reported a loss of $198.3 million including $114.2 million in significant items.
Operating revenue fell 24 per cent on the previous year due to project delays.
Some of the poor result was attributed to one-off accounting write downs.
ERG CEO Peter Fogarty said the company had been through a difficult two years.
He said despite the poor figures, the results contained elements that would “begin to demonstrate the positive effects of our capital restructure and commencement of new projects”.
“We expect to see the benefits increasingly flow through in the 2003-04 financial year,” Mr Fogarty said.