survival

Once the Herd loved ERG, and now the Herd is gone from ERG

The Herd is ALWAYS wrong.

Some reflections on ERG....

Restructuring of Borrowing Facilities

There would be no ERG were it not for Ingot Securities. Duncan Saville has saved ERG and ERG has paid a high price for being saved.
At the AGM we will know the details of the $87M being offered by Ingot. Suffice it to say now that the Sept conversion is postponed.

In my opinion ERG is a good thing to succeed, and be ultimately quite profitable. Not the least of which is the $500M in losses. When ERG is a going concern those losses will be rivers of gold.

There is no doubt that Dr Sullivan brought discipline and structure to ERG. ERG has maintained that discipline. There are no meaningless announcements. So what ERG says is what is going to happen. Mr Henson says ERG will survive and prosper. This is credible for the following reasons.

Large Projects Division

The Translink Project

Golden Gate and AC Transit announce plans for full launch

The TransLink® project in San Francisco has nearly 10,000 smart cards in circulation with commuters from Golden Gate Transit and AC Transit taking over 100,000 trips per month. On September 17th these Operators will proceed with a full launch campaign with extensive media coverage. ERG anticipates system usage to grow quickly to 50,000 commuters. The two largest transit operators "BART" and "SFMTA" are now in advanced stages of system testing together with "Caltrain" and current plans are for commercial operation for all three operators to commence at the beginning of 2008. The system is being tested to handle over 400,000 trips per day based on estimated system usage following full launch.

Stockholm rail network in operation and bus system ready for launch by end of 2007

The rail network in Stockholm comprising over 1200 gates has been successfully upgraded for both magnetic and smart card capability. The ERG back office processing system is now managing over 300,000 transactions per day for the rail network. The bus system including point of sale units at retail outlets and hand-held inspection devices has conducted site acceptance testing. The customer, Storstockholms Lokaltrafik ("SL"), is planning to commence public launch of the system in late 2007 following successful completion of an operational trial about to commence.

Public trial successful in Seattle

The 7 transit agencies together with ERG have completed a public trial for the smart card ticketing system with 3,000 participants. Additional functionality is now being developed prior to full system operations planned for the second half of 2008

Limited trials continue in Sydney in preparation for public participation

Limited trials for both bus and rail are continuing in Sydney. The Bus trials include both magnetic card and smart card ticket capability with ERG currently processing over 100,000 transactions per day. ERG is working with the customer, the Public Transport Ticketing Corporation ("PTTC") and is committed to resolve the remaining minor technical issues prior to entering a public trial for smart card functionality. ERG believes this will be ready in September 2007.

The rail trial at Ashfield station using magnetic card tickets has been running for several months. Average daily usage is currently 25,000 transactions, issuing 1,200 tickets collecting $10,000 cash. Preparations for smart card ticketing are now in witness testing. To ensure high levels of system quality prior to any broad scale public trial a proposal has recently been submitted to the customer to increase the depth and coverage of testing. This will delay the planned start of a broad based public trial on the rail system until the beginning of 2008. This public trial, including performance evaluation and system tuning, will be conducted over a 6 month period. The full scale deployment of bus and rail equipment will then take a further 12 months to complete.
Sydney remains an enigma. It is not the technology. The technology has proven itself over and over again.
It is the antiquated fare structure. It has to go Zonal like HK and Singapore

And when that happens Tcard may become a jewel in the crown.


Rome Line A & B metro rail system, Lazio region

Work is underway


Beijing

In addition the Company is progressing well with system development and testing for delivery of a clearing house for the Beijing Metro rail system which is scheduled for commissioning in mid-2008.


Operating Companies Division

Steady performance for the past three years. Revenue about $100M

Small Projects Division

Steady performance. I notice the project in Utah is complete. Unheralded, but eminently successful. The first of its kind in the USA.