ERG Half-Year Results

Operating revenues have been received for the build and installation of systems in Gothenburg, Las Vegas, San Francisco Phase 2, Seattle, Stockholm, Sydney and Washington DC. Both of the Groups operating segments reported positive contributions. The Projects, Supply and Installation segment recorded $47.4 million revenue with a contribution of $12.4 million before significant items. The Operation and Maintenance segment recorded revenue of $90.2 million with a contribution of $3.3 million including the effects of the sale of the Rome infrastructure. EBITDA excluding significant items was a loss of $5.3 million compared with a loss of $25.4 million for the previous corresponding period; however, major projects were in their early stages which resulted in reduced operating revenue. Interest, depreciation and amortisation charges collectively reduced by $21.1 million from the previous corresponding period to $12.4 million. A profit of $10.9 million resulted from the early settlement of the liabilities to American Express and the restructure of the Rome contract. One-off write-downs and provisions totalled $36.2 million reducing the intangible assets on the balance sheet to $77.6 million. The provisions include an amount of $5.0 million to cover the cost of restructuring the Group to significantly reduce overheads and the cost of goods sold. Total cash reserves stood at $45.6 million including $12.6 million of cash at bank and $33.0 million on deposit as security for performance bonds. Subsequent to 31 December 2003, the Group has secured an additional $25 million working capital facility from the Ingot Group. Revenue Revenue for the six months ended 31 December 2003 was $147.6 million. Revenues derived from operating activities in the Projects, Supply and Installation segment totalled $47.4 million and the Operation and Maintenance segment totalled $90.2 million. Total revenue included a gain of $9.0 million from the early settlement of the American Express liabilities. The details of the American Express settlement were announced on 26 November 2003. The Projects, Supply and Installation segment contains the revenue derived from the installation of the Groups major projects around the world. Revenue for the current half was comprised of a large number of relatively small contributions from projects in Las Vegas, San Francisco, Seattle, Stockholm, Sydney and Washington DC, as well as multiple small projects. Only the Sydney project exceeded $5 million revenue in the half. Revenue in this segment is recognised on a percentage of completion basis and, with these large projects in their relatively early stages, the rate of revenue recognition is at a lower level than it will be in future periods. The Group has, however, overcome the significant delays it has experienced in the past in commencing these projects. The primary revenue contributors to the Operation and Maintenance segment are, as in other periods, the operating revenues from Melbourne, Rome and San Francisco and the maintenance revenue from Hong Kong and Singapore. The Operations and Maintenance segment includes the revenue received from the restructure of the Rome contract totalling $37.8 million, which is effectively a delayed recognition of revenue from this project. Operating revenue from the Rome contract has been accounted for on a basis consistent with prior periods. The new operating company structure is expected to be in place by the end of the financial year. Excluding the Rome restructure, the level of revenue in the Operation and Maintenance segment represents a decrease of $7.8 million or 13.0% compared with the previous corresponding period, due to the sale of Proton World. Expenses Cost of sales has reduced compared with the previous corresponding period giving rise to a profitable contribution at the operating level from both segmen