ERG 13.2% 5.9¢ eneco refresh ltd

ERG - Fact or Fiction (Volume 1)

  1. 99 Posts.
    Since my entry into the ERG debate, the desperate shareholders who continue to hold onto the dream immediately presume that any commentary relating to the stock discloses a holding in the stock, either long or short. Well this discussion does not evolve around a monetary exposure, in fact I have a zero cash exposure to this company. Past, present or future, this is more about challenging discussion and the emotion that surrounds the decision to hold or sell a stock.

    Please do not presume this discussion is political, preferential or targeted. This is about the realisation that the market attracts certain behaviours, good, bad or indifferent.

    To date, ERG shareholders have proven to be an emotional lot, captivated in a belief that they have come across an investment that represents the holly grail. The smart card market has been around for decades, the continued regurgitation of the discussion that we are about to see the world change is an amazing revelation, given ERG’s has been involved in this market for many years and has failed to deliver the results.

    The market is quite frankly sick of hearing about the rhetoric surrounding the smart card evolution and about how it will change all of our lives. Ho Hum. We have all heard it before, and any presumption that ERG is the key to the future is clearly a very misguided interpretation of the facts. ERG is not a financial powerhouse, its balance sheet is weak, it has cash flow problems and to top it off it has a very weak management team. If this company was as good as some would think, why are they in the position they are currently in….

    Smart card technology has been around for decades. Visa, AMEX, etc dumped Proton onto ERG, why, because they think ERG is the great white hope. I doubt it. They have lost a lot of money trying to make this technology work. Congratulation on the recent technology award however it means nothing if you can not convert it into value.

    For the purest, there have been many great inventions that have never crystalised value for its owners. This is not a lesson in history, rather a reflection on reality. Whether you like it or not.

    Can we please refer to the facts. Has ERG made any money for shareholders based on the delivery of real bottom line results. I am not about to give the laymen a lesson in accounting however, this company has delivered losses to shareholders. They are the FACTS. Please read the accounts and decide for yourself that we have a cashflow and profitability issue.

    Please do not continue to refer to proof when the results are in you face, if you can not interpret the facts, please seek professional advice. A first year graduate of accounting will be in a position to assist you in your analysis. Approach any university and you will no doubt be in a position to gain that advice. Stating the obvious is hardly a point that needs to be made in this forum.

    It is interesting that certain existing shareholders, who no doubt have a vested interest in pumping the stock will continue to present the positive to a situation that no doubt has a inherent amount of danger surrounding the investment. In fact to pursue investments that have such a high risk weighting suggest many things about the investor.

    Either these shareholders are very, very wealthy and can afford to loose money on the ERG investment or they are extremely s----d, you can fill in the blanks, to target this type of investment suggest that the desire to make money regardless of the risk is the inherent driver of the investment decision. It’s all a matter of belief and a desire to prove the world wrong.

    To further encapsulate the debate, a simplistic response regarding the debate and comments of rhetoric is in fact a denial to some of the commentary that preceded the discussion.

    Please refer to the volumes of commentary that surrounded the discussion regarding ERG, the facts speak for themselves. Shall we point to the scoreboard? The share price is representative of the debate and the emotion that surrounds the stock.

    In respect of the financial position of the company, one would presume that shareholders have actually read the auditors report, which supports the accounts. If I am not mistaken, the word going concern appears. Perhaps for those who are not across the terminology should at least make reference to the relevant accounting and auditing standard.

    In the interpretaion of going concern, shall we consider what Pricewaterhousecoopers had to consider. An extract of the relevant standard is as follows;

    The going concern basis is defined in Accounting Standards AAS 6/AASB 1001 "Accounting Policies":
    "going concern basis means the accounting basis whereby in the preparation of the financial report the reporting entity is viewed as a going concern: that is, the entity is expected to:

    (a) be able to pay its debts as and when they fall due; and

    (b) continue in operation without any intention or necessity to liquidate or otherwise wind up its operations."

 
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