EGI 0.00% $1.14 ellerston global investments limited

Godd announcement from eGlobal

  1. 420 Posts.
    The following announcement should guarantee plenty of working capital for eGlobal for quite a while. Good news for shareholders.


    eGlobal International Limited (ASX: "EGI") ("eGlobal") has today announced it has agreed favourable terms with Logica for the sale of its Enterprise Resource Planning (ERP) IT division, eGlobal Pacific Pty Ltd. The business unit is primarily involved in the software
    implementation of ERP software solutions based on the SAP product sets.

    Under the terms of a Share Purchase Agreement, Logica will buy all the shares in eGlobal Pacific Pty Ltd for a cash sum of AUD$6,500,000 (six million, five hundred thousand Australian dollars). The quantum of the exact cash to be transferred with the business will be
    determined after the ensuing six months trading when the adjustments for Working Capital requirements have been finalized between the two parties. The present carrying value of eGlobal Pacific Pty Ltd in the
    books of eGlobal International is approximately AUD$3,200,000.

    A cash consideration of approximately AUD$5 million will be paid upon completion of the deal with the remainder held in a trust account for a retention period of upto 12 months. The cash received from the sale of eGlobal Pacific Pty Ltd will be partially utilised as working
    capital for the development and expansion in the first twelve months of eGlobal's North American joint venture business with InsureNet USA Inc. The deal with Logica will also result in a strengthening of the Company's Balance Sheet with a strong increase in the Net Assets of the business and put it in a better position with respect to any future mergers and/or acquisitions. At present the Company is in discussions with a number of businesses that will add further value to eGlobal's product offering in the key areas of Smart Cards and
    Internet Security.

    Mr. Gordon Chalmers, Managing Director of eGlobal said, "today's announcement is the first step in a process of restructuring the business in line with previous plans. The significant opportunities for eGlobal's smart card and security solutions in Asia and USA mean that the Company will now be able to better focus it's attention on these lucrative markets. Within Australia the business will also now be able to devote more time and energy towards developing its advanced and leading technology solutions that are beginning to have success in these much larger markets."

    "We are delighted to be able to announce the deal with Logica as it also signifies the start of what will hopefully be an ongoing business partnership with this Global IT Group. It is important to note that the remaining eGlobal software division (eGlobal Services Pty Ltd) will continue developing eBusiness Systems Integration
    around it's Java software skill sets. More importantly it ensures eGlobal can now focus these abilities in developing total solutions in the stated high growth areas of Smart Card and Internet Security."

    As announced by eGlobal International Limited on 20 May 2002, the company has formed a new company, in partnership with InsureNet USA Inc, to sell a patented smart-card based motor vehicle insurance verification system into the North American market. The forecasts
    prepared by the company's joint venture partner indicate that the North American business revenues of approximately AUD$13 million for this financial year will therefore adequately replace eGlobal Pacific's ERP/SAP business. At this initial stage the projected before tax profits from the American operations are predicted to in
    the range of AUD$3 to AUD$10 million and should therefore allow for a rapid rollout of the system to a number of American States. The smart card based insurance verification system also has the advantage of
    strong projected annuity based income in future years as the systems are implemented.

    eGlobal Chairman Jim Goldburg said, "the Company was excited about the deal with Logica which capped off a pleasing year with the business emerging from very challenging market conditions. eGlobal was now clearly focused on the increasingly important and fast-growing sectors such as internet security and smart card
    technologies. The company has also undertaken some significant product development and restructuring that will place the Company in a very strong position with these new emerging technologies as previously announced."

    The present deal with Logica is also part of an ongoing plan to re-align the eGlobal business to a broader mix of professional services and annuity incomes from this new technology. The income streams are based on client's use of eGlobal intellectual property and hardware products or their use of eGlobal developed applications
    which are hosted in the eGlobal Data Centre.

    Mr Chalmers stated "We are now effectively a much more focussed company in control of our own destiny and we are excited about the new opportunities available that will allow us to drive the business
    forward to reach its full potential."

    "It is pleasing that eGlobal's business activities have continued to show strong growth. We are now looking forward to focusing all energies into our core business and fully capitalising on the market opportunities before us both in Australia and overseas."


    Logica (LOG.L) is a leading global solutions company providing management and IT consultancy, systems integration, products, services and support. Logica's clients operate across diverse markets including telecoms, financial services, energy and utilities,
    industry, distribution and transport and the public sector. The company has revenues over 1 billion and operates in 34 countries worldwide. Founded in 1969, Logica is the largest IT services company listed on the London Stock Exchange. More information can be found at

    In Australia, over 700 staff are employed by Logica across the main business centres (Sydney, Melbourne, Brisbane, Perth and Adelaide). Logica's offerings in Australia focus on telecommunications, public
    sector and energy & utilities sectors. The majority of the Australian business was acquired in December 2000 with the takeover of MITS and this operation has been fully and successfully integrated into the Logica global business.

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