Orbital Engine Corp. CEO Open Briefing on NYSE
June 30 2004 - 12:25AM
PR Newswire (US)
Orbital Engine Corp. CEO Open Briefing on NYSE PERTH, Australia,
June 29 /PRNewswire-FirstCall/ -- The following is an open briefing
giving by the CEO of Orbital Engine Corporation Limited: Date of
lodgement: 29-Jun-2004 Title: Open Briefing. Orbital Engine Corp.
CEO on NYSE Delisting Record of interview: corporatefile.com.au
Orbital Engine Corporation Limited recently announced that its US
listing will be moved to the OTC Bulletin Board from the New York
Stock Exchange (NYSE). How will the move in listing impact on your
current and future operating performance? CEO Peter Cook The move
in listing won't have any impact on our operating performance now
or in the future. The underlying operating performance of the
business has improved strongly. In the year ended June 2002 we
reported a loss of $26.7 million, the following year we reported a
loss of only $1.9 million, and this fiscal year we've provided a
forecast to the market of $3 million worth of profit. I should also
stress that, with the current six-month period, we'll have reported
three successive six-month periods of profit. That's a major
achievement, which won't in any way be affected by the shift from
one exchange to another. corporatefile.com.au To what extent have
your earnings become more predictable following the restructuring
efforts over the past two years and what's the growth outlook? CEO
Peter Cook The restructuring has given us three income streams. One
is our engineering services, the second is our royalty and licence
income, which historically we've always had, and the third is our
share of the profit from Synerject, our manufacturing joint venture
with Siemens-VDO. In combination, these give a more stable base to
the business than relying only on licence fees, which is what we'd
done up until two or three years ago, in spite of the volatility of
this type of income. Each of these income streams has its own
separate, but somewhat related, growth pattern. And the combination
of the separate profit centres and lines of growth provides
stability and surety for our shareholders. It's been disappointing
for us that the market to date, hasn't given us credit for either
the major turnaround we've achieved or for putting in place a much
more stable and sustainable earnings base. corporatefile.com.au
What were the NYSE listing requirements you failed to meet and by
what margin did you fail to meet them? CEO Peter Cook Simply, the
NYSE has a requirement for combined market capitalisation and
shareholders' funds of around US$100 million. Over a period of
about 18 months, we've been in the US$50 million to US$60 million
range. corporatefile.com.au Will the NYSE delisting impact on your
access to capital? CEO Peter Cook We successfully raised about $6
million 12 months ago, and the nature of that capital raising was
such that we didn't need to go to the US. Indeed the cost of going
to the US made it prohibitive. So drawing on that limited
experience, I'd suggest there's no need for us to access the US
base of capital. corporatefile.com.au How will your US reporting
requirements change as a result of the move from NYSE listing? CEO
Peter Cook There won't be any change whatsoever in our reporting
requirements. We report to the standards required by the US
Securities and Exchange Commission (SEC), the regulator that
controls the NYSE, and we'll continue to meet those requirements. I
should point out that companies traded on the OTC Bulletin Board
are obliged to meet their reporting obligations and indeed would be
removed if they didn't. corporatefile.com.au Rather than trade on
the OTC Bulletin Board have you reviewed options to list on another
US based exchange? CEO Peter Cook We see the OTC Bulletin Board as
the most appropriate forum for our stock, and as we've indicated,
that's basically driven off size. You've got to recognise that
exchanges like NYSE and even NASDAQ and AMEX, all handle huge
volumes and are hugely valuable markets, and organisations of our
size get lost in them. There are about 3,300 companies traded on
the OTC Bulletin Board and they range from companies with market
caps as low as US$0.5 million to companies with market caps in
excess of US$500 million. We estimate there are about 400 companies
with a market cap similar to ours. The OTC Bulletin Board has a
daily dollar trading value of around US$170 million, compared with
the NYSE's daily trading of US$47 billion. That puts into
perspective the issue of size, and shows how inappropriate it would
be for an organisation of our size to remain with the goliaths on
NYSE. corporatefile.com.au Why have a US listing at all when your
market capitalisation is relatively small at about A$57 million or
US$40 million? What longer-term alternatives do you consider
viable? CEO Peter Cook Our prime objective was to make certain the
40 percent of our shareholders that are in the US and hold American
Depositary Shares (ADS), have a local, readily accessible market.
Given our current size, there's no alternative that we'd see as
viable. corporatefile.com.au Orbital has about 9,500 US based
shareholders and about 12,000 Australian based shareholders. How
will the change from NYSE to OTC Bulletin Board impact shareholders
in each country? CEO Peter Cook In a rational market there should
be no impact whatsoever. There remains an accessible and seamless
market for ADS holders in the US and as price is determined by
current and future earnings, there should be no impact. The
Australian listing remains unchanged. corporatefile.com.au Is
Orbital part of any NYSE indices and is the stock held by US based
index tracking fund managers? CEO Peter Cook We know we're not part
of any NYSE index. And we're unaware of being part of any US index
tracking fund, although we can't rule that out because there could
be some very selective index tracking by certain sectors of the
market such as ethical investment funds. But we're unaware of any,
so the impact would be minimal. Almost all of our US shareholders
are retail investors only and don't hold their shares through
investment funds that may be index linked. corporatefile.com.au
What has been the daily volume of Orbital shares traded on the
NYSE; how does that compare with daily turnover of your shares on
ASX and what would be your expectation for daily turnover when your
shares are OTC Bulletin Board traded? CEO Peter Cook Over the last
three months, our average volume on the NYSE has been about 5,700
ADSs, which represents about 230,000 shares per day. On the ASX,
our trading has averaged around 300,000 shares per day over the
same period. Our trading volumes in the US and Australia are fairly
similar, which shows how important it is that we maintain a trading
forum in the US. We don't see any reason for the move to
significantly change our trading volumes. Our underlying business
has improved, and we feel that should dictate the level of interest
in our stock, not which particular board we're traded on.
corporatefile.com.au Thank you Peter. For previous Open Briefings
with Orbital Engine Corporation, visit
http://www.corporatefile.com.au/ For more information about Orbital
Engine Corporation, visit http://www.corporatefile.com.au/ or
contact Peter Cook on (+61 8) 9441 2311 CONTACTS Email - Website -
http://www.orbeng.com/ Australia: Mr. Peter Cook USA: Mr. Bob
Schmidt Chief Executive Officer Tel: 1 810 245 0621 Tel: +61 (8)
9441 2311 DATASOURCE: Orbital Engine Corporation Limited CONTACT:
Australia: Mr. Peter Cook, Chief Executive Officer,
+61-8-9441-2311, or , USA: Mr. Bob Schmidt, +1-810-245-0621, both
of Orbital Engine Corporation Limited Web site:
http://www.orbeng.com.au/
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