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ETTA Options V2 2004

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					                       ETTA Options Paper 2004

Energy Industry Advisory Group Inc November 2004
The ETTA Options Paper has been prepared on behalf of the:

                        Energy Industry Advisory Group Inc.




                   The ETTA Options Paper has been prepared by:
                                                 Arrina Pty. Ltd.
                                           ACN 007 437 416 168
                                       Locked Bag 1 The Patch,
                                          Victoria 3792 Australia
                                          Phone: 61 3 97521300
                                            Fax: 61 3 97521400
                                   email: aone@ozemail.com.au
                                                                                          0



                                  Note

This discussion paper has been prepared as a ‘Commercial in Confidence’ document for
limited circulation to the EIAG Board. Any comments in this paper reflect the views of the
authors and are not intended for broader consumption or circulation. In the event that a
person or persons outside the circulation group specified read the document it is on the
understanding that the information contained herein is confidential. Any comments which
may appear to be disparaging regarding a third or other parties should be read in context
and are stated on a without prejudice basis. The authors take no responsibility and will be
deemed to be indemnified from any legal action or claim as a consequence of the issues
detailed in this discussion paper.

Authors:
        Dr. Rovel Shackleford
        Dr. Michelle Pizer

Document Tracking

                             Title                               Release Date
    ETTA Options Paper Draft 1                                    4/11/2004



    ETTA Options Paper Draft 2                                     8/11/2004




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                                         Acronyms

 Acronym                              Explanation
 ABC          Activity Based Costing
 ASIAL        Australian Security Industry Association Ltd
 CBL          Competency Based Learning
 CBD          Central Business District
 CGIT         Central Gippsland Institute of TAFE
 CSD          Commercial Services Division
 EIAG         Energy Industry Advisory Group
 EIEF         Energy Industry Education Foundation
 ETTA         Energy Telecommunications Training Australia
 FFS          Fee For Service
 HV           High Voltage
 IP           Intellectual Property
 K            Thousand ($)
 LV           Low Voltage
 M            Million ($)
 NMTC         National Mining Training Centre
 NSW          New South Wales
 NT           Northern Territory
 OH&E         Occupational Health & Environment
 OTTE         Office of Technical & Tertiary Education
 PAWA         Power and Water Authority
 PPP          Public Private Partnership
 Qld          Queensland
 SA           South Australia
 SEC          State Electricity Commission
 UNSW         University of New South Wales
 Vic          Victoria
 WA           Western Australia
Note - All currency is in Australian Dollars.




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                                Table of Contents

                                                    Page

1      Introduction                                       3

1.1 Project Objectives                                    3

1.2 Development Process                                   4

1.3 Business Description                                  5

1.4 Physical Facilities                               17

1.5 Intellectual Property                             19

1.6 The Value of the Business                         19

1.7 Major Issues to Overcome                          25

1.8 Stakeholders Defined                              26

1.9 The Options Matrix                                28

1.10    Recommendations                               33




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1   Int rod u ct ion

          1. 1 P ro je ct O b j ect i ves

                Arrina Strategic Planning and Economics, has been commissioned by the Energy Industry
                Advisory Group Inc (EIAG) and the Energy Industry Education Foundation (EIEF) to help
                produce an Options Paper that addresses the options associated with the potential
                acquisition of the training facility known as Energy Telecommunications Training Australia
                (ETTA).

                The objectives stated by the EIAG Board were as follows:

                The Options Paper should aim to identify the opportunities and implications, areas of growth
                and decline, and business development and operational activities, and then evaluate and
                assess the implications associated with the potential acquisition of ETTA. All considerations
                need to be framed within the context of investment and risk to investors. The underpinning
                considerations for acquisition include:


                 •     The future viability of ETTA as a commercial venture.
                 •     Future growth of utilities based training delivery.
                 •     Potential to develop a culture that can work with flexible training delivery modes.
                 •     The potential to leverage non-asset based solutions.
                 •     Maximise utilisation of existing facilities at ETTA.


                Rationalise the potential hurdles and risks associated with the acquisition of ETTA.

                Why now?

                Since disaggregation of the energy industry over 10 years ago there has been a constant
                and continual fracturing of the industry and its ancillary service and service providers such
                as training. The EIAG has emerged from Skilling for The Future (SFF) as a forum focused
                on dealing with the energy training/skilling debate in the most pragmatic way. There are few
                common threads that draw the ‘industry’ together in any meaningful way; there are lots of
                forums; lots of seminars; lots of discussion papers unfortunately there appears to be little
                action beyond good intent.

                This may be the final chapter in the disaggregation of an industry, its demise underpinned by
                inaction and a litany of failed attempts to reignite the passion of an industry to be the best at
                what it does; to develop a robust and dynamic well qualified workforce from the
                tradesperson through to the paraprofessional to the professional and in so doing protect
                industry and domestic consumers by providing a reliable and robust energy safe future for
                Australia.

                This discussion paper will hopefully ignite the passion of the industry and provide a catalyst
                for change by drawing together a group of likeminded industry organizations to fund and
                support the ongoing provision of timely, relevant and cost effective training to Australia’s
                energy industry.



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1. 2 De ve lo p ment P ro c ess

     It was also agreed that the ETTA Options Paper needed to be robust and credible.
     Therefore, the development process included substantial consultation across the wide range
     of energy industry stakeholders, as well as numerous in depth interviews to verify issues and
     findings.

     Given the complexity of the energy/utilities industry the research was required to identify and
     address the key issues that emerged throughout the development process, three streams of
     investigation were conducted by the respective discussion paper authors as defined in
     (Figure 1.1).

   Figure 1 – The Options Evaluation Process




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     As shown in Figure 1.1, a number of written outputs will inform the deliberations of the EIAG
     and EIEF Boards and members. These included:
         •     An Options Paper (released 4/11/2004) documenting the options available to
               secure one of Australia’s best recognized energy training facilities, with a view to
               creating an energy industry owned and managed enterprise that is responsive to the
               industry’s skill development/delivery needs,


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         •   A Business Case (to be released in the first week of December 2004) providing a
             realistic forecasted position for the option that the EIAG chooses to adopt. The
             business model must protect the ETTA investors and deliver an appropriate and
             responsive portfolio of training/skill development services to Australia’s energy
             industry;
         •   A Prospectus (to be released mid December 2004) the prospectus will be the
             instrument used to attract potential investors to invest in ETTA as a viable business
             proposition which provides the dual edged benefits of a healthy return on investment
             and the delivery of timely skills training services to Australia’s energy industry.

     This Options Paper reflects the recommended options available to the Board’s of the EIAG &
     the EIEF as researched by the consulting team.

     Given this development process, it is impossible for this Options Paper to capture the entire
     range of permutations and variations of options available however the fundamental options
     have been selected with the understanding that any variation will need to be evaluated
     within its own context against the predetermined success criteria as outlined within this
     paper. The process adopted has negated the risk of significant repetition; as a result, this
     Options Paper focuses on the consideration of a range of pivotal options.

1. 3 Bus in e ss D esc rip t i on

     ETTA is the commercial, Fee for Service (FFS) division of Central Gippsland Institute of
     TAFE (CGIT). ETTA is not an RTO, it trades under the RTO status of CGIT.

     Between 1945 and 1994 the training facility formerly referred to as the, “Line-School” belong
     to the Victorian State Government’s State Electricity Commission (SEC).

     In 1994 the State Government of Victoria sold the SEC Line-School as part of the
     desegregation of the power industry.

     In 1996/7 CGIT acquired and annexed to ETTA the Gas Training Team from the Hyatt Gas
     & Fuel Training Centre closely followed by the Telecom Training Team from Telecom’s
     Training Centre at Doncaster. Within a time frame of less than five years the training
     disciplines for electricity (generation and distribution), water, gas and telecommunications
     were consolidated on one site now known as ETTA. The aggregation of the various training
     disciplines now broadly described as the utilities sector caused untold consternation and
     cultural upheaval with the training teams at ETTA. Table 2 denotes ETTA’s indicative
     portfolio of training as it stands today.




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Table 2
                       Activity                      $ Contribution   % Activity
            Lineworker Apprenticeship                    $1.6M          33%
            Telecommunications                           $620K          15%
            Gas Distribution                             $480K          10%
            Type B Gas                                   $360K           8%
            HV Operations                                $300K           7%
            OH&E                                         $280K           5%
            Short Courses                                $300K           5%
            Generation                                   $200K           4%
            Security Risk Management                     $180K           4%
            Consulting                                   $180K           4%
            Live-line Refresher                          $120K           3%
            Leadership                                    $98K           2%
            Total                                        $4.7M


The projected fee for service revenue for ETTA, the Commercial Services Division (CSD) of
CGIT amounts to $4.682M a proposed $1.24M increase on revenue targets projected in
2003. The Commercial Services Division activity is subjected to the prevailing whims of the
markets that ETTA serves and as such it would be less than responsible to admit that the
proposed income target represents a medium to high risk.

Anticipated National Economic Impacts

1
 Interest rates are expected to continue to rise in 2004/05 levelling off at approximately
6.25%. This will have the impact of slowing the economy and in turn cooling business
activity. Other anticipated impacts include labour shortages which are expected to increase
personal incomes thus placing further pressure on the discretionary training expenditure
budgets of industry. The compounded factors of increased interest rates and wages may
have a dampening impact on investment in training. However increased skills shortages in
the utilities sector have the potential to escalate demand for quality flexible training/skill
development significantly over the ensuing 8-10 years.

Over the past eight years the Human Resources departments in most industries in Australia
have become strategically impotent and as such their capacity to influence training budgets
has diminished in most cases by upwards of 50-80%. This situation is changing as labour
forces become more dynamic and the shortage of technical labour in Australia starts to
erode the competitive capability of many industries. CEO’s are now placing this matter on
the agendas of economic forums around the country. The Federal Government is also
working on the skills shortage issue; this was a significant policy platform for industry during
the recent Federal Election (October 2004).

2
 Fortunately ETTA provides training into industries which are compliance heavy thus
providing the ETTA team with the opportunity to be innovative in attempting the following:




1
    Reserve Bank Forecasts 2004
2
    Details in ETTA Strategy released in December 2003



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        Recapturing market share lost to competitors conservatively estimated to be $2.5M
        per annum,
        Grow the business geographically into national markets such as WA, Northern
        Territory, NSW and Queensland which have been under serviced in the utilities
        sectors.
        Subject to the strength of the AU$ pursue regional markets particularly the more
        lucrative markets of telecommunications and energy in the Asia Pacific Rim.
        Driving the training agenda of industries as a cluster rather than working only on a
        client by client basis; in other words becoming more strategic and vertical by
        providing training/skill development at three levels:
             o Technical – trades
             o Paraprofessional
             o Professional

Risk Mitigation Strategies for ETTA Business:

        Effective utilisation of training personnel through flexible contracting arrangement,
        multi skilling and multi-tasking, targeted delivery utilization from current 68% to 80%
        in 2005,
        Representation on strategically focused national industry committees/forums,
        Development and packaging of new products and services with a concerted focus
        on growing the higher value business opportunities such as consulting services and
        publishing,
        Continued reshaping of the way ETTA does its business from static to dynamic
        delivery models,
        Expansion of market share into national markets through strategic alliances,
        agencies and franchises,
        Capture of Victorian market share from existing competitors,
        Increase charge-out rates/fees to a realistic and sustainable level.

Telecommunications (incorporating Sydney and Adelaide operations) – Target
Revenue $0.637M (Table 3)

The demand for telecommunications training is slowly returning after the roller coaster ride
from 1999 through to 2003. ETTA has been successful in gaining preferred provider status
with Telstra in its own right as previous arrangements through partnerships with other TAFEs
eroded ETTA’s relationships and subsequently its income stream from Telstra training. The
Security training business has grown significantly in 2003 and it is anticipated that the rate of
growth will continue in 2004.

The telecommunications team recently secured a national training program with Skilled to
deliver 300 Traineeships to Telstra over the next thee years; the contract is valued at $3M.

The telecommunications team are expected to move solidly into the training market in the
Asia Pacific region on the back of their recent success in Tonga. The key issue to achieving
this business will be their ability to be responsive.




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Specialised courses such as RF Radiation Manhole Rescue and Dangerous Gases will
ensure that the Telecommunications section becomes a preferred supplier within Industry in
Qld, Vic, NSW and SA.

Table 3

             Area of Training     Risk Assessment                Comment

          Sydney

          Power Awareness       Low                    Power Awareness refresher
                                                       courses are an annual
                                                       requirement which is
                                                       mandatory for all staff
                                                       working on electrical assets
                                                       and will be consistent in NSW

          Security Short        Low                    Associations with ASIAL and
          courses                                      Direct Alarm Supplies will
                                                       allow ETTA to penetrate the
                                                       new security market, along
                                                       with renewed advertising.
                                                       ETTA has applied for a
                                                       Master licence in NSW.
                                                       Upon registration ETTA can
                                                       accredit their instructors to
                                                       deliver Security courses in
                                                       2004

          Green Card Courses    Low                    All construction workers
                                                       require Green Card
                                                       Accreditation to continue to
                                                       work on any building site in
                                                       NSW. The Sydney Instructor
                                                       will be able to deliver this
                                                       course upon receipt of his
          Adelaide                                     category 4 OH&S certification
                                                       in 2004
          Open registration
          Cat 5                 Medium                 In SA traditional TAFE
          Coaxial Cable                                colleges do not possess the
          Optical Fibre                                skills required to deliver these
                                                       courses. ETTA’s reputation
                                                       in training of
                                                       telecommunications makes
                                                       ETTA the ideal training
                                                       provider. We will up skill the
                                                       SA instructor to take on this
                                                       market.



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                                 ETTA is the preferred
Exchange Entry          Medium   supplier of exchange entry
                                 courses for TELSTRA in SA
Melbourne
                                 An effort to package various
Cabling licensing       Medium   licences has proven effective
                                 and we are already filling
                                 classes for 2004. ETTA’s
                                 facilities, equipment and
                                 hands on course program
                                 give ETTA an edge over
                                 traditional TAFE providers

                                 ETTA currently has trainee’s
Refresher courses       Medium   in the Certificate III in
                                 Security Access and has the
                                 potential to increase this
                                 number due to our advantage
                                 over other TAFE Institutes
                                 with our excellent practical
                                 training areas

                                 Refresher courses provide
Security Traineeships   Low      ongoing revenue as we
                                 attract back clients after
                                 completing their ‘initial’
                                 courses a year ago. We are
                                 recognised by industry as
                                 providing comprehensive
                                 OH&S related courses in
                                 these areas and with the
                                 focus on risk management
                                 and credibility of training
                                 providers we envisage the
                                 trend will continue.

                                 ETTA has the ability to
Telecommunications      Medium   deliver Security and Satellite
Courses                          short courses in 2004

                                 Telstra Mechanical Aids
Telstra Courses         Medium   training is on the increase
Mechanical Aids                  and reports are that ETTA is
                                 the preferred supplier for this
                                 training in 2004

                                 ETTA has been named by
Exchange Entry          Medium   Telstra as the supplier for



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                                                       training of Exchange Entry in
                                                       Victoria for all contract staff




Lineworker Revenue $1.6M (Table 4)

This area continues to perform well and is expected to achieve a better overall result in
2004/05 due to an increasing demand for competency assessments for qualified line worker
tradespersons against the national training packages. The continued shortage of qualified
trainers has been addressed through the recruitment of contractors who will be hired on an
on-call basis.

Table 4
           Area of Training     Risk Assessment                  Comment

          Line worker         Low                      Continued demand for this
                                                       area of training will be even
                                                       greater in 2004.

          Interstate          Medium                   ETTA is still the ‘User Choice’
          apprentices                                  RTO for Lineworker
                                                       apprentices for the Northern
                                                       Territory. ETTA’s sound
                                                       relationship with the NT Govt
                                                       has gained it training
                                                       opportunities in the power,
                                                       gas and telecommunications
                                                       area.

          Apprentices         High                     ETTA is the only provider of
                                                       training in Victoria of this
                                                       apprenticeship. It is a high
                                                       cost area to deliver, due to
                                                       OH&S requirements and
                                                       consumables but industry has
                                                       been leveraged for and
                                                       funding from government
                                                       ensures this course continues
                                                       to be viable.

          Power Generation    Medium                   ETTA continues to provide
                                                       training and consulting
                                                       services to the generation
                                                       industry around Australia.
                                                       The primary factors holding
                                                       ETTA back in recent years
                                                       has been a tendency to
                                                       undercharge for this type of
                                                       work.


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        OH&S                   Medium                   This is a highly competitive
                                                        area however it is provided to
                                                        service the ongoing needs of
                                                        ETTA’s clients. This portfolio
                                                        is expected to grow
                                                        significantly in 2004. The
                                                        team supporting this activity
                                                        at ETTA has been reshaped
                                                        to grow this business
                                                        opportunity through product
                                                        and service differentiation.

        High Voltage           Medium-High              Repeated support from major
        Operations                                      clients due to good reputation
                                                        for training. New areas to
                                                        pursue in 2004 are interstate
                                                        mines and other high energy
                                                        users. Steady area with
                                                        reliable income. Appropriate
                                                        charge out rates will ensure
                                                        the ongoing viability of this
                                                        activity.

Gas: Target Revenue $0.729M (Table 5)

There has been high demand for traineeships in Gas Operations in 2003 and this will
continue in 2004. The move to Ardeer is a key to ETTA’s success with Abigroup. ETTA
continues to be the primary provider of their training at this stage. Over 80% of ETTA’s gas
training has been delivered at Ardeer and an improvement across the board is anticipated
once the review of the national competency standards is completed in 2004. Enquiries from
interstate are increasing steadily. The gas team was restructured in July 2004 to become
more responsive and flexible to meet the ebb and flow of industry demand.




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Table 5

           Area of Training                 Risk Assessment             Comment

     Gas Operations                       Low                 ETTA        has      extensive
                                                              enrolments     from    several
                                                              major      gas     construction
                                                              companies.           Interstate
                                                              interest from QLD, NSW and
                                                              Tasmania        is     gaining
                                                              momentum and points to a
                                                              busy year ahead for this area.

     Type ‘B’                             Low                 A shortage of qualified
                                                              trainers in this area stifles
                                                              ETTA’s ability to expand this
                                                              niche market.         ETTA is
                                                              delivering on behalf of
                                                              Tasmania TAFE and at this
                                                              stage, ETTA is still the only
                                                              provider of this qualification in
                                                              Victoria as agreed by the
                                                              Office of Gas Safety in 2003.

                                                              This portfolio    is   currently
     Gas Pressure Control                 Low                 under review.




Short Courses Revenue - $0.479M
The short course market within the sectors currently serviced by ETTA has never been truly
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exploited; currently the utilities sectors in Victoria alone spend $2.8M on short course
training products such as:
          Project Management
          Risk Management
          Frontline Management
          Negotiation
          Time Management
          Specialist technical training
Similarly there are also opportunities to deliver high value one-off workshops and seminars:
typically these types of functions generate $20K-$50K per event.

The short course team will investigate and attempt to exploit the potentially significant range
of publishing opportunities that reside within both the utilities and generation sectors; these
products are:
         Procedures manuals
         Ready reckoners
         Specialised handbooks and manuals

3
    Energy Industry Training Statistics ABS 2001



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         Technical book sales
The risk is anticipated to be medium to high as this portfolio is new and untested.

Workforce & Leadership Development: Target Revenue - $0.270M

Formerly known as the Big W project, this project has evolved and matured into a product
that has been adopted by wider industry. New target markets have been defined and are
currently being exploited, particularly the traditional markets serviced by ETTA, This portfolio
is medium risk due to the fact that the marketing opportunity has crystallized during 2003
providing a promising outlook for 2004.

ETTA Current Ratios:
         The current ratio is forecast to increase by $0.03 to $1.21: $1.00.
         The return on assets for 2004 is -7.93%.
         The return on equity for 2004 is -2.88%
Table 6 provides an insight into ETTA’s projected performance as at end December 2004;
this target has been severely downgraded since the dismissal of ETTA’s General Manager
in September 2004. Many initiatives have been terminated by CGIT.

Table 6

                                               ETTA Budgeted Performance 2004



                              FINANCIAL PERFORMANCE
                             Forecast at end December 2004



 RECURRENT OPERATIONS - REVENUE
          Fees                                                                        3,681,517
          Govt. Student Fees & Charges                                                   92,000
          Common. Govt. Grants
          Govt Fee for Service
          State Government Current                                                     688,275
          State Govt. Other
          Ancillary Trading
          Sale of Non Current Assets
          Income from Facilities                                                         8,000
          Interest Received
          Other Revenue                                                                 17,840

                              TOTAL REVENUE                                           4,487,632

 RECURRENT OPERATIONS - EXPENSES
          Salaries including Oncosts                                                  2,766,180
          Direct Teaching Expenses                                                      125,000
          Travel Expenses                                                               200,100
          Motor Vehicle Expenses                                                        197,000
          Equipment                                                                      11,000
          Consumables                                                                    72,100
          Other                                                                         321,468

                              TOTAL EXPENSES                                          3,692,848

                         FUNDED OPERATING SURPLUS / - DEFICIT                         794,784

          Depreciation                                                                 268,620

                                        BUDGETED OPERATING RESULT                      526,164


          Capital Revenues

                                                                                       526,164
                                       NET RESULT SURPLUS / - DEFICIT



 Table 7 provides an insight into the projected portfolio performance of ETTA for the calendar
 year January to December 2004.




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    Table 7


      ETTA Business Activity Centres                  Unit




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      #
      #
      #



*Note the negative sign denotes a surplus

Current Position (October 2004)

CGIT is currently engaged in a process of contraction of ETTA’s training and consulting
activity and is currently in a mode of winding back of national initiatives. Essentially the
strategy is to deconstruct ETTA so that by end December 2004 ETTA will fundamentally
only have an asset value equivalent to that of the 7.5 acres upon which the business
currently trades. The reason why this approach is being taken is that it will be easier for
CGIT and OTTE to seek divestment of real estate than a business. Neither entity; CGIT nor



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OTTE truly values what ETTA can deliver nor its strategic value to the energy industry. This
coupled with a current round of EBA negotiations with the teaching staff at ETTA and a
significant reduction in revenue is likely to drive ETTA’s financial performance into negative
territory by end October/November 2004.

The $3M Telstra contract will be abandoned by ETTA in November 2004; and existing
partnerships with providers such as BEC Engineering in WA, CBL in Qld and Charles
Darwin University in the Northern Territory and NMTC have been reversed thereby reducing
the opportunity to build and capitalise on strategic training opportunities around the country.

Figure 2 provides a fundamental outline of the organizational structure of ETTA as it exists
today. The future structure will be determined by the range of portfolios acquired and
retained business activity of ETTA following CGIT’s progressive deconstruction of ETTA’s
business model.




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Figure 2
                                                       ETTA Structure 2004


                                                                  CEO ETTA


           ETTA Operations Manager
           Finance & Expenditure Management                                                  ETTA Market Development Manager
           Human Resources                                                                 International
           Administration Services                                                         Tendering
                                                                                           Strategic Marketing
                                                                                           Publicity
                       Program Leader Telecommunications                                   Public Relations
                       Program Leader Electrical Distribution                              Commercial Development
                       Program Leader HV Operations                                        Business Planning
                       Program Leader Electrical Operations
                       Program Leader Gas Operations
                       Program Leader Gas Appliances
                       Program Leader Telecommunications
                       Program Leader Workforce & Leadership Development
                       Program Leader Short Courses
                       Program Leader Infrastructure Risk Management
                       Program Leader Generation
                       Program Leader Consulting Services
                                                                           Instructors
                       Program Leader OH&E
                                                                           Consultants
                       Program Leader Water
                                                                           Support Staff




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1. 4 Ph ys i cal Fa ci li t i es

      The facility known as ETTA occupies 7.5 acres of land 20 minutes from Melbourne’s Central
      Business District (CBD) in the South Eastern suburb of Chadstone.




      The ETTA facilities comprise outdoor training areas for the Lineworker training, HV/LV
      operations, gas and telecommunications, several classrooms, maintenance sheds and
      administration buildings. The facilities are purpose built and in most instances replicate to
      within 88% accuracy the assets that exist in the street. The unique feature of the ETTA
      facility is that trainees and apprentices can work in a safe environment that replicates the
      assets they will be working on when they complete their training.

      The first building was constructed in 1945 followed by extensive construction in the 1970’s
      followed by a yard upgrade in 1990/91. The facility is in a poor state of repair and requiring
      an estimated $2M to render the training facility safe and functional. CGIT diverted $5M
      capital upgrade from ETTA to Leongatha Campus about two years ago (2002). The
      Institute’s attitude to the ETTA facility has always been less than enthusiastic. All of ETTA’s
      administrators (4 in 10 years) have been openly and consistently castigated by the Institute
      for failing to improve the financial performance of ETTA. ETTA until 2003 was not a viable
      business and it was blamed for placing ongoing financial stress on the Institute.

      The land is currently zoned by the City of Monash as residential; this zoning will need to be
      changed to a zone category for educational purposes, if the site is to be used as a training
      facility in the future.

      The City of Monash has also requested that a Master Plan be prepared for the site when
      rezoning is requested; the indicative budget for this activity is anticipated to be $80K.




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ETTA Training Facility Chadstone Victoria




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1. 5 Int ell e ctu al P ro p er t y

     Since 1994 ETTA’s instructor workforce has been diminishing at the rate of 5% per annum
     until April 2003 when the business was totally revamped and 18% of the workforce was
     retrenched. The positive change that occurred at this time was the introduction of a largely
     contracted workforce providing the capacity to tailor training response to demand thus
     creating a more demand driven workforce. Other initiatives included bottom up budgeting
     and a refinement of cost centre management relative to portfolios thereby creating a
     capacity to implement activity based costing (ABC) for the first time in any training institution
     in Australia. New management and financial management principles introduced in 2003
     coupled with a workforce restructure; promotion of the ETTA brand and diversification of the
     services delivery portfolio resulted in ETTA achieving its first profitable performance in ten
     years.

     Training provided by ETTA currently meets the technical skills needs of approximately 50-
     70% of the Lineworker trades; high Voltage (HV), generation and ancillary services training,
     such as traffic management, Red Card, vegetation clearing and occupational health and
     environment (OH&E).

     Since the termination of the ETTA Curriculum Development Team in 1998 there has not
     been any significant intellectual property development. Most of the training materials in gas
     and some streams of LV and HV still carry the logos of the former Gas & Fuel and SEC.
     About 40% of the curriculum content is stale and training methods still reflect practices
     developed in the 1960/70’s. Whilst existing trainers are qualified to conduct training; many
     have not been on the tools for upwards of ten years.

     The challenge now is that due to existing skills shortages in the utilities sector many trainers
     are being lured back to industry with the promise of better pay and conditions. The average
     age of the ETTA Instructor team is 58 years of age. Younger people are not inclined to join
     the training team at ETTA; trainers are paid less than 50% of the income enjoyed by their
     counterparts in industry.

     Intellectual property upgrades and methodology improvement will require an initial
     investment of approximately $300K.

1. 6 Th e V alu e of t h e Bu si n e ss

     Several methods were investigated to determine the value of ETTA as a business, such as:
             Asset Valuations: Calculates the value of all of the assets of a business and
             arrives at the appropriate price.
             Liquidation Value: Determines that value of the company’s assets if it were forced
             to sell all of them in a short period of time (usually less than 12 months).
             Income Capitalization: Future income is calculated based upon historical data and
             a variety of assumptions.
                                                                     s               s
             Income Multiple: The net income (profit/owner' benefit/seller' cash flow) of a
             business is subject to a certain multiple to arrive at a selling price.
             Rules Of Thumb: The selling price of other “like” businesses is used as a multiple
             of cash flow or a percentage of revenue.




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                                                                                              20



Table 8 attempts to provide a valuation of the business on an asset valuation basis over
the core portfolio elements of ETTA’s business. The elements have then been weighted by
potential stakeholder interest and a notional value has been placed against the component
element at an indicative replacement value. The value has been mapped against potential
stakeholder interest and income as a degree of analytical dissection is critical when
considering the divestment/acquisition options.

Table 9 delineates by portfolio potential stakeholder interest in ETTA incorporating investor
and service participation considerations.

Figure 3 & 4 chart the sectors that the EIAG can expect potential ETTA investors to come
from and where the business can expect to derive its future income. Clearly several sectors
seem weak; telecommunications, gas operations and gas appliance industry groups need to
be encouraged to take a deeper interest in skills development and training. It appears that
the strongest support for training and potential investment in ETTA in the short to medium
term will be derived from the electrical energy sector in:

        Generation,
        Transmission,
        Distribution,
        Traction
        HV operations

This collection of tables and figures should provide a clear picture for the EIAG as to which
particular portfolios it may wish to target in its consideration for investment. It may be wise
to strip out the portfolios of most relevance to the EIAG and build them into a strong
business rather than focusing on the entire utilities sector.

The authors are of the opinion that the EIAG should consider the widest range of possible
options from the selective acquisition of ETTA portfolios through to the purchase of ETTA as
it stands today.




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                                                                                                                                                                21



Table 8
                                                                                        Value Components
          Activity               Asset Value            IP Value           People P/A       Government            Activity         Value         EIAG Relevance
                                  $000,000              $000,000            $000,000         Funded. %              %             $000,000           L-M-H

Telecommunications                    .5                    .25                 .3                8                  16               .7                  L-M

Gas Operations                        .5                    .25                 .3                3                  15               .7                  H

Gas Appliances                        .1                    .2                  .1                X                  9                .4                  H

Electrical Operations                 .8                    .3                  .2                X                  14               .7                  H

Electrical Distribution                2                    .3                  .5                80                 23               1                   H

Other                                 .1                    .1                  .1                X                  2                .5                  M

Workforce Leadership                   X                    .1                  .1                20                 10               .2                  M

Short Courses                         .2                    .15                .15                X                  11              .5                   M
Total                                 4.2                  1.55                1.75               18                                 4.7

                Asset Value - denotes the value of the assets used to deliver this type of training at full replacement cost.
                IP Value - denotes the value of the IP to purchase or rebuild.
                People – this is the indicative lowest possible labour cost associated with running the portfolio at the trainer level.
                Government Funding – this is the amount of training income either directly or indirectly funded by State & Federal Governments.
                Activity – denotes the portfolio relative to activity of whole of budgeted income.
                Value – portfolio income per annum.
                EIAG Relevance – indicates the potential level of interest in a training portfolio matched to the current needs of the EIAG membership.




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                                                                                                                                                                                                                            22


Table 9

                                                                               ETTA Training Portfolios




                                                                                                                                                     Other
                                                                                                                                                                                    Short Courses




                                                              Gas Operations
                                                                                  Gas Appliances




                                         Telecommunications
                                                                                                   Electrical Operations
                                                                                                                                                                                                    Participation in ETTA
                                                                                                                                                                                                    Potential Stakeholder




                                                                                                                           Electrical Distribution
                                                                                                                                                             Workforce Leadership
                     Stakeholders
    1     Vic Government                 L                     H                 L                  M                         H                      L          L                    M                 L-M
    2     Federal Government             H                     H                 L                   H                        H                      M        M                      M                 L-M
    3     Internal Support CGIT          L                      L                L                    L                        L                     L          L                     L                     L
    4     Personnel Support/Commitment   M                     M                 M                   H                        H                      M          L                    M                 M-H
    5     Industry (Broad Context)       H                     H                 M                   H                        H                      M        M                      M                 M-H
    6     Other RTO’s                    L                      L                L                  M                        M                       L          L                     L                     L
    7     Generation                     L                     M                 M                  M                        M                       L          L                    M                      L
    8     Transmission                   L                      L                L                  M                        M                       L          L                     L                     L
    9     Distribution                   L                      L                L                   H                        H                      M        M                      M                     H
   10     Traction                       L                      L                L                  M                        M                       L          L                    M                 M-H
   11     Regulators                     L                     H                 H                   H                        H                      M        M                      M                     H
   12     Unions                         L                      L                L                   H                        H                      L        M                       L                    H
   13     Telecommunications             L                      L                L                    L                        L                     L          L                     L                     L
   14     Gas                            L                     H                 L                    L                        L                     M        M                      M                 M-H
   15     Other Utilities                L                      L                L                    L                        L                     L        M                      M                 L-M


L=Low; M=Medium; H=High




                     !
                                                                                                  23


Figure 3 - Relational Interest/Commitment Chart


                             /
                                                                         "
                                                  0           High
                  /
                  2                                                      /


                                                          !              0
         /                                                               !
         1
                                                                         1
                                                                         2    !    "!#
                                                                  1      3             $   % $
   /!
                                                                         4

                                  +-
                                                                         5
                                                                         /    &    '
                                                                     2
                                                                         //
    /0
                                                                         /    "(
                                                                         /0   )
                                                                         /!
                                                              3
                                                                         /1
             /                                                           /2   !    )


                                                      4                                     * +
                      /
                      /                                                       *    (        * +
                             /           5




                 !
                                                                                                      24



Figure 4 - Probable Investor Mix




                                                                             "
                                         /


                                                      0           High
                           /2                                                /


                                                                             0
                                                              !

                  /1
                                                                             !
                                                                             1
                                                                             2    !    " !#
                                                                             3             $   % $
                                                                      1

            /!                                                               4
                                                                             5
                                             +-
                                                                             /    &    '
                                                                             //
                                                                         2
             /0                                                              /    "(
                                                                             /0   )
                                                                             /!
                                                                  3          /1
                       /
                                                                             /2   !    )


                                                          4
                                                                                                * +
                                //


                                     /            5




                   !
                                                                                                  25


1. 7 Ma jo r I ss ue s t o O ve r co me

     There are many issues to consider at this time; the EIAG is in the position where it will be
     judged by the decisions made regarding the acquisition or otherwise of ETTA. The issues
     facing the industry are multilayered and multidimensional; the word that is commonly used is
     “dynamic”. This is simply untrue; the Australian energy industry is in a state of flux and
     constant change, in such an environment the development and implementation of strategic
     training and skill development initiatives at a national or local level is almost impossible and
     fraught with risk.

     The challenges and complexities facing the industry are further compounded by changes in
     Federal policy in regard to education. The primary funding conduit for TAFE is being
     dismantled and a parallel tertiary technical college network is being established.

     The only way that a sustainable and robust training agenda can be developed and
     implemented in this country is through collaboration. The energy industry has a unique
     opportunity to use the entire or partial acquisition of ETTA as a catalyst to rally the industry
     around the development of a national skills strategy for the industry; this initiative can be
     driven through the establishment of a skills centre of excellence to the energy industry.

     ETTA as a business has tremendous potential; initiatives developed over the past 15
     months can deliver the following returns to ETTA:

     Table 10

                  Initiative                  Value $000,000              Timeline
      Gas Turbine Users Group                        .4                   July 2005
      New Training Options                           .6                   April 2005
      Hybrid                                         .2                   April 2005
      PAWA Tender                                   3.2                  March 2005
      PAWA Risk Management                          .1                  January 2005
      NMTC                                           .2                    Ongoing
      Transalata Training Yard                      1.2                   July 2005
      CBL                                            .3                    Ongoing
      Telstra Traineeships                          3.4                  3.2 current
      Telstra Tower Project                          .3                  March 2005
      Tonga training                                 .1                    Ongoing
      Malaysia                                       .4                 August 2005
      TXU Online Induction                          .1                     Current
      GASA Secretariat                               .2                   July 2005
      Techcom Simulation                            .2                   March 2005
      EDL                                            .5                 August 2005
      Total                                        11.4

     All the initiatives in Table 10 have been reversed due to the fact that the Institute (CGIT)
     appears to be devoid of qualified and experienced managers who are capable to manage
     these initiatives.




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                                                                                                                                                                   26



        1. 8 St ak eh o ld e rs D ef in ed

                Table 10 details the key stakeholders in the potential ETTA acquisition/divestment process. Apart from the EIAG there are two other entities
                interested in the future of ETTA for varied reasons and then there are the existing stakeholder/owners and managers of ETTA.

                When considering the options it is important to view the opportunities from a range of perspectives. The convergent or divergent perspectives of
                other stakeholders either internal or external to the divestment of ETTA may have a positive or detrimental impact on the EIAG’s plans to acquire
                ETTA either in its totality or in its portfolio components.

                Table 10

Stakeholder                   Likely Agenda                                  Likely Response                                       EIAG Response

Department of    OTTE wants to sell off the land, it needs   OTTE will make some veiled attempt at showing         The best way to mitigate this response from
Education.       the funds; with an estimated market value   an interest in ETTA, however its response is clear;   OTTE is to seek the support of the Minster for
(OTTE)           of $12M the ETTA campus at Chadstone        sell the land and claw back the funds it outlaid on   Energy & Resources to either block OTTE’s
                 has more value to OTTE in the bank.         ETTA several years ago. OTTE will filter its          disposal of the asset or alternatively transfer the
                 The Minister of Education will be keen to   decision making process on ETTA through CGIT.         asset to a more empathetic Ministerial portfolio
                 recover $4M that her department paid for    CGIT will be the scapegoat for OTTE; the trade off    such as Energy & Resources.             The EIAG
                 the Chadstone site nearly 3 years ago.      will be that CGIT will get 50K hours from OTTE to     response will also be dependent on which option
                                                             fund training in the Valley. An inevitability has     it decides to pursue.
                                                             been orchestrated which will result in the demise
                                                             of ETTA as a viable training business by
                                                             December 24, 2004.




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                                                                                                                                                                     27


Stakeholder                     Likely Agenda                                      Likely Response                                      EIAG Response
CGIT          Divestment of ETTA. This has been an              CGIT has already started to deconstruct ETTA;          The EIAG may need to act reasonably quickly if
              agenda pursued by some senior managers at         initiatives launched in the past 15 months have        it hopes to salvage any of the ETTA business
              CGIT for several years. The logic of CGIT         been reversed and asset maintenance                    activities. Alternatively the EIAG can wait for a
              commercial decision making defies gravity as      schedules have ceased. The current executive           fire sale and pick the components of interest up
              an Institute it has never been credited with      of CGIT appears to be neither competent nor            at a discount. The issue may be that in the
              making a sensible commercial decision. The        confident enough to deal with industry. The            next eight to twelve weeks ETTA’s best training
              disposal of a division known as SMART Driver      preferred course of action is to run ETTA into the     personnel will depart for industry positions. The
              training in 2003 is the most recent case in       ground and thereby assist OTTE to achieve its          paper authors have been informed that at least
              point.    Since the fire sale divestment of       objective to sell off the land. CGIT and OTTE          12 key ETTA personnel are actively seeking
              SMART to DECCA the business has gone              will work with each other in such a manner that        outside positions.
              from strength to strength SMART recently          one will blame the other for the demise of ETTA
              engaged 5 new staff and purchased 2 knew          and then divide the residual spoils of ETTA’s
              trucks to cope with demand for driver training.   inevitable demise.
Powercor      Has a definite interest in the demise of ETTA.    Powercor will applaud the closure of ETTA              The EIAG needs to consider whether it will
              In recent years Powercor has set up its own       because this will force industry to train through      establish a rival training facility to Powercor
              training facilities around Melbourne and is       their facilities in Melbourne and South Australia.     (ETTA Mark 2) or join the Powercor national
              currently applying for RTO status. ETTA has       Powercor has already contacted OTTE                    training initiative currently linked across three
              been a thorn in Powercor’s plans in recent        supporting the closure of ETTA suggesting that it      states of Australia:
              months. Powercor clearly has a national           has not met industry needs for many years.                  Warren Centre UNSW in NSW
              training plan centred at ETSA in South            Powercor is perusing the opportunities that may             ETSA in South Australia
              Australia.                                        emerge from the new Federal Government’s                    Training facilities in Victoria.
                                                                initiatives on education. The establishment of
                                                                specialist technical colleges.
ETU           The ETU has made some overtures over past         The ETU may be considering its options. The            The EIAG and the ETU should consider
              months regarding the acquisition of ETTA as       ETU will be thinking about how it positions itself     working in collaboration to secure a training and
              a full asset purchase; in other words             in the light of the changing political landscape in    skills development future for the energy
              purchasing ETTA as it stands today.               Australia. All unions will be redefining their roles   industry.
                                                                and assessing how they will remain viable.




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                                                                                                28



1. 9 Th e O p t io n s M at ri x

     The Options Matrix identifies the options for acquiring ETTA at four distinct levels:
            First Order Consideration – these options are low risk to the investor however
            these options may be the most difficult to initiate due to the fact that the primary
            stakeholder OTTE is seeking a quick and viable cash result; a complete sell off of
            ETTA as detailed in Option 7 would undeniably suit OTTE. These options may also
            be complex in the negotiation and acquisition phase. A simple walk in walk out
            arrangement will certainly be expeditious however this is also high risk as defined in
            the Fourth Order Considerations.
            Second Order Consideration – these options are of moderate risk; however are
            also complex in so far as some of the detail and multiple relationships will need to
            be established to achieve the desired outcomes.
            Third Order Consideration – these options are high risk for the investor but lower
            risk to the vendor; in this instance OTTE and CGIT.
            Fourth Order Consideration – these options are high risk to the investor however
            low risk to the vendor. These options would certainly be very quick to implement
            however the return on investment considering the level of capital investment may
            not be realised for at least 10-15 years if at all.

     The authors of this paper firmly believe that the funds should be committed to building a
     robust product and service delivery model which is and should be the core business of
     ETTA; investment in real-estate is not the core business of ETTA. There is the potential to
     attract two types of investor to this opportunity; the ETTA business investor and the property
     investor. The only overriding issue when considering this investor mix is that the utilization
     of the land that ETTA currently occupies at Chadstone would not provide the level of return
     that a property investor would be seeking.

     The true intrinsic value in the business known as ETTA is as follows:

              Intellectual Property (IP) – learning resources and materials,
              The People – a unique group of individuals generally respected by industry with the
              capability and passion to training to the energy sector.
              The Database – a comprehensive list of clients developed over 10 years,
              Brand – ETTA is a brand that is widely recognized by the energy industry.

     The land; pole yard, transformer yards, outbuildings and classrooms can be easily replicated
     at a number of locations through the utilization of existing asset and or the use of
     modularized training facilities.

     There may be a range of other options which will be permutations and variations of the
     options defined however these options are believed to reflect the core/fundamental options
     available to the EIAG.




       !                               !
                                                                                                                                                         29


                                             Table 12 The Options Matrix

                                                          First order consideration
                                                          Second order consideration
                                                          Third order consideration
                                                          Fourth order consideration


                                                         Cost Elements $000,000
No.            Option Description                Land    Buildings       IP       People     Total    Risk                      Impact
                                                         Yard/Tools    Brand                 Cost
                                                                                           $000,000
                                                                                                             This option is like a PPP; OTTE will retain
1     Take over the management rights of             X        X            X        .4        .4      L-M    the asset, the business will be transferred to
      ETTA; on a profit/cost or a no profit/no                                                               a business management group such as the
      cost share arrangement. With OTTE.                                                                     EIEF. The EIEF will carry/share the costs
                                                                                                             and profits with OTTE. It is unlikely that
                                                                                                             OTTE will be interested in maintaining a
                                                                                                             ongoing liability/commitment to ETTA.
                                                                                                             OTTE’s preferred position will be that the
                                                                                                             business managers take all the risk.
                                                                                                             OTTE’s primary objective will be to sell the
                                                                                                             land that ETTA currently occupies and grab
                                                                                                             the cash. It is unlikely that OTTE will
                                                                                                             confirm this strategy however it has been
                                                                                                             the central discussion with CGIT in recent
                                                                                                             weeks. The trade off for CGIT is that it will
                                                                                                             receive about 50K hours additional training
                                                                                                             a year this adds about $500K to CGIT’s
                                                                                                             training budget.




                 !                               !
                                                                                                                                                     30




                                                      Cost Elements $000,000
No.             Option Description             Land   Buildings       IP       People     Total    Risk                      Impact
                                                      Yard/Tools    Brand                 Cost
                                                                                        $000,000
                                                                                                          Significant capital will be tied up in assets
3     Purchase the IP and ETTA                  4          3         2.2         X        9.2      M-H    which at best will only experience 75%
      brand/database and establish the                                                                    utilization. The expectation that
      training facility in another location.                                                              apprenticeships will continue in the existing
                                                                                                          format may be tested in ensuing years. It is
                                                                                                          highly likely that two year traineeships will
                                                                                                          supersede the current apprenticeship
                                                                                                          programs this may reduce the asset
                                                                                                          requirement for training.
                                                                                                          The risk is that OTTE will seek a
2     Purchase of the business of ETTA and      X          X         2.2         .4       2.6      M-     commercial lease arrangement possibly in
      lease the land and buildings from                                                                   the range of $300K - $400K per annum.
      OTTE.                                                                                               OTTE does need the revenue. It is unlikely
                                                                                                          that the business can sustain this overhead.
                                                                                                          OTTE may forgo the lease income however
                                                                                                          a trade-off will need to be negotiated; such
                                                                                                          as apprenticeships funding offset by the
                                                                                                          ETTA business management team.
                                                                                                          This option basically substitutes one
4     Take over the management rights to        X          X         2.2         .4       2.6      L-M    business manager with another; in this case
      ETTA.                                                                                               CGIT will be replaced by the EIEF. This is
                                                                                                          a low risk option as all risks are shared.
                                                                                                          OTTE will have some direct input into the
                                                                                                          business operations, however it is
                                                                                                          envisaged that overall direction setting will
                                                                                                          be driven by the industry.



                                     !
                                                                                                                                                      31




                                                     Cost Elements $000,000
No.             Option Description            Land   Buildings       IP       People     Total    Risk                      Impact
                                                     Yard/Tools    Brand                 Cost
                                                                                       $000,000
                                                                                                         Additional investment will be required to
5     Establish a new parallel business        4          3         1.8         .6       9.4      M-H    build a new brand. Similar asset investment
      competing with ETTA.                                                                               issues as options 3 & 7.


                                                                                                         Establish a symbiotic partnership with a
6     Purchase the IP and ETTA                 X          2         2.2         .4       4.6      M-H    TAFE or RTO which will be compatible,
      brand/database and establish the                                                                   empathic and is prepared to work
      training facility in another training                                                              collaboratively with industry. The risk is that
      institute (TAFE) or private RTO.                                                                   the partnership could deteriorate to the level
                                                                                                         of the existing relationship with CGIT. The
                                                                                                         issue is that there is no real control over
                                                                                                         how RTO’s manage their priorities. The
                                                                                                         consequence of this is that there may not
                                                                                                         be any sustained level of certainty for the
                                                                                                         energy industry.
7                                                                                                        Over 90% of the capital will be tied up in
      Purchase the entire business known       12        4.2        2.2         .4       18.8      H     land and buildings; unless it can be clearly
      as ETTA. The outright acquisition of                                                               demonstrated that the existing location at
      ETTA including all assets; databases;                                                              Chadstone is extremely strategic it seems
      forward contracts and liabilities.                                                                 folly to invest in this manner. In the event
                                                                                                         that the business fails only 61% of the
                                                                                                         capital investment will be recovered. It is
                                                                                                         unlikely that the EBIT can justify the level of
                                                                                                         investment that this option requires.




                                     !
                                                                                                                                                        32




                                                    Cost Elements $000,000
No.           Option Description             Land   Buildings       IP       People     Total    Risk                      Impact
                                                    Yard/Tools    Brand                 Cost
                                                                                      $000,000
                                                                                                        This option will result in the ultimate demise
8     Status quo                              X          X          X          X      COST OF    M-H    of training to the energy sector in any
                                                                                      TRAINING          cohesive way. Training will become
                                                                                                        fragmented as a consequence of only the
                                                                                                        profitable and well supported components
                                                                                                        being picked up by other RTO’s. CGIT has
                                                                                                        clearly demonstrated that it has no vision for
                                                                                                        ETTA as the one-stop-shop energy industry
                                                                                                        centre of excellence. The training gap is
                                                                                                        likely to be filled by the likes of Powercor.
                                                                                                        This option will produce a parallel result to
9     Break ETTA up; move the sub-            X          X          X          X      COST OF    M-H    Option 8. Energy industry training will
      elements of telecommunications, Type                                            TRAINING          become fragmented and potentially more
      B Gas, sort courses, electrical and                                                               complex and costly for end-users.
      leadership training into other RTO’s




                                !
                                                                                                 33



1. 10 Reco m men d at i on s

     When considering how to move forward with the potential acquisition of ETTA it is worth
     pausing and thinking about what it is that the EIAG is attempting to achieve.

     There are two fundamental questions to be asked initially:

          1. Does the EIAG want to invest in an entity which it can call a centre of excellence in
             energy industry training; an iconic landmark that has deep historical relevance to the
             industry in Victoria? Or,

          2. Does the EIAG want to invest in new training methods and technology in a new
             setting which may be more dynamic with a workforce that is flexible and committed,
             thereby building a new ETTA?

     There are four critical elements to a successful training business:

               Intellectual property – as stale as some of ETTA’s IP might be it has a value and
               there is a solid core of IP that can be built on given the right amount of resources.
               People – the ETTA team in the main are high net-worth individuals, in an industry
               that is rapidly running out of talent; the team is worth retaining.
               Database – ETTA has the most comprehensive industry training database in the
               country. ETTA’s address and telephone numbers are extremely valuable as is its
               web address www.etta-traing.com .
               Brand – ETTA’s brand is well known in the industry and respected in most quarters;
               this is not to suggest that there is no room for improvement. The ETTA brand is
               recognized by 90% of the energy industry in Victoria and close to 78% of the energy
               industry in Australia.

     The recommendation is that the EIAG considers what it wants to achieve as an industry
     advisory group and then focus on the four elements worth salvaging from ETTA as listed
     above. There is a notional value associated with the four critical elements this is anticipated
     to be approximately $2M. Additional investment of about $3-4M will be required to relocate
     ETTA and realign its training technology to meet the new wave of training demand that will
     sweep this country in the next ten years.

     The next step:

          1.   Decide and commit to a preferred option.
          2.   Develop the business case.
          3.   Develop and issue a prospectus.
          4.   Pursue the preferred option and close the deal.




      !                                 !

				
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