funding, page-30

re: funding / comunications division Hi Guys,

The September investors briefing states that:
"The board has decided not to proceed with the sale process for the communications business." Whether this means they couldn't find a buyer or it is definitely not for sale I can't tell. Should a buyer happen along, would they sell?

It may be that they think the Comunications division will continue to turn a profit, even if this profit is dwarfed by the Traffic division. The RDF corporate borrowing costs are low and so there seems to be no desperate need for cash from a possible sale right now.

Whatever the story behind the statement is, it seems that the Comunications division is here to stay and we can only hope that it remains in profit (A$1.85mm in fy 05, expected to increase in fy 06).

The investor breifing also notes that the Comunications division has Voice over Internet Protocol software that they are now commercialising. This seems to be a hot area right now and if their product is superior to those already in use, could be a substantial moneyspinner. The only downside could be them trying to turn themselves into a dot.com and burning up all the lovely Traffic division profits chasing an internet dream.

To answer the original question, any new large contract is only likely to add profits which is no bad thing and would shore up PE ratios etc. From past performance, it would seem that the profits would be in the order of milions, rather than tens of millions, and so would be lost in the tsunami of Traffic division profits that are headed ino the coffers over the next few years. I could certainly see it increasing the value of the Comunications division were a buyer to appear and that could only be good for shareholders. As to the sp, probably not much direct effect imho.

Regards,

Keith