re: flexing the muscles
The only hedging Redflex have/had in place related to the Comms Division on specific contracts they entered into. Comms is now pretty immaterial but even so I hope they are still taking out proper hedging at the time of entering into contracts and allow the cost of that hedging in their pricing.
The traffic division business in the US is not hedged. They have a natural hedge in that all revenues are in US$, most borrowings are in US$, and a majority of their expenses, including a lot of the expenses related to installing systems, are also in US$. Their only real exchange rate exposure at present is that the camera systems are made in Australia but even then a lot of the components are sourced under US$ contracts.
Perhaps if the traffic division makes big sales to Europe or elsewhere then hedging may be required.
When the day comes for the traffic division to remit surplus funds from the US to Australia to pay dividends in A$ then we will see an exchange rate effect, who knows?, by then we could be a Nasdaq company.
RDF Price at posting:
0.0¢ Sentiment: LT Buy Disclosure: Held
