re: arthur not athur Arthur, sorry for the delay replying, was...

re: arthur not athur Arthur, sorry for the delay replying, was out for the afternoon shopping with Madam Lash.

Paul100 has crunched a lot of numbers on this one, I believe he is on the ball but will prove to be conservative. I've crawled all over it for the past 2 years and am happy with that sort of number.

The Traffic division CEO has done a great job since his appointment over 2 years ago, he first had to get rid of a lot of deadwood and then he set about building a world class business. We're very lucky in that he is a true all-rounder, first class technical mind (Honeywell and Raytheon), top salesman, excellent manager and spot on with personnel. The Redflex Traffic Division in the US and locally now has a great team.

A few things to watch. The system installation rate is critical to the ramp up of revenue, 12 months ago the CEO promised 10 a month and actually averaged 15, now he's promising 15 a month and should do better. (March 17, April 16) Each new installation adds US$5K per month to revenue. That $22.6 million is predicated on 15 a month. They have plenty of backlog, that is contracted systems not yet installed so supply is not a problem. The backlog itself is also not a problem for various reasons but having a large backlog does help streamline the work of the installation crews.

There are two driving forces in this company, Bruce Higgins as CEO of Traffic and Rob Debernardi, an independent director. Rob Debernardi is a large shareholder and the main force behind the corporate transformation where the old board was turfed out, excellent US$ lending facilities were obtained from the National Bank, and a different, much more positive, culture was put in place. In my opinion their continued presence at Redflex will see this company in the ASX 200 by early next year and with a capitalisation over $1 billion by 2010.
The 2010 figure is a big call, but the company's revenue now is on a very predictable curve and competition has been soundly thrashed in the US and locally. I saw somewhere Redflex being compared with a company that owned toll roads without even having to pay to build the toll roads. Talking of toll roads, have a look at the Toll Holdings chart about 3 years ago where they went from about 50c to $2 in the space of 8 months. Paul100 mentioned this a while ago, the Redflex chart for the last 8 months is almost identical. And we all know where Toll Holdings is now.

A takeover by US or European interests could put paid to the best laid plans, always a possibility but hopefully not for a while. Give this one a multiple equivalent to the Yankee companies and the shareprice now would be about $5.50.