Ann: Change of Directors Interest Notice, page-7

Hi Sabine,

Overall I think RDF is an undervalued turnaround play (following the recapitalisation in Nov17) that could turn into a growth play down the track. It’s only ~3% of my portfolio and a bit too illiquid for me to increase that too much (I accumulated that over 7 tranches during past 18months). The latest dip was lower than any of my purchases (range 38c-41c mainly but first was at 46c) ... I thought good buying but didn’t want a higher weight.

The thesis was playing out well until the Texan law change (for qrtly new business performance see https://hotcopper.com.au/posts/39513314/single ). Unfortunately this took the wind out of RDFs sales and despite wins in Pennsylvania and Vancouver approximately offsetting the loss, the SP stayed low.. This post sums up my still current views of RDF https://hotcopper.com.au/posts/40190418/single.

Some short term triggers for a higher SP include:
- another big contract win
- any success in legacy Mexican/Saudi bad debts (100% written off now - so any $’s are straight to EBIT)
- Qrtly sales report as/when Pennsylvanian and Vancouver wins are contracted

These could be tempered by:
- Flat earnings for FY20 (as Texan loss offsets new business wins)
- Any unexpected loss of a large rollover contract (RDF has been rolling over at close to 100% for many years now)

Medium term, the smart motorways thematic seems to have a lot of legs and RDF is IMO now well positioned to capitalise from it. Also, the business is winning more annuity business so more stable growth of revenue (past more project based).

Cheers, Simon