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- Dec 20, 2024
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November 2014
Messy intersection for pollie’s traffic company
Having a former politician as your chairman seems to be a recipe for conflict, at least in recent times. Just ask under-fire training company Vocation, chaired by former federal treasurer John Dawkins.
- Updated
October 2013
- Opinion
Acorn Capital takes substantial stake in Traffic Technologies
Acorn Capital has popped up as a substantial shareholder in Traffic Technologies, the maker of LED traffic lights, which has tapped the market to the tune of $7 million.
- Sarah Thompson, Anthony Macdonald and Gretchen Friemann
November 2011
- Opinion
Traffic Technologies enters lighting, but Saferoads safer
Traffic Technologies has signed a supply agreement with Rexel Group Australia under which it will manufacture and supply road lighting products in Australia, but Saferoads looks the better bet.
- Updated
- Trevor Hoey
December 2010
Traffic Tech makes inroads in Europe
Contracts in the UK and Ireland will be welcomed by Traffic Technologies’ long-suffering shareholders.
- Updated
- Trevor Hoey
June 2010
Traffic Tech sells management business
Traffic Technologies has sold its Traffic Management business for $14.5 million to reduce debt and concentrate on developing its technical products business.
- Updated
August 2009
Briefs
Red turns to orange Red light camera operator Traffic Technologies expects an improvement to annual profit, forecasting a smaller $5 million loss for full-year 2009 compared with a $16
- Staff reporter
February 2008
Acquisitive companies can be risky investments
The small companies sector has always been rife with groups looking to aggressively grow through acquisition. Toll Holdings is the shining light, delivering a 30-fold increase in value over 10 years as it consolidated the transport and logistics industry. Others such as Australian Wealth Management, QBE and Sonic Healthcare have shown how it's done. Sadly, many other promising consolidation plays do not succeed, resulting in some spectacular losses. Investors should always remember that growth via acquisition is much higher risk than organic growth, and should be prepared to sell quickly should cracks appear in the story. Over the past 12 months there have been some spectacular blow-ups in highly acquisitive stocks. Some which spring to mind are BlueFreeway (down 73 per cent), Boom Logistics (71 per cent), Commander Communications (90 per cent), Funtastic (68 per cent), MFS Ltd (77 per cent), Staging Connections (51 per cent) and Traffic Technologies (70 per cent). In most of these cases, warning signs were apparent before the real losses were suffered. Growth through acquisition often makes sense on paper. Listed companies have a natural advantage because they have access to capital via the market to buy relatively cheap private competitors. Private businesses sometimes fail to reach their full potential due to the reluctance of owners to invest capital for long-term gain. The combined larger company can often extract cost savings through shared services and, probably most importantly, reduces aggressive price discounting by removing competitors. So why does it go wrong? In summary, acquisitions are almost always harder to bed down than originally expected. For all the due diligence, the acquirer learns far more after they commit than they knew before. Some common problems that arise are poor due diligence, culture clashes, key staff departures (most often from the vendor of the business), integration costs, poor information flow given different accounting systems, and management distraction during the integration phase. The more aggressive the acquisition pace, the higher the risk. These types of stocks are, at first, exciting. Short-term earnings are boosted rapidly, and news flow is strong. Share prices can rise quickly, which tends to distract investors from the building risk. Perversely, pressure coming from shareholders to maintain the pace can push management into deals which otherwise would not usually pass muster. For investors, this risk increases exponentially if debt is heavily relied on to fund acquisitions. If things go wrong, investors wear all of the downside risk. The first sign of bad news is the best time to sell, even if it results in a small loss. More often than not, more bad news will follow, with devastating implications for share prices. So enjoy the ride, but sit in the aisle seat. * Ed Prendergast is portfolio manager at Pengana Capital.
- Ed Prendergast
February 2007
September 2006
March 2006
Safer roads, full order books
When it comes to road maintenance and construction, many investors focus on high-profile contractors such as Leighton Holdings that boast billion-dollar order books
- Trevor Hoey
August 2005
Bright sparks
With their history of lucrative deals and acquisitions, the managers of a small listed company plan to buy their way into greater success.
- By Craig Roberts
July 2005
Traffic circles assets of ailing Transol
Serial acquirer Traffic Technologies is a likely buyer of Transol Corp's assets after the collapsed speed-camera company's receiver announced it would be carved up.
- James Hall
June 2005
January 2005
Traffic signal group pulls away smoothly
Traffic Technologies made a successful debut on the Australian Stock Exchange yesterday following a backdoor listing of the traffic management and technology business into the corporate shell of collapsed dotcom Infosentials.
- Eli Greenblat
Traffic signal group pulls away smoothly
Traffic Technologies made a successful debut on the Australian Stock Exchange yesterday after a backdoor listing of the traffic-management and technology business into the corporate shell of collapsed dotcom Infosentials.
- Eli Greenblat and David Crowe