[Infowarrior] - Public Opposition Drives Down Redflex Profit Margin

[Richard Forno]

Anyone who feels sorry for this company, please raise your  
hand.....anybody?  Thought so!!!!   -rf


Public Opposition Drives Down Redflex Profit Margin
Photo enforcement vendor Redflex is losing millions as a result of  
public opposition to automated ticketing.

http://www.thenewspaper.com/news/28/2879.asp

The largest provider of red light camera and speed camera services in  
the US admitted yesterday that public opposition has begun to affect  
the bottom line. In an announcement to the Australian Securities  
Exchange (ASX), Melbourne-based Redflex Traffic Systems reported a  
nine percent drop in net profit for the year ended June 30, 2009. This  
has come about in part as motorists increasingly refuse to pay  
automated fines and use public pressure to force cities to eliminate  
photo enforcement programs.

"We have been adversely affected by reduced collection rates on some  
of our US contracts, write-downs on several contracts that have not  
been renewed, extended start-up difficulties with a major state-wide  
speed contract in Arizona and costs in dealing with litigation and  
legislative issues," a Redflex statement explained. "These and other  
factors have affected profitability for the year."

Reduced collections have cost the company A$2.2 million this year.  
Motorists in Arizona and Virginia, for example, have become  
increasingly aware that they may throw away any automated camera  
ticket received in the mail. Both states require personal service for  
any citation to be valid. To offset this loss, Redflex added another  
394 red light cameras and speed cameras in the US market. This helped  
increase the amount of money extracted from American motorists by 61  
percent to $114,543,000 this year -- despite the net decrease in  
profit over the previous year.

Of all its contracts, the Arizona photo enforcement contract has  
proved the most problematic as intense public protest forced lawmakers  
to limit speed camera deployment. Redflex has lost $2.3 million on  
this contract to date.

"The program has encountered a number of difficulties," Redflex  
explained. "Despite initial expectations of installing 40 mobile and  
60 fixed units, the installations have been held to 40 mobile and 36  
fixed at this stage. We are hopeful of installing the additional 24  
systems in the future but do not have a committed timeframe at this  
stage. Initially, deployments of the mobile units were limited in time  
and were constrained to less than ideal locations."

Those additional deployments may never happen as the group  
CameraFraud.com continues to collect signatures for a statewide  
initiative that would ban all photo ticketing. Arizona is not the only  
jurisdiction where Redflex faces trouble.

Redflex boasted that it had signed 49 new ticketing contracts, but the  
list provided to investors was somewhat deceptive. Among the "new  
contract" cities, Redflex counted Sulphur, Louisiana and Heath, Ohio.  
In April, a stunning 86 percent of voters ordered the camera program  
to be shut down. Heath voters will have the same opportunity in  
November after a group of citizens gathered signatures to force a  
referendum. So far, the write downs on closed contracts cost the  
company $1.6 million. Redflex also highlighted its contract renewal  
with Santa Ana, California even though a Superior Court judge has  
ruled that the Redflex program is "illegal and void" (view ruling).

The legal troubles do not end with motorists fighting photo ticketing.  
In fact, Redflex is involved in litigation with other photo  
enforcement companies. So far this year, that suit has cost Redflex  
$815,000. A failed attempt to entice investors to buy out Redflex cost  
another $438,000.

The biggest loss in future earnings potential has come as a number of  
states shut the door on photo ticketing in 2009. After the  
legislatures in Maine, Mississippi and Montana acted, Redflex had to  
pull the plug on a number of planned red light camera and speed camera  
programs.