The risks of not having a balance sheet translation foreign exchange hedging policy has come to haunt listed vending machine technology company, VTL Group. They will report a loss for the December half year due to adverse currency movements having a $4.5 million impact on their bottom line.

Like one or two other listed exporters, their foreign exchange hedging policy seems to be based on “hope” that the exchange rate will move their way, rather than prudent risk management policies. VTL's unrealised foreign exchange losses come about from re-valuing overseas assets at the higher NZD value.

VTL shareholders are experiencing extreme volatility in the company's profitability performance almost on a par with the swings in the NZD value. For the year ended 30 June 2006 they reported a dramatic improvement from a $9 million loss in 2005 to a $2 million profit. All due to changes in the value of the exchange rate.