17384	 06/05/2010	 Proof	6 17384	 06/05/2010	 Proof	6
TRAFFICMASTER PLC
MARTELL HOUSE | UNIVERSITY WAY | CRANFIELD | BEDFORDSHIRE | MK43 0TR
T: +44 [0]1234 759000 | F: +44 [0]1234 759318 | W: www.trafficmaster .co.uk
RegisteRed in england and Wales 2292714 | V at RegisteRed no. gB 539 9704 95
AnnuAL REPoRT AnD ACCounTS
TrafficmasTer PLc
for the year ended 31 December 2009
Stock code: TFC
TrafficmasTer PLc   aNNUaL rePOr T aND acc OUNTs 2009 17384	 06/05/2010	 Proof	6 17384	 06/05/2010	 Proof	6
HigHLigHTs
a year of evolution and progress
f inancial highlights 
Operational highlights 
> Strong performance in Business Services, with revenue up 23%, and 
EBITDA up 110%. 
> Continued expansion of Fleet Director direct sales team, with volumes 
from National Accounts trebling in 2009.
> 12% growth in Fleet Director subscriber base to 98,000 vehicle 
tracking units.
> Acquisition of Fleet Management Solutions, Inc. in early 2010 expands 
service offering globally.
> Stolen Vehicle Tracking and Traffic businesses show modest revenue 
declines in tough market conditions, although improved profitability. 
Revenue up 4% to £57.5m (2008: £55.1)
pRofit befoR e tax up 14% to £5.1m (2008: £4.5M)
ebitDa * up 17% to £12.2m (2008: £10.4M)
opeRating pR ofit befoR e non-R ecuRRing items up 9% to £6.3m 
(2008: £5.8M)
opeRating pR ofit £5.3m (2008: £5.4M)
b asic eps up 6% to 3.62p (2008: 3.41p)
unDeR l ying eps** up 16% to 4.81p (2008: 4.14p)
* EBITDA refers to earnings before interest, taxation, depreciation and amortisation and also excludes any non-recurring costs.
** Calculated after removing the effect of non-recurring items, amortisation of acquired intangibles, share based payments and deferred 
tax movement.
Note: as previously announced, during 2009 the group adopted a new accounting methodology for revenue recognition. Comparatives have 
been restated accordingly.
r egistered Office and advisors
RegisteRe D office 
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Registered Number 2292714 
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Tel: 0207 4483244 www.trafficmaster.co.uk  TrafficmasTer Plc   01
Our Accounts Our Governance Our Business
17384	 06/05/2010	 Proof	6
02	Group at a Glance
04	our products and services
06	t rafficmaster in the B usiness 
environment
08	chairman’s statement
10	chief executive’ s statement
14	financial r eview
16 Board of directors
18	directors ’ report
21	directors ’ remuneration 
report
25	corporate Governance
30	statement of directors ’ 
responsi Bilities
31	independent auditors ’ report
32	consolidated st atement of 
comprehensive income
33	consolidated statement of 
financial position
34	consolidated statement of 
cash flows
35	consolidated statement of 
chan Ges in equity
36	notes formin G part of the 
financial statements
68	company Balance sheet
69 company reconciliation of 
movements in shareholders ’ 
funds
70	notes formin G part of the 
financial statements
Contents
T rafficmaster is an expert in intelligent driving.   
it operates through two businesses which provide 
intelligent vehicle services to enhance the driving 
experience and improve business performance by 
saving companies and drivers time and money  
and reducing their environmental impact. 
Business services
provides fleet tracking and dynamic 
navigation capabilities to business users.
c onsumer services
provides users with traffic and journey time 
data, stolen vehicle tracking and integrates our 
telematics platforms with our commercial 
partners to support their services and make our 
services available to their customers. 02  TrafficmasTer Plc  annual report and accounts 2009
17384	 06/05/2010	 Proof	6
GrouP
at a glance
Business services
provides fleet tracking and dynamic 
navigation capabilities to business users.
c onsumer services
provides users with traffic and journey 
time data, stolen vehicle tracking and 
integrates our telematics platforms with 
our commercial partners to  
support their services and  
make our services available  
to their customers.
revenue
up 23%
to £40.0m
(2008: £32.6m)
eBiTDa
up 108%
to £10.0m
(2008: £4.8m)
Key Performance Data
COnsumer serviCes revenue (£m)
COnsumer serviCes eBiTDA (£m)
2008
7.9
2009
4.2
2008
22.4
2009
17.4
n emerging products
n t raffic
n stolen v ehicle t racking www.trafficmaster.co.uk  TrafficmasTer Plc   03
Our Accounts Our Governance Our Business
17384	 06/05/2010	 Proof	6
Key Performance Data
58%	
stolen v ehicle t racking
31%	
t raffic
11%	
emerging products
shAre Of COnsumer serviCes  
revenue 2009 (%)
47%	
stolen v ehicle t racking
28%	
t raffic
25%	
emerging products
shAre Of COnsumer serviCes  
revenue 2008 (%)
Group
revenue (£m)
2008
55.1
2009
57.5
eBiTDA (£m) 
Before non-recurring items
2008
10.4
2009
12.2
OPerATinG PrOfiT (£m)
Before non-recurring items
2008
5.8
2009
6.3
70%	
Business services
shAre Of GrOuP revenue (%)
n consumer s ervices
n Business services
30%	
consumer s ervices
Business serviCes eBiTDA (£m)
2008
4.8
2009
10.0
Business serviCes revenue (£m)
2008
32.6
2009
40.0 04  TrafficmasTer Plc  annual report and accounts 2009
17384	 06/05/2010	 Proof	6
our ProDucTs anD services
T rafficmaster’s products and services offer a range of 
benefits. so whether you are a fleet operator, business 
driver, private motorist or international traveller we can 
provide driving efficiencies, savings and security.
fleeT DireCTOr sTOlen vehiCle TrACKinG
 
> t ried and trusted by over 6,000 fleets operating 
98,000 vehicles
> used in a number of market sectors such as distribution, 
utilities, public sector, property and construction and service 
industries
> provides a host of functionalities such as vehicle location 
and tracking, satellite navigation, two-way communication, 
exception alerts for prohibited areas and vehicle misuse and 
detailed reporting for overtime, fuel consumption, mileage 
and vehicle usage.
> provides business benefits to customers who include 
ryder, t exas instruments, nottingham county council, robert 
heath heating ltd
> t rackstar is Bmw and minis chosen stolen vehicle 
tracking supplier
> through its advanced technology platform it also provides 
‘on-demand’, the facility for business drivers to view 
historical journeys, check vehicle location at any given time 
and run reports on business or private mileage.
> the eurowatch service is the world’s leading tracking and 
recovery service, and enables our customers to be confident 
that their assets can be tracked and recovered from over  
40 countries.
> eurowatch has developed long-term stolen vehicle tracking 
relationships with Jaguar, land-rover, Ge l easing and  
aston martin.
T rackstar, the most advanced stolen vehicle 
tracking system available, provides peace 
of mind for drivers and businesses. 
f leet Director, an internet-based fleet 
management system, has been specifically 
developed to help fleets improve their 
business performance and efficiency — 
including reducing fuel costs, improving 
productivity and controlling their general 
environmental impact www.trafficmaster.co.uk  TrafficmasTer Plc   05
17384	 06/05/2010	 Proof	6
smartnav reduces
measured driver
stress by a factor of 3
f act
TrAffiC serviCes smAr TnAv 
AnD smAr TPhOne mOBile serviCes
We save 30,000 
hours per month 
in driving time
f act
Our Accounts Our Governance Our Business
 
s martnav is a dynamic navigation service 
that intelligently guides you around the 
jams. n ot only is it available to install in 
your vehicle, but it can also be downloaded 
straight to your smartphone. 
> we collect over 200 million data records per day on real 
road speeds and have over 70 billion data records for uK 
roads.
> six of the uK’s top car brands use our traffic data services, 
as well as leading portable navigation manufacturers such as 
Garmin, t omt om, medion, magellan and Jvc
> we are exclusive suppliers of journey time and real road 
speed data to the department of t ransport 
> smartnav uses t rafficmaster’s real time traffic information 
to calculate the best and quickest routes. this saves our 
customers over 4 hours a month
> it is the only navigation service supported by round the 
clock personal assistants, who are on hand to provide 
emergency, break-down and routing assistance
> smartnav navigation and t rackstar also includes safe 
speed, a speed camera alert service
> citroën installs smartnav and t rackstar as standard across 
its van range
 > smartnav is also part of the t rafficmaster companion 
application available on iphone, Blackberry and other Gps 
based smartphones 
r eal time traffic data is collated from our 
traffic network that covers all motorways 
and 95% of trunk roads. This information is 
also supplemented by data taken from over 
80,000 in-vehicle units providing real road 
speed records. 06  TrafficmasTer Plc  annual report and accounts 2009
17384	 06/05/2010	 Proof	6
TrafficmasTer 
in the business environment
T rafficmaster’s products and services help 
businesses cut costs and become more profitable 
in a highly competitive market.
Driver overtime reduced by an
average of 15%, unauthorised
vehicle use reduced by 12% and
productivity increased by 12%.
While individual results vary,
the statistical evidence is
clear: you get substantial
results with fleet Director.
That’s the big picture.
f act www.trafficmaster.co.uk  TrafficmasTer Plc   07
Our Accounts Our Governance Our Business
17384	 06/05/2010	 Proof	6
in a quest to survive the ongoing global economic crisis and 
remain in business, the first challenge within many companies’ 
business strategies is to become more productive, whilst 
reducing operating costs. 
as well as purchasing the latest fuel efficient vehicles, the 
adoption of new generation fleet telematics solutions is a sure 
and fast way of enhancing vehicle management practices. 
these telematics solutions can be as simple or as complex as 
a business requires, and fleets from as small as three vehicles 
through to fleets covering hundreds of vehicles can benefit.  
t rafficmaster and t eletrac’s fleet director is one of the leading 
fleet management systems in both the uK and north america. 
its combination of easy to use and intuitive tools can help a 
business manage its fleets more cost effectively and profitably. 
fleet director combines real time vehicle tracking, smartnav 
satellite navigation, up to the minute traffic data, two-way 
communication, safety camera warnings, exception alerts 
which tell a fleet manager if a vehicle is entering a no-go 
area or being driven out of hours and finally provides in-depth 
reporting and analysis. 
the benefits of using fleet director’s applications are 
significant both financially and environmentally. according to 
customer research, t rafficmaster and t eletrac have helped 
businesses increase productivity by 12% and have proven to 
reduce overtime by 15% and unauthorised vehicle use by 12%. 
these benefits have been particularly acknowledged in the 
us. t eletrac welcomed its 6,000th fleet customer in 2009, 
which means that more than 98,000 vehicles now benefit from 
t eletrac solutions. t eletrac continues to focus on all fleet 
sizes, from the smallest-like f riesenhahn plumbing, a well-
established business of more than 30 years in san antonio, 
t exas, that currently has four vehicles, three equipped with 
fleet director, to the largest-such as l ewis t ree service, one of 
america’s largest vegetation management organisations, that 
manages over 2,000 vehicles. 
the company also continues to develop its partnership with 
ryder t ruck. ryder adopted t eletrac as the technology 
underlying ryder rydesmart
®
 solutions. f or customers with 
split fleets—part owned, part leased from ryder—this means 
they benefit from seamless management technologies and 
consistent procedures across the entire fleet.
in the uK t rafficmaster’s partnership with automotive 
manufacturer citroën also remains strong. this has been 
underpinned by its own study that has independently measured 
an overall operating cost saving of £2,000 per vehicle per year 
with the support of the standard fit of smartnav, stolen vehicle 
tracking and speed camera alerts. 
charles p eugeot, head of commercial vehicles and business 
sector sales, explains, “citroën remains committed to  
providing its customers with the technology to optimise vehicle 
efficiency and safety.  this will empower even more operators 
with the means to cut costs, minimise emissions and reduce 
driver stress.” 
these savings not only contribute to a company’s bottom 
line but also reduce the impact business driving has on the 
environment. 
t rafficmaster and t eletrac have measured astonishing fuel 
savings driven through the use of its fleet management solution 
across its customer base. overall its fleet customers have 
reduced their fuel consumption by 13 per cent on average. this 
equates to an annual total of 280,000 tonnes of co 2 .
principally our technology is able to help businesses cut down 
on journey times, reduce the length of a journey, eliminate 
wasted and unauthorised journeys and enable both fleet 
operator and driver to become more proactive. this is possible 
through the company’s ability to provide unrivalled and accurate 
information, such as our traffic data and mapping, process 
data quickly, present concise and valuable reporting tools and 
finally provide clear communications between office, driver and 
ultimately the end customer .
a survey of our customers
revealed that implementing
our intelligent driving and
fleet management solutions
helped reduce fuel cost by
30% across fleets of all sizes.
f act 08  TrafficmasTer Plc  annual report and accounts 2009
17384	 06/05/2010	 Proof	6
the board is pleased to report strong results for 2009.  
revenue in 2009 grew by 4% to £57.5m and profit before tax 
grew by 14% to £5.1m for the group as a whole. our Business 
services division performed very strongly, with revenue 
growth of 23% and operating profit growth of 138%, as our 
fleet director product continues to deliver excellent service 
to a growing customer base. revenue in our consumer 
services division declined by 22% and operating profit 
declined by 79% as we moved away from project-based, 
non-recurring revenues to focus on building a business 
based on recurring subscription revenue. overall the group 
is now in a significantly stronger position, with the underlying 
subscription-based nature of our services driving revenue and 
profit growth. 
we have had a number of notable sales successes in 2009, 
with a particularly strong performance from our national 
accounts team. w e are providing services to an increasing 
number of large customer fleets as well as maintaining our 
traditional strength amongst smaller fleet operators as the 
operating cost benefits of our technology become increasingly 
recognised. 
since the year-end we have been able to take steps towards 
expanding our business through an acquisition. in January 
we completed the refinancing of the group, by successfully 
raising an additional £4.2m of equity (before expenses) and 
refinancing our long-term bank facilities. this allowed us to 
complete the acquisition of fleet management s olutions, inc., 
which expands the range of services we can offer customers 
and will allow us to take advantage of exciting opportunities 
globally. the refinancing also provides certainty of funding to 
underpin the group’s activities over the next few years.  
2009 was a very difficult year in which to make progress and 
the board recognises the tremendous drive and determination 
of our people. along with many other businesses we have 
had to make hard decisions to reduce costs, which has put 
additional pressures on our people and we thank those who 
are no longer with us for their contribution. 
there have been two board changes since the last annual 
report. our previous chairman, colin w alsh, stepped down 
at the last annual General meeting and the board takes 
this opportunity to again express our thanks to colin for his 
enthusiasm, inspiration and commitment to t rafficmaster 
over the previous seventeen years. in may 2009 we were 
delighted to welcome phil cartmell as a non-executive 
director . phil’s extensive experience in running a wide range 
of businesses over many years is already proving invaluable to 
the board.
in summary the board is very pleased with the progress the 
company has made. the uncertain market conditions in 2009 
have been well documented and the board believes that 
t rafficmaster has performed well against its competitors 
throughout the period and is well positioned to continue its 
development.
Al An McW Alter
chairman of trafficmaster plc
chairman’s sT aTemenT
“The Board is pleased to report another year of strong 
progress at T rafficmaster despite the challenging 
market conditions. revenue grew and profitability 
improved as the recurring subscription-based nature 
of the business strengthened. With the acquisition of 
fms and associated refinancing post year-end, the 
group has made great progress in positioning itself 
well to benefit from future opportunities” .  www.trafficmaster.co.uk  TrafficmasTer Plc   09
Our Accounts Our Governance Our Business
17384	 06/05/2010	 Proof	6
We reduce overtime
by 15% on average;
unauthorised vehicle
use by 12% on
average and improve
productivity by 12%
on average
f act
Case study
Robert	Heath	Heating is one of the uK’s leading heating and 
maintenance contractors, working across the south of england 
for local authorities, housing associations and social landlords.  
the company’s 110-strong team of engineers carry out repairs 
and servicing in circa 60,000 properties.
it decided to install fleet director after investigating a number  
of fleet management solutions:
stuart cocks, financial director at robert heath, said:
“once we saw what fleet director could deliver for us, at an 
extremely competitive price, it was the obvious choice.  
fleet director is also very easy to use — and our drivers have 
found the smartnav routing very user-friendly as well.  i believe 
fleet director has also played an important part in helping us 
not only maintain current customers but secure new business 
contracts as well.”
the company has since reduced private mileage costs by 25%. 10  TrafficmasTer Plc  annual report and accounts 2009
17384	 06/05/2010	 Proof	6
chief execuTive’s
sTaTemenT 
t rafficmaster continued to make good progress in 2009. 
profitability grew strongly in our Business s ervices division, 
which now represents 70% of group revenues and 87% of 
operating profit before corporate costs and non-recurring 
items. our consumer s ervices division also had a good 
year, with our recurring stolen v ehicle t racking and t raffic 
businesses growing operating profit in aggregate, albeit 
offset by a decline in our project-based emerging products 
business. overall revenues and operating profits from our 
vehicle tracking subscription-based activities grew by 17% 
and 190% respectively to £50.2m and £7.8m.
Business services
through our fleet director product, our Business s ervices 
division offers customers in the us and the uK the ability to 
make significant operating efficiencies to their businesses 
through a range of fleet tracking services. divisional revenues 
continued to grow, to £40.0m, up 23% on 2008. profitability 
improved significantly, with divisional operating profit of 
£7.3m being 138% ahead of 2008. operating margins grew 
to 18% (2008: 9%) as the benefits of scale continue to be 
delivered, along with a shift in revenue mix towards higher 
margin subscriptions. our performance in 2009 demonstrates 
the benefits of having a subscription-based recurring 
revenue model at the core of our business. overall fleet 
subscribers have grown from 47,000 in 2005 to over 98,000 
in 2009, representing compound growth of 20% per year . 
customer churn in 2009 was 12%, which was in line with 
our average over the past five years. on a constant currency 
basis Business services revenue grew by 8% in the year and 
operating profit by 95%. 
 in the us, t eletrac continued to progress well. we expanded 
the major accounts sales team we established in 2008, 
and sales volumes derived through this team trebled in 
2009. notable successes in the past year include winning 
contracts with united site s ervices, united road t owing and 
mp nexlevel. w e have a growing pipeline of opportunities to 
provide service to customers with larger and more complex 
fleet requirements, which supplements our traditional 
strength in the smaller business market. as well as expanding 
our resource in major accounts we have continued to expand 
our smaller business sales teams, and since the year end 
have begun to establish a network of third party resellers to 
supplement our direct sales activities.
during 2009 we completed the transition of our customer base 
from legacy rf networks onto our current state of the art 
technology. t his process has been undertaken over a period of 
several years, and we are pleased that most of our customers 
have taken advantage of this transition to upgrade their service. 
t he completion of this transition process has resulted in surplus 
legacy inventory which we have provided against in 2009.
over the past year we have strengthened our partnership with 
ryder and sales of rydesmart, powered by t eletrac, have 
grown as the benefits of managing fleets efficiently 
have become even more pressing. ryder have committed to 
rolling out rydesmart across their entire rental fleet over the 
coming year .
in the uK sales of fleet director have continued to grow and 
we have won contracts with south t yneside council, liebherr, 
and Giffen Group over the past year . we have expanded our 
sales team and continued to develop our partnership with 
citroën under which we provide navigation and stolen vehicle 
tracking services as standard on relay, Berlingo and dispatch 
vans, and can support the vehicle owner by providing a range 
of additional services with fleet director . in early 2010 citroën 
announced that they would be extending our contract to 
include the base models of their entire van range.
fleet director continues to lead the industry, and during 2009 
won the fleet v an t echnology initiative of the year award and 
mobile electronics news’ Best fleet t racking product award, 
to add to a host of awards received over the past few years. 
as our business expands we are able to invest further in our 
product capability which will allow us to further improve our 
customer proposition compared to our competitors.
since the year-end we have announced the acquisition of f leet 
management solutions, inc (“fms ”). fms is a fast growing 
provider of satellite-based fleet tracking services enabling 
customers to manage their mobile assets anywhere in the world. 
“Business services has continued its strong 
progress in a tough environment. in the us, T eletrac 
continued to expand and we now have over 100,000 
vehicles using our services. our national accounts 
team had another successful year with some 
significant customer wins and sales volumes treble 
those in 2008. in the uK, fleet Director subscribers 
grew, building on the momentum created in 2008. ” www.trafficmaster.co.uk  TrafficmasTer Plc   11
Our Accounts Our Governance Our Business
17384	 06/05/2010	 Proof	6
We collect over 200m
data records per day on
real road speeds via our
in-vehicle units
f act
Awards
fleet director collected the prestigious fleet v an t echnology 
initiative of the year award 2009
the a ward specifically recognised the latest range of software 
enhancements to the system – particularly the ability to 
identify the actual closest vehicle based on live traffic 
information, which is unique in the industry. t ogether with the 
other new features of live traffic information now overlaid on 
virtual mapping; the instant dashboard reports and two-way 
messaging, fleet director really impressed the judges with its 
ability to support both fleet managers and drivers.
Fleet Van Magazine
t rafficmaster’s move to put smartnav navigation and its unique 
personal assistant service onto Gps mobile phones and 
BlackBerry was hailed by Businesscar as taking the hand-held 
sat nav market “to a new level” and consequently awarded it 
the 2009 Businesscar t echnology award.
Business Car Magazine
t rafficmaster also received the Best fleet management 
product with fleet director and  Best t racking product  
for t rackstar at the men a wards.  the awards not only 
acknowledged the excellence of the product but also the 
highest quality service delivered by t rafficmaster to their 
customers across the mobile electronics industry.
Mobile electronics news 12  TrafficmasTer Plc  annual report and accounts 2009
17384	 06/05/2010	 Proof	6
chief execuTive’s
sTaTemenT 
conTinueD
“overall T rafficmaster performed well in 2009.  
We have made some significant steps over the past 
twelve months, and the business is in a strong 
position to take advantage of the many 
opportunities for growth that we expect in 2010. ” 
the acquisition complements our fleet director service, 
which requires assets to be located in areas of mobile phone 
coverage. fms has established a strong presence in two 
key markets, the oil & gas market, and government, who 
require global, secure asset management systems. the us 
department of homeland s ecurity is currently deploying the 
fms service across 4,500 of its vehicles and the sales pipeline 
is growing.
Consumer services
our consumer s ervice division offers a range of t raffic 
and stolen v ehicle t racking services to consumers, and is 
also where we manage our emerging products activities. 
consumer s ervices revenues in 2009 declined 22% to £17.4m 
(2008: £22.4m), and operating profits declined by 78% to 
£1.1m (2008: £5.0m). almost all of the decline is driven by our 
non-recurring, project-based activities in emerging products. 
the ongoing, recurring consumer-led activities represented 
around 90% of consumer s ervices revenues in 2009.
stolen v ehicle t racking revenues declined 2% to £10.2m 
(2008: £10.4m) and the business reported an improved 
operating profit of £0.5m (2008: loss of £0.4m). our strong 
market position helped protect us somewhat, although the 
severe depression in prestige car sales has had an inevitable 
impact on the business. we have key relationships with Bmw, 
Jaguar, land-rover and aston martin amongst others, which 
help to protect our market share. we have continued to 
develop these relationships, and have been able to increase 
our penetration of vehicles requiring tracking.
our t raffic business provides users with access to market-
leading live traffic information through a range of different 
services. in line with overall consumer sentiment revenue 
declined 15% in 2009 to £5.4m (2008: £6.3m). with a largely 
fixed cost base, operating profit declined to a loss of £0.3m 
(2008: profit £0.4m), although the business generated positive 
contribution before depreciation of £1.0m (2008 £1.9m). 
during the year we signed a contract with navteq which 
enables navteq to use our market-leading live traffic data in 
a broad range of applications globally and as a core part of 
their pan-european traffic service offerings. w e also signed a 
two year extension to our contract with the uK Government’s 
department for t ransport (“dft”) for the supply of traffic data. 
this contract now runs until 2014. 
our emerging products developments continue to focus on 
paid-for development work in nascent markets for which a 
robust revenue model has yet to be fully established. all of the 
activities we undertake in this area are financed by external 
customers. this allows us to leverage existing investments, 
and work with customers and partners in establishing long-
term commercial opportunities. in 2009 we completed the first 
phase of the uK department for t ransport’s multi-year trial, 
evaluating the technological elements of road pricing, and 
have been awarded the contract for the second phase, which 
will complete in 2010. there is a significant international 
opportunity to develop and deploy road-pricing technologies 
in jurisdictions around the world and we are actively pursuing 
these opportunities in conjunction with partners.
Outlook
Business services has grown well driven by a growing 
subscriber base. owners of vehicle fleets are relying on 
technology to manage their mobile assets more effectively 
in the difficult financial climate. fleet director’s advanced 
capabilities allow our customers to realise operating 
efficiencies immediately and market penetration of fleet 
management solutions is rising.
our acquisition of fms after the year-end expands our range 
of fleet management capabilities, and allows us to address 
new markets. it also demonstrates our ability to identify and 
execute acquisitions which allow us to build scale, and expand 
the range of services available to our customers.
consumer s ervices has diverse revenue streams but 
continues to depend on overall levels of consumer spending 
in the economy. we are managing operating costs very tightly 
and are developing opportunities to grow our market share.
2009 was successful in a tough environment and looking 
ahead it appears that 2010 will again be challenging. however 
we believe that we are in strong position, and are approaching 
the future with confidence.
t ony eAles
chief executive www.trafficmaster.co.uk  TrafficmasTer Plc   13
Our Accounts Our Governance Our Business
17384	 06/05/2010	 Proof	6
Case study
Lyndhurst,	Department	of	Public	Works in the state of new 
Jersey, achieved astonishing results within a month.
having fitted t eletrac’s fleet director, it drastically reduced 
idling and cruising time as well as completely stamping out any 
unauthorised vehicle movement out of town or out of hours.
Between the months of december 2009 and January 2010 the 
organisation saved 265 gallons of diesel.
Case study
Pro-Tect	Systems	Ltd, the uK’s sole distributor of t aser 
products, which are electronic control devices used by police 
forces and the military runs a fleet of only six vehicles, however 
it uses an advanced fleet management system to manage its 
drivers better . Glenn cameron, it director and office manager, 
explains his use of fleet telematics:
“we had a driver in scotland when a customer based in cumbria 
called in with an emergency technical fault. as the driver was 
travelling back down we notified him of the job details and 
immediately sent directions via smartnav. not only were we able 
to satisfy the customer’s demand, but we saved ourselves from 
sending out another driver on another day.” 14  TrafficmasTer Plc  annual report and accounts 2009
17384	 06/05/2010	 Proof	6
financial revieW 
revenue and profit
r evenue for the year to 31 december 2009 was £57.5m, which 
was 4% ahead of 2008 (2008: £55.1m) and operating profit before 
non-recurring items was £6.3m, up 9% on 2008 (2008: £5.8m). 
t his performance was driven by a strong year for Business 
services, which grew revenue by 23% to £40.0m (2008: £32.6m) 
and operating profit by 138% to £7.3m (2008: £3.1m). eBitda * 
margins continued to grow, and in 2009 the Business services 
division grew eBitda * margins to 25% (2008: 15%). t his growth 
was delivered from a combination of the increasing proportion 
of revenue derived from recurring subscriptions, operational 
leverage in the business, and tight cost control. 
the consumer s ervices division saw revenue decline by 22% 
to £17.4m (2008: £22.4m), and operating profit decline by 
78% to £1.1m (2008: £5.0m). most of this decline was in the 
emerging products activities, which now make up around 3% 
of group revenue (2008: 10%). excluding these project-driven 
activities, revenue from our recurring consumer s ervices 
businesses was down 7% to £15.6m (2008: £16.7m), and 
eBitda * grew 13% to £3.2m (2008: £2.8m) as we continue 
to manage costs tightly and our revenue mix benefits from a 
higher proportion from subscriptions.
revenue recognition
during 2009 the group revised the methodology it uses to 
recognise revenue. t he revised approach, based on fair values 
of the individual components, recognises less revenue on 
initial unit sales and a greater proportion of contract revenue 
over the contract duration in line with the fair value of services 
delivered. previously the group used cost to determine 
the value of revenue components. t his has necessitated a 
restatement of the prior year’s accounts which was announced 
with our half year results in august 2009. management believes 
that the new methodology better reflects the underlying 
recurring nature of the group’s business, and provides more 
relevant information about future revenue streams. 
non-recurring items
we have recognised a non-recurring item of £1.0m (2008: 
£0.5m) which relates to the exit from our legacy rf networks 
in the us. w e have been migrating customers from this 
technology steadily over the past few years and finally 
closed the last remaining metropolitan network in 2009. the 
non-recurring charge relates to a provision against residual 
amounts of inventory which are not suitable for use by our 
customers in future.
interest
the net interest charge before the effect of foreign exchange 
remained broadly flat year on year at £0.9m (2008: £0.9m), 
as a portion of the group’s debt is hedged at fixed rates. in 
addition we recognised a foreign exchange gain of £0.7m 
(2008: nil) which arose on the retranslation of our us$ 
denominated bank debt into sterling at the year-end.
T ax
the group recorded a tax charge of £0.2m in the year (2008: 
£0.2m credit). the tax charge relates to various state-
level taxes payable in the us. the group still has access to 
significant levels of unutilised trading losses. 
Dividend
in line with previous years, the company is not proposing the 
payment of a dividend. the board reviews its dividend policy 
periodically, and is committed to the payment of a dividend at 
an appropriate time.
earnings per share
Basic earnings per share grew 6% to 3.62p in 2009 (2008: 
3.41p). in line with practice at many other companies, the group 
has prepared an adjusted earnings per share measure which 
is intended to increase the understanding of the underlying 
performance of the business. t his measure removes the effect 
of non-recurring items, amortisation of acquired intangibles, 
share-based payments and deferred tax movements. using 
this measure, basic underlying earnings per share grew 16% 
to 4.81p (2008: 4.14p). detailed calculations supporting this 
measure are shown in note 10 of the financial statements.
diluted earnings per share and adjusted earnings per share 
were not materially different as the potential dilutive effect 
of share options in issue was minimal due to the share price 
compared to historic levels of award. www.trafficmaster.co.uk  TrafficmasTer Plc   15
Our Accounts Our Governance Our Business
17384	 06/05/2010	 Proof	6
Cash-flow and capital expenditure
n et cash-flow from operating activities was £0.4m (2008: £4.6m). 
t he reduction in operating cash-flow was caused primarily by 
the reduced level of external customer lease funding undertaken 
by our leasing partners, which resulted in a higher proportion 
of internally financed receivables than has historically been the 
norm. t his will result in increased cash inflow in future as the 
long term receivable is collected. c ash out-flow from investing 
activities reduced to £3.4m (2008: £5.0m) as we continue to 
manage investments in product development very tightly. c ash 
spent on capital expenditure fell as a proportion of depreciation 
and amortisation to 74% in 2009 (2008: 108%). 
Balance sheet
net assets at 31 december 2009 increased by 12% to £32.2m 
(2008: £28.7m). this increase of £3.6m was created primarily 
by the profit generated in the year of £4.9m, offset by £1.2m of 
adverse foreign exchange movements arising on the group’s 
$us denominated assets. inventory levels continued to be 
actively managed downwards, and ended the year at £6.6m 
(2008: £11.9m).
subsequent to the year-end, the balance sheet has been 
further strengthened following the successful raising of 
additional new equity of £4.2m before expenses, which was 
completed in f ebruary 2010.
Bank facilities and covenants
in f ebruary 2010 the group completed a refinancing exercise 
to finance the acquisition of fms, to strengthen its balance 
sheet and to extend the life of its long-term debt financing. 
an additional 13.6m ordinary shares were placed with 
shareholders, raising £4.2m of additional equity before 
expenses. in addition, the group secured a new multi-currency 
bank facility with Barclays Bank. the bank facilities comprise 
term loans of £2.5m and $12.4m and a revolving credit facility 
of $12.4m. the facilities, which run until July 2013, include 
a range of covenants and include a schedule of quarterly 
repayments for the term loans. the facilities have security 
over various group assets including the freehold of its head 
office building at cranfield, Bedfordshire. during 2009 the 
group satisfied all of its covenants on its previous bank facility. 
as at 28 f ebruary 2010, the group’s net debt position was 
£14m, which allows £5m of available cash headroom.
T reasury
the group operates a centralised treasury function, whose 
primary aim is to manage cash-flow and currency risks. 
the group has transactional and translational exposure to 
overseas currencies, primarily the $us through its t eletrac 
operation. the group’s policy is not to hedge translation risk, 
but to hedge transactional cash-flow exposure if appropriate. 
we have established a natural hedge for transactional risk 
by denominating most of the net debt in $us. the group has 
access to a range of instruments to help it manage risk. 
the group is a party to an interest rate collar and a swap 
instrument which have the effect of capping the amount of 
interest payable on a portion of the net debt.
Acquisitions
in f ebruary 2010 the group acquired fleet management 
solutions, inc. (“fms”). $7.5m consideration was paid at 
completion, and the acquisition is subject to a performance-
related earn-out arrangement under which a maximum 
additional consideration of $6m is payable over the next 
two years. fms is performing to plan, and integration is 
proceeding as expected.
our previous acquisition, t ri-mex Group ltd (“eurowatch”), 
which was completed in July 2008 is fully integrated and 
performing in line with expectations. 
tiM ColeMAn
Group finance director 16  TrafficmasTer Plc  annual report and accounts 2009
17384	 06/05/2010	 Proof	6
BoarD of DirecT ors
Al An McWAlter
n on-executive Chairman
alan was appointed c hairman 
of the company at the annual 
General meeting in 2009. he 
was previously a n on-
executive director having 
joined the board in 2007. he is 
also a n on-executive director 
of alphameric plc, c attles plc, 
dignity plc, haygarth Group 
and c hairman of c onstantine 
holdings.
prior to these appointments, he 
was Group marketing director 
at marks & spencer plc and 
with the Kingfisher Group as 
marketing director of 
woolworths and marketing 
and Business development 
director of comet. 
tony eAles
Chief executive, 
t rafficmaster Plc  
and Chief executive officer  
teletrac inc., UsA
tony was appointed to the 
trafficmaster board in January  
1999, one year after joining the 
company in 1998.
Before then, he held senior 
management positions in 
f inance, marketing and 
strategic planning during 15 
years in the mobile telecoms 
sector . his expertise lies in 
strategic relationships, 
business and product 
development.
in august 2001, tony became 
chief executive officer of 
teletrac, trafficmaster’s us 
subsidiary. in this pivotal role, 
he was central to teletrac’s 
turnaround and expansion, 
making it a key revenue and 
profit generator for the 
trafficmaster Group. in July 
2005, tony was appointed chief 
executive of trafficmaster and, 
under his management the 
group has achieved significant 
profitable growth.
t iM Cole MAn
Group Finance Director
t im joined t rafficmaster in 
september 2008. having 
qualified as a c hartered 
accountant with price 
waterhouse in 1990, t im has 
held a number of senior 
financial roles with telecoms 
and software companies, 
including Bt , mfs 
c ommunications and 
packetvideo. since 2003 he 
was at n orthgate information 
solutions plc, the 
international software, 
outsourcing and information 
technology services company 
which was taken private by 
Kohlberg Kravis r oberts in 
march 2008. t im held several 
roles within n orthgate 
through a period of 
unprecedented growth, and 
was most recently uK f inance 
director . while at n orthgate, 
t im gained significant m&a 
experience and was closely 
involved with financing, 
acquiring and integrating 
numerous acquisitions.
st UArt Ber MAn
executive Director
stuart has held a number of 
senior executive positions in 
t rafficmaster, including c hief 
executive and c hief operating 
officer, joining the fold in 
2001. in his current role as 
director of t rafficmaster 
technologies, stuart is 
responsible for bringing to 
market new products and 
technologies for the benefit 
of the driver . 
with his combination of an 
engineering background and 
an mBa, his scope covers 
pioneering technology and he 
has previously worked for 
high growth technology 
companies holding senior 
director positions.  www.trafficmaster.co.uk  TrafficmasTer Plc   17
17384	 06/05/2010	 Proof	6
Our Accounts Our Governance Our Business
ti M VAn Cle Ve
executive Vice President, 
teletrac inc.
t im joined teletrac in 1996 
and in 2002 he was named 
c hief operating officer . t im 
joined the t rafficmaster board 
in may 2006. in his current 
role as executive vice 
president of teletrac he is 
responsible for developing 
indirect sales channels  
and market strategy across 
the us .
t im offers a wealth of 
expertise and business 
acumen having previously 
held sales positions at 
teletrac, including vice 
president of sales and 
c ustomer service.
Geo FFrey BiCKnell
n on-executive Director
alongside his role at 
t rafficmaster, Geoffrey is 
f inance director of 
douglasBay c apital, and a 
n on-executive director of 
Brady plc, an aim listed 
company. he has held 
executive directorships in 
companies including 
r ockwell international, ti 
Group plc, l ucas industries, 
maxima holdings plc and 
n orthgate information 
solutions plc. 
he combines broad based 
financial, commercial and 
operational management 
expertise with practical 
corporate finance experience 
gained in both the uK and in 
the us . he is a c hartered 
accountant both in c anada 
and the uK.
iAn Coo MBer
n on-executive Director
ian’s comprehensive expertise 
comes from over 35 years‘ 
experience in the motor 
industry. his career began in 
1963 at vauxhall motors l td, 
where he quickly rose through 
the ranks to become 
executive director, sales, 
marketing and c ustomer 
c are. while at vauxhall, ian 
also held positions of district 
service manager, Zone f leet 
manager, f leet sales 
manager and General  
sales manager .
ian’s other board 
appointments also include 
positions as a director of 
Gmac uK plc, iBc vehicles 
and opel performance c entre 
(Gmbh), and he was c o-c hair 
of the r etail f orum l td and 
c hairman of the society of 
motor manufacturers and 
t raders (smm&t ) c ar section 
c ommittee. he is also a  
n on-executive director at 
automotive engineers rml 
Group l td and international 
motorsports l imited.
Phil C Art Mell
n on-executive Director
phil joined t rafficmaster in 
may 2009. prior to this phil’s 
most recent executive role 
was as ceo of ve Ga Group plc 
which he joined in July 2000. 
he left ve Ga in may 2008 
following the sale of the 
business to f inmeccanica of 
italy, generating significant 
returns for investors. prior to 
ve Ga, phil held senior 
positions with Baan, origin 
uK, and KpmG c onsulting. 
phil is currently ceo of c orac 
Group plc, an oil and gas 
technology company listed on 
aim, and is a n on-executive 
director of csf Group plc, a 
malaysian data centre 
management company listed 
on aim. phil was previously 
c hairman of mmi Group plc. 18  TrafficmasTer Plc  annual report and accounts 2009
17384	 06/05/2010	 Proof	6
DirecT ors’ rePor T
t he directors have pleasure in presenting their report and the 
audited financial statements for the year ended 31 december 2009.
PrinciP al acTiviTies anD Business revieW
t rafficmaster is an expert in intelligent driving. it operates 
through four business segments which provide intelligent 
vehicle services to enhance driving experience and improve 
business performance by saving companies and drivers time 
and money and reducing their environmental impact. a review 
of the business of the group during the year is given in the 
chairman’s and chief executive’s statements on pages 8 to 12 
which are incorporated in this report by reference.
resul Ts
the results for the year are set out in the statement of 
comprehensive income on page 32. these show a group profit 
before tax of £5,131,000 (2008: £4,508,000) on group revenue 
of £57,466,000 (2008: £55,051,000) and a group gross profit of 
£36,230,000 (2008: £34,428,000). the directors do not 
recommend that a dividend be paid (2008: £nil).
research anD DeveloPmenT
the group pursues an active policy of research and 
development to introduce new products and to improve the 
quality and cost-effectiveness of its services.
DirecT ors anD Their inTeresTs a T 31 DecemBer 2009
the directors who held office during the year together with their share interests in the company (all beneficial unless otherwise 
stated) are:
 Ordinary	shares ordinary shares
 31	December	2009 31 december 2008
colin w alsh (resigned 20 may 2009) — 250,000
t ony eales 60,000 60,000
tim coleman 185,000 185,000
stuart Berman 55,000 55,000
tim v an cleve — —
ian coomber 100,000 100,000
Geoffrey Bicknell 100,000 100,000
alan mcw alter 100,000 100,000
phil cartmell (appointed 20 may 2009) — —
the directors’ interests in share options of the company are included on page 24.
the market price of shares at 31 december 2009 was 29.75p (31 december 2008: 18.50p). the highest price during the year was 
41.50p and the lowest price during the year was 15.00p.
caPiT al sTrucTure
the authorised share capital of the company as at 31 december 2009 was £8,000,000 ,comprised of 160,000,000 ordinary shares 
of 5p each. at the year end, 136,672,000 fully paid ordinary shares were in issue, including 40,000 shares issued during the year 
in relation to the company’s share option schemes. this represents 85% of the authorised share capital. each share carries the 
right to one vote at general meetings of the company and all shares are listed on the l ondon stock exchange.
the rights and obligations attached to the shares are contained within the articles of association, a copy of which can be 
obtained by writing to the company s ecretary.
there are no restrictions on the transfer or limitation on the holding of shares, nor are there any requirements to obtain prior 
approval in respect of any transfers of shares. the company is not aware of any agreements which limit the transfer or curtail 
the voting rights attached to those shares.
suBsT anTial shareholDinGs
as at 25 april 2010, the directors are aware of the following beneficial or non-beneficial holdings of 3% or more of the issued 
ordinary share capital of the company:
 number of percentage 
 ordinary of issued 
shareholder shares share capital
schroder investment management ltd 28,153,305 18.73
aberforth p artners llp 20,592,488 13.70
Barclays plc 11,630,861 7.74
td w aterhouse investor s ervices 7,532,476 5.01
l egal and General investment management 8,939,234 5.95
Gartmore investment management 5,159,446 3.43 www.trafficmaster.co.uk  TrafficmasTer Plc   19
17384	 06/05/2010	 Proof	6
Our Accounts Our Governance Our Business
DirecT ors anD ar Ticles of associa Tion
the constitution of the board and its committees and details of 
directors’ attendance at meetings, together with a statement 
on board evaluation, is set out in the corporate Governance 
statement on pages 25 to 29.
the articles of association require that each director retire by 
rotation if they have held office for more than 3 years.
the articles of association state that a director may be 
appointed by an ordinary resolution of the shareholders. the 
board has power to appoint directors during the course of a 
year and, if so, that appointee has to retire at the annual 
General meeting of the company following the appointment.
under the articles of association the directors are responsible 
for the management of the company and in doing so may 
exercise all the powers of the company subject to the 
provisions of relevant legislation. the powers of the directors 
extend to the issue and buy back of shares as set out in the 
articles of association.
marKeT value of BuilDinGs
the directors estimate the market value of the freehold 
building in the group supports the net carrying value as shown 
in the financial statements. details of property, plant and 
equipment are shown in note 11.
Treasur Y mana GemenT /Treasur Y Polic Y
the group’s policy seeks to ensure that adequate financial 
resources are available for the development of the group’s 
business whilst managing its currency, interest rate and credit 
risks. the group’s policy in respect of the major areas of 
treasury activity is set out below:
currency T ranslation exposure
the results of the group’s foreign subsidiaries are translated 
to sterling at the average exchange rates for the period 
concerned. the balance sheets of foreign subsidiaries are 
translated into sterling at the closing exchange rates. any 
gains and losses resulting from translation are recorded in 
the translation reserve. the group does not hedge translation 
exposure by forward exchange contracts or currency swaps, 
nor does it currently hedge translation exposures arising on 
unremitted non-uK earnings.
currency T ransaction exposure
this arises where actual sales and purchases are made by a 
business unit in a currency other than its own functional 
currency. the group does not currently hedge currency 
transaction exposure by forward exchange contracts and 
currency swaps.
interest rate risk
t he group’s policy is to borrow funds to finance working capital 
and acquisitions. such borrowings are in the form of bank 
overdrafts and bank loans. such borrowings have variable 
interest rates based upon bank base rates and risks are 
therefore subject to fluctuations in such rates. t he group uses 
interest rate swaps to manage its interest rate exposures.
credit risk
cash deposits and other financial instruments give rise to 
credit risk, represented by the loss that would be recognised if 
a customer failed to perform as contracted. the credit rating 
and performance of customers are monitored on a regular 
basis in accordance with board-approved policies.
f urther information relating to the group’s financial risk 
management can be found in note 26 on pages 60 to 63.
PaYmenT of creDiT ors
the group does not follow any code or standard on payment 
practice. its policy in relation to all its suppliers is to settle the 
terms of payment at the outset of a transaction and to abide by 
these terms provided that it is satisfied that the supplier has 
provided the goods or services in accordance with the agreed 
terms and conditions. the number of days’ billings from 
suppliers outstanding for the company at 31 december 2009 
was 49 (2008: 48).
GoinG concern
the directors have carried out an assessment of going 
concern, details of which are included in note 1.
corPora Te social resPonsiBiliTY
the group recognises its responsibilities to the communities 
in which we operate, our employees, the environment and 
other stakeholders in society. the board continues to identify 
climate change, health and safety and business ethics as main 
risks in the context of corporate s ocial responsibility and 
believes that these issues are integral and important 
components of best practice in business management. the 
board is committed to managing these risks, as well as others 
that it has identified, on an ongoing basis and to developing 
policies to promote best working practices in these areas.
as a leading technology company, people are at the centre of 
our business. their intellectual capital, commitment and 
enthusiasm drive the enterprise and our success depends on 
attracting, engaging and developing the very best. our 
employees are provided with ongoing learning and 
development opportunities and personal development 
programmes that are aligned to the group’s strategic 
objectives. 20  TrafficmasTer Plc  annual report and accounts 2009
17384	 06/05/2010	 Proof	6
our health and safety record continues to be good with no 
serious reported incidents during the year . all our staff have 
received health and safety training and we have an established 
structure in place for dealing with health and safety matters.
we are committed to continuing to provide a safe and secure 
working environment and equal opportunities for all our 
employees.
the board strongly believes in acting in an environmentally 
responsible manner, which is reflected in the way we operate 
and conduct our business. our business is built on the concept 
of ‘intelligent driving’; our products and services continue to 
foster efficient use of vehicles to avoid congestion, thereby 
eliminating wasted journeys and helping to reduce 
environmental impact. our products came runner up in the 
energy s aving t rust’s innovation 2007 awards and were 
acclaimed as a fleet hero which further endorsed their green 
credentials. in 2008, we received the prestigious Green fleet 
award for it and communication product of the y ear for fleet 
director .
we also believe that acting in an environmentally responsible 
manner should extend beyond the abilities of our products and 
services and should be reflected in the way we do business, to 
minimise our own carbon footprint while helping other 
companies to reduce theirs.
the board is committed to environmental management to 
reduce the group’s environmental impact. our environmental 
management system (ems) in the uK has been independently 
audited by Bsi and met the Bs en iso14001:2004 standard.
we aspire to be a responsible partner in the communities in 
which we operate around the world. the board encourages all 
our businesses to engage constructively with their local 
communities and contribute to their prosperity through 
providing employment and support for their sustainable 
growth.
the board believes that our business should be operated only 
through ethical policies and practices. our code of conduct 
establishes the ethical standards that all our employees are 
required to follow and we have established a structure to 
follow up any breaches of these ethical policies.
emPlo Yees
the group places considerable value on the involvement of its 
employees and has continued its previous practice of keeping 
them informed on matters affecting them as employees and 
on the various factors affecting the performance of the group. 
this is achieved through formal and informal meetings.
DisaBleD emPlo Yees
the group recognises its social and statutory duties to employ 
disabled persons and pursues a policy of providing, wherever 
possible, the same employment and training opportunities to 
disabled persons as to other employees.
where existing employees become disabled, it is the group’s 
policy wherever practicable to provide continuing employment 
under normal terms and conditions and to provide training 
and career development and promotion to disabled employees 
wherever appropriate.
Dona Tions
the group made no political or charitable donations during the 
year (2008: £nil).
Disclosure of informa Tion T o auDiT ors
the directors who held office at the date of approval of this 
directors’ report confirm that, so far as they are each aware, 
there is no relevant audit information of which the company’s 
auditors are unaware; and each of the directors have taken all 
steps that they ought to have taken as directors to make 
themselves aware of any relevant audit information and to 
establish that the company’s auditors are aware of that 
information.
DirecT ors’ auThoriTY T o issue shares
at the forthcoming annual General meeting, the directors will 
seek to renew their existing authority to allot all the unissued 
ordinary share capital (£483,018) at that time. they will also 
seek to renew their existing authority to allot for cash up to 
5% (£375,849) of the issued share capital otherwise than pro 
rata to existing shareholders.
auDiT ors
KpmG audit plc have expressed their willingness to continue 
in office as auditors and, in accordance with section 489 of the 
companies act 2006, a resolution to reappoint them will be 
proposed at the forthcoming annual General meeting.
By order of the board
rADoMir l Alo ViC
secretary
27 april 2010
DirecT ors’ rePor T
continued www.trafficmaster.co.uk  TrafficmasTer Plc   21
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Our Accounts Our Governance Our Business
DirecT ors’ remunera Tion rePor T
 
the directors present their remuneration report for the year 
ended 31 december 2009.
remunera Tion commiTTee
the policy for directors’ remuneration is set by the board as a 
whole. the remuneration committee operates within this 
policy to advise on levels of remuneration.
the remuneration committee of the board is responsible for 
ensuring that the remuneration packages provided to 
executive directors are appropriate to individual levels of 
experience, responsibility and performance, are consistent 
with the company’s remuneration policy, and are in line with 
the principles of good corporate governance.
the remuneration committee is composed entirely of 
non-executive directors who have no financial interest in the 
group (other than as shareholders), no personal interest in the 
committee’s deliberations or decisions, and no involvement 
in the day-to-day management of the group’s operations. 
the members of the committee during the year were: 
ian coomber (chairman), colin w alsh , Geoffrey Bicknell, 
phil cartmell and alan mcw alter .
the committee usually meets at least twice a year . the chief 
executive is normally invited to attend its meetings in order to 
make recommendations concerning remuneration. the 
finance director and company s ecretary provide support to 
the committee and external advice is obtained when 
necessary. the chief executive is not present when his own 
remuneration is being discussed. during the year the 
committee received material assistance on remuneration 
decisions from the chief executive.
remunera Tion Polic Y
the group’s policy on directors’ remuneration is that its 
remuneration packages should be capable of attracting, 
rewarding and retaining both executive and non-executive 
directors who have the skills, experience and expertise that 
will enable the group to deliver superior levels of shareholder 
return.
account is taken of the salary and total remuneration levels 
prevailing in comparable jobs in similar size organisations, 
together with the individual performance and contribution of 
each of the executive directors.
the remuneration of executive directors consists of base 
salary, performance related bonus, benefits in kind (a car or 
car allowance, medical expenses insurance, life assurance 
and income protection insurance), share options and pension 
provision.
all executive directors participate in a bonus scheme that is 
related to consolidated group profitability. in addition, 
directors other than the chief executive have individual bonus 
schemes based on achieving goals specifically related to their 
areas of responsibility.
the remuneration details of each director are given on 
page 23.
service conTracTs
executive directors are all employed under agreements which 
set out their responsibilities and obligations to the group, and 
the terms of their employment include a twelve-month rolling 
notice period and meet the requirements of the combined 
code.
none of the service contracts contain any specific termination 
provisions.
the board notes and has reviewed the provision of the 
combined code concerning notice periods and the aBi/napf 
joint guidelines on service contracts. in agreeing these 
contracts, account has been taken of the board’s wish to retain 
people of high calibre.
unless the interests of the group require otherwise (which it is 
anticipated will only be in exceptional circumstances), it is the 
board’s intention that any future executive appointments to the 
board will be on the basis that notice periods will not exceed 
12 months or, if they do, this will only be for a short initial 
term.
in the event of early termination, the remuneration 
committee will take careful account of the prevailing 
circumstances in awarding compensation and will take 
appropriate professional advice to ensure that best practice is 
consistent with the parties’ contractual rights.
the committee would look favourably on a request by an 
executive director to take up a non-executive appointment at 
a non-competing company having regard to the time 
commitment that this would entail compared to the benefits 
that it could bring the group.
non-execuTive DirecT ors
the non-executive directors receive fees for their services. 
the executive directors determine the remuneration of the 
non-executive directors.
the non-executive directors have letters of appointment, with 
rolling notice periods of between one and three months. they 
are not eligible for pension scheme membership or for 
contributions to their own individual pension schemes, receive 
no benefits in kind, and do not participate in any profit sharing, 
share option or other incentive scheme. 22  TrafficmasTer Plc  annual report and accounts 2009
17384	 06/05/2010	 Proof	6
DirecT ors seeKinG re-elecTion
in accordance with the articles of association, t ony eales, 
ian coomber and phil cartmell are required to seek re-
election at the next annual General meeting.
Pensions
the company pays up to 10% of basic salary into personal 
pension funds set up by each of the executive directors.
DirecT ors’ inTeresTs in conTracTs anD o Ther 
TransacTions WiTh GrouP comP anies
no director has any material interest in any contracts with any 
group companies other than a service contract.
share oPTions
the company has operated the following share option plans 
for several years:
● ● 1996 hm revenue and customs approved and unapproved 
plans. awards under both of these plans are made at 
ruling market prices at the date of grant. awards can only 
be exercised if either the growth in earnings in each of 
three consecutive financial years exceeds the rate of 
increase in the uK retail prices index by at least 1%, or, in 
the case of the unapproved scheme only, the average of 
the growth in earnings in the second and third financial 
years exceeds the earnings in the first year by a 
percentage which is no less than the rate of increase in 
the uK retail price index plus 10%. this latter test has 
been introduced by the remuneration committee to 
operate alongside the original test to take account of the 
fact that, although the group may have achieved 
sustained average underlying growth, this might not 
necessarily have satisfied the year on year growth 
required by the original test. the remuneration 
committee is of the opinion that the adjustment produces 
a fairer result.
● ● the 2006 non-hm revenue and customs approved share 
option scheme were introduced in June 2006. awards 
made under this scheme was made at ruling market 
prices at the grant date and can be exercised if the growth 
in earnings p er share (eps) over the three year period 
ending 31 december 2008 is greater than 15%, and the 
growth in share price is at least 30%. these awards vest 
on a straight-line basis for share price growth between 
30% and 100%.
● ● in 2007, two share options arrangements were setup for 
the group’s employees in the uK and the us. a wards 
under both of these schemes are made at ruling market 
prices at the date of grant discounted by up to 20% and 
15% respectively. the scheme available to the uK 
employees of the group is approved by hm revenue and 
customs and is a s ave as you earn scheme. the us plan 
is an employee stock purchase plan.
all schemes are operated under the auspices of the 
remuneration committee and a total of 5,576,207 (2008: 
9,908,431) options have been awarded to a total of 52 staff and 
four directors. share option movements during the year are 
shown in note 23 on page 58.
shareholDer value
the graph below looks at the value, by the end of year 2009, 
of £100 invested in t rafficmaster plc at december 2004 
compared with the value of £100 invested in the ftse 
fledgling index. other points plotted are the values at the 
financial year ends. the comparator index has been chosen as 
it represents a relevant index of which the company is a 
member .
DirecT ors’ remunera Tion rePor T
continued
Total cumulative shareholder return for the five-year period to 31 December 2009 
0
20
40
60
80
100
120
140
160
2004 2005 2006 2007 2008 2009
FTSE Fledgling 
TSR Trafficmaster Plc www.trafficmaster.co.uk  TrafficmasTer Plc   23
17384	 06/05/2010	 Proof	6
Our Accounts Our Governance Our Business
the auditors are required to report on the information contained in this section of the report.
DirecT ors’ emolumenTs
	 	 	 	 	 	 Company	
	 	 	 	 	 	 contributions	to	
	 	 	 	 	 	 money	purchase	
	 Salary	 	 	 	 	 pension	schemes
	 	 and	fees	 Bonus	 Benefits	 2009	 2008	 2009	 2008
	 	 £000	 £000	 £000	 £000	 £000	 £000	 £000
aggregate directors’ remuneration:
executive directors
t ony eales 247	 125	 5	 377 288 23 18
tim coleman 145	 68	 1	 214 50 14 4
stuart Berman 150	 70	 3	 223 194 14 14
tim v an cleve 230	 —	 —	 230 197 — —
nigel Bond —	 —	 —	 — 30 — 2
non-executive directors
alan mcw alter (chairman)* 48	 —	 —	 48 24 — —
colin w alsh 15	 —	 —	 15 40 — —
Geoffrey Bicknell 30	 —	 —	 30 24 — —
ian coomber 32	 —	 —	 32 24 — —
phil cartmell 20	 —	 —	 20 — — —
  917	 263	 9	 1,189 871 51 38
* alan was appointed chairman of t rafficmaster plc on 20 may 2009.
       2009 2008
the number of directors to whom benefits are accruing under money purchase pension schemes  3 3 24  TrafficmasTer Plc  annual report and accounts 2009
17384	 06/05/2010	 Proof	6
DirecT ors’ share oPTions in orDinar Y shares
number of options during the year
 at 31    At	31
 december    December exercise exercise
 2008 lapsed Granted exercised 2009 price period
t ony eales
unapproved scheme 100,000 — — — 100,000 £0.520 25.10.04–24.10.11
unapproved scheme 250,000 — — — 250,000 £0.235 05.04.05–04.04.12
unapproved scheme 110,000 — — — 110,000 £0.420 16.10.06–15.10.13
unapproved scheme 75,000 — — — 75,000 £0.835 28.10.07–27.10.14
unapproved scheme 1,200,000 (1,200,000) — — — £0.362 30.06.09–29.06.16
saye scheme 11,017 — — — 11,017 £0.5228 09.11.10-08.11.17
unapproved scheme 870,000 — — — 870,000 £0.380 11.04.11–10.04.18
tim coleman
unapproved scheme 300,000 — — — 300,000 £0.130 03.12.11–02.12.18
stuart Berman
approved scheme 57,692 — — — 57,692 £0.520 25.10.04–24.10.11
unapproved scheme 75,000 — — — 75,000 £0.835 28.10.07–27.10.14
unapproved scheme 750,000 (750,000) — — — £0.362 30.06.09–29.06.16
saye scheme 11,017 — — — 11,017 £0.5228 09.11.10-08.11.17
unapproved scheme 300,000 — — — 300,000 £0.380 11.04.11–10.04.18
tim v an cleve
approved scheme 80,000 — — — 80,000 £0.155 24.09.05–23.09.12
approved scheme 46,933 — — — 46,933 £0.375 17.06.06–16.09.13
unapproved scheme 3,067 — — — 3,067 £0.375 17.06.06–16.09.13
unapproved scheme 50,000 — — — 50,000 £0.660 07.04.07–06.04.14
unapproved scheme 50,000 — — — 50,000 £0.835 28.10.07–27.10.14
unapproved scheme 50,000 — — — 50,000 £0.532 05.04.08–04.04.15
unapproved scheme 100,000 — — — 100,000 £0.330 24.10.08–23.10.15
unapproved scheme 750,000 (750,000) — — — £0.362 30.06.09–29.06.16
saye scheme 8,780 (8,780) — — — £0.3974 03.10.09-02.12.17
unapproved scheme 200,000 — — — 200,000 £0.380 11.04.11–10.04.18
t otal 5,448,506 (2,708,780) — — 2,739,726
iAn CooMBer
chairman, remuneration committee
27 april 2010
DirecT ors’ remunera Tion rePor T
continued www.trafficmaster.co.uk  TrafficmasTer Plc   25
17384	 06/05/2010	 Proof	6
Our Accounts Our Governance Our Business
corPora Te Governance
 
throughout the year to 31 december 2009, the group complied 
with the provisions of the revised combined code on 
corporate Governance issued by the financial reporting 
council in June 2008 except as detailed below. the group has 
a policy of seeking to comply with established best practice in 
the field of corporate governance. the board has adopted core 
values and standards which set out the behaviour expected of 
staff in their dealings with shareholders, customers, 
colleagues, suppliers and other stakeholders of the group. 
one of the core values is the acceptance of the highest 
standard of integrity in the group’s business activities.
BoarD sTrucTure
currently, the board comprises the chairman, three other 
non-executive directors and four executive directors. the 
names of the directors together with their biographical details 
are set out on pages 16 and 17.
as announced previously, colin w alsh, long standing non-
executive director and chairman of t rafficmaster plc, retired 
from the board at the annual General meeting held in may 
2009. at the same meeting, alan mcw alter was appointed as 
chairman of t rafficmaster plc and phil cartmell as non-
executive director . the directors believe that the current 
structure of the board provides an excellent balance of 
relevant corporate and commercial experience together with 
effective non-executive director independence.
non-comPliance
the directors have strengthened significantly the board’s 
compliance with the changes introduced in the past few years. 
notwithstanding those changes, the combined code also 
requires the board to report the following areas of non-
compliance during 2009:
● ● the executive directors, not the chairman, take primary 
responsibility for meeting the major shareholders 
regularly to develop an understanding of their views 
which are communicated to the chairman, s enior 
independent non-executive director and the rest of the 
board.
The BoarD
the group is controlled through its board of directors. the 
board’s main roles are to create value for shareholders, to 
provide entrepreneurial leadership of the group, to approve 
the group’s strategic objectives and to ensure that the 
necessary financial and other resources are made available to 
enable them to meet those objectives. the board, which meets 
at least ten times a year, considers matters set out in an 
agenda circulated before each meeting. decisions of a 
strategic nature are approved by the board.
the specific responsibilities reserved to the board include: 
setting group strategy and approving an annual budget and 
medium-term projections; reviewing operational and financial 
performance; approving major acquisitions, divestments and 
capital expenditure; reviewing the group’s systems of financial 
control and risk management; ensuring that appropriate 
management development and succession plans are in place, 
reviewing the environmental, health and safety performance 
of the group; approving appointments to the board and the 
company s ecretary and ensuring that a satisfactory dialogue 
takes place with shareholders.
the board has delegated the following responsibilities to the 
executive management committee: the development and 
recommendation of strategic plans for consideration by the 
board that reflect the longer-term objectives and priorities 
established by the board; implementation of the strategies 
and policies of the group as determined by the board; 
monitoring of the operating and financial results against plans 
and budgets; monitoring the quality of the investment process 
against objectives; prioritising the allocation of capital, 
technical and human resources; monitoring the composition 
and terms of reference of divisional management committees; 
and developing and implementing risk management systems.
The roles of The chairman anD chief execuTive
the division of responsibilities between the chairman of the 
board, alan mcw alter, and the chief executive, t ony eales, is 
clearly defined and has been approved by the board.
the chairman is responsible for organising the business of 
the board and ensuring its effectiveness. the chairman has 
no involvement in the day-to-day business of the group. 
the chairman facilitates the effective contribution of non-
executive directors and constructive relations between 
executive and non-executive directors, and ensures that 
directors receive accurate, timely and clear information and 
ensures effective communication with shareholders.
the chief executive determines the group’s strategy, has 
direct charge of the group on a day-to-day basis and is 
accountable to the board for the financial and operational 
performance of the group.
senior inDePenDenT DirecT or
ian coomber, the s enior independent director, is always 
available to meet shareholders on request and to ensure that 
the board is aware of shareholder concerns not resolved 
through the existing mechanisms for investor communication.
DirecT ors’ inDePenDence
the board includes non-executive directors who 
constructively challenge and help develop proposals on 
strategy, and bring strong, independent judgement, 
knowledge, and experience to the board’s deliberations.   26  TrafficmasTer Plc  annual report and accounts 2009
17384	 06/05/2010	 Proof	6
they are of sufficient calibre and number that their views 
carry significant weight in the board’s decision making.
the directors are given access to independent professional 
advice at the group’s expense, when the directors deem it is 
necessary in order for them to carry out their responsibilities.
details of the chairman’s professional commitments are 
included in the chairman’s biography.
none of the non-executive directors at the year end:
● ● has been employed by the group within the last five years;
● ● has, or had within the last three years, a material 
business relationship with the group;
● ● receives remuneration other than a director’s fee;
● ● has close family ties with any of the group’s advisers, 
directors or senior employees;
● ● holds cross-directorships or has links with other 
directors through involvement in other companies or 
bodies.
Professional DeveloPmenT
on appointment, the directors take part in an induction 
programme where they receive information about the group, 
the role of the board and the matters reserved for its decision, 
the terms of reference and membership of the principal board 
and management committees, and the powers delegated to 
those committees, the group’s corporate governance practices 
and procedures, including the powers reserved to the group’s 
most senior executives, and the latest financial information 
about the group. this is supplemented by meetings with other 
key senior executives. throughout their period in office the 
directors are continually updated on the group’s business, the 
competitive and regulatory environments in which it operates, 
corporate social responsibility matters and other changes 
affecting the group and the industry it operates in as a whole, 
by written briefings and meetings with senior executives. 
directors are also advised on appointment of their legal and 
other duties and obligations as a director of a listed company, 
both in writing and in face-to-face meetings with the 
secretary. they are reminded of these duties each year and 
they are also updated on changes to the legal and governance 
requirements of the group and upon themselves as directors.
Performance evalua Tion
the board, led by the chairman, performs an informal 
evaluation of the performance of the board, its principal 
committees, and individual directors with particular attention 
to those who are due for reappointment. this evaluation takes 
the form of a discussion with reference to the minutes of 
relevant meetings during the year under review.
re-elecTion
subject to the company’s articles of association, the 
companies act and satisfactory performance evaluation, 
directors stand for re-election every three years. in addition, 
non-executive directors who have served for more than nine 
years are put forward for annual re-election.
The comP anY secreT ar Y
the company s ecretary is responsible for advising the board 
through the chairman on all governance matters. the 
directors have access to the advice and services of the 
company s ecretary. the company’s articles of association 
provide that the appointment and removal of the company 
secretary is a matter for the full board.
informa Tion
regular reports and papers are circulated to the directors in a 
timely manner in preparation for board and committee 
meetings. the papers are supplemented by information 
specifically requested by the directors from time to time.
the non-executive directors receive monthly management 
accounts and regular management reports and information 
which enable them to scrutinise the group’s and 
management’s performance against agreed objectives.
rela Tions WiTh shareholDers
the chief executive and finance director give feedback to the 
board on issues raised with them by major shareholders and 
the group’s broker . in addition, the chairman is in regular 
discussions with the group’s broker and is available to 
shareholders as required. the annual General meeting is 
normally attended by all directors, and all shareholders have 
an opportunity to ask questions during the meeting and to 
meet with directors after the formal proceedings have ended.
the group maintains a corporate web site (www.trafficmaster .
co.uk) containing a wide range of information of interest to 
institutional and private investors. the group has frequent 
discussions with institutional shareholders on a range of 
issues affecting its performance. these include meetings 
following the announcement of the annual results with the 
group’s largest institutional shareholders on an individual 
basis. in addition, the group responds to individual and ad hoc 
requests for discussions from institutional shareholders. the 
senior independent director is available to shareholders if 
they have concerns, which contact through normal channels 
of chairman or chief executive has failed to resolve, or for 
which such contact is inappropriate.
corPora Te Governance
continued www.trafficmaster.co.uk  TrafficmasTer Plc   27
17384	 06/05/2010	 Proof	6
Our Accounts Our Governance Our Business
inTernal conTrol
in accordance with the guidance of the t urnbull committee the 
board of directors is responsible for the group’s system of 
internal control; sets appropriate policies on internal control; 
seeks regular assurances that enable it to satisfy itself that 
the system is functioning effectively; and ensures that the 
system of internal control is effective in managing risks in the 
manner which it has approved.
the directors have continued to review the effectiveness of the 
group’s system of financial and non-financial controls, 
including operational and compliance controls, risk 
management and the group’s high level internal control 
arrangements. these reviews have included an assessment of 
internal controls, management assurance of the maintenance 
of control and a report from the external auditor on matters 
identified in the course of its statutory audit work. a key part 
of these reviews is an annual “letter of assurance” process by 
which responsible managers confirm the adequacy of their 
system of internal financial and non-financial controls, their 
compliance with group policies (including those relating to 
safety, health and the environment), local laws and 
regulations (including the industry’s regulatory requirements) 
and report any control weaknesses identified in the past year .
the group views the careful management of risk as a key 
management activity. managing business risk to deliver 
opportunities is a key element of all activities. this is done 
using a simple and flexible framework which provides a 
consistent and sustained way of implementing the group’s 
values. these business risks, which may be strategic, 
operational, reputational, financial or environmental, should 
be understood and visible. the business context determines in 
each situation the level of acceptable risk and controls.
BoarD commiTTees
the number of full board meetings and committee meetings 
attended by each director during the year to 31 december 
2009 was as follows:
  scheduled remuneration audit nomination 
  Board committee committee committee 
  meetings meetings meetings meetings
colin w alsh, f ormer chairman  5 (5) 3(3) 1(1) 1(1)
alan mcw alter, chairman  11(11) 5(5) 3(3) 1(1)
t ony eales, chief executive  11 (11) n/a n/a 1(1)
tim coleman, finance director  11 (11) n/a n/a n/a
stuart Berman, executive director  11 (11) n/a n/a n/a
tim v an cleve, executive director  10 (11) n/a n/a n/a
ian coomber, non-executive director  11 (11) 5(5) 3(3) 1(1)
Geoffrey Bicknell, non-executive director  10(11) 4(5) 3(3) 1(1)
phil cartmell, non-executive director  7(7) 2(2) 2(2) 0(0)
figures in brackets indicate the maximum number of meetings in the period in which the individual was a board member . 28  TrafficmasTer Plc  annual report and accounts 2009
17384	 06/05/2010	 Proof	6
nomina Tion commiTTee
the board periodically considers the mix of skills and 
experience that the board requires and seeks the appointment 
of directors to meet its assessment of what is required to 
ensure the board is effective in discharging its responsibilities. 
if considered appropriate by the board, a nomination 
committee is formed to make recommendations to the board 
regarding the appointment of directors. during 2009 the 
nomination committee, under the chairmanship of ian 
coomber, s enior independent director, was convened to 
manage the process of appointing a new chairman and a new 
non-executive director . the nomination committee 
comprised colin w alsh, Geoffrey Bicknell, alan mcw alter and 
t ony eales. alan mcw alter did not participate in nomination 
committee meetings concerning his appointment.
remunera Tion commiTTee
during the year the remuneration committee comprised ian 
coomber (chairman), Geoffrey Bicknell, alan mcw alter, 
phil cartmell (from may 2009) and colin w alsh (up to may 
2009). the committee met five times during the year; when 
necessary, non-committee members were invited to attend.
the committee’s principal responsibilities are:
● ● setting, reviewing and recommending to the board for 
approval the group’s overall remuneration policy and 
strategy;
● ● setting, reviewing and approving individual remuneration 
packages for executive directors and the chairman 
including terms and conditions of employment and any 
changes to the packages;
● ● reviewing the salary structure and terms, conditions and 
benefits of employment of other group executive 
committee members; and
● ● approving the rules, and launch, of any group share, 
share option or cash-based incentive scheme and the 
grant, award, allocation or issue of shares, share options 
or payments under such schemes.
in addition, the committee regularly reviews the group’s 
remuneration policy in relation to:
● ● its competitors and industry norms;
● ● compensation commitment; and
● ● contract periods.
with the specific approval of the board in each case, executive 
directors may accept external appointments as non-executive 
directors of other companies and retain any related fees paid 
to them. none of the executive directors held such an 
appointment during the year .
auDiT commiTTee
during the year the audit committee comprised Geoffrey 
Bicknell (chairman), ian coomber, phil cartmell (from may 
2009), alan mcw alter and colin w alsh (up to may 2009). all the 
members of the committee are non-executive directors. the 
audit committee met three times during the year .
the committee has at least one member possessing recent 
and relevant experience in Geoffrey Bicknell. Geoffrey is a 
chartered accountant in both the uK and canada, gaining 
practical corporate finance experience whilst occupying 
various senior executive positions in the uK and the us . it will 
be seen from the directors’ biographical details, appearing on 
pages 16 and 17 that the other members of the committee 
bring to it a wide range of experience from positions in the uK.
the audit committee monitors the integrity of the group’s 
financial statements and any formal announcements relating 
to the group’s performance. the committee is responsible for 
monitoring the effectiveness of the external audit process and 
making recommendations to the board in relation to the 
appointment, reappointment and remuneration of the external 
auditor . it is responsible for ensuring that an appropriate 
relationship between the group and external auditors is 
maintained, including reviewing non-audit services and fees. it 
also reviews annually the group’s systems of internal control 
and the processes for monitoring and evaluating the risks 
facing the group.
corPora Te Governance
continued www.trafficmaster.co.uk  TrafficmasTer Plc   29
17384	 06/05/2010	 Proof	6
Our Accounts Our Governance Our Business
the board has considered establishing an internal audit 
function and has decided that this would not be appropriate at 
this stage of the group’s development. the board considers 
that it currently receives sufficient assurance from external 
advisers and regulatory bodies on relevant areas of risk. the 
board is committed to reviewing the need for internal audit on 
a regular basis.
the committee meets with executive directors and 
management, as well as privately with the external auditors.
in 2009 the audit committee discharged its responsibilities by:
● ● reviewing the group’s draft financial statements and 
interim results statements prior to board approval and 
reviewing the external auditors’ detailed reports thereon;
● ● reviewing the group’s trading update announcements 
prior to release;
● ● reviewing the appropriateness of the group’s accounting 
policies;
● ● reviewing regularly the potential impact to the group’s 
financial statements of certain matters such as 
impairments of asset values and international financial 
reporting standards;
● ● reviewing and approving the audit fee and reviewing 
non-audit fees payable to the group’s external auditors;
● ● reviewing the external auditors’ plan for the audit of the 
group’s accounts, which includes key areas of extended 
scope work, key risks on the accounts, confirmation of 
auditor independence and the proposed audit fee, and 
approving the terms of engagement for the audit;
● ● reviewing an annual report on the group’s systems of 
internal control and its effectiveness, reporting to the 
board on the results of the review and receiving regular 
updates on key risk areas of financial control.
auDiT ors’ inDePenDence anD oBJecTiviTY
the audit committee monitors annually the non-audit 
services being provided to the group by its external auditors, 
and has developed an auditor independence policy to check 
that this does not impair their independence and objectivity, 
and that the group maintains a sufficient choice of 
appropriately qualified audit firms. the policy sets out four key 
principles which underpin the provision of non-audit services 
by the external auditors: the auditor should not audit its own 
firm’s work, make management decisions for the group, have 
a mutuality of financial interest with the group, or be put in a 
role of advocate for the group. any activities that may be 
perceived to be in conflict with the role of external auditor 
must be submitted to the committee for approval prior to 
engagement regardless of the amounts involved. the audit 
committee monitors all services being provided by the 
external auditors annually to review their independence and 
objectivity, taking into consideration the relevant professional 
and regulatory requirements, so that these are not impaired 
by the provision of permissible non-audit services.
details of the amounts paid to external auditors during the 
year for audit and other services are set out in the notes to the 
financial statements on page 46.
on behalf of the board
rADoMir l Alo ViC
secretary
27 april 2010 30  TrafficmasTer Plc  annual report and accounts 2009
17384	 06/05/2010	 Proof	6
sTaTemenT of DirecT ors’ resPonsiBiliTies in resPecT 
of The DirecT ors’ rePor T anD The financial sT aTemenTs
 
the directors are responsible for preparing the annual report 
and the group and parent company financial statements in 
accordance with applicable law and regulations.
company law requires the directors to prepare group and 
parent company financial statements for each financial year . 
under that law they are required to prepare the group 
financial statements in accordance with ifrss as adopted by 
the eu and applicable law and have elected to prepare the 
parent company financial statements in accordance with uK 
accounting standards and applicable law (uK Generally 
accepted accounting practice).
under company law the directors must not approve the 
financial statements unless they are satisfied that they give a 
true and fair view of the state of affairs of the group and 
parent company and of their profit or loss for that period. in 
preparing each of the group and parent company financial 
statements, the directors are required to:
● ● select suitable accounting policies and then apply them 
consistently;
● ● make judgements and estimates that are reasonable and 
prudent;
● ● for the group financial statements, state whether they 
have been prepared in accordance with ifrss as adopted 
by the eu;
● ● for the parent company financial statements, state 
whether applicable uK accounting standards have been 
followed, subject to any material departures disclosed 
and explained in the parent company financial 
statements; and
● ● prepare the financial statements on the going concern 
basis unless it is inappropriate to presume that the group 
and the parent company will continue in business.
the directors are responsible for keeping adequate accounting 
records that are sufficient to show and explain the parent 
company’s transactions and disclose with reasonable 
accuracy at any time the financial position of the parent 
company and enable them to ensure that its financial 
statements comply with the companies act 2006. they have 
general responsibility for taking such steps as are reasonably 
open to them to safeguard the assets of the group and to 
prevent and detect fraud and other irregularities.
under applicable law and regulations, the directors are also 
responsible for preparing a directors’ report, directors’ 
remuneration report and corporate Governance statement 
that complies with that law and those regulations.
the directors are responsible for the maintenance and 
integrity of the corporate and financial information included 
on the company’s web site. l egislation in the uK governing the 
preparation and dissemination of financial statements may 
differ from legislation in other jurisdictions.
the directors confirm that to the best of their knowledge:
● ● the financial statements, prepared in accordance with the 
applicable set of accounting standards, give a true and 
fair view of the assets, liabilities, financial position and 
profit or loss of the company and the undertakings 
included in the consolidation taken as a whole; and
● ● the directors’ report includes a fair review of the 
development and performance of the business and the 
position of the issuer and the undertakings included in 
the consolidation taken as a whole, together with a 
description of the principal risks and uncertainties that 
they face.
tony eAles tiM ColeMAn
chief executive Group finance director
27 april 2010 27 april 2010 www.trafficmaster.co.uk  TrafficmasTer Plc   31
17384	 06/05/2010	 Proof	6
Our Accounts Our Governance Our Business
inDePenDenT auDiT ors’ rePor T 
To The memBers of TrafficmasTer Plc
 
we have audited the financial statements of t rafficmaster plc 
for the year ended 31 december 2009 set out on pages 32 to 
78. the financial reporting framework that has been applied in 
the preparation of the group financial statements is applicable 
law and international financial reporting standards (ifrss) 
as adopted by the eu. the financial reporting framework that 
has been applied in the preparation of the parent company 
financial statements is applicable law and uK accounting 
standards (uK Generally accepted accounting practice).
this report is made solely to the company’s members, as a 
body, in accordance with chapter 3 of p art 16 of the 
companies act 2006. our audit work has been undertaken so 
that we might state to the company’s members those matters 
we are required to state to them in an auditors’ report and for 
no other purpose. t o the fullest extent permitted by law, we do 
not accept or assume responsibility to anyone other than the 
company and the company’s members, as a body, for our audit 
work, for this report, or for the opinions we have formed.
resPecTive resPonsiBiliTies of DirecT ors anD 
auDiT ors
as explained more fully in the directors’ responsibilities 
statement set out on page 30, the directors are responsible for 
the preparation of the financial statements and for being 
satisfied that they give a true and fair view. our responsibility 
is to audit the financial statements in accordance with 
applicable law and international standards on auditing (uK 
and ireland). those standards require us to comply with the 
auditing practices Board’s (apB’s) ethical standards for 
auditors.
scoPe of The auDiT of The financial sT aTemenTs
a description of the scope of an audit of financial statements is 
provided on the apB’s web site at www.frc.org.uk/apb/scope/
uKp
oPinion on financial sT aTemenTs
in our opinion:
● ● the financial statements give a true and fair view of the 
state of the group’s and of the parent company’s affairs as 
at 31 december 2009 and of the group’s profit for the year 
then ended;
● ● the group financial statements have been properly 
prepared in accordance with ifrss as adopted by the eu;
● ● the parent company financial statements have been 
properly prepared in accordance with uK Generally 
accepted accounting practice;
● ● the financial statements have been prepared in 
accordance with the requirements of the companies act 
2006; and, as regards the group financial statements, 
article 4 of the ias regulation.
oPinion on o Ther ma TTers PrescriBeD BY The 
comP anies a cT 2006
in our opinion:
● ● the part of the directors’ remuneration report to be 
audited has been properly prepared in accordance with 
the companies act 2006; and
● ● the information given in the directors’ report for the 
financial year for which the financial statements are 
prepared is consistent with the financial statements; and
● ● the information given in the corporate Governance 
statement set out on pages 25 to 29 with respect to 
internal control and risk management systems in relation 
to financial reporting processes and about share capital 
structures is consistent with the financial statements.
maTTers on Which We are requireD To rePor T BY 
excePTion
we have nothing to report in respect of the following:
under the companies act 2006 we are required to report to 
you if, in our opinion:
● ● adequate accounting records have not been kept by the 
parent company, or returns adequate for our audit have 
not been received from branches not visited by us; or
● ● the parent company financial statements and the part of 
the directors’ remuneration report to be audited are not 
in agreement with the accounting records and returns; or
● ● certain disclosures of directors’ remuneration specified by 
law are not made; or
● ● we have not received all the information and explanations 
we require for our audit; or
● ● a corporate Governance statement has not been prepared 
by the company.
under the listing rules we are required to review:
● ● the directors’ statement, set out on page 19, in relation to 
going concern; and
● ● the part of the corporate Governance statement on pages 
26 to 29 relating to the company’s compliance with the 
nine provisions of the combined code specified for our 
review.
J D leeCh (senior s t AtUtory A UDitor)
for and on behalf of
KpmG audit plc, s tatutory a uditor
chartered a ccountants
1 waterloo w ay
leicester
le1 6lp
27 april 2010 32  TrafficmasTer Plc  annual report and accounts 2009
17384	 06/05/2010	 Proof	6
consoliD aTeD sTaTemenT of comPrehensive income
for the year ended 31 december 2009
       2009 2008
        (restated)
      notes £000 £000
 revenue     1,2 57,466 55,051
 cost of sales      (21,236) (20,623)
 Gross profit      36,230 34,428
 other operating income     4 70 140
 selling and distribution costs      (9,746) (8,351)
 administrative expenses      (21,217) (20,838)
 operating profit excluding non-recurring items     6,333 5,830
 non-recurring items     5 (996) (451)
 operatinG profit     2 5,337 5,379
 financial income     8 1,579 724
 financial expenses     8 (1,785) (1,595)
 profit Before tax      5,131 4,508
 t axation     9 (191) 150
 profit for the year attriButaBle to equity holders of the parent   4,940 4,658
 other comprehensive income
 f oreign exchange translation differences     (1,854) 3,162
 effective portion of changes in fair value of cash flow hedges   8 100 (258)
 other comprehensive income for the year     (1,754) 2,904
 total comprehensive income attriButaBle to equity holders of the parent  3,186 7,562
 earninGs per share
 — basic     10 3.62p 3.41p
 — diluted     10 3.61p 3.41p
  www.trafficmaster.co.uk  TrafficmasTer Plc   33
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Our Accounts Our Governance Our Business
consoliD aTeD sTaTemenT of financial PosiTion
as at 31 december 2009
       2009 2008
        (restated)
      notes £000 £000
 non-current assets
 property, plant and equipment     11 13,005 14,588
 intangible assets     12 16,294 16,632
 l ease prepayments     14 1,431 1,439
 deferred tax asset     15 1,313 1,313
       32,043 33,972
 current assets
 inventories     16 6,558 11,887
 t rade and other receivables     17 11,729 9,821
 l ease receivables     17 32,686 29,720
 cash and cash equivalents     18	 — 2,619
       50,973 54,047
 total assets      83,016 88,019
 current liaBilities
 Bank overdraft     18 1,388 —
 other interest-bearing loans     19 833 833
 t rade and other payables     20 11,823 12,487
 deferred income     20 16,265 20,046
       30,309 33,366
 non-current liaBilities
 other interest-bearing loans     19 8,526 10,000
 deferred income     21 10,364 14,451
 provisions     22 1,576 1,540
       20,466 25,991
 total liaBilities      50,775 59,357
 net assets      32,241 28,662
 equity
 share capital     25 6,834 6,832
 share premium     25 258 254
 other reserve     25 2,248 2,248
 f oreign exchange translation reserve    25 (742) 1,112
 f air value reserve     25 213 113
 retained earnings      23,430 18,103
 total equity attriButaBle to equity holders of the parent   32,241 28,662
the board of directors approved these financial statements on 27 april 2010 and they were signed on its behalf by:
tony eAles tiM ColeMAn
chief executive Group finance director
registered company number 2292714 34  TrafficmasTer Plc  annual report and accounts 2009
17384	 06/05/2010	 Proof	6
consoliD aTeD sTaTemenT of c ash floWs
for the year ended 31 December 2009
       2009 2008
        (restated)
      notes £000 £000
 cash flows from operatinG activities
 profit for the year      4,940 4,658
 adjusted for:
 financial income      (1,579) (724)
 financial expense      1,785 1,595
 t axation      191 (150)
 depreciation and amortisation      5,893 5,068
 Gain on sale of property, plant and equipment     (5) (10)
 equity settled share-based payment expenses     387 524
 operatinG profit Before chanGes in worKinG capital and provisions  11,612 10,961
 increase in trade and other receivables     (10,080) (7,248)
 decrease in inventories      4,644 190
 (decrease)/increase in trade and other payables     (3,720) 2,285
 cash flows from operations      2,456 6,188
 interest paid      (1,757) (1,560)
 income tax paid      (311) —
 net cash inflows from operatinG activities    388 4,628
 cash flows from investinG activities
 proceeds from sale of property, plant and equipment    5 12
 interest received      926 724
 acquisition of property, plant and equipment    11 (1,314) (1,562)
 development expenditure and acquisition of intangible fixed assets  12 (3,039) (3,858)
 acquisition of investment in subsidiary    24 — (359)
 net cash outflows from investinG activities    (3,422) (5,043)
 cash flows from financinG activities
 proceeds from the issue of share capital     6 59
 (repayments)/drawdowns of bank borrowings     (833) 6,666
 net cash (outflows)/inflows from financinG activities    (827) 6,725
 net (decrease)/increase in cash and cash equivalents    (3,861) 6,310
 cash and cash equivalents at 1 January    18 2,619 (4,051)
 effect of exchange rate fluctuations on cash held     (146) 360
 cash and cash equivalents at 31 decemBer    18 (1,388) 2,619 www.trafficmaster.co.uk  TrafficmasTer Plc   35
17384	 06/05/2010	 Proof	6
Our Accounts Our Governance Our Business
c onsoli DaTeD s T aTemen T of chan Ges in equi TY
for the year ended 31 december 2009
	 	 Share	 Share	 Other	 Translation	 Fair	value	 Retained	 	
	 	 capital	 premium	 reserve	 reserve	 reserve	 earnings	 Total	
	 	 £000	 £000	 £000	 £000	 £000	 £000	 £000
 at 1 January 2009 as 
 previously reported 6,832	 254	 2,248	 6,772	 113	 38,329	 54,548
 prior year restatement 
 (note 1) —	 —	 —	 (5,660)	 —	 (20,226)	 (25,886)
 Balance at 1 January 2009 6,832	 254	 2,248	 1,112	 113	 18,103	 28,662
 total comprehensive 
 income for the period
 profit for the period —	 —	 —	 —	 —	 4,940	 4,940
 other comprehensive 
 income
 f oreign exchange translation 
 differences —	 —	 —	 (1,854)	 —	 —	 (1,854)
 effective portion of changes in 
 fair value of cash flow hedges —	 —	 —	 —	 100	 —	 100
 transactions with 
 owners recorded 
 directly in equity       
 share-based payments —	 —	 —	 —	 —	 387	 387
 shares issued 2	 4	 —	 —	 —	 —	 6
 at 31 decemBer 2009 6,834	 258	 2,248	 (742)	 213	 23,430	 32,241
for the year ended 31 December 2008
  share share other t ranslation f air value retained  
  capital premium reserve reserve reserve earnings t otal 
  £000 £000 £000 £000 £000 £000 £000
 at 1 January 2008 as 
 previously reported 6,819 208 2,248 (1,741) 371 32,849 40,754
 prior year restatement 
 (note 1) — — — (309) — (19,928) (20,237)
 Balance at 1 January 2008 6,819 208 2,248 (2,050) 371 12,921 20,517
 total comprehensive 
 income for the period
 profit for the period — — — — — 4,658 4,658
 other comprehensive 
 income
 f oreign exchange translation 
 differences — — — 3,162 — — 3,162
 effective portion of changes in 
 fair value of cash flow hedges — — — — (258) — (258)
 transactions with 
 owners recorded 
 directly in equity
 share-based payments — — — — — 524 524
 shares issued 13 46 — — — — 59
 at 31 decemBer 2008 6,832 254 2,248 1,112 113 18,103 28,662 36  TrafficmasTer Plc  annual report and accounts 2009
17384	 06/05/2010	 Proof	6
no Tes forminG P ar T of The financial sT aTemenTs
 
1. accounTinG Policies
t rafficmaster plc is a company incorporated in the uK and listed on the l ondon stock exchange.
Basis of PreP ara Tion
the group financial statements have been prepared and approved by the directors in accordance with international financial 
reporting standards as adopted by the eu (‘ adopted ifrss’) and in accordance with the companies act 2006. the company has 
elected to prepare its parent company financial statements in accordance with uK Gaap; these are presented on pages 68 to 78.
the accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these 
group financial statements.
Judgements made by the directors in the application of these accounting policies that have a significant effect on the financial 
statements and estimates with a significant risk of material adjustment in the next year are discussed in note 30.
the consolidated financial statements are presented in GBp (£), which is the company’s functional currency.
GoinG concern 
t he group’s business activities, together with the factors likely to affect its future development, performance and position are set 
out in the c hairman’s and c hief executive’s statements on pages 8 to 12. t he financial position of the group, its cash flows, liquidity 
position and borrowing facilities are described in the f inancial r eview on pages 14 and 15. in addition, note 26 to the financial 
statements includes the group’s objectives, policies and processes for managing its capital; its financial risk management 
objectives; details of its financial instruments and hedging activities; and its exposures to credit risk and liquidity risk. 
as highlighted in note 19 to the financial statements, the group meets its day to day working capital requirements through a 
revolving multicurrency credit facility. a new facility has been agreed with the bank in January 2010 and expires after 42 months 
from the date of agreement. the current economic conditions create uncertainty particularly over (a) the level of demand for the 
group’s products; (b) the exchange rate between sterling and the us dollar and thus the consequence for the cost of the group’s 
raw materials; and (c) the availability of bank finance in the foreseeable future. 
the group’s forecasts and projections, taking account of reasonably possible changes in trading performance, show that the 
group should be able to operate within the level of its current and new facility. 
the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the 
foreseeable future. thus they continue to adopt the going concern basis of accounting in preparing the annual financial 
statements.
f urther information regarding the group’s business activities, together with the factors likely to affect its future development, 
performance and position is set out in the chief executive’s statement on pages 10 to 12. f urther information regarding the 
financial position of the company, its cash flows, liquidity position and borrowing facilities are described in the financial review 
on pages 14 and 15. in addition notes 1, 25 and 26 to the financial statements include the group’s objectives, policies and 
processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging 
activities; and its exposures to credit risk and liquidity risk.
chanGe in accounTinG Policies
starting as of 1 January 2009, the group has changed its accounting policies in the following areas:
● ● accounting for borrowing costs
● ● determination and presentation of operating segments
● ● presentation of financial statements
● ● revenue recognition
accounting for borrowing costs
in respect of borrowing costs relating to qualifying assets for which the commencement date for capitalisation is on or after 
1 January 2009, the group capitalises borrowing costs directly attributable to the acquisition, construction or production of a 
qualifying asset as part of the cost of that asset. previously the group immediately recognised all borrowing costs as an expense. 
this change in accounting policy was due to the adoption of ias 23 Borrowing costs (2007). in accordance with the transitional 
provisions, comparative figures have not been restated. 
due to the lack of qualifying assets within the group, the change in accounting policy had no material impact on earnings per share.  www.trafficmaster.co.uk  TrafficmasTer Plc   37
17384	 06/05/2010	 Proof	6
Our Accounts Our Governance Our Business
Determination and presentation of operating segments
as of 1 January 2009 the group determines and presents operating segments based on the information that internally is provided 
to the ceo, who is the group’s chief operating decision maker . this change in accounting policy is due to the adoption of ifrs 8 
operating s egments. previously operating segments were determined and presented in accordance with ias 14 s egment 
reporting. comparative segment information has been re-presented in conformity with the transitional requirements of the new 
standard. since the change in accounting policy only impacts presentation and disclosure aspects, there is no impact on 
earnings per share. the new accounting policy in respect of segment operating disclosures is presented as follows.
an operating segment is a component of the group that engages in business activities from which it may earn revenues and incur 
expenses, including revenues and expenses that relate to transactions with any of the group’s other components. an operating 
segment’s operating results are reviewed regularly by the ceo to make decisions about resources to be allocated to the segment 
and assess its performance, and for which discrete financial information is available. 
segment results that are reported to the ceo include items directly attributable to a segment as well as those that can be 
allocated on a reasonable basis. unallocated items comprise mainly corporate assets (primarily the company’s headquarters), 
head office expenses, and income tax assets and liabilities. 
segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment, and intangible 
assets other than goodwill.
Presentation of financial statements
the group applied revised ias 1 presentation of financial statements (2007), which became effective as of 1 January 2009. 
as a result, the group presents in the consolidated statement of changes in equity all owner changes in equity, whereas all 
non-owner changes in equity are presented in the consolidated statement of comprehensive income.
comparative information has been re-presented so that it also is in conformity with the revised standard. since the change in 
accounting policy only impacts presentation aspects, there is no impact on earnings per share. 
revenue recognition
previously revenue was allocated to components of a multiple-element revenue arrangement on a cost basis and has now been 
restated to allocate revenue to components on a fair value basis in line with the accounting policy for revenue recognition stated 
on page 40. in addition, this change has resulted in the recognition of intangible assets for certain non-cancellable contracts.
this change in measurement basis has been reflected as a prior year restatement as follows:
● ● revenues for the year ended 31 december 2008 have been revised from £55.8m to £55.1m
● ● amortisation of intangible assets included in cost of goods sold has been revised from £nil to £0.2m and other cost of goods 
sold revised from £21.1m to £20.4m. 
the net effect is to revise gross profit from £34.7m to £34.4m, operating profit from £5.7m to £5.4m and profit after tax from 
£5.0m to £4.7m for the year ended 31 december 2008.
in order to bring the accounting into line with the policy for the recognition of customer relationships on page 41, intangible 
assets are revised from £16.0m to £16.6m (31 december 2007 from £11.1m to £11.3m). 
in addition at 31 december 2008 deferred income is revised from £8.5m to £34.5m (31 december 2007 from £4.8m to £25.4m). 
n o movements have been recognised within the deferred tax asset as a result of these changes. t here is no effect on current tax.
t ogether, these changes revise net assets and equity from £54.5m to £28.7m (31 december 2007 from £40.8m to £20.5m). the 
effect of the restatement revises basic earnings per share for 2008 from 3.63p to 3.41p, and diluted earnings per share from 
3.63p to 3.41p.
aDoPTeD ifrss no T YeT aPPlieD
a number of new standards, amendments to standards and interpretations are not yet effective for the year ended 31 december 
2009, and have not been applied in preparing these consolidated financial statements.   38  TrafficmasTer Plc  annual report and accounts 2009
17384	 06/05/2010	 Proof	6
accounting for business combinations
the group will be required to adopt ifrs 3 Business combinations (2008) and ias 27 consolidated and s eparate financial 
statements (2008) for all business combinations occurring in the financial year starting 1 January 2010. 
the main changes arising from the new standard include:
● ● ifrs 3 (2008) applies also to business combinations involving only mutual entities and to business combinations achieved by 
contract alone.
● ● the definition of a business combination has been revised to focus on control.
● ● the definition of a business has been amended to clarify that it can include a set of activities and assets that are not being 
operated as a business, as long as an acquirer is capable of operating the set as a business.
● ● all items of consideration transferred by the acquirer are measured and recognised at fair value as of the acquisition date, 
including contingent consideration.
● ● the acquirer can elect to measure any non-controlling interest at fair value at the acquisition date, or at its proportionate 
interest in the fair value of the identifiable assets and liabilities of the acquiree, on a transaction-by-transaction basis.
● ● t ransaction costs incurred by the acquirer in connection with the business combination do not form part of the business 
combination transaction.
● ● when an acquisition is achieved in successive share purchases (step acquisition), the identifiable assets and liabilities of the 
acquiree are recognised at fair value when control is obtained; and a gain or loss is recognised in profit or loss for the 
difference between the fair value and the carrying amount of the previously held equity interest in the acquiree. any amount 
related to previously held equity interests in the acquiree that was recognised directly in equity (e.g., the investment was 
classified as available-for-sale) is reclassified and included in the calculation of the gain or loss recognised in profit or loss.
● ● acquisitions of additional non-controlling equity interests after the business combination are accounted for as equity 
transactions.
● ● disposals of equity interests while retaining control are accounted for as equity transactions.
● ● t ransactions resulting in a loss of control result in a gain or loss being recognised in profit or loss. the gain or loss includes 
a remeasurement to fair value of any retained equity interest in the investee.
● ● new disclosures are required.
primarily this change in accounting policy will be applied prospectively. however, where transactions costs have been capitalised 
prior to the adoption of the new policy, in respect of a future business combination which will be accounted for under ifrs 3 
(2008), these costs will be expensed in the year the new standard is adopted. the impact of this is considered in note 24.
measuremenT convenTion
the financial statements are prepared on the historical cost basis except that certain assets are stated at their fair value. s uch 
assets relate to derivative financial instruments.
Basis of consoliD aTion
the consolidated financial statements comprise the financial statements of the parent company and its subsidiaries.
subsidiaries are entities over which the group has the power to govern the financial and operating policies so as to obtain benefit 
from their activities. subsidiaries are fully consolidated from the date that control commences until the date that control ceases.
GooDWill
all business combinations are accounted for by applying the purchase method. Goodwill acquired represents the excess of the 
fair value of the consideration and associated costs over the fair value of the assets, liabilities and contingent liabilities acquired.
after initial recognition, goodwill is measured at cost less any accumulated impairment losses. at the date of acquisition, the 
goodwill is allocated to cash generating units for the purpose of impairment testing and is tested at least annually for 
impairment.
on a subsequent disposal or termination of a business acquired, the profit and loss on disposal or termination is calculated after 
charging the carrying value of any related goodwill.
no Tes forminG P ar T of The financial sT aTemenTs
conTinueD www.trafficmaster.co.uk  TrafficmasTer Plc   39
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Our Accounts Our Governance Our Business
research anD DeveloPmenT
expenditure on development activities, whereby research findings are applied to a plan or design for the production of new or 
substantially improved products and processes, is capitalised only if development costs can be measured reliably, the product or 
process is technically and commercially feasible and the group has sufficient resources to complete development and to use or 
sell the asset. the expenditure capitalised includes direct labour, the cost of materials and purchased services and directly 
attributable overheads.
other research and development expenditure is recognised in the statement of comprehensive income as an expense as 
incurred. capitalised development expenditure is stated at cost less accumulated amortisation and impairment losses. 
f ollowing the initial recognition of development expenditure, the cost is amortised over the product’s estimated useful life, 
usually between three and five years.
oTher inT anGiBle asseTs
other intangible assets that are acquired by the group which have a finite useful life are measured at cost less accumulated 
amortisation and accumulated impairment losses. the estimated useful life for the current and the comparative periods are as 
follows:
licenses 15 years
customer relationships over contract term
ProPer TY , PlanT anD equiPmenT
property, plant and equipment are stated in the financial statements at cost less depreciation and any impairment in value. 
depreciation is provided to write-off the cost less the estimated residual value of property, plant and equipment on a straight-
line basis over their useful lives (which are reviewed at least at each financial year end) as follows:
fixtures, fittings and computer equipment 5 years
motor vehicles 4 years
infrastructure 7 years
f reehold building 50 years
infrastructure relates to a network of nationwide sensors and transmitters that gather and distribute traffic data in the uK.
imPairmenT
financial assets
a financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect 
on the estimated future cash flow of that asset.
an impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its 
carrying amount and the present value of the estimated future cash flows discounted at the original effective interest rate.
individually significant financial assets are tested for impairment on an individual basis. the remaining financial assets are 
assessed collectively in groups that share similar credit risk characteristics.
an impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was 
recognised. f or financial assets measured at amortised costs and available-for-sale financial assets that are debt securities, the 
reversal is recognised in profit or loss.
non-financial assets
the carrying amounts of the group’s non-financial assets, other than inventories and deferred tax assets, are reviewed at each 
reporting date to determine whether there is any indication of impairment. if any such indication exists, the asset’s recoverable 
amount is estimated.
an impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. 
a cash-generating unit is the smallest identifiable asset group that generates cash flows that are largely independent from other 
assets and groups. impairment losses are recognised in the income statement. impairment losses recognised in respect of 
cash-generating units are allocated first to reduce carrying amount of any goodwill allocated to the units and then to reduce the 
carrying amount of the other assets in the unit (group of units) on a pro rata basis.
the recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. 
in assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate 
that reflects current market assessments of the time value of money and the risk specific to the asset. 40  TrafficmasTer Plc  annual report and accounts 2009
17384	 06/05/2010	 Proof	6
an impairment loss in respect of goodwill is not reversed. in respect of other assets, impairment losses recognised in prior 
periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. an impairment 
loss is reversed if there has been a change in the estimates used to determine the recoverable amount. an impairment loss is 
reversed only to the extent that the asset’s carrying amount does not exceed the carrying value that would have been 
determined, net of depreciation or amortisation, if no impairment loss had been recognised.
lease PreP aYmenTs
prepayments for leasehold land are stated in the financial statements at cost less depreciation. depreciation is provided to 
write-off the cost of the lease prepayments over the term of the lease (199 years).
oPera TinG leases
rentals under operating leases are charged to the statement of comprehensive income on a straight-line basis over the period 
of the lease.
Pension cosTs
the group does not operate a pension scheme for its employees. it does, however, make contributions to the private pension 
arrangements of certain employees. these arrangements are of the money purchase type, and the amount charged to the 
statement of comprehensive income represents the contributions payable by the group during the year .
share-BaseD P aYmenTs
the company operates a number of share option schemes which allow employees to acquire shares of the company. the fair 
value of options is recognised as an employee expense with a corresponding increase in equity. the fair value at the date at 
which the options are granted is recognised in the statement of comprehensive income on a straight-line basis over the  
vesting period, taking into account the number of options that are expected to be exercised. f air value is measured using the 
Black-scholes model. the number of options that are expected to be exercised is reviewed at each balance sheet date and, if 
necessary, estimates are revised.
revenue recoGniTion
revenue is measured as the fair value of the consideration received or receivable and represents amounts receivable for goods 
and services provided over the normal course of business. if it is probable that discounts will be granted and that amount can be 
measured reliably, then the discount is recognised as a reduction in revenue as the sales are recognised.
sale of goods
revenue from the sale of goods is recognised when persuasive evidence exists, the significant risks and rewards of ownership 
have transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be 
estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured 
reliably.
the timing of the transfer of risks and rewards varies depending on the individual terms of the contract of sales. in most cases, 
transfer occurs at the time the product is shipped and delivered to the customer . however, in the case of some customers, bill 
and hold arrangements exist which accelerate the point at which ownership and the risks and rewards associated with the goods 
are passed to the buyer, and revenue is recognised in advance of shipping.
in certain circumstances, there remains additional activity to be performed in order for the customer to be able to use these 
goods for the purpose they were purchased. in these cases, revenue will only be recognised where this remaining activity is 
considered insignificant to the overall delivery of the goods and the costs associated with completing the activity can be reliably 
estimated and accrued for .
services
service revenue is generally recognised on a straight line basis over the service period, unless there is evidence that some other 
method better represents the stage of completion.
multiple element arrangements
Bundled sales or multiple-element arrangements require the group to deliver hardware and/or a number of services under one 
agreement, or a series of agreements which are commercially linked.
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under such agreements, an assessment is made over the ability to identify and account for each of the components separately. 
in order for these components to be identified, it is determined whether the component has stand-alone value to the customer 
and whether the fair value of the component can be measured reliably. if these criteria are deemed to be met, the components 
are accounted for separately. 
where these agreements are accounted for separately, the consideration received is allocated to each of the identifiable 
components based on the relative fair values. f air values are determined on a hierarchical basis as follows:
● ● evidence where the group sells on a stand-alone basis
● ● evidence where the same or similar components are being sold by another third party
● ● Best estimate of the selling price
the amount of revenues allocated to the hardware element is accounted for in line with the policy for the sale of goods, and the 
amount allocated to services is accounted for in line with the policy for services.
alternatively, where it is determined that either the component does not have stand-alone value or it is not possible for fair value 
to be determined reliably, revenue is recognised on the entire agreement on a straight line basis over the service period.
customer relationships
in some circumstances, the accounting for revenue on multi element arrangements contracts in line with policies outlined 
above, results in the amount of revenue being allocated to the sale of goods being less than the cost of these goods. in these 
cases, any excess of directly attributable costs over the revenue allocated to the delivered goods is expected to be recovered over 
the term of the contract, and is recognised as an intangible asset, amortised over the initial non-cancellable, contract term.
foreiGn exchanGe Transla Tion
t ransactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. monetary 
assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the foreign exchange rate 
ruling at that date. f oreign exchange differences arising on translation are recognised in the statement of comprehensive 
income. non-monetary assets and liabilities are translated using the exchange rate at the date of the transaction.
the financial statements of foreign subsidiaries denominated in foreign currencies are translated into sterling as follows:
● ● assets and liabilities are translated into sterling at the rates of exchange ruling at the balance sheet date with the resulting 
exchange differences recognised in the foreign exchange translation reserve account;
● ● items of revenue and expense are translated into sterling at an average exchange rate with the resulting exchange 
differences recognised in the foreign exchange translation reserve account;
● ● cash flows are translated into sterling at an average exchange rate;
● ● exchange gains and losses arising from monetary items that, in substance, form a net investment in a foreign subsidiary are 
recognised in the foreign exchange translation reserve account;
the group has taken advantage of the relief available in ifrs 1 to deem the cumulative translation differences for all foreign 
operations to be zero at the date of transition to ifrs on 1 January 2004.
invenT ories
inventories are stated at the lower of cost and net realisable value. the amount to recognise as an expense is determined using 
the weighted average principle which approximates to actual costs.
Taxa Tion
income tax on the profit or loss for the periods presented comprises current and deferred tax. income tax expense is recognised 
in the statement of comprehensive income, except to the extent that it relates to items recognised directly in equity, in which 
case it is recognised in equity. current tax is the expected tax payable on the taxable income for the year, using tax rates enacted 
or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
deferred tax is provided on temporary differences between carrying amounts of assets and liabilities for financial reporting 
purposes and the amounts used for taxation purposes. the following temporary differences are not provided for: the initial 
recognition of goodwill; the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in 
a business combination; the differences relating to investments in subsidiaries to the extent that they will probably not reverse in 
the foreseeable future. the amount of deferred tax provided is based on the expected manner of realisation or settlement of the 
carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. 42  TrafficmasTer Plc  annual report and accounts 2009
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deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and jointly 
controlled entities except where the group is able to control the reversal of the temporary difference and it is probable that the 
temporary difference will not reverse in the foreseeable future.
a deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which 
the assets can be utilised.
financial asseTs anD liaBiliTies
financial assets and liabilities are recognised on the group balance sheet when the group becomes a party to the contractual 
provisions of the instrument.
financial assets and financial liabilities are accounted for in the financial statements as follows:
● ● financial assets or liabilities held for trading, all derivatives other than hedging instruments and any other financial assets 
or liabilities designated at the time of initial recognition as ‘measured at fair value through profit and loss’ are stated at fair 
value and all changes in fair value are recognised immediately in the statement of comprehensive income;
● ● l oans and receivables are measured at amortised cost calculated using the effective interest method;
● ● other financial liabilities are measured at amortised cost using the effective interest method.
the group does not use derivative financial instruments to hedge its exposure to foreign exchange, nor does it hold or issue 
derivative financial instruments for trading purposes. the group’s principal financial instruments are borrowings for the 
purposes of funding operating activities and acquisitions. the group holds financial derivatives to hedge its exposure to interest 
rate fluctuations.
the group does not hedge its foreign currency denominated trading cash flows. the group is exposed to fluctuations in exchange 
rates on the translation of profits earned by overseas subsidiaries. average rates are used for the retranslation of such profits 
when they approximate to the rates of exchange on the dates of the transaction.
Deriva Tive financial insTrumenTs 1
the group holds derivative financial instruments to hedge its interest rate risk exposures. embedded derivatives are separated 
from the host contract and accounted for separately if the economic characteristics and risks of the host contract and the 
embedded derivative are not closely related, a separate instrument with the same terms as the embedded derivative would meet 
the definition of a derivative, and the combined instrument is not measured at fair value through profit or loss.
derivatives are recognised initially at fair value; attributable transaction costs are recognised in profit or loss when incurred. 
subsequent to initial recognition, derivatives are measured at fair value, and changes therein are accounted for as described 
below.
cash flow hedges
changes in the fair value of the derivative hedging instrument designated as a cash flow hedge are recognised directly in equity 
to the extent that the hedge is effective. t o the extent that the hedge is ineffective, changes in fair value are recognised in profit 
or loss.
if the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, then 
hedge accounting is discontinued prospectively. the cumulative gain or loss previously recognised in equity remains there until 
the forecast transaction occurs. when the hedged item is a non-financial asset, the amount recognised in equity is transferred to 
the carrying amount of the asset when it is recognised. in other cases the amount recognised in equity is transferred to profit or 
loss in the same period that the hedged item affects profit or loss.
separable embedded derivatives
changes in the fair value of separable embedded derivatives are recognised immediately in profit or loss.
other non-trading derivatives
when a derivative financial instrument is not held for trading, and is not designated in a qualifying hedge relationship, all 
changes in its fair value are recognised immediately in profit or loss.
TraDe anD o Ther receivaBles
f air value of trade and other receivables is estimated at the present value of future cash flows discounted at the market rate of 
interest at the reporting date.
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lease receivables
under certain contracts credit terms are negotiated with customers over an extended period. the lease receivable element of 
the contract represents the amount which has been committed but not yet invoiced.
TraDe P aY aBles
t rade payables are not interest-bearing and are initially measured at their fair value, being payment or settlement amounts, and 
subsequently at amortised cost.
cash anD cash equivalenTs
cash comprises, for the purpose of the statement of cash flows, cash in hand and deposits payable on demand and bank 
overdrafts. cash equivalents are short-term highly liquid investments that are readily convertible to known amounts of cash and 
that are subject to an insignificant risk of changes in value. cash equivalents are normally with the date of maturity of three 
months or less from the acquisition date.
equiTY insTrumenTs
equity instruments issued by the company are initially recorded at the proceeds received, net of direct issue costs.
financial income anD exPenses
f inance expenses and income comprise interest payable, interest receivable on funds invested, discounts applicable to provisions 
and foreign exchange gains and losses that are recognised in the statement of c omprehensive income. f inance income and 
expenses are recognised in the statement of c omprehensive income as they accrue, using the effective interest method.
Provisions
a provision is recognised in the statement of financial p osition when the group has a present legal or constructive obligation as 
a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. if the 
effect is material, provisions are determined by discounting the expected future cash outflows at a pre tax rate that reflects 
current market assessments of the time value of money and, where appropriate, the risk specific to the liability.
DismanTlinG
liabilities for dismantling costs are recognised when the group has an obligation to dismantle and remove a facility or an item of 
plant and to restore the site on which it is located, and when a reasonable estimate of that liability can be made. the amount 
recognised is the present value of the estimated future expenditure determined in accordance with local conditions and 
requirements. a corresponding item of property, plant and equipment of an amount equal to the provision is also created. this is 
subsequently depreciated as part of the capital costs of the facility or item of plant.
2. seGmenT rePor TinG
the group operates under four reportable segments, as described below, which form the group’s strategic business units.
internal management reporting is structured based on two main divisions, Business s ervices and consumer s ervices, the latter 
being further analysed into three business segments which reflect their differing marketing and technological influences. the 
following summary describes the operations in each of the group’s reportable segments:
● ● Business services division
● ❍ fleet tracking - provides fleet tracking and dynamic navigation capabilities to business users.
● ● consumer s ervices division
● ❍ stolen v ehicle t racking - provides stolen vehicle tracking and navigation services to consumers and businesses
● ❍ t raffic- provides traffic and journey time data to business users, consumers and government agencies.
● ❍ emerging products - markets the group’s technology through new and innovative products and services
information regarding the results of each reportable segment is included below. performance is measured based on segment 
earnings before interest, taxation, depreciation and amortisation (eBitda ), as included in the internal management reports which 
are reviewed by the board. eBitda is used to measure performance as management believes that such information is most  
relevant in evaluating the results of certain segments relative to other entities which operate within these industries. t he effects  
of non-recurring items are excluded from management’s measurement basis. interest and tax are not allocated to the segments.
inter-segment pricing is determined on an arm’s length basis. 44  TrafficmasTer Plc  annual report and accounts 2009
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2. seGmenT rePor TinG (conTinueD)
informa Tion aBouT rePor TaBle seGmenTs
for the year ended 31 december 2009
	 	 Business	 Consumer	Services
	 	 Services	 	 	 	
	 	 	 Stolen	 	 	 Consumer	
	 	 Fleet	 Vehicle	 	 Emerging	 Services	 Group	
	 	 Tracking	 Tracking	 Traffic	 Products	 Total	 Costs	 Total	
	 	 £000	 £000	 £000	 £000	 £000	 £000	 £000
 revenue from external 
 customers 40,018	 10,172	 5,387	 1,889	 17,448	 —	 57,466
 eBitda 10,020	 2,136	 1,023	 1,046	 4,205	 (1,999)	 12,226
 segment operating profit 7,287	 542	 (291)	 817	 1,068	 (2,022)	 6,333
 non-recurring items*       (996)
 operating profit       5,337
 financial income       1,579
 financial expenses       (1,785)
 profit before tax       5,131
 segment assets 56,827	 17,108	 5,501	 1,139	 23,748	 —	 80,575
 unallocated assets       2,441
 t otal assets      	 83,016
 segment liabilities 30,769	 6,914	 1,599	 —	 8,513	 —	 39,282
 unallocated liabilities       11,493
 t otal liabilities       50,775
 capital expenditure 2,276	 696	 287	 947	 1,930	 —	 4,206
 unallocated capital 
 expenditure       558
 t otal capital expenditure       4,764
 depreciation and 
 amortisation 2,732	 1,594	 1,314	 229	 3,137	 —	 5,869
 unallocated depreciation 
 and amortisation       24
 t otal depreciation and
 amortisation       5,893
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for the year ended 31 december 2008
  Business consumer s ervices
  services    
   stolen   consumer 
  fleet v ehicle  emerging s ervices Group 
  t racking t racking t raffic products t otal costs t otal 
  £000 £000 £000 £000 £000 £000 £000
 revenue from external 
 customers 32,644 10,420 6,307 5,680 22,407 — 55,051
 eBitda 4,782 1,175 1,617 5,088 7,880 (2,215) 10,447
 segment operating profit 3,056 (360) 373 4,979 4,992 (2,218) 5,830
 non-recurring items*       (451)
 operating profit       5,379
 financial income       724
 financial expenses       (1,595)
 profit before tax       4,508
 segment assets 59,134 19,633 6,270 208 26,111 — 85,245
 unallocated assets       2,774
 t otal assets       88,019
 segment liabilities 31,560 14,652 1,557 — 16,209 — 47,769
 unallocated liabilities       11,588
 t otal liabilities       59,357
 capital expenditure 3,648 1,299 929 153 2,381 — 6,029
 unallocated capital 
 expenditure       14
 t otal capital expenditure       6,043
 depreciation and 
 amortisation 1,916 1,670 1,479 — 3,149 — 5,065
 unallocated depreciation 
 and amortisation       3
 depreciation and 
 amortisation       5,068
*non-recurring items are defined in note 5.
Group costs represent the headquarters-related costs of running the group. the 2008 comparatives have been restated on a 
consistent basis.
GeoGraPhical informa Tion
in presenting information on the basis of geographical segments, segment revenue is based on the geographical location of 
customers. segment assets are based on the geographical location of the assets.
  united Kingdom north america t otal
   2009 2008 2009 2008 2009 2008
   £000 £000 £000 £000 £000 £000
 t otal revenue  26,174 24,901 37,043 32,356 63,217 57,257
 l ess: inter-segment trading  (5,751) — — (2,206) (5,751) (2,206)
 revenue from external customers  20,423 24,901 37,043 30,150 57,466 55,051
 non-current assets  23,386 24,229 8,657 9,743 32,043 33,972 46  TrafficmasTer Plc  annual report and accounts 2009
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3. exPenses anD auDiT ors’ remunera Tion
       2009 2008
expenses      £000 £000
 included in profit are the following:
 depreciation      2,537 2,492
 amortisation of intangible assets      3,348 2,569
 amortisation of lease prepayment      8 7
 impairment loss on trade receivables     1,395 867
 f oreign exchange gains      673 1,341
 research and development costs expensed as incurred    664 490
 operating lease rentals — property      824 1,136
                                            — other      225 222
       2009 2008
auditors’ remuneration      £000 £000
 f ees payable to company’s auditor for the audit of parent company and 
 consolidated financial statements      77 81
 amounts received by the auditor and its associates in respect of:
 audit of subsidiary undertakings financial statements pursuant to legislation   50 53
 other services supplied pursuant to legislation — review of interim financial statements  13 13
 other services relating to taxation      37 17
 services related to corporate finance transactions     40 —
 all other services      35 —
       252 164
4. oTher oPera TinG income
       2009 2008
       £000 £000
 operating property lease rentals receivable     70 140
       70 140
5. non-recurrinG iTems
included within non-recurring administrative income and expenses are the following:
       2009 2008
       £000 £000
 settlement of legal claims in Germany     — 451
 w rite-down of inventory*      996 —
 total non-recurrinG items      996 451
*  during the year, the group ceased supporting its rf network in the usa. the existing customers have been converted onto Gps 
technology and the remaining rf units in inventory have been fully provided for .
non-recurring is defined as income or costs that are not expected to be incurred every year .
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6. sTaff numBers anD cosTs
the average number of persons employed by the group (including executive and non-executive directors) during the year was:
       2009 2008
 operations      301 362
 sales and marketing      171 166
 administration      52 57
       524 585
the aggregate payroll costs of these persons charged to the income statement were as follows:
       2009 2008
       £000 £000
 wages and salaries      18,545 18,646
 wages and salaries capitalised      (2,029) (2,344)
 wages and salaries recognised in the income statement    16,516 16,302
 share-based payments (see note 23)    	 387 524
 social security costs      1,263 1,226
 pension costs      511 411
       18,677 18,463
pension costs are included within administrative expenses in the statement of comprehensive income.
7. DirecT ors’ emolumenTs
details of directors’ emoluments are shown in the directors’ remuneration report on page 23.
8. financial income anD exPense
recoGniseD in The sT aTemenT of comPrehensive income
       2009 2008
       £000 £000
 interest income      926 724
 net foreign exchange gain      653 —
 financial income      1,579 724
 Bank interest      (430) (870)
 interest on non-recourse debtor finance     (1,319) (690)
  expense relating to discount applied to provisions     (36) (35)
 financial expense      (1,785) (1,595)
 f oreign exchange translation differences     (1,854) 3,162
 effective portion of changes in fair value of cash flow hedges    100 (258)
 other comprehensive income      (1,754) 2,904 48  TrafficmasTer Plc  annual report and accounts 2009
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9. Taxa Tion
recoGniseD in The sT aTemenT of comPrehensive income
       2009 2008
        (restated) 
       £000 £000
 overseas taxation
 current tax      191 85
 deferred tax expense
 recognition of previously unrecognised tax losses     — (235)
 total tax charGe/(credit) in the statement of comprehensive income  191 (150)
reconcilia Tion of effecTive T ax ra Te
       2009 2008
       £000 £000
 profit before tax      5,131 4,508
 t ax using uK corporation tax rate of 28.00% (2008: 28.50%)    1,437 1,285
 effects of:
 non-deductible expenses      61 266
 other permanent adjustments      62 92
 non-taxable income      (2) (494)
 t ax losses used in the year not recognised in deferred tax   	 (1,418) (1,548)
 t ax losses carried forward not recognised in deferred tax    51 249
 total tax in income statement      191 (150)
with effect from 1 april 2008 the statutory rate of corporation tax changed to 28%. as a result the standard rate of tax for the 
year ended 31 december 2008 was 28.5%, being 30% from 1 January 2008 to 31 march 2008 and 28% from 1 april 2008 to 
31 december 2008.
t ax trading losses totalling £23,862,000 (2008: £21,800,000) are available to carry forward against future taxable profits.
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10. earninGs Per share
Basic earninGs Per share
the calculation of basic earnings per share at 31 december 2009 was based on the profit attributable to ordinary shareholders of 
t rafficmaster plc of £4,940,000 (2008: £4,658,000) and on the weighted average number of ordinary shares in issue during the 
year of 136,647,394 (2008: 136,486,561).
Weighted average number of ordinary shares
       2009 2008
       000 000
 issued ordinary shares at 1 January      136,632 136,382
 effects of shares issued in august 2008     — 105
 effects of shares issued in June 2009     10 —
 effects of shares issued in s eptember 2009     5 —
 weiGhted avera Ge numBer of ordinary shares at 31 decemBer   136,647 136,487
the calculation of diluted earnings per share at 31 december 2009 was based on profit attributable to ordinary shareholders of 
£4,940,000 (2008: £4,658,000) and the weighted average number of ordinary shares (diluted) outstanding during the year of 
136,998,907 (2008: 136,657,236) calculated as follows:
Weighted average number of ordinary shares (diluted)
       2009 2008
       000 000
 weighted average number of ordinary shares at 31 december    136,647 136,487
 effects of shares options in issue      352 170
 weiGhted avera Ge numBer of ordinary shares (diluted) at 31 decemBer  136,999 136,657
the calculation of diluted earnings per share assumes that all associated performance criteria are achieved in full.
aDJusTeD earninGs Per share
in order to provide a better understanding of the underlying trading performance of the group an adjusted earnings per share 
figure has been calculated, which adjusts the profit attributable to ordinary shareholders for the items typically excluded from 
such calculations, as the following table shows:
       2009 2008
       £000 £000
 profit attributable to ordinary shareholders     4,940 4,658
 non-recurring items      996 451
 equity settled share-based payment expense     387 524
 amortisation of acquired intangible assets     247 247
 deferred tax movement      — (235)
 ad Justed profit attriButaBle to ordinary shareholders   6,570 5,645
ad Justed earninGs per share
 — basic      4.81p 4.14p
 — diluted      4.80p 4.13p 50  TrafficmasTer Plc  annual report and accounts 2009
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11. ProPer TY , PlanT anD equiPmenT
      fixtures, 
      fittings 
    f reehold motor and infra- 
    building vehicles computers structure t otal 
    £000 £000 £000 £000 £000
 cost
 at 1 January 2008   7,173 373 5,654 34,184 47,384
 acquisitions   — 13 975 574 1,562
 disposals   — (79) (94) — (173)
 effects of movements in foreign exchange  — 92 752 2,288 3,132
 at 31 decemBer 2008   7,173 399 7,287 37,046 51,905
 at 1 January 2009   7,173	 399	 7,287	 37,046	 51,905
 acquisitions   —	 —	 900	 414	 1,314
 disposals   —	 (29)	 —	 —	 (29)
 effects of movements in foreign exchange  —	 (34)	 (283)	 (855)	 (1,172)
	 at 31 decemBer 2009   7,173	 336	 7,904	 36,605	 52,018
 depreciation
 at 1 January 2008   1,028 264 3,487 28,153 32,932
 depreciation charge for the year   144 45 805 1,498 2,492
 disposals   — (77) (94) — (171)
 effects of movements in foreign exchange  — 61 579 1,424 2,064
 at 31 decemBer 2008   1,172 293 4,777 31,075 37,317
 at 1 January 2009  	 1,172	 293	 4,777	 31,075	 37,317
 depreciation charge for the year   143	 45	 828	 1,521	 2,537 
 disposals   —	 (29)	 —	 —	 (29)
 effects of movements in foreign exchange  —	 (25)	 (222)	 (565)	 (812)
	 at 31 decemBer 2009   1,315	 284	 5,383	 32,031	 39,013
 carryinG amounts
 at 1 J anuary 2008   6,145 109 2,167 6,031 14,452
 at 31 decemBer 2008   6,001 106 2,510 5,971 14,588
 at 1 J anuary 2009   6,001 106 2,510 5,971 14,588
 at 31 decemBer 2009   5,858	 52	 2,521	 4,574	 13,005
the title over the freehold building has been assigned as security for the loan and overdraft facility in place at the balance sheet 
date. on refinancing its working capital in January 2010, the group pledged all other fixed assets as security in the form of a 
floating charge as part of a cross guarantee with certain group companies.
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12. inTanGiBle asseTs
      customer development
    Goodwill licences relationships costs t otal 
      (restated)  (restated)
    £000 £000 £000 £000 £000
 cost
 at 1 January 2008   3,369 145 970 21,129 25,613
 acquisitions through business combinations  2,312 — — — 2,312
 other acquisitions    — — 623 3,858 4,481
 effects of movement in foreign exchange  — 55 — 1,691 1,746
 at 31 decemBer 2008   5,681 200 1,593 26,678 34,152
 at 1 January 2009   5,681	 200	 1,593	 26,678	 34,152
 other acquisitions   —	 —	 411	 3,039	 3,450
 derecognition   —	 —	 (743)	 (7,416)	 (8,159)
 effects of movement in foreign exchange  —	 (20)	 —	 (698)	 (718)
 at 31 decemBer 2009   5,681	 180	 1,261	 21,603	 28,725
 amortisation
 at 1 January 2008    — 80 295 13,943 14,318
 amortisation for the year   — 10 437 2,122 2,569
 effects of movement in foreign exchange  — 33 — 600 633
 at 31 decemBer 2008   — 123 732 16,665 17,520
 at 1 January 2009   —	 123	 732	 16,665	 17,520
 amortisation for the year   —	 12	 583	 2,753	 3,348
 derecognition   —	 —	 (743)	 (7,416)	 (8,159)
 effects of movement in foreign exchange  —	 (12)	 —	 (266)	 (278)
 at 31 decemBer 2009   —	 123	 572	 11,736	 12,431
 carryinG amounts
 at 1 J anuary 2008   3,369 65 675 7,186 11,295
 at 31 decemBer 2008   5,681 77 861 10,013 16,632
 at 1 J anuary 2009   5,681 77 861 10,013 16,632
 at 31 decemBer 2009   5,681	 57	 689	 9,867	 16,294
the amortisation charge for the year is included within administrative expenses in the statement of comprehensive income.
derecognition on customer relationships of £743,000 relates to fully amortised customer relationships originally recognised on 
the group’s acquisition of the remaining share capital of its fully owned subsidiary, t rafficmaster t elelematics services ltd,  
in January 2007.
derecognition on development costs of £7,416,000 relates to the development costs in connection with the group’s old products 
and services which are no longer marketed or supported by the group and which were fully amortised by 31 december 2002. 52  TrafficmasTer Plc  annual report and accounts 2009
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12. inTanGiBle asseTs (conTinueD)
imPairmenT TesTs for The cash-Genera TinG uniTs conT aininG GooDWill
the following cash-generating units have significant carrying amounts of goodwill:
       2009 2008
       £000 £000
 fleet t racking      1,699 1,699
 stolen v ehicle t racking      3,982 3,982
       5,681 5,681
the impairment tests for both cash-generating units involved the determination of recoverable amounts based upon value in use 
calculations. in the assessment undertaken in 2009, value in use was derived using discounted free cash flow projections based 
upon actual operating results, the annual business plan and directors’ long-term estimates based on past experience and 
external estimates related to market growth. management estimates discount rates using the weighted average cost of capital 
of the group, adjusted for risks specific to the cash-generating units. the key assumptions used are as follows:
   fleet stolen v ehicle 
   t racking t racking
     2009 2008 2009 2008
 pre-tax discount rate    10% 12% 12% 14%
 year on year growth in free cash flows   4% 2% 2% 2%
 number of annual cash flows considered   4 5 4 5
the recoverable amounts for both cash-generating units exceeded their respective carrying amounts at 31 december 2009.
reasonable changes in the above key assumptions would not create an impairment of goodwill.
13. invesTmenTs in suBsiDiaries
the principal companies in which the group’s interest at the year end is 20% or more are as follows:
    2008	and	2009
  country of principal Class	and	%
  incorporation activity of	shares	held
 suBsidiary undertaKinGs
 t eletrac inc united states of america t elematics Ordinary	100%
 t rafficmaster t elematics services ltd Great Britain t elematics Ordinary	100%
 t rackstar ltd Great Britain t elematics Ordinary	100%
 eurowatchcentral ltd Great Britain t elematics Ordinary	100%
 eurowatchcentral norway as norway t elematics Ordinary	100%
 t elematica systems ltd Great Britain non-trading Ordinary	100%
 t rafficmaster developments ltd Great Britain non-trading Ordinary	100%
 t rafficmaster inc united states of america non-trading Ordinary	100%
 t rafficmaster usa inc united states of america non-trading Ordinary	100%
 t eletrac license inc united states of america non-trading Ordinary	100%
 exflinsy ltd Great Britain non-trading Ordinary	100%
 protechnica consultants ltd Great Britain non-trading Ordinary	100%
 yeoman Group plc Great Britain non-trading Ordinary	100%
 yeoman navigation systems ltd Great Britain non-trading Ordinary	100%
 yeoman(cambridge) plc Great Britain non-trading Ordinary	100%
 t ri-mex Group ltd Great Britain non-trading Ordinary	100%
 t ri-mex international ltd Great Britain non-trading Ordinary	100%
 Globalwatch central ltd Great Britain non-trading Ordinary	100%
 Jointly controlled entities
 t ravel news ltd Great Britain non-trading Ordinary	50%
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14. lease PreP aYmenT
        l easehold 
        land 
        £000
 cost
 at 1 January 2008       1,507
 at 31 decemBer 2008       1,507
 at 1 January 2009       1,507
 at 31 decemBer 2009       1,507
 amortisation
 at 1 January 2008       61
 amortisation for the year       7
 at 31 decemBer 2008       68
 at 1 January 2009       68
 amortisation for the year       8
 at 31 decemBer 2009      	 76
 carryinG amount
 at 1 J anuary 2008       1,446
 at 31 decemBer 2008       1,439
 at 1 J anuary 2009       1,439
 at 31 decemBer 2009       1,431
the title over the long leasehold land has been assigned as security for the loan facility in place at the balance sheet date as well 
as the new revolving credit facility secured in January 2010.
15. DeferreD T ax asseT
recoGniseD DeferreD T ax asseTs anD liaBiliTies
deferred tax assets and liabilities are attributable to the following:
  assets liabilities net
   2009 2008 2009 2008 2009 2008
   £000 £000 £000 £000 £000 £000
 t ax value of loss carry-forward 
 recognised  (1,304) (1,982) — — (1,304) (1,982)
 t ax value of accelerated capital 
 allowances  (9) — — 669 (9) 669
 net tax assets  (1,313) (1,982) — 669 (1,313) (1,313)
there are no temporary differences in 2009 or 2008 associated with subsidiaries and jointly controlled entities.
unrecoGniseD DeferreD T ax asseTs
deferred tax assets have not been recognised in respect of the following items:
       2009 2008
       £000 £000
 accelerated capital allowances      1,599 907
 t emporary differences      — (722)
 share-based payment expense      (29) (4)
 t ax losses      (5,377) (3,621)
       (3,807) (3,440) 54  TrafficmasTer Plc  annual report and accounts 2009
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15. DeferreD T ax asseT (conTinueD)
the group has losses and other timing differences for which no value has been recognised for deferred tax purposes in these 
financial statements. these can arise in loss making companies in the group, where the future economic benefit of these timing 
differences is not probable. if trading or other appropriate profits are earned in future in these companies, the timing differences 
may yield benefit to the group in the form of a reduced tax charge.
movemenT in DeferreD T ax DurinG The Year
   	 	 Balance	 Recognised	 Recognised	 Balance
	 	 	 	 	 1	January	 in	 in	 31	December	
	 	 	 	 	 2009	 income	 equity	 2009	
	 	 	 	 	 £000	 £000	 £000	 £000
 t ax value of loss carry-forward recognised  	 (1,313)	 —	 —	 (1,313)
	 	 	 	 	 (1,313)	 —	 —	 (1,313)
movemenT in DeferreD T ax DurinG The Prior Year
     Balance recognised recognised Balance 
     1 January in in 31 december 
     2008 income equity 2008 
     £000 £000 £000 £000
 t ax value of loss carry-forward recognised   (1,078) (235) — (1,313)
     (1,078) (235) — (1,313)
the group has recognised deferred tax assets in respect of unutilised tax losses. account has been taken of future forecasts of 
taxable profit in arriving at the values at which these assets are recognised. if these forecast profits do not materialise, or 
change, or if there are changes in tax rates or to the period over which the losses might be recognised, then the value of the 
deferred tax asset will need to be revised in a future period.
16. invenT ories
       2009 2008
       £000 £000
 raw materials and consumables      1,356 3,728
 finished goods for resale      5,202 8,159
       6,558 11,887
inventories to the value of £7,467,000 were recognised as expenses in the year (2008: £9,271,000 ). all inventories are expected to 
be recovered within twelve months of the balance sheet date.
17. TraDe anD o Ther receivaBles
       2009 2008
       £000 £000
 t rade receivables      7,473 4,641
 prepayments and other receivables      4,256 5,180
       11,729 9,821
 l ease receivables      32,686 29,720
       44,415 39,541
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included within lease receivables is £17,354,000 (2008: £17,010,000) expected to be recovered in more than twelve months.
t rade and lease receivables are shown net of the aggregate impairment allowance of £857,000 in 2009 (2008: £949,000).
Based on past experience, the group believes that no impairment allowance is necessary in respect of trade receivables not 
past due.
the movement in the allowance for impairment in respect of trade receivables during the year was as follows:
       2009 2008
       £000 £000
 at 1 January      949 451
 impairment loss recognised      1,395 867
 impairment loss utilised     	 (1,487) (369)
 at 31 decemBer      857 949
the aging profiles of trade and lease receivables that are not impaired at the year end were as follows:
       2009 2008
       £000 £000
 not past due      37,301 31,027
 not more than one month past due      884 1,927
 more than one but less than three months past due    558 675
 more than three months past due      1,416 732
 Balance at 31 decemBer      40,159 34,361
18. cash anD cash equivalenTs / BanK overDrafTs
       2009 2008
       £000 £000
 Bank balances      — 2,619
 cash and cash equivalents      — 2,619
 Bank overdrafts      (1,388) —
	 cash and cash equivalents in the statement of cash flows   (1,388) 2,619
the group’s exposure to interest rate risk and sensitivity analysis for financial assets and liabilities is disclosed in note 26.
19. oTher inTeresT BearinG loans anD BorroWinGs
  current liabilities non-current liabilities t otal
   2009 2008 2009 2008 2009 2008
   £000 £000 £000 £000 £000 £000
 secured bank loan  833 833 1,667 2,500 2,500 3,333
 revolving credit facility  — — 6,859 7,500 6,859 7,500
   833 833 8,526 10,000 9,359 10,833
on 29 f ebruary 2008, the group signed a £10,000,000 revolving multicurrency credit facility agreement. this facility was subject 
to floating rates of interest and is secured by a first legal charge over the freehold building and leasehold land, a cross 
guarantee between certain group companies and an upstream guarantee from a subsidiary.
the group’s borrowings are subject to the group meeting certain obligations, including customary financial covenants.
during the year, all financial covenants related to the group’s borrowings were satisfied. 56  TrafficmasTer Plc  annual report and accounts 2009
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19. oTher inTeresT BearinG loans anD BorroWinGs (conTinueD)
of the total borrowing facilities available to the group, the undrawn committed facilities available were as follows:
       2009 2008
       £000 £000
 expiring between one and two years     1,112 —
 expiring in more than two years, but not more than five years    — 2,500
 as at 31 decemBer      1,112 2,500
on 29 January 2010 the group signed a new $24,750,000 and £2,500,000 facilities agreement which replaced both the secured 
bank loan and revolving credit facility which were in place at the year end. the new facility, which expires after 42 months from 
the date of the agreement, comprises:
— $12,375,000 loan repayable in 14 quarterly instalments from 31 march 2010
— £2,500,000 loan repayable in 14 quarterly instalments from 31 march 2010
— $12,375,000 revolving facility which expires on 29 July 2013.
all of the above facilities attract variable interest rates based on liBor + margin + mandatory costs.
20. TraDe anD o Ther P aY aBles
       2009 2008
       £000 £000
 t rade payables      4,314 6,366
 non-trade payables and accrued expenses     6,154 5,855
 interest payable      — 8
 recourse finance liability      1,197 —
 derivatives used for hedging      158 258
       11,823 12,487
 deferred income — amounts falling due within one year    16,265 20,046
       28,088 32,533
the group’s exposure to currency and liquidity risk related to trade and other payables is discussed in note 26.
21. DeferreD income
       2009 2008
       £000 £000
 deferred income — amounts falling due after more than one year    10,364 14,451
       10,364 14,451
22. Provisions
    asset dismantling
    obligation
       2009 2008
       £000 £000
as at 1 January      1,540 1,505
discount applied to provision      36 35
as at 31 decemBer      1,576 1,540
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the group has made a provision for dismantling and removing the infrastructure (a network of nationwide sensors and 
transmitters) in accordance with ias 16. Because of the long-term nature of the liability, the biggest uncertainty in estimating 
the provision is the timing and the cost that will be incurred.
in determining the provision, the group have based their assessment on the size of the existing network and have assumed that 
the work will be carried out using technology and materials that are currently available.
the basis used to determine the amount of the provision requires the use of judgements and estimates regarding the costs 
associated with dismantling the network.
the provision is classified as non-current.
23. emPlo Yee BenefiTs
Pension
the group does not operate a pension scheme for its employees. it does, however, make contributions to the private pension 
arrangements of certain employees. these arrangements are of the money purchase type and the total expense related to these 
arrangements was £511,000 (2008: £411,000).
share-BaseD P aYmenTs
the company operates several share option schemes as detailed in the directors’ remuneration report on page 22. the terms 
and conditions of the grants are as follows, whereby all options are settled by physical delivery of shares:
  number of vesting conditions contractual 
 Grant date/employees entitled instruments  life of options
 option grant to key management 
 at 16 october 2000 62,112 see directors’ remuneration report on page 22 10 years
 option grant to key management 
 and senior employees at 25 october 2001 387,692 see directors’ remuneration report on page 22 10 years
 option grant to key management 
 and senior employees at 5 april 2002 250,000 see directors’ remuneration report on page 22 10 years
 option grant to key management 
 at 24 september 2002 80,000 see directors’ remuneration report on page 22 10 years
 option grant to key management 
 and senior employees at 16 april 2003 110,000 see directors’ remuneration report on page 22 10 years
 option grant to key management 
 at 17 september 2003 50,000 see directors’ remuneration report on page 22 10 years
 option grant to key management 
 at 16 october 2003 110,000 see directors’ remuneration report on page 22 10 years
 option grant to key management 
 and senior employees at 7 april 2004 185,000 see directors’ remuneration report on page 22 10 years
 option grant to key management 
 and senior employees at 28 october 2004 477,000 see directors’ remuneration report on page 22 10 years
 option grant to key management 
 and senior employees at 5 april 2005 360,000 see directors’ remuneration report on page 22 10 years
 option grant to key management 
 and senior employees at 22 october 2005  350,000 see directors’ remuneration report on page 22 10 years
 option grant to key management 
 and senior employees at 20 april 2007 250,000 see directors’ remuneration report on page 22 10 years
 option grant to key management 
 and senior employees at 5 november 2007  100,000 see directors’ remuneration report on page 22 10 years
 option grant under saye at 9 november 2007 134,403 see directors’ remuneration report on page 22 10 years
 option grant to key management 
 and senior employees at 11 april 2008  2,370 000 see directors’ remuneration report on page 22 10 years
 option grant to key management 
 and senior employees at 3 december 2008 300,000 see directors’ remuneration report on page 22 10 years
 t otal share options 5,576,207 58  TrafficmasTer Plc  annual report and accounts 2009
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23. emPlo Yee BenefiTs (conTinueD)
the number and weighted average exercise prices of share options are as follows:
     Weighted  weighted
     average	 Number average number
     exercise	 of exercise of
    	 price	 options price options
     2009	 2009 2008 2008
 outstanding at the beginning of the year   44.08p	 9,908,431 50.05p 8,056,487
 Granted during the year    —	 — 37.96p 2,920,000
 f orfeited/lapsed during the year    37.15p	 (4,292,224) 87.35p (818,056)
 exercised during the year    16.13p	 (40,000) 23.50p (250,000)
 outstandinG at the end of year   49.61p	 5,576,207 44.08p 9,908,431
 exercisaBle at the end of the year   62.97p	 2,421,804 61.65p 2,576,804
the options outstanding at 31 december 2009 have an exercise price in the range of 8.75p and 563.5p and a weighted average 
contractual life of seven years.
the fair value of services received in return for share options granted is measured by reference to the fair value of share options 
granted. the estimate of the fair value of the services received is measured based on the Black-s choles model. the following 
are the assumptions used in the model for the fair values of options granted in the year:
    options granted
       2009 2008
 weighted average share price      — 37.96p
 weighted average exercise price      — 37.96p
 expected life of the options      — 4 years
 expected volatility      — 47%
 risk free interest rate (based on government bonds)    — 4.52%
 expected dividends      — £nil
expected volatility is based on historical volatility measured over the most recent periods that are commensurate with the 
expected term of the options.
the total expense recognised within administration costs for the year arising from share-based payments was as follows:
       2009 2008
       £000 £000
 equity settled share-based payment expense     387 524
       387 524
there is a potential deferred tax asset of £29,000 arising from the share-based payment expense in 2009 (2008: £4,000). this has 
not been recognised as the future economic benefit is uncertain.
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24. acquisiTion of suBsiDiar Y
fleet management solutions inc.
on 3 f ebruary 2010 t rafficmaster plc acquired fleet management s olutions, inc (fms) for a total consideration of $13.25m 
(£8.1m) including $6m (£3.7m) of deferred contingent consideration based on certain performance criteria being met in the 
calendar years 2010 and 2011. fms is a fast-growing provider of satellite-based tracking solutions for remote-based mobile 
assets established in california, usa in 2004.
this transaction will be accounted for by the purchase method of accounting. at the date of signing of these financial statements 
the fair value accounting related to this acquisition has not been finalised.
the group is required to adopt ifrs 3 (2008) for the accounting period commencing 1 January 2010. the group has currently 
prepared the financial statements under the transitional rules of ifrs 3 (2008) and has included transaction costs of £211,000 
within “prepayments and other receivables”. as a result of the full adoption of this change in accounting standards, this amount 
will be required to be expensed in the 2010 results.
Tri-mex Group ltd
on 21 July 2008, the group acquired the entire share capital of tri-mex Group ltd and its subsidiaries (collectively trading 
under the ‘eurowatch’ brand) for a deferred contingent consideration capped at £4,750,000. the consideration is payable over the 
following three years subject to the achievement of certain earn-out criteria. the directors believe that it is not probable 
that those criteria will be met in the current economic climate.
this transaction has been accounted for by the purchase method of accounting.
       Book value f air value 
       £000 £000
 net assets acquired
 t rade and other receivables      652 652
 cash and cash equivalents      20 20
 t rade and other payables      (2,605) (2,605)
       (1,933) (1,933)
 Goodwill       2,312
 t otal consideration       379
 satisfied B y
 directly attributable costs       (379)
        (379)
 net cash outflow arisinG on acquisition
 cash consideration       (379)
 cash and cash equivalents acquired       20
        (359)
the goodwill arising on the acquisition of tri-mex Group ltd is attributable to the identified future operating synergies from the 
combination and the anticipated profits from the distribution of the group’s products in new markets. 60  TrafficmasTer Plc  annual report and accounts 2009
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25. caPiT al anD reserves
share caPiT al
    number of ordinary 
    shares of 5p each
       2009 2008
       000 000
 on issue at 1 January      136,632 136,382
 issued for cash      40 250
 on issue at 31 decemBer — fully paid    	 136,672 136,632
       2009 2008
       £000 £000
 authorised share capital
 160,000,000 ordinary shares of 5 pence each     8,000 8,000
 allotted, called up and fully paid
 136,672,000 (2007: 136,632,000) ordinary shares of 5 pence each    6,834 6,832
 shares classified in shareholders’ funds     6,834 6,832
the company has one class of ordinary shares which carry no right to fixed income. the holders of ordinary shares are entitled 
to receive dividends as declared and are entitled to one vote per share at meetings of the company.
share Premium
share premium represents the excess of the price paid by shareholders on acquisition of shares over their nominal value.
oTher reserves
the group accounted for the difference between the fair value and the nominal value of shares used as a purchase consideration 
in acquisitions within other reserves. it also includes the capital contribution of a third party to a jointly controlled entity.
foreiGn exchanGe Transla Tion reserve
t ranslation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign 
operations since the date of transition to ifrss on 1 January 2005.
fair value reserve
the fair value reserve includes the fair value increase on a previously owned interest acquired through step acquisitions, and the 
effective portion of the cumulative net change in the fair value of cash flow hedging instruments related to hedged transactions 
that have not yet occurred.
26. financial insTrumenTs
a) caPiT al risK mana GemenT
the group manages its capital to ensure that entities in the group will be able to continue on a going concern basis while 
maximising the return to stakeholders through the optimisation of the debt and equity balance. the capital structure of the 
group consists of debt, which includes the borrowings disclosed in note 19, cash and cash equivalents and equity attributable to 
equity holders of the parent, comprising issued capital, reserves and retained earnings.
the group regularly reviews its capital structure and risk associated with each class of capital. debt is primarily used for 
financing working capital and acquisitions and the level of debt is determined through liquidity risk management. the group 
does not set its target gearing ratio.
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GearinG ra Tio
       2009 2008
       £000 £000
 debt      (9,359) (10,833)
 cash and cash equivalents      (1,388) 2,619
 net debt      (10,747) (8,214)
 equity      32,241 28,662
 net deB t to equity ratio      0.33	:	1 0.29 : 1
the group is not subject to externally imposed capital requirements.
b) financial risK mana GemenT
siGnificanT accounTinG Policies
details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of 
measurement and basis on which income and expenses are recognised in respect of each class of financial asset, financial 
liability and equity instrument are disclosed in note 1 of the financial statements.
financial risK mana GemenT oBJecTives
financial risks include market risk (including foreign exchange risk, fair value interest rate risk and price risk), credit risk, 
liquidity risk and cash flow interest rate risk. the group seeks to minimise the effects of these risks by developing and 
consistently applying board approved policies and procedures. such policies and procedures are regularly reviewed for their 
appropriateness and effectiveness to deal with changing nature of financial risks.
the group meets its day-to-day working capital requirements through a revolving credit facility which is due for renewal in July 
2013. the current economic conditions create uncertainty particularly over (a) the level of demand for the group’s products; (b) 
the exchange rate between sterling and us dollar with the consequences for the cost of the group’s raw materials and us dollar 
denominated earnings; and (c) the availability of bank finance in the foreseeable future.
the group has considerable financial resources together with long-term contracts with a number of customers and suppliers 
across different geographic areas and industries. as a consequence, the directors believe that the group is well placed to 
manage its business risks successfully despite the current uncertain economic outlook.
f urther information regarding the group’s business activities, together with the factors likely to affect its future development, 
performance and position, is set out in the financial review and the directors’ report.
foreiGn exchanGe risK
approximately 70% (2008: 70%) of the group’s net assets are in currencies linked with the us dollar and are generated by a 
trading subsidiary in the usa.
exposure to foreign currency exchange risk on normal sales and purchases is minimised by trading in the foreign subsidiaries’ 
local currencies whenever possible. the group also mitigates its foreign currency exchange risk by borrowing in foreign 
currency, hence the group’s £6.9m revolving credit facility at 31 december 2009 is denominated in us dollars. this facility was 
replaced by new revolving credit facility and loan on 29 January 2010 totalling $24,750,000 and a term loan of £2,500,000.
the group is exposed to fluctuations in exchange rates on the translation of profits earned by its subsidiary in the usa. these 
profits are translated at average exchange rates for the year which is an approximation to rates at the date of transaction.
cash floW anD fair value inTeresT ra Te risK
the group has no significant interest-bearing assets and consequently its income and cash flows are largely independent of 
changes in market interest rates. the group’s interest rate risk arises primarily from its borrowings in the form of bank loans 
and overdrafts, mitigated by the effects of interest rates on cash balances. Borrowings at floating rates expose the group to cash 
flow interest rate risk. there are no fixed rate borrowings, therefore minimising the exposure of the group to fair value interest 
rate risk.
the group entered into a three year interest rate swap contract to hedge its interest rate risk exposure on the $12,375,000 and 
£2.5m term loans as required by the underlying loan agreement. the interest rate swap settles quarterly on a net basis. 62  TrafficmasTer Plc  annual report and accounts 2009
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26. financial insTrumenTs (conTinueD)
creDiT risK
credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the group. 
management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. credit evaluations are 
performed on all customers requiring credit using information supplied by independent rating agencies where available. the 
group also uses other publicly available financial information and its own trading records to rate its major customers.
at the balance sheet date there were no significant concentrations of credit risks. the maximum exposure to credit risk is 
represented by the carrying amount of each financial asset in the statement of financial p osition.
Goods are sold subject to retention of title clauses, so that in the event of non-payment the group may have a secured claim. the 
group does not require collateral in respect of trade and other receivables. the group also manages its credit risk by 
transferring some of its usa-based receivables to finance companies on a non-recourse basis as set out in note 29. during the 
year, the group’s exposure to credit risk increased mainly due to a decision to self-fund some of its usa-based long-term 
receivables, or to transfer receivables on a recourse basis.
liquiDiTY risK
liquidity risk is the risk that the group may not be able to meet its financial obligations as they fall due. the group ensures that 
there are sufficient levels of committed facilities, cash and cash equivalents to ensure that the group is at all times able to meet 
its financial commitments. liquidity risk is managed by continuous monitoring of forecast and actual cash flows and matching 
the maturity profiles of financial assets and liabilities. details in respect of the bank loan and facility are considered in note 19.
the following table details the group’s remaining contractual maturity for its financial liabilities. the table has been drawn up 
based on the undiscounted cash flows of financial liabilities based on the earliest date on which the group can be required to pay. 
the table includes both estimated interest and principal cash flows.
  2009 2008 
  Effective	 	 	  effective
  interest	 	 0	to	3	 4	to	12 Over	12 interest  0 to 3 4 to 12 over 12
  rate	 Total	 months	 months	 months rate t otal months months months
  %	 £000	 £000	 £000	 £000	 % £000 £000 £000 £000
 non-derivative
 financial liabilities
 Bank overdrafts Base+1.5%	 1,388	 1,388	 —	 — Base+1.5% — — — —
 Bank loan Base+1.3%	 9,576	 250	 746	 8,580 Base+1.3% 11,118 256 766 10,096
 t rade creditors	 0%	 4,314	 4,314	 —	 — 0% 6,366 6,366 — —
   15,278	 5,952	 746	 8,580  17,484 6,622 766 10,096
 derivative 
 financial liabilities
 interest rate swaps	 	 158	 —	 —	 158  258 — — 258
fair values of financial insTrumenTs
f air value is defined as the amount at which a financial instrument could be exchanged in an arm’s length transaction between 
informed and willing parties and is calculated by reference to market rates discounted to current value. where market values 
are not available, fair values have been calculated by discounting cash flows at prevailing rates translated at year end 
exchange rates.
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the fair values together with the carrying amounts shown in the balance sheet are as follows:
 
     Carrying	 Fair carrying f air
     amount	 value amount value
     2009	 2009 2008 2008
     £000	 £000 £000 £000
 assets at amortised costs
 t rade and other receivables    11,729	 11,729 9,821 9,821
 l ease receivables (i)    32,686	 32,165 29,720 28,699
 cash and cash equivalents (ii)    —	 — 2,619 2,619
     44,415 43,894 42,160 41,139
 liaBilities at amortised costs 
 Bank overdraft (ii)    (1,388)	 (1,388) — —
 l oan (iii)    (9,089)	 (8,824) (10,833) (10,558)
     (10,477)	 (10,212) (10,833) (10,558)
 liaBilities at fair value
 interest rate swaps used for hedging (iv)   (158)	 (158) (258) (258)
     33,780	 33,524 31,069 30,323
(i) f air value of lease receivables has been measured by discounting amounts receivable after more than 1 year using a 
discount rate of 3% (2008: 6%).
(ii) the bank overdraft in 2009 of £1,388,000 (2008: cash balance of £2,619,000), comprises a bank overdraft of £2,363,000 (2008: 
cash balance of £1,223,000) denominated in sterling and a cash balance of £975,000 (2008: cash balance of £1,396,000) 
denominated in us dollars.
(iii) f air value of loans have been measured by comparing discounted cash flows, using a discount rate of 3% (2008: 6%), and the 
existing terms of loan against appropriate current market terms available from lenders.
(iv) f air value of interest rate swaps is based on broker quotes. these quotes are tested for reasonableness by discounting 
estimated future cash flows on the terms and maturity of each contract and using market interest rates for a similar 
instrument at the measurement date.
interest rates are floating rates for all above financial instruments determined by reference to the bank base rate plus a margin.
currenc Y exPosure of financial asseTs anD liaBiliTies
included within trade payables at 31 december 2009 is £140,000 (2008: £382,000) of liabilities denominated in foreign currencies 
where the functional currency is denominated in sterling. this liability is not hedged. there were no other material assets or 
liabilities that are not denominated in the functional currency of the relevant operating company within the group.
sensiTiviTY anal Ysis
in managing interest rate and currency risks the group aims to reduce the impact of short-term fluctuations on the group’s 
earnings. over the long-term, however, permanent changes in foreign exchange and interest rates would have an impact on 
consolidated earnings.
at 31 december 2009, it is estimated that a general increase of two percentage points (2008: two) in interest rates would 
decrease the group’s profit before tax by approximately £400,000 (2008: £216,000).
it is estimated that a general increase of ten percentage points (2008: twenty) in the value of sterling against other foreign 
currencies would have decreased the group’s profit before tax by approximately £219,000 for the year ended 31 december 2009 
(2008: decreased by £556,000).
in both cases, the change from a decrease in rates is expected to be equal in size to the changes from an increase. 64  TrafficmasTer Plc  annual report and accounts 2009
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27. oPera TinG leases
t otal future minimum lease payments under non-cancellable operating lease rentals are payable as follows:
       2009 2008
       £000 £000
 not later than one year      759 1,065
 later than one year and not later than five years    	 148 811
 later than five years      — —
       907 1,876
t he majority of the group’s operating lease commitments totalling £516,000 in 2009 (2008: £1,249,000) relate to the hire of offices 
and infrastructure sites (a network of paging transmitters and receivers mounted on tall buildings in urban areas) in the usa .
the lease commitments in the uK relate to non-cancellable motor vehicle leases with expiry dates from three to thirty-four 
months from the balance sheet date.
t otal future minimum sublease payments expected to be received under non-cancellable subleases at the balance sheet date 
are as follows:
       2009 2008
       £000 £000
 not later than one year      — 70
 later than one year and not later than five years     — —
 later than five years      — —
       — 70
the amounts of lease payment expenses and sublease income are disclosed in notes 3 and 4 respectively.
28. conTinGenT liaBiliTies
on 3 f ebruary 2010 t rafficmaster plc acquired the entire share capital of us-based fleet management s olutions, inc (fms) for a 
total consideration of $13.25m (£8.1m) including $6m (£3.7m) of deferred contingent consideration based on certain 
performance criteria being met in the calendar years 2010 and 2011.
on 21 July 2008, the group acquired the entire share capital of tri-mex Group ltd and its subsidiaries (collectively trading under 
the ‘eurowatch’ brand) for a deferred contingent consideration capped at £4,750,000. the consideration is payable over the 
following three years subject to the achievement of certain earn-out criteria. the directors believe that it is not probable that 
those criteria will be met in the current economic climate.
details of guarantees given by the company, on behalf of the group, are given in note 48.
29.  commiTmenTs
off balance sheet arrangements
as part of its credit management procedures, the group uses third party finance organisations as intermediaries to fund some of 
its medium term credit arrangements with customers.
under the agreed terms with these finance organisations, the group sells customer receivables on a non-recourse basis in order 
to accelerate cash flows on these transactions.
these transactions are primarily for multiple year service agreements with customers. whilst the group has limited exposure to 
credit risk on the balances recoverable from these customers, under the terms of these arrangements, the group is required to 
provide assistance to the financial organisations in recovering any overdue amounts.
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30. mana GemenT JuDGemenTs anD esTima Tion uncer TainTies
the preparation of the consolidated financial statements in conformity with ifrss requires management to make judgements, 
estimates and assumptions that reflect the application of accounting policies and of reported amounts of assets, liabilities, 
income and expenses. actual results may differ from these estimates.
estimates and underlying assumptions are reviewed on an ongoing basis. revisions to the accounting estimates are recognised 
in the period in which the estimates are revised and in any future periods affected.
JuDGemenTs
critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the 
consolidated financial statements are as follows:
● ● revenue recognition
● ● capitalisation of development expenditure
revenue recognition
certain aspects of the group’s revenue recognition policies require management to exercise judgement over whether certain 
conditions have been met, such as:
● ● the ability to identify and separately account for components of a multiple-element revenue arrangement
● ● the point at which the risks and rewards pass to the customer under agreements which are not clearly defined
● ● where additional activity is to be performed on sale of goods arrangements, whether the remaining activity is considered to 
be insignificant
capitalisation of development costs
it is group policy to capitalise and amortise development expenditure where research findings are applied to a plan or design for 
the production of new or substantially improved products and processes, if the product or process is technically and 
commercially feasible and the group has sufficient resources to complete development. 
such expenditure is amortised over the period in which the group expects to obtain economic benefits. this policy includes 
judgements regarding the initial recognition of the asset based upon market research and expected future net revenues. it also 
includes estimations regarding the period of amortisation. 
Judgements regarding the feasibility of such research and market demand could impact significantly on the initial recognition or 
subsequent carrying value of such expenditure.  variations in the estimated amortisation period could also impact significantly 
on group profit through an increase or decrease in the amortisation charge.
off balance sheet arrangements
as set out in note 29, the group enters into agreements with third party finance organisations to fund medium term credit agreements.
in order to determine the accounting treatment for these arrangements, group management are required to determine whether 
the risks and rewards associated with the receivables have been passed to the third party finance organisation. one of the key 
factors considered by management is whether  these agreements are with or without recourse. in cases where the receivables 
are funded without recourse, management consider that substantially all of the risks and rewards associated with these 
receivables have been transferred from the company to the third party, and the arrangements are therefore considered to be off 
balance sheet and are de-recognised accordingly.
assumPTions anD esTima Tes
assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next 
financial year are as follows:
● ● Goodwill
● ● current asset provision
● ● deferred taxation
● ● dismantling provision
Goodwill
the directors use their judgement to estimate the extent to which goodwill has a value that will benefit the performance of the 
group over future periods. t o assist in making this judgement, the directors undertake an assessment, at least annually, of the 
carrying value of the group’s capitalised goodwill, using discounted cash flow forecasts to derive the “value in use” to the group 
of the capitalised goodwill.
the assumptions used in the calculation are shown in note 12.  66  TrafficmasTer Plc  annual report and accounts 2009
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30. mana GemenT JuDGemenTs anD esTima Tion uncer TainTies (conTinueD)
current asset provisions
in the course of normal trading activities, judgement is used to establish the net realisable value of various elements of working 
capital, principally inventory and trade receivables. 
provisions are established for obsolete or slow moving inventories and bad and doubtful debts based on historical evidence, and the 
best available information in relation to the specific issues. in estimating the collectability of trade receivables, judgement is required 
assessing their likely realisation, including the current creditworthiness of each customer and related ageing of past due balances. 
specific accounts are assessed in situations where a customer may not be able to meet its financial obligations due to 
deterioration of its financial condition, credit ratings or bankruptcy. details of balances provided are included within note 17.
Deferred taxation
information regarding the recognition or non-recognition of deferred tax assets is considered in note 15.
Dismantling provision
in the uK, the group has obligations to dismantle a network of nationwide sensors expanding across numerous highways in the 
country, at the point that this technology is no longer used.
information regarding the provision is included in note 22.
31. rela TeD Par Ties
the group has a related party relationship with its subsidiaries and jointly controlled entities (see note 13). t ransactions between 
group subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.
the group considers its key management personnel to be the board, comprising both the non-executive and executive directors.
details regarding the compensation and any other transactions with the board are included within the “directors’ interests in 
contracts and other transactions with group companies”, “share options” and “directors’ emoluments” sections of the 
directors’ remuneration report.
all transactions with related parties were at arm’s length.
there were no other reportable transactions with related parties during the year .
32. suBsequenT evenTs
acquisition of a subsidiary
on 3 f ebruary 2010 t rafficmaster plc acquired the entire share capital of us based fleet management s olutions inc. details of 
this acquisition are disclosed in note 24.
new equity placing
in January and f ebruary 2010,t rafficmaster plc has placed a total of 13,667,238 new ordinary shares at 31p each through its 
financial adviser and broker in order to raise funds for the acquisition of f leet management solutions inc. t he total amount raised, 
before expenses, amounted to £4.2 million with the first tranche of 6,833,619 shares being admitted to the official l ist and to 
trading on the l ondon stock exchange’s main market for listed securities on 21 January 2010 and the remaining 6,833,619 being 
admitted on 10 f ebruary 2010.
new debt facility
on 29 January 2010 the group signed a new debt facility agreement with Barclays Bank plc. details of this facility are disclosed 
in note 19.
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 33. consoliD aTeD sTaTemenT of financial PosiTion as 
aT The BeGinninG of The earliesT comP ara Tive PerioD
details on the restatement are disclosed in note 1.
as at 31 december
         	2009 2008 2007
       (restated) (restated)
      £000 £000 £000
non-currenT asseTs
property, plant and equipment     13,005 14,588 14,452
intangible assets     16,294 16,632 11,295
l ease prepayments     1,431 1,439 1,446
deferred tax asset     1,313 1,313  1,078
      32,043 33,972 28,271
currenT asseTs
inventories     6,558 11,887 11,300
t rade and other receivables     11,729 9,821 9,648
l ease receivables    	 32,686 29,720 12,575
cash and cash equivalents     — 2,619 —
      50,973 54,047 33,523
ToTal asseTs       83,016  88,019 61,794
currenT liaBiliTies
Bank overdraft     1,388 — 4,051
other interest-bearing loans     833 833 4,167
t rade and other payables     11,823 12,487 6,154
deferred income     16,265 20,046 15,421
      30,309 33,366 29,793
non-currenT liaBiliTies
other interest-bearing loans     8,526 10,000 —
deferred income     10,364 14,451 9,979
provisions     1,576 1,540 1,505
      20,466 25,991 11,484
ToTal liaBiliTies     50,775 59,357 41,277
neT asseTs       32,241 28,662 20,517
equiTY
share capital     6,834 6,832 6,819
share premium     258 254 208
other reserve     2,248 2,248 2,248
f oreign exchange translation reserve     (742) 1,112 (2,050)
f air value reserve     213 113 371
retained earnings     23,430 18,103 12,921
ToTal equiTY a TTriBuT aBle T o 
equiTY holDers of The P arenT 	   32,241 28,662 20,517 68  TrafficmasTer Plc  annual report and accounts 2009
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       2009 2008
        (restated)
      notes £000 £000
 fixed assets
 intangible assets     35 6,389 6,427
 t angible assets     36 11,345 11,990
 investments     37	 5,903 5,739
       23,637 24,156
 current assets
 stocks     38 5,682 9,236
 debtors due within one year     39 9,127 18,713
 other debtors due after one year     39 26,282 14,757
 debtors     39 35,409 33,470
 cash at bank and in hand      — 1,091
       41,091 43,797
 creditors: amounts falling due within one year    40 (21,072) (22,224)
 net current assets      20,019 21,573
 total assets less current liaBilities     43,656 45,729
 creditors: amounts falling due after more than one year   41 (1,404) (2,320)
 provisions for liabilities     42 (1,576) (1,540)
 net assets      40,676 41,869
 capital and reserves
 called up share capital     44 6,834 6,832
 share premium account     45 258 254
 f air value reserve     45 (158) (258)
 profit and loss account     45 33,742 35,041
 equity shareholders’ funds     	 40,676 41,869
the board of directors approved these financial statements on 27 april 2010 and they were signed on its behalf by:
tony eAles tiM ColeMAn
chief executive Group finance director
registered company number: 2292714
comP anY Balance sheeT
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comP anY reconcilia Tion of movemenTs 
in shareholDers’ funDs
for the year ended 31 December 2009
       2009 2008
        (restated) 
        £000 £000
 (l oss)/profit for the financial year      (1,686) 4,429
 issue of ordinary share capital      6 59
 credit in relation to share-based payments     387 524
 effective portion of changes in fair value cash flow hedges    100 (258)
 net addition to shareholders’ funds      (1,193) 4,754
 opening equity shareholders’ funds      41,869 37,115
 closinG equity shareholders’ funds     40,676 41,869 70  TrafficmasTer Plc  annual report and accounts 2009
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34. accounTinG Policies
Basis of PreP ara Tion
the financial statements have been prepared in accordance with the companies act 2006, applicable uK accounting standards, 
and under the historical cost accounting rules.
under section 408 of the c ompanies act 2006 the company is exempt from the requirement to present its own profit and loss account.
the company’s results are included in the consolidated financial statements of t rafficmaster plc, a company registered in the 
united Kingdom.
the company has taken advantage of the frs 29 ‘financial instruments: disclosure’ exemption not to present its own financial 
instruments disclosure.
invesTmenTs
in the company’s financial statements, investments in subsidiary undertakings, associates and joint ventures are stated at cost 
less any impairment in value.
TanGiBle fixeD asseTs anD DePrecia Tion
depreciation is provided by the company in order to write off the cost less the estimated residual value of tangible fixed assets by 
equal instalments over their estimated useful economic lives as follows:
l eases and leasehold improvements — over the period of the lease
fixtures, fittings and computer equipment — 5 years
motor vehicles — 4 years
infrastructure — 7 years
f reehold building — 50 years
l easehold land — 199 years
infrastructure relates to a network of nationwide sensors and transmitters that gather and distribute traffic data.
oPera TinG leases
rentals under operating leases are charged to the profit and loss account on a straight-line basis over the period of the lease.
research anD DeveloPmenT exPenDiTure
development costs on clearly defined projects, the outcome of which has been assessed with reasonable certainty, are 
capitalised to the extent that their recovery can reasonably be regarded as assured and are amortised on a straight-line basis 
over the shorter of the expected life of the product and five years. other research and development expenditure is written off in 
the profit and loss account in the year in which it is incurred.
Pension cosTs
the company does not operate a pension scheme for its employees. it does, however, make contributions to the private pension 
arrangements of certain employees. these arrangements are of the money purchase type, and the amount charged to profit and 
loss account represents the contributions payable by the group during the financial year .
share-BaseD P aYmenTs
in accordance with frs 20, ‘share-based payments’ the share options are accounted for in the financial statements at their fair 
values at the grant date and charged to the profit and loss account over their vesting periods with the corresponding entries in 
reserves. f air value is measured using the Black–scholes model. the issuance by the company to its subsidiaries of a grant over 
the company’s options represents additional capital contribution by the company to its subsidiaries. an additional investment in 
the subsidiaries results in a corresponding increase in shareholders’ equity.
revenue recoGniTion
revenue is measured as the fair value of the consideration received or receivable and represents amounts receivable for goods 
and services provided over the normal course of business. if it is probable that discounts will be granted and that amount can be 
measured reliably, then the discount is recognised as a reduction in revenue as the sales are recognised. www.trafficmaster.co.uk  TrafficmasTer Plc   71
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sale of goods
revenue from the sale of goods is recognised when persuasive evidence exists, the significant risks and rewards of ownership 
have transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be 
estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured 
reliably.
the timing of the transfer of risks and rewards varies depending on the individual terms of the contract of sales. in most cases, 
transfer occurs at the time the product is shipped and delivered to the customer . however, in the case of some customers, bill 
and hold arrangements exist which accelerate the point at which ownership and the risks and rewards associated with the goods 
are passed to the buyer, and revenue is recognised in advance of shipping.
in certain circumstances, there remains additional activity to be performed in order for the customer to be able to use these 
goods for the purpose they were purchased. in these cases, revenue will only be recognised where this remaining activity is 
considered insignificant to the overall delivery of the goods and the costs associated with completing the activity can be reliably 
estimated and accrued for .
services
service revenue is generally recognised on a straight line basis over the service period, unless there is evidence that some other 
method better represents the stage of completion.
multiple element arrangements
Bundled sales or multiple-element arrangements require the company to deliver hardware and/or a number of services under 
one agreement, or a series of agreements which are commercially linked.
under such agreements, an assessment is made over the ability to identify and account for each of the components separately. 
in order for these components to be identified, it is determined whether the component has stand-alone value to the customer 
and whether the fair value of the component can be measured reliably. if these criteria are deemed to be met, the components 
are accounted for separately. 
where these agreements are accounted for separately, the consideration received is allocated to each of the identifiable 
components based on the relative fair values. f air values are determined based on a hierarchical basis as follows:
● ● evidence where the company sells on a stand-alone basis
● ● evidence where the same or similar components are being sold by another third party
● ● Best estimate of the selling price
the amount of revenues allocated to the hardware element is accounted for in line with the policy for the sale of goods, and the 
amount allocated to services is accounted for in line with the policy for services.
alternatively, where it is determined that either the component does not have stand-alone value or it is not possible for fair value 
to be determined reliably, revenue is recognised on the entire agreement on a straight line basis over the service period.
customer relationships
in some circumstances, the accounting for revenue on multi element arrangements contracts in line with policies outlined 
above, results in the amount of revenue being allocated to the sale of goods being less than the cost of these goods. in these 
cases, any excess of directly attributable costs over the revenue allocated to the delivered goods is expected to be recovered over 
the term of the contract, and is recognised as an intangible asset, amortised over the initial non-cancellable, contract term.
foreiGn currencies
t ransactions in foreign currencies are recorded at the rate of exchange ruling at the date of the transaction.
assets and liabilities denominated in foreign currencies are translated into sterling at rates prevailing at the balance sheet date. 
differences arising from the translation, at closing rates, of loans to overseas subsidiaries, foreign currency borrowings, trading 
and other items are taken to the profit and loss account. 72  TrafficmasTer Plc  annual report and accounts 2009
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34. accounTinG Policies (conTinueD)
sTocK s
stocks are stated at the lower of cost and net realisable value.
Provisions
a provision is recognised in the Balance sheet when the company has a present legal or constructive obligation as a result of a 
past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. if the effect is 
material, provisions are determined by discounting the expected future cash outflows at a pre-tax rate that reflects current 
market assessments of the time value of money and, where appropriate, the risk specific to the liability.
DismanTlinG
liabilities for dismantling costs are recognised when the company has an obligation to dismantle and remove a facility or an item 
of plant and to restore the site on which it is located, and when a reasonable estimate of that liability can be made. the amount 
recognised is the present value of the estimated future expenditure determined in accordance with local conditions and 
requirements. a corresponding item of property, plant and equipment of an amount equal to the provision is also created. this is 
subsequently depreciated as part of the capital costs of the facility or item of plant.
Taxa Tion
the charge for taxation is based upon the result for the year and takes account of taxation deferred because of timing differences 
between the treatment of certain items for taxation and accounting purposes.
deferred tax is recognised without discounting in respect of all timing differences between the treatment of certain items for 
taxation and accounting purposes which have arisen but not reversed by the balance sheet date, except as otherwise recognised 
by frs 19.
net debit balances are recognised as assets only to the extent that they are expected to be recovered.
financial asseTs anD liaBiliTies
financial assets and liabilities are recognised on the company Balance sheet when the company becomes a party to the 
contractual provisions of the instrument.
financial assets and financial liabilities are accounted for in the financial statements as follows:
● ● financial assets or liabilities held for trading, all derivatives other than hedging instruments and any other financial assets 
or liabilities designated at the time of initial recognition as ‘measured at fair value through the profit and loss’ are stated at 
fair value and all changes in fair value are recognised immediately in the profit or loss;
● ● financial assets held to maturity are measured at amortised cost calculated using the effective interest method;
● ● loans and receivables are measured at amortised cost calculated using the effective interest method;
● ● financial assets available for sale are measured at fair value with gains and losses on remeasurement of these assets 
recognised directly in equity;
● ● other financial liabilities are measured at amortised cost using the effective interest method.
the company does not use derivative financial instruments to hedge its exposure to foreign exchange, nor does it hold or issue 
derivative financial instruments for trading purposes and acquisitions. the company’s principal financial instruments are 
borrowings for the purposes of funding operating activities and acquisitions.
Deriva Tive financial insTrumenTs
the group holds derivative financial instruments to hedge its interest rate risk exposures. embedded derivatives are separated 
from the host contract and accounted for separately if the economic characteristics and risks of the host contract and the 
embedded derivative are not closely related, a separate instrument with the same terms as the embedded derivative would meet 
the definition of a derivative, and the combined instrument is not measured at fair value through profit and loss.
derivatives are recognised initially at fair value; attributable transaction costs are recognised in profit or loss when incurred. 
subsequent to initial recognition, derivatives are measured at fair value, and changes therein are accounted for as described below.
cash flow hedges
c hanges in the fair value of the derivative hedging instrument designated as a cash flow hedge are recognised directly in equity to 
the extent that the hedge is effective. to the extent that the hedge is ineffective, changes in fair value are recognised in profit or loss.
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if the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, then 
hedge accounting is discontinued prospectively. the cumulative gain or loss previously recognised in equity remains there until 
the forecast transaction occurs. when the hedged item is a non-financial asset, the amount recognised in equity is transferred to 
the carrying amount of the asset when it is recognised. in other cases the amount recognised in equity is transferred to profit or 
loss in the same period that the hedged item affects profit or loss.
separable embedded derivatives
changes in the fair value of separable embedded derivatives are recognised immediately in profit or loss.
other non-trading derivatives
when a derivative financial instrument is not held for trading, and is not designated in a qualifying hedge relationship, all 
changes in its fair value are recognised immediately in profit or loss.
cash anD shor T -Term DePosiTs
cash comprises, for the purpose of the cash flow statement, cash in hand and deposits repayable on demand, less overdrafts 
payable on demand.
35. inTanGiBle fixeD asseTs
      customer development 
      relationships costs t otal 
      £000 £000 £000
 cost
 at 1 January 2009     850 20,114 20,964
 additions     411 1,687 2,098
 derecognition     — (7,416) (7,416)
	 at 31 decemBer 2009     1,261	 14,385	 15,646
 amortisation
 at 1 January 2009     237 14,300 14,537
 charge for the year     335 1,801 2,136
 derecognition     — (7,416) (7,416)
	 at 31 decemBer 2009     572	 8,685	 9,257
 net BooK value
	 at 31 decemBer 2009     689	 5,700	 6,389
 at 31 decemBer 2008     613 5,814 6,427
capitalised development costs are not treated as a realised loss for the purpose of determining the company’s distributable 
profits as, in the directors’ view, they are assets that will result in future economic benefits arising from increased revenues and 
related profits.
derecognition on customer relationships of £743,000 relates to fully amortised customer relationships originally recognised on 
the company’s acquisition of the remaining share capital of its fully owned subsidiary, t rafficmaster t elelematics services ltd,  
in January 2007.
derecognition on development costs of £7,416,000 relates to the development costs in connection with the group’s old products 
and services which are no longer marketed or supported by the group and which were fully amortised by 31 december 2002. 74  TrafficmasTer Plc  annual report and accounts 2009
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36. TanGiBle fixeD asseTs
    l ong 
    leasehold  fixtures, 
    land and  fittings 
    freehold motor and infra- 
    building vehicles computers structure t otal 
    £000 £000 £000 £000 £000
 cost
 at 1 January 2009   8,679 61 4,505 28,092 41,337
 additions   — — 636 178 814
 disposals   — (29) — — (29)
	 at 31 decemBer 2009   8,679	 32	 5,141	 28,270	 42,122
 depreciation
 at 1 January 2009   1,239 61 2,634 25,413 29,347
 charge for the year   151 — 622 686 1,459
 disposals   — (29) — — (29)
	 at 31 decemBer 2009   1,390	 32	 3,256	 26,099	 30,777
 net BooK value
	 at 31 decemBer 2009   7,289	 —	 1,885	 2,171	 11,345
 at 31 decemBer 2008   7,440 — 1,871 2,679 11,990
all land and buildings relate to the head office at cranfield.
the title over the freehold building has been assigned as security for the loan and overdraft facility in place at the balance sheet 
date. as part of refinancing its working capital in January 2010, all other fixed assets were pledged as security in the form of a 
floating charge as part of a cross guarantee with certain group companies.
the net book value of land and buildings comprises:
       2009 2008
       £000 £000
 f reehold buildings      5,858 6,001
 l ong leasehold land      1,431 1,439
       7,289 7,440
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37. invesTmenTs
        shares in group 
        undertakings 
        £000
 cost
 at 1 January 2009       33,911
 additions       164
	 at 31 decemBer 2009       34,075
 provisions
 at 1 January 2009       28,172
 at 31 decemBer 2009       28,172
 net BooK value
 at 31 decemBer 2009       5,903
 at 31 decemBer 2008       5,739
details of the principal companies in which the company’s interest at the end of the year was 20% or more are disclosed in 
note 13.
the addition to shares in group undertakings represents the share-based payments charge related to share options granted to 
employees of an existing wholly owned subsidiary.
38. sTocK s
       2009 2008
       £000 £000
 raw materials and consumables      1,356 3,728
 finished goods for resale      4,326 5,508
       5,682 9,236
39. DeBTors
       2009 2008
       £000 £000
 t rade debtors      1,895 1,214
 amounts owed by group undertakings     30,911 29,939
 deferred tax asset      1,313 1,297
 prepayments and accrued income      1,290 1,020
       35,409 33,470
included within amounts due from group undertakings are debts due after more than one year amounting to £24,969,000 (2008: 
£13,460,000).
the deferred tax asset is expected to be recovered after more than one year from the balance sheet date. 76  TrafficmasTer Plc  annual report and accounts 2009
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40. creDiT ors: amounTs fallinG Due WiThin one Year
       2009 2008
       £000 £000
 Bank loans and overdraft      11,804 10,833
 t rade creditors      1,696 4,745
 amounts due to group undertakings     880 615
 other taxes and social security      602 466
 accruals      2,735 1,345
 derivatives used for hedging      158 258
 deferred income      3,197 3,962
       21,072 22,224
the bank loan and the overdraft facility are secured by a legal charge on the freehold building and a cross guarantee with 
certain group companies.
41. creDiT ors: amounTs fallinG Due afTer more Than one Year
       2009 2008
       £000 £000
 deferred income      1,404 2,320
       1,404 2,320
deferred income relates to subscriptions received from customers in respect of future journey management services.
42. Provision for liaBiliTies
a) DeferreD T axa Tion
       2009 2008
       £000 £000
 asset at 1 January      (1,297) (1,062)
 credit to the profit and loss account for the year     (16) (235)
 asset at 31 decemBer     	 (1,313) (1,297)
the elements of deferred taxation are as follows:
   amount provided amount unprovided
     2009 2008 2009 2008
     £000 £000 £000 £000
 accelerated capital allowance    (9) 669 — —
 short-term timing differences    — — (676) (625)
 share-based payment expense    — — (29) (4)
     (9) 669 (705) (629)
 l ess losses    (1,304) (1,966) (1,793) (720)
     (1,313) (1,297) (2,498) (1,349)
the deferred tax asset relating to trading losses has been recognised on the basis that the losses are expected to be used 
against future trading profits in the next twelve months, the economic benefit of which will be derived after more than one year 
from the balance sheet date.
the deferred tax assets not recognised in 2008 and 2009 have not been recognised on the basis that the future economic 
benefits are uncertain.
no Tes forminG P ar T of The financial sT aTemenTs
conTinueD www.trafficmaster.co.uk  TrafficmasTer Plc   77
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Our Accounts Our Governance Our Business
b) oTher Provisions
    asset dismantling 
    obligation
       2009 2008
       £000 £000
 Balance at 1 January      1,540 1,505
 discount applied to provision      36 35
 Balance at 31 decemBer      1,576 1,540
the company has made a provision for dismantling and removing the infrastructure (a network of nationwide sensors and 
transmitters). Because of the long-term nature of the liability, the biggest uncertainty in estimating the provision is the timing 
and the cost that will be incurred. in particular, the company has assumed that the work will be carried out using technology 
and materials that are currently available.
43. share-BaseD P aYmenTs
the grants and related accounting treatment adopted by t rafficmaster plc under frs 20, ‘share-based p ayments’ are identical 
to those adopted by the group under ifrs 2, ‘share-based p ayments’. f or details refer to note 23.
the company’s total expense recognised within administrative expenses for the year arising from share-based payments was 
£223,000 (2008: £275,000).
there is a potential deferred tax asset of £29,000 arising from the share-based payment expense in 2009 (2008: £4,000). this has 
not been recognised as the future economic benefit is uncertain.
44. calleD uP share caPiT al
       2009 2008
       £000 £000
 authorised
 160,000,000 ordinary shares of 5 pence each     8,000 8,000
 allotted, called up and fully paid
 136,672,000 (2008: 136,632,000) ordinary shares of 5 pence each    6,834 6,832
there is a contingent right to allot a total of 5,576,207 (2008: 9,908,431) ordinary shares of 5p each currently under share 
options. these options are exercisable, if necessary performance criteria are satisfied, at varying dates between the date of 
this report and 2018. the exercise prices range from £0.0875 to 563.5p per share. directors’ options are set out on page 24 of 
this report.
     saye number number 
     plan approved unapproved t otal
 at 1 January 2009    496,627 443,354 8,968,450 9,908,431
 f orfeited/lapsed    (362,224) — (3,930,000) (4,292,224)
 exercised    — (40,000) — (40,000)
 at 31 decemBer 2009    134,403	 403,354	 5,038,450	 5,576,207 78  TrafficmasTer Plc  annual report and accounts 2009
17384	 06/05/2010	 Proof	6
no Tes forminG P ar T of The financial sT aTemenTs
conTinueD 
45. reserves
      share  
     f air value premium profit and 
     reserve account loss t otal 
     £000 £000 £000 £000
 at beginning of year    (258) 254 35,041 35,037
 l oss for the financial year    — — (1,686) (1,686)
 effective portion of changes in fair value of cash flow hedges  100 — — 100
 issue of ordinary shares    — 4 — 4
 credit in respect of share-based payments   — — 387 387
 at 31 decemBer 2009    (158)	 258	 33,742	 33,842
46. financial commiTmenTs
     Land	and  land and
     buildings	 Other buildings other
     2009	 2009 2008 2008
     £000	 £000 £000 £000
 annual commitments under non-cancellable operating leases
 which expire:
 in less than one year    60	 38 130 3
 in the second to fifth years inclusive    —	 114 — 164
 over five years    —	 — — —
     60	 152 130 167
47. rela TeD Par TY TransacTions
the company’s related party transactions are the same as disclosed for the group in note 31 on page 66.
48. conTinGenT liaBiliTies
on 3 f ebruary 2010 t rafficmaster plc acquired the entire share capital of us-based fleet management s olutions, inc (fms) for a 
total consideration of $13.25m (£8.1m) including $6m (£3.7m) of deferred contingent consideration based on certain 
performance criteria being met in the calendar years 2010 and 2011.
the company is party to a cross guarantee with respect to the bank borrowings of certain group companies. at 31 december 
2009 and 2008 the bank balances of the subsidiaries which are party to this guarantee were not overdrawn.
on 21 July 2008, the company acquired the entire share capital of tri-mex Group ltd and its subsidiaries (collectively trading 
under the ‘eurowatch’ brand) for a deferred contingent consideration capped at £4,750,000. the consideration is payable over 
the following three years subject to the achievement of certain earn-out criteria. the directors believe that it is not probable that 
those criteria will be met in the current economic climate. www.trafficmaster.co.uk  TrafficmasTer Plc   79
17384	 06/05/2010	 Proof	6
Our Accounts Our Governance Our Business
shareholDer’s no Tes
  80  TrafficmasTer Plc  annual report and accounts 2009
17384	 06/05/2010	 Proof	6
shareholDer’s no Tes
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HigHLigHTs
a year of evolution and progress
f inancial highlights 
Operational highlights 
> Strong performance in Business Services, with revenue up 23%, and 
EBITDA up 110%. 
> Continued expansion of Fleet Director direct sales team, with volumes 
from National Accounts trebling in 2009.
> 12% growth in Fleet Director subscriber base to 98,000 vehicle 
tracking units.
> Acquisition of Fleet Management Solutions, Inc. in early 2010 expands 
service offering globally.
> Stolen Vehicle Tracking and Traffic businesses show modest revenue 
declines in tough market conditions, although improved profitability. 
Revenue up 4% to £57.5m (2008: £55.1)
pRofit befoR e tax up 14% to £5.1m (2008: £4.5M)
ebitDa * up 17% to £12.2m (2008: £10.4M)
opeRating pR ofit befoR e non-R ecuRRing items up 9% to £6.3m 
(2008: £5.8M)
opeRating pR ofit £5.3m (2008: £5.4M)
b asic eps up 6% to 3.62p (2008: 3.41p)
unDeR l ying eps** up 16% to 4.81p (2008: 4.14p)
* EBITDA refers to earnings before interest, taxation, depreciation and amortisation and also excludes any non-recurring costs.
** Calculated after removing the effect of non-recurring items, amortisation of acquired intangibles, share based payments and deferred 
tax movement.
Note: as previously announced, during 2009 the group adopted a new accounting methodology for revenue recognition. Comparatives have 
been restated accordingly.
r egistered Office and advisors
RegisteRe D office 
Martell House 
University Way 
Cranfield 
Bedfordshire  MK43 0TR.  
Registered Number 2292714 
stoc KbRoKeRs & 
financial aD viseRs 
canaccord adams l td 
Cardinal place 
7th Floor 
80 Victoria Street 
London  SW1E 5JL 
Tel: 0207 050 6500
au Dito Rs 
Kpmg a udit plc 
1 Waterloo Way 
Leicester  LE1 6Lp  
Tel: 0116 256 6000
solicitoRs 
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1 park Row 
Leeds  LS1 5AB 
Tel: 0113 244 5000 
RegistRaRs 
capita Registrars 
The Registry 
34 Beckenham Road 
Beckenham 
Kent  BR3 4TU 
Tel: 0870 162 3100
banKeRs 
b arclays b ank plc 
11 Bank Court 
Hemel Hempstead  Hp1 1BX 
Tel: 01582 686271
financial pR 
city profile g roup l td 
Augistine House
6a Austin Friars
London EC2N 2HA
Tel: 0207 4483244 17384	 06/05/2010	 Proof	6 17384	 06/05/2010	 Proof	6
TRAFFICMASTER PLC
MARTELL HOUSE | UNIVERSITY WAY | CRANFIELD | BEDFORDSHIRE | MK43 0TR
T: +44 [0]1234 759000 | F: +44 [0]1234 759318 | W: www.trafficmaster .co.uk
RegisteRed in england and Wales 2292714 | V at RegisteRed no. gB 539 9704 95
AnnuAL REPoRT AnD ACCounTS
TrafficmasTer PLc
for the year ended 31 December 2009
Stock code: TFC
TrafficmasTer PLc   aNNUaL rePOr T aND acc OUNTs 2009