TRAFFICMASTER ANNUAL REPORT AND ACCOUNTS
YEAR ENDED 31 DECEMBER 2005
TRAFFICMASTER ANNUAL REPORT AND ACCOUNTS                                               YEAR ENDED 31 DECEMBER 2005
Trafficmaster Plc
Martell House
University Way
Cranfield
Bedfordshire
MK43 0TR
www.trafficmaster .co.uk 02 | TRAFFICMASTER ANNUAL REPORT AND ACCOUNTS
CONTENTS
03 HIGHLIGHTS
05 CHAIRMAN’S STATEMENT
07 CHIEF EXECUTIVE’S STATEMENT
12 BOARD OF DIRECTORS
14 REGISTERED OFFICE AND ADVISORS
15 DIRECTORS’ REPORT
19 DIRECTORS’ REMUNERATION REPORT
23 CORPORATE GOVERNANCE
30 STATEMENT OF DIRECTORS’ RESPONSIBILITIES
31 INDEPENDENT AUDITORS’ REPORT
33 CONSOLIDATED INCOME STATEMENT
33 CONSOLIDATED STATEMENT OF RECOGNISED
INCOME AND EXPENSE
34 CONSOLIDATED BALANCE SHEET
35 CONSOLIDATED CASH FLOW STATEMENT
36 NOTES TO THE FINANCIAL STATEMENTS
63 COMPANY BALANCE SHEET
64 NOTES TO THE FINANCIAL STATEMENTS
Trafficmaster, a leading supplier of intelligent vehicle tracking 
and navigation solutions, announces its results for the year ended
31st December 2005. Financial Highlights:
Revenues up 16% to £42.3m (2004: £36.6m)
T eletrac revenues increased by 23% to £20.6m (2004: £16.8m)
UK revenues increased by 10% to £21.7m (2004: £19.8m)
Operating profit – £1.8m (2004: £2.5m) before,
and £1.0m (2004: £2.5m) after non-recurring items
Strong improvement in operating profit in H2 over H1 – 
£1.8m vs £0.028m before non-recurring items,
and £1.5m vs loss £0.5m after non-recurring items
Operational Highlights:
Strategic review led to reduced cost base and improved 
service margins
New business structure leading to improved future performance
Standard fit programmes signed with six motor manufacturers
including Ford, Peugeot, Isuzu, Subaru, Mitsubishi 
and DaimlerChrysler
RDS TMC traffic information contracts signed with Audi, 
Honda, Alpine, Garmin, Destinator and Navigon
YEAR ENDED 31 DECEMBER 2005 | 03 04 | TRAFFICMASTER ANNUAL REPORT AND ACCOUNTS
Lance Bradley, Sales Director at Mitsubishi
“Smartnav is unlike other satellite navigation systems, in that it is supported by operators who
are able to find an address, even if you don’t have the full details. You are also able to safely
download a route whilst you are on the move, which can help people save time. Above all it
uses the most accurate traffic information available, enabling drivers to automatically avoid
the traffic jams.” 
Smartnav was standard on the Mitsubishi L200 Animal and Shogun Warrior 
short wheel base throughout 2005
Kenyon Neads, Marketing Director at Isuzu UK
“This standard offering comes after the success of fitting Smartnav to the limited edition 
Rodeo Denver Max. This vehicle is used from builders to holiday-makers towing caravans 
and Smartnav was an extremely popular addition. It helps prevent them from getting lost,
directs them around traffic jams, warns them of speed cameras and provides protection if the 
vehicle is stolen. It's a great asset to businesses too as it increases productivity and prevents
excessive downtime. It helps the money roll in, in fact!” 
Smartnav fitted as standard on the Isuzu Rodeo Denver Max 
from January 2006 to December 2006 YEAR ENDED 31 DECEMBER 2005 | 05
CHAIRMAN’S STATEMENT
Your board is pleased to report significantly improved
performance for Trafficmaster during the year following a 
reorganisation of our UK operations and continued strong
growth of our business in the USA.
Teletrac has continued the expansion of its fleet management
business. The growing recognition of the quality of our
offering by major account customers has been particularly
noteworthy; we have been focusing on this segment and are
hopeful of further success in the coming year . 
The reorganisation of our UK activities and the focus on
business partnerships, described in more detail in the Chief
Executive’s Statement, has had a successful start. We are
particularly pleased with the manufacturer take up of our
revised proposition. In recent months Ford, Peugeot,
Mitsubishi, Isuzu and DaimlerChrysler have launched
standard fit offers backed by high profile marketing
campaigns associating Smartnav with their brands. 
We believe this demonstrates their faith in the unique
features and quality of service we can deliver .
Much of the progress in the past year has come from
exploiting the depth of Trafficmaster's technology and 
market know-how by more effectively leveraging the 
talented management team employed within the group.
Under the leadership of Tony Eales, our new streamlined
flatter management structure has deployed our most
experienced executives running clearly defined elements 
of the business that also have a clear fit with their 
respective personal strengths.
Having such "square pegs in square holes", combined with a
reduced cost base has repositioned the group to take strong
advantage of the opportunities now before us. We expect the
year ahead to build on the progress already achieved and your
board looks forward to reporting tangible evidence of our
continued progress during the year ahead.
Colin Walsh, Chairman of Trafficmaster Plc 06 | TRAFFICMASTER ANNUAL REPORT AND ACCOUNTS
Steve Lambert, Manager Product Planning and Pricing at Peugeot Motor Company Plc
“Smartnav was our first choice satellite navigation system. With its real time traffic
information that automatically guides you around the delays and up-to-date mapping to 
take you on the right roads, integrated safety camera warnings and stolen vehicle tracking it
provides real benefits to our customers. We believe Smartnav complements the 407 brand, 
in that it provides advanced technology that makes driving more cost effective, enjoyable 
and stress free.” 
Smartnav fitted as standard on Peugeot 407 vehicles from November 2005
Lawrence Good, Sales Director at Chrysler
“Smartnav has already been available as an accessory on all of Chrysler’s vehicles but we
wanted to take it one step further and decided to offer it as standard on the Chrysler Crossfire.
Smartnav has the advantage of offering simplicity combined with outstanding functionality.” 
Smartnav fitted as standard on the Chrysler Crossfire in a campaign launched in March 2006 CHIEF EXECUTIVE’S STATEMENT
YEAR ENDED 31 DECEMBER 2005 | 07
The strategic steps taken to reposition the UK business in 
the latter half of 2005 have lowered the cost base, improved
service margins and built solid foundations based upon
improved business fundamentals. In the UK we are now fully
focused upon delivering our strategy through the three new
business units and have experienced growing interest in our
value proposition. In recent months Ford, Peugeot, Mitsubishi,
Isuzu and DaimlerChrysler have launched high profile
marketing campaigns associating Smartnav with their
brands. We believe this demonstrates their faith in the unique
features and quality of service we can deliver .
In the USA, Teletrac continues to perform well and we expect
continued growth in this market as we expand operations and
benefit from added value services.
Overall, we are confident that the progress made in the
second half of 2005 will continue into 2006 and beyond.
FINANCIAL RESULTS
Trading improved significantly during the course of the year .
After a profit of just £0.028m in the first half, Trafficmaster
recorded full year operating profits before non-recurring
items of £1.8m (2004: £2.5m).
Revenues for the full year increased 16% to £42.3m compared
to £36.6m in 2004 driven by a 23% revenue increase in
Teletrac and a 10% increase in UK revenues.
Net borrowings at year end were £4.7 million compared with
£3.8 million at 30 June 2005. Cash balances were £1.4 million
at 31 December 2004. 08 | TRAFFICMASTER ANNUAL REPORT AND ACCOUNTS 
USA OPERATIONS
Teletrac
Teletrac continued to increase revenues during the year,
recording a 23% rise in 2005 to £20.6 million (2004: £16.8
million) and increased operating profits 17% from £2.9 million
to £3.4 million. Teletrac is the second largest provider of local
fleet tracking and management services, through its
FleetDirector product, in the United States and contributes
approximately half of Trafficmaster’s sales. At the end of 2005
over 50,000 vehicles were being monitored each day, across
the USA and Teletrac’s data centres handled over 11 million
transactions per day.
Teletrac continued to grow its sales and service presence
during the year with 120 direct Sales and Service personnel in
the USA serving over 25 cities. 
Tim Van Cleve, Chief Operating Officer of Teletrac Inc, leads
our efforts in this area. Tim has worked in the fleet tracking
business for over 10 years and has operated at all levels in
the Sales and Operations of the business. 
As Teletrac develops, we are increasing our focus on securing
larger accounts with major vehicle fleets. The Major Accounts
team continues to make good progress with significant wins
in 2005, including GCS, a division of Ecolab a Fortune 500
company and Builders FirstSource, a $2bn USA building
products company. We have a strong pipeline of potential 
new business for 2006.
Teletrac continues to enhance its product offerings to improve
its position at the high-value high-feature end of the growing
fleet tracking market. In line with this strategy, we will be
launching Smartnav, fully integrated with FleetDirector, 
in the USA fleet market in the first half of this year .  
STRATEGIC REVIEW OF UK OPERATIONS
Following my appointment in July 2005, we undertook a
strategic review of the business to improve Trafficmaster’s 
UK performance. 
The key actions from the review are:
• to increase our emphasis on business partnerships and
move away from consumer marketing;
• to focus on the delivery of a profitable subscription services
business and;
• to integrate the development of our market-leading 
in-vehicle products and off-board services technologies.
As a result, three new business units have been created 
in the UK: Trafficmaster In-Vehicle Products, 
Trafficmaster Services and Trafficmaster Technologies. 
The new strategy has already delivered improvements in 
our product positioning by focusing on our most effective
channels including OEM (Original Equipment Manufacturer)
standard fit sales. 
We have improved productivity, improved supplier terms and
eliminated costs that do not support the revised strategy. 
As a result, we have improved service margins and 
generated cost savings. 
We continue to make good progress in our technology
partnership opportunities.
Jimmie Schindewolf, P .E. Director of Public Works for the City of Houston
“We’re seeing impressive reductions in response times for area residents needing time critical
service. The inspectors using Teletrac are working more efficiently because they no longer have to
manually input the data needed for status reports.”
Teletrac enables Houston’s Public Works to dispatch the closest drivers to area residents
needing immediate help YEAR ENDED 31 DECEMBER 2005 | 09
Trafficmaster In-Vehicle Products
Trafficmaster In-Vehicle Products concentrates on the 
sale of Smartnav, our award winning satellite navigation 
and integrated traffic information system, and Trackstar
hardware, our stolen vehicle tracking system. Revenues
increased by 8% in 2005 to £11.7 million (2004: £10.8 million).
The operating profit before non-recurring items for this
division reduced to £1.3 million from £2.2 million, and from
£2.2 million to £0.2 million after non-recurring items, due to
increased marketing costs in the first half of 2005.
Pat Gallagher, Director of In-Vehicle Products, has been in
the In-Vehicle Products industry for over 20 years having 
worked at a senior level in Cobra and Renault before 
joining Trafficmaster in 1999.
In-Vehicle Products strategy is to concentrate our efforts on
“business to business” relationships and create a simplified
product proposition to our OEM partners. This is proving
productive. In the last six months, we have significantly
enhanced our relationships with our OEM partners and have
generated standard fit programmes with Ford, Peugeot,
Isuzu, Subaru and DaimlerChrysler . Mitsubishi, one of our
largest OEM customers in 2005, has extended their contract
throughout 2006 to fit Smartnav as standard on a number of
models in its range including the new L200.
Each of these OEM partners has supported brand-building
campaigns for Smartnav. We have therefore seen the highest
level of marketing effort in Trafficmaster’s history – including
significant campaigns featuring a mix of TV, radio and press
by Peugeot, Ford, Isuzu, Mitsubishi and DaimlerChrysler . 
Smartnav is currently primarily sold with new car purchases –
a market of some 2.4 million cars per annum in the UK, and
is showing good penetration in this market.  As a result we
expect Smartnav to increase its penetration in the wider car
market, which currently totals around 26 million in the UK, 
in future years. 
Trackstar, our market leading GPS stolen vehicle tracking
system, continues to grow in a stable market. 
One of our key strengths in the market is flexibility. 
Our in-vehicle platform can deliver class leading services 
for navigation, stolen vehicle tracking, safety camera warning,
emergency/breakdown call, usage based insurance and
traffic information services. This allows Trafficmaster 
In-Vehicle Products to tailor unique propositions for the OEM.
Mark McKenna, Head of Marketing at SEAT
“Out of all the satellite navigation systems on the market, Smartnav offers a truly comprehensive
driving solution. Not only does it stop you from getting lost, using up-to-date mapping stored on
Trafficmaster’s central computers, but it dynamically guides you around traffic problems and tracks
your car if it is stolen. It is a great addition to our cars.”
Smartnav fitted as standard on the SEAT Leon FR and Leon Cupra R 
from July 2005 to December 2005 Trafficmaster Services
Trafficmaster Services is focused on generating enhanced
recurring revenue from each user of Trafficmaster’s products.
During the year, revenues increased by 12% to £10.1 million
(2004: £9.0 million). The division reported an operating profit
of £0.2 million (2004: £0.5 million) with increased marketing
costs in the first half and reductions in legacy traffic 
revenues offset by increases in Smartnav 
and Trackstar service revenues.
Craig Blount, Director of Trafficmaster Services, has 20 years
experience in subscription services and marketing having
worked in various General Manager positions at The AA
before joining Trafficmaster in 2000.
Trafficmaster Services provides the widest range of traffic 
and vehicle related services available from one source in the
market today. We are seeing strong uptake in our Safe Speed
and Trackstar value added services on the Smartnav platform
with over 40% of our customers signing up for these options.
We are in a strong position to drive this penetration through
our constant contact with customers and our ability to provide
trial services to users.
In the second half of the year we have made significant
progress on service operating margins, reducing our average
cost per customer going forward by over 20%. We continue to
maintain excellent levels of customer satisfaction,
underpinning our belief that Trafficmaster’s range of services
meets customer needs.
Trafficmaster Services is also responsible for our traffic
information business. The launch of our RDS TMC services 
at the start of 2005 has been extremely successful in both the
automotive and portable markets. In its first year of service
contracts have been put in place with Audi, Honda, Alpine,
Garmin, Destinator, Wayfinder and Navigon. 
A significant proportion of revenues both in the UK 
and USA now come from recurring subscriptions and sale 
of information. 
Paul Ormond Head of Press & PR at Honda
“Honda has a culture that demands quality in both its own products and those of its suppliers. 
In our evaluation we concluded that the accuracy, timeliness and quality of the traffic data provided
by Trafficmaster through its RDS TMC service was ideally suited to the needs of our customers. 
The traffic data will benefit our customers as it will be incorporated into our satellite navigation
systems and used to help drivers avoid traffic jams as they are navigated to their destination.”
In May 2005 Honda selected Trafficmaster’s RDS TMC traffic information to be available on all
Honda vehicles fitted with satellite navigation as standard
10 | TRAFFICMASTER ANNUAL REPORT AND ACCOUNTS  YEAR ENDED 31 DECEMBER 2005 | 11
Trafficmaster Technologies
Trafficmaster Technologies is responsible for developing new
markets and new applications for our technologies such as
Usage Based Insurance and vehicle diagnostics.  
Stuart Berman, Director of Trafficmaster Technologies, 
is leading our efforts in this area. Stuart has been involved in
advanced technology businesses, at director level, for 10
years having previously worked at Demon Internet. 
Our relationships with our partners in these areas are
progressing well. The Transport for London initiative is now
providing live traffic information based on every vehicle
entering and leaving the Congestion Zone – we believe,
providing motorists in London with the best traffic information
available in the world today. All of our products will benefit
from this including Smartnav and RDS TMC traffic services. 
Trafficmaster is ideally placed to provide strategic technology
to a wide range of organisations based on its pioneering
technology developments in in-vehicle products, traffic
information and off-board services for vehicle tracking,
navigation and mobile resource management. These
technologies and capabilities are finding new markets,
partners and opportunities.
OUTLOOK
The strategic steps taken to reposition the UK business in 
the latter half of 2005 have lowered the cost base, improved
service margins and built solid foundations based upon
improved business fundamentals. Actions already taken will
result in annualised cost savings in excess of £2 million in
2006. We are now fully focused upon delivering our strategy
through the three new business units in the UK and already
have experienced growing interest in our value proposition. 
In recent months Ford, Peugeot, Mitsubishi, Isuzu and
DaimlerChrysler have launched high profile marketing
campaigns associating Smartnav with their brands. 
We believe this demonstrates their faith in the unique
features and quality of service we can deliver .
In the USA, Teletrac continues to perform well and we expect
continued growth in this market as we expand operations 
and benefit from added value services.
Overall, we are confident that the progress made in the
second half of 2005 will continue into 2006 and beyond.
Tony Eales, Chief Executive of Trafficmaster Plc
Salim Baltagi, Vice President of Logistics for Builders FirstSource
“We were looking for a very broad set of fleet management and driver measurement tools. We were
seeking an integrated system that would allow us to monitor engine idle times, provide maintenance
alerts and DOT report preparation plus allow us to monitor driver activities such as start, stop, and
on-break times as well as vehicle speed. Improving vehicle and driver security were also concerns.”
Teletrac enables Builders FirstSource to better co-ordinate the on-demand routing changes
that occur during the day and improve response times  BOARD OF DIRECTORS
COLIN WALSH
NON-EXECUTIVE CHAIRMAN
Colin was appointed as Trafficmaster's Chairman in June
2004.  He previously served as a Non-Executive Director 
with the company and had a particular involvement in the
company’s strategic management and helped to secure
funding for the company prior to its flotation in 1994.  
Colin has worked in the venture capital industry since 1989,
securing funds for early stage and growth companies. 
He also serves on the boards of a number of other public 
and private companies. With an MBA in International
Business and Industrial Development from the University 
of Ulster, Colin currently manages a venture capital fund
investing in growth companies in Northern Ireland.
TONY EALES
CHIEF EXECUTIVE OF TRAFFICMASTER PLC 
AND CHIEF EXECUTIVE OFFICER TELETRAC INC., USA 
Prior to joining Trafficmaster in 1998, Tony held senior
management positions in Finance, Marketing and Strategic
Planning during his 15 years in the mobile telecoms industry. 
He was appointed to the Trafficmaster board in January 1999
and was responsible for strategic relationships, business and
product development. In August 2001, Tony became Chief
Executive Officer of Teletrac, Trafficmaster’s USA operation.
Tony was central to Teletrac’s turnaround and expansion,
making it a key revenue and profit generator for the
Trafficmaster group. Tony was appointed Chief Executive of
Trafficmaster in July 2005, and under his management, 
the UK operation has been re-organised into three business
units: Trafficmaster Technologies, Trafficmaster Services and
Trafficmaster In-Vehicle Products.
NIGEL BOND
FINANCE DIRECTOR
Nigel has over 18 years experience as a Finance Director . 
He started his career at Shell Chemicals in 1971 and has 
held positions at Blanchards Plc, a design and construction
company, and Antocks Group Ltd. In a move to Alison
Associates Ltd, a group that specialises in information
systems for the motor industry, Nigel contributed to the
expansion of the company, whereby the business grew from 
a staff of 40 to 400 people employed across Europe and the
USA. Nigel joined Trafficmaster in 2001 and has responsibility
for both the financial and procurement departments. Nigel is
a Fellow of the Institute of Chartered Accountants in England
and Wales and studied economics at Cambridge University.
STUART BERMAN
EXECUTIVE DIRECTOR
Stuart joined Trafficmaster in September 2001. He has held 
a number of senior executive positions at Trafficmaster,
including Chief Executive and Chief Operating Officer . In his
current role as Director of Trafficmaster Technologies, Stuart
is responsible for bringing to market new products and
technologies for the benefit of the driver . Stuart has an
engineering background and an MBA, and has worked in
various pioneering technology companies holding senior
director positions in a number of high growth technology
companies. Prior to joining Trafficmaster, Stuart was
Managing Director of Films2 Limited, a broadband video-on-
demand venture that he developed from start-up. He also
held the role of Commercial Director at Demon Internet Ltd,
where he was responsible for all revenue generating activities
in both the UK and Europe.
12 | TRAFFICMASTER ANNUAL REPORT AND ACCOUNTS  ”...lowered the cost base, improved service margins 
and built solid foundations”
IAN COOMBER
NON-EXECUTIVE DIRECTOR
Ian Coomber offers Trafficmaster over 35 years experience 
of the motor industry. Having started as a sponsored degree
student in 1963 at Vauxhall Motors Ltd, Ian moved through
the ranks to become Executive Director, Sales, Marketing and
Customer Care. During his time at Vauxhall, Ian held
positions of District Service Manager, Zone Fleet Manager,
Fleet Sales Manager and General Sales Manager . 
In addition to the Vauxhall board, Ian was Director of GMAC
(UK) Ltd, IBC Vehicles and Opel Performance Centre (GmbH).
Ian was also Co-Chair of the Retail Forum Ltd and Chairman
of the Society of Motor Manufacturers and Traders (SMM&T)
Car Section Committee.
BILL MCINTOSH
NON-EXECUTIVE DIRECTOR
Bill was Finance Director at Trafficmaster from 1994 until 
he resigned in September 2001. Since then he has been a
Non-Executive Director and brings a wide range of relevant
experience to the role having held senior financial and
company secretarial positions in international subscription
and telematics businesses. Until recently, he was a 
Non-Executive and Monitor Director of Cyclops UK Ltd and is
an accredited Small Business Adviser with his local
Enterprise Trust, assisting start-up and early stage
businesses. He is a graduate in Law from Glasgow 
University and a member of the Institute of Chartered
Accountants of Scotland.
IAN WILLIAMS
NON-EXECUTIVE DIRECTOR
Ian is one of the co-founders of Trafficmaster . Ian has a
background in retail and production management and he has
worked both in the USA and in London. Ian has been involved
in the development of a wide range of business interests and
he holds directorships in a number of companies.
YEAR ENDED 31 DECEMBER 2005 | 13 REGISTERED OFFICE AND ADVISERS
REGISTERED OFFICE
Martell House,
University Way, Cranfield, Befordshire, MK43 0TR.
Registered Number 2292714
AUDITORS
KPMG Audit Plc
1 Waterloo Way, Leicester, LE1 6LP .
Tel: 0116 256 6000
STOCKBROKERS
Bridgewell Limited
Old Change House, 128 Queen Victoria Street
London, EC4V 4BJ.
Tel: 020 7003 3000
SOLICITORS
Addleshaw Goddard
25 Cannon Street, London, EC4M 5TB.
Tel: 0207 606 8855
Lewis Silkin
12 Gough Square, London, EC4A 3DW.
Tel: 020 7074 8000
PUBLIC RELATIONS
Financial Dynamics
Holborn Gate, 26 Southampton Buildings,
London, WC2A 1PB.
Tel: 020 7873 3113
REGISTRARS
Capita Registrars
The Registry, 34 Beckenham Road,
Beckenham, Kent, BR3 4TU.
Tel: 0870 162 3100
BANKERS
Barclays Bank Plc
11 Bank Court, Hemel Hempstead, HP1 1BX.
Tel: 01582 686271
14 | TRAFFICMASTER ANNUAL REPORT AND ACCOUNTS YEAR ENDED 31 DECEMBER 2005 | 15
DIRECTORS’ REPORT
The directors have pleasure in presenting their report and the audited financial statements for the year ended
31 December 2005.
Principal Activities and Business Review
Trafficmaster is a leading journey management company providing high quality satellite navigation, traffic data, fleet
management and vehicle tracking. A review of the business of the group during the year is given in the Chairman’s and Chief
Executive’s Statements on pages 5 to 11.
Results
The results for the year are set out in the Consolidated Income Statement on page 33. These show a group profit before tax of
£935,000 (2004: £4,853,000) on group revenue of £42,323,000 (2004: £36,613,000) and a group gross profit of £22,712,000 (2004:
£20,794,000). The directors do not recommend that a dividend be paid (2004: £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.
Directors and Their Interests
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 2005 31 December 2004
Ian Williams* 883,636 2,100,728
Bill McIntosh 104,248 104,248
Colin Walsh 200,000 100,000
Tony Eales 10,000 10,000
Nigel Bond 10,000 10,000
Stuart Berman 10,000 10,000
Adrian Joseph (resigned 10 November 2005) — — 
Ian Coomber 15,000 —
* Included within the interest of Ian Williams are 794,532 (2004: 794,532) shares held by Air Continental Securities Ltd, in
which Mr Williams has a one-third interest. 
During the year certain directors made the following sales and purchases of ordinary shares:
Lutea Trustees Ltd as Trustees of the I Williams Trust, the ultimate beneficiary of which is Ian Williams, sold 1,217,092 shares
on 18 March 2005 at 56p per share. 16 | TRAFFICMASTER ANNUAL REPORT AND ACCOUNTS 
DIRECTORS’ REPORT CONTINUED
Mr Ian Coomber acquired 15,000 shares on 8 November 2005 at 31p per share.
Mr Colin Walsh acquired 100,000 shares on 22 December 2005 at 26p per share. 
The directors’ interests in share options of the company are included on page 22.
The market price of shares at 31 December 2005 was 27.75p (31 December 2004: 59.5p). The highest price during the year was
64.75p and the lowest price during the year was 25.00p.
Substantial Shareholdings
As at 24 April 2006 the register maintained by the company under Section 211 of the Companies Act 1985 contains a
notification to the company that the following shareholders hold 3% or more of the issued ordinary share capital of the
company.
Number of Percentage
ordinary of issued 
Shareholder shares share capital
Oppenheimer Funds Inc 10,000,000 7.42
Standard Life Group Plc 4,857,979 3.60
Market Value of Freehold Building
In the opinion of the directors, the market value of the freehold building in the group is not materially different to the net book
value as shown in the financial statements. Details of property, plant and equipment are shown in note 11.
Treasury Management/Treasury Policy
Trafficmaster Plc’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. Trafficmaster Plc’s policy in respect of the major areas of
treasury activity is set out below:
Currency Translation Exposure
The results of the group’s foreign subsidiaries are normally translated into 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 reserves. The group does not hedge translation exposure by
forward exchange contracts or currency swaps, nor does it currently hedge translation exposure arising on unremitted non-UK
earnings.
Currency Transaction Exposure
This arises where actual sales and purchases are made by a business unit in a currency other than its own functional currency.
The majority of sales are in the business units’ own functional currency which minimises this risk. The group does not
currently hedge transaction exposure by forward exchange contracts and currency swaps. YEAR ENDED 31 DECEMBER 2005 | 17
Interest rate risk
The group’s policy is to borrow funds to finance working capital. Such borrowings are in the form of bank overdrafts and, since
the year end, bank loans. These borrowings have variable interest rates based upon bank base rates and risks are therefore
subject to fluctuations in such rates. The group does not use interest rate swaps or other instruments 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.
Further information relating to the group’s financial risk management can be found in note 25 on pages 55 to 57.
Payment of Creditors
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 2005 was 47 (2004: 45).
Employees
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 Employees
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.
Corporate Social Responsibility
Trafficmaster recognises its responsibilities to the environment and believes that social, ethical and environmental issues are
integral and important components of best practice in business management. The board has identified the following risks as
the most significant in the context of Corporate Social Responsibility:
● Climate change
● Health and safety
● Business ethics
The UK and USA Governments’ strategy on climate change recognises that precautionary action to reduce pollution from
vehicles is necessary and they have implemented a number of measures to reduce congestion with the objective, in part, of
reducing greenhouse gas emissions. The group shares this objective, which is at the heart of the benefits that our services
deliver, through reducing journey times and journey miles of our customers. 18 | TRAFFICMASTER ANNUAL REPORT AND ACCOUNTS 
DIRECTORS’ REPORT CONTINUED
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.
The board believes that our business should be operated only through ethical policies and practices. Our code of conduct
establishes the ethical standards that our employees are required to follow and we have established a structure to follow up
any breaches in these ethical policies.
The board is committed to managing these risks as well as others that it has identified on an ongoing basis and developing
policies to promote best working practices in these areas. 
Donations
The group made no political or charitable donations during the year (2004: £nil). 
Directors’ Authority to Issue Shares
At the Annual General Meeting to be held on 20 June 2006, the directors will seek to renew their existing authority to allot all of
the unissued ordinary share capital (£1,256,981) at that time. They will also seek to renew their existing authority to allot for
cash up to 5% (£337,150) of the issued share capital otherwise than pro rata to existing shareholders.
Auditors
KPMG Audit Plc have expressed their willingness to continue in office as auditors and in accordance with Section 384 of the
Companies Act 1985, a resolution to reappoint them will be proposed at the forthcoming Annual General Meeting.
By order of the board
Nigel Bond
Secretary
27 April 2006 YEAR ENDED 31 DECEMBER 2005 | 19
DIRECTORS’ REMUNERATION REPORT
The directors present their remuneration report for the year ended 31 December 2005.
Remuneration 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 the Non-Executive Directors who have no financial interest in the group
(other than as shareholders and for Bill McIntosh, share option holder as stated below), 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: Bill McIntosh, Colin Walsh (who was Chairman of the Committee), Ian
Coomber and Ian Williams.
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 Secretary provide secretarial 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.
Remuneration Policy
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), share options and pension provision. 
All Executive Directors participate in a bonus scheme that is related to consolidated group revenues and profitability; however,
no payments were made under this scheme in 2005. On target earnings under this scheme would have resulted in bonus
payments between 10% and 25% of salary. In addition, directors had individual bonus schemes based on achieving goals
specifically related to their areas of responsibility.
Remuneration details of each director are given on page 21.
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. 20 | TRAFFICMASTER ANNUAL REPORT AND ACCOUNTS 
DIRECTORS’ REMUNERATION REPORT CONTINUED
Unless the interests of the company 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
twelve 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 Directors
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 twelve months or shorter . 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 with the exception of Bill McIntosh
who held 300,000 share options throughout the year .
Directors Seeking Re-Election
In accordance with the Articles of Association, Stuart Berman and Nigel Bond are required to seek re-election at the next
Annual General Meeting.
As recommended by the Combined Code, Non-Executive Directors who have been in office for more than nine years will stand
for re-election on an annual basis. On this basis, Colin Walsh, Bill McIntosh and Ian Williams will be seeking re-election at the
next Annual General Meeting.
Pensions
The company pays 10% of basic salary into personal pension funds set up by each of the Executive Directors.
Directors’ Interests in Contracts and Other Transactions with Group Companies
No director has a material interest in any contracts with any group companies other than a service contract.
Share Options
The company has operated two share option schemes for several years: a Revenue and Customs Approved and an Unapproved
scheme. Awards under both of these schemes 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 price 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.
In addition, the shareholders approved a 1998 Share Option Plan, restricted to Bill McIntosh, former Finance Director, and a
former Chief Executive, at an Extraordinary General Meeting of the company on 21 September 1998. Under this long-term
scheme, options over 4 million ordinary shares were granted at the ruling market price. The period in which the performance
criteria relating to this scheme may be satisfied has expired since the year end, and the performance criteria have not been
met.   YEAR ENDED 31 DECEMBER 2005 | 21
All schemes are operated under the auspices of the Remuneration Committee and a total of 8,791,464 (2004: 8,973,600) options
have been awarded to a total of fifty-eight staff and four directors. Share option movements during the year are shown in note
23 on page 52.
Shareholder Value
The graph below looks at the value, by the end of year 2005, of £100 invested in Trafficmaster Plc at December 2000 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 .
The auditors are required to report on the information contained in this section of the report: 
Directors’ Emoluments
Company
Compens- contributions to
ation money purchase
Salary for loss of pension schemes
and fees Bonus Benefits office 2005 2004 2005 2004
£000 £000 £000 £000 £000 £000 £000 £000
Aggregate directors’ remuneration:
Executive Directors
David Martell (resigned 
16 September 2004) ————— 113 — 36
Tony Eales 119 61 1 — 181 137 11 11
Nigel Bond 127 4 6 — 137 142 12 11
Stuart Berman 135 — 3 — 138 133 14 11
Adrian Joseph (resigned 
10 November 2005) 89 8 6 141 244 118 27 19
Non-Executive Directors
Bill McIntosh 16 — — — 16 15 — —
Colin Walsh (Chairman) 30 — — — 30 23 — —
Ian Williams 16 — — — 16 15 — —
Ian Coomber 16 — — — 16 12 — —
Sir James McKinnon 
(resigned 14 June 2004) ————— 14 — —
548 73 16 141 778 722 64 88
2005 2004
The number of directors to whom benefits are accruing under money purchase
pension schemes 3 4
Total cumulative shareholder return for the five-year period to 31 December 2005
0
20
40
60
80
100
120
140
160
180
2000 2001 2002 2003 2004 2005
FTSE Fledgling
TSR Trafficmaster Plc 22 | TRAFFICMASTER ANNUAL REPORT AND ACCOUNTS 
DIRECTORS’ REMUNERATION REPORT CONTINUED
Directors’ Share Options in Ordinary Shares
Number of options during the year
At At Exercise Exercise
31.12.04 Issued Lapsed 31.12.05 price period
Bill McIntosh
1998 Plan 300,000 — — 300,000 £1.053 21.09.01-20.09.08
Adrian Joseph
Approved scheme 72,272 — — 72,272 £0.4125 21.10.06–20.10.13
Unapproved scheme 127,728 — — 127,728 £0.4125 21.10.06–20.10.13
Unapproved scheme 75,000 — — 75,000 £0.835 28.10.07–27.10.14
Tony Eales
Approved scheme 28,500 — — 28,500 £1.053 21.09.01–20.09.08
Unapproved scheme 371,500 — — 371,500 £1.053 21.09.01–20.09.08
Unapproved scheme 100,000 — — 100,000 £0.52 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 £0.42 16.10.06–15.10.13
Unapproved scheme 75,000 — — 75,000 £0.835 28.10.07–27.10.14
Nigel Bond
Approved scheme 57,692 — — 57,692 £0.52 25.10.04–24.10.11
Unapproved scheme 42,308 — — 42,308 £0.52 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 £0.42 16.10.06–15.10.13
Unapproved scheme 75,000 — — 75,000 £0.835 28.10.07–27.10.14
Stuart Berman
Approved scheme 57,692 — — 57,692 £0.52 25.10.04–24.10.11
Unapproved scheme 42,308 — — 42,308 £0.52 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 £0.42 16.10.06–15.10.13
Unapproved scheme 75,000 — — 75,000 £0.835 28.10.07–27.10.14
Total 2,580,000 — — 2,580,000
The performance criteria relating to the 1998 Plan options have not been met. Options granted under the Approved and
Unapproved schemes are subject to performance related conditions as set out on page 20.
Colin Walsh
Chairman, Remuneration Committee
27 April 2006 YEAR ENDED 31 DECEMBER 2005 | 23
CORPORATE GOVERNANCE
Throughout the year to 31 December 2005, the group complied with the provisions of the revised Combined Code on corporate
governance issued by the Financial Reporting Council in July 2003 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 group
standards which set out the behaviours expected of staff in their dealings with shareholders, customers, colleagues, suppliers
and other stakeholders of the group. One of the core values communicated within the group is a belief that the highest
standard of integrity is essential in business.
Non-Compliance
The directors consider that the group has strengthened its compliance with the Combined Code this year and is seeking to
further comply in the following areas during 2006:
● Apart from Ian Coomber, all other Non-Executive Directors have served on the board for more than nine years and
therefore are not independent as considered by the Combined Code. However, the board considers all its Non-Executive
Directors to be independent in character and judgement. As a consequence the Remuneration Committee does not solely
comprise of independent Non-Executive Directors, the Audit Committee does not comprise of at least three independent
Non-Executive Directors and at least half the board, excluding the Chairman, does not comprise of independent Non-
Executive Directors.
● As there have been no new director nominations during the year a Nominations Committee has not sat.
● The Remuneration Committee does not recommend and monitor the level and structure of remuneration for senior
management who are not directors.
● The Executive Directors, not the Chairman, take responsibility for meeting the major shareholders regularly to develop an
understanding of their views which are communicated to the Chairman, Senior Independent Director and the rest of the board.
The board recognises that it is not compliant with the Combined Code in a number of respects, particularly in relation to
the Non-Executive Directors. With effect from this Annual General Meeting, all Non-Executive Directors who have served
nine years or more will stand for re-election annually.  
The Chairman has initiated a process with a view to appointing additional Non-Executive Directors to the board during
the coming year, and it is intended that the longer standing Non-Executive Directors will be progressively replaced as
these appointments are effected. It is intended that at least one new Non-Executive Director will be appointed this
calendar year, and one or two of the existing Non-Executive Directors will then retire during the coming year.
With effect from this year, the Remuneration Committee is also reviewing and monitoring the remuneration of senior
management below director level.
The Board
The group is controlled through its board of directors. The board’s main roles are to create value to 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. 24 | TRAFFICMASTER ANNUAL REPORT AND ACCOUNTS 
CORPORATE GOVERNANCE CONTINUED
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 Secretary 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, Colin Walsh, and the Chief Executive, Tony 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 Director
The board has appointed Ian Coomber as Senior Independent Director with effect from 1 November 2005. Ian Coomber 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.
Directors and Directors’ Independence
The board currently comprises the Chairman, three Non-Executive Directors and three Executive Directors. The names of the
directors together with their biographical details are set out on pages 12 and 13. All the directors served throughout the period
under review. 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. The directors 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. The Chairman acts as an
executive of Crescent Capital, the venture capital fund, and fulfils a number of non-executive positions but the board is satisfied
that these are not such as to interfere with the performance of the Chairman’s duties for the group which are based around a
commitment of approximately 20 days per annum. YEAR ENDED 31 DECEMBER 2005 | 25
None of the Non-Executive Directors other than Bill McIntosh (who resigned as a full-time employee of the company in
September 2001):
● have 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 director’s fee;
● has close family ties with any of the group’s advisers, directors or senior employees;
● holds cross-directorships or has significant links with other directors through involvement in other companies or bodies.
Apart from Ian Coomber, who was appointed on 18 March 2004, all other Non-Executive Directors have served on the board for
more than nine years.
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 Evaluation
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 Acts and satisfactory performance evaluation, Non-Executive
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 Company Secretary
The Company Secretary 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 Secretary. The company’s Articles of Association provide that the
appointment and removal of the Company Secretary is a matter for the full board.
Information
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
enables them to scrutinise the group’s and management’s performance against agreed objectives. 26 | TRAFFICMASTER ANNUAL REPORT AND ACCOUNTS 
CORPORATE GOVERNANCE CONTINUED
Relations 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 shareholders are invited to ask questions
during the meeting and to meet with directors after the formal proceedings have ended.
The group maintains a corporate website (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.
All shareholders, including private investors, have an opportunity to put questions to members of the board on matters relating
to the group’s operation and performance at the Annual General Meeting.
Internal Control
In accordance with the guidance of the Turnbull 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 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.
The group has developed and is establishing an integral management framework with the aim of continuing to ensure that the
business understands the key risks it faces, especially cross-functional risks, has an embedded risk management approach to
all of its activities, links risk management to business performance reporting and seeks continuous improvement in the
management of risk by sharing best practice throughout the organisation. YEAR ENDED 31 DECEMBER 2005 | 27
Board Committees
The number of full board meetings and committee meetings attended by each director during the year to 31 December 2005
was as follows:
Scheduled Remuneration Audit
Board Committee Committee
Meetings Meetings Meetings
Colin Walsh
Chairman 11 (11) 3 (3) 2 (2)
Tony Eales
Chief Executive 11 (11) 1 (3) n/a
Nigel Bond
Finance Director 11 (11) n/a n/a
Stuart Berman
Executive Director 11 (11) n/a n/a
Adrian Joseph
Executive Director 9 (9) n/a n/a
Ian Coomber
Non-Executive Director 11 (11) 3 (3) 2 (2)
Bill McIntosh
Non-Executive Director 11 (11) 3 (3) 2 (2)
Ian Williams
Non-Executive Director 11 (11) 3 (3) 2 (2)
Figures in brackets indicate the maximum number of meetings in the period in which the individual was a board member .
Nomination Committee
Director appointments are considered by the whole board rather than a separate Nomination Committee. The board
periodically considers the mix of skills and experiences 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. 
Remuneration Committee
During the year the Remuneration Committee comprised Colin Walsh, Ian Coomber, Bill McIntosh and Ian Williams. Colin
Walsh acts as Chairman of the Committee. The Remuneration Committee met three 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 scheme. 28 | TRAFFICMASTER ANNUAL REPORT AND ACCOUNTS 
CORPORATE GOVERNANCE CONTINUED
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 Ian Coomber, Colin Walsh, Bill McIntosh and Ian Williams. Ian Coomber acted
as the Chairman of the committee having taken over from Bill McIntosh on 17 October 2005. All the members of the
Committee are Non-Executive Directors. The Audit Committee met three times in the year to April 2006.
The Committee has at least one member possessing what the Smith Report describes as recent and relevant experience. Bill
McIntosh, a chartered accountant, was Group Finance Director of Trafficmaster Plc between 1994 and 2001. It will be seen
from the directors’ biographical details, appearing on pages 12 and 13, 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.
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 2005 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 in the group’s financial statements of certain matters such as impairments of fixed
asset values and International Accounting Standards;
● reviewing and approving the audit fee and reviewing non-audit fees payable to the group’s external auditors; YEAR ENDED 31 DECEMBER 2005 | 29
● reviewing the external auditors’ plan for the audit of the group’s accounts, which included key areas of extended scope
work, key risks on the accounts, confirmations 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.
Auditors’ 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 42.
On behalf of the board
Nigel Bond
Secretary
27 April 2006 30 | TRAFFICMASTER ANNUAL REPORT AND ACCOUNTS 
STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF
THE DIRECTORS’ REPORT AND THE FINANCIAL STATEMENTS 
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 the directors are required to prepare the group financial statements in accordance with IFRSs as adopted by the EU
and have elected to prepare the parent company financial statements in accordance with UK Accounting Standards. 
The group financial statements are required by law and IFRSs as adopted by the EU to present fairly the financial position and
performance of the group; the Companies Act 1985 provides in relation to such financial statements that references in the
relevant part of that Act to financial statements giving a true and fair view are references to their achieving a fair presentation. 
The parent company financial statements are required by law to give a true and fair view of the state of affairs of the parent
company. 
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 proper accounting records that 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 1985. 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 comply 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 website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from
legislation in other jurisdictions. YEAR ENDED 31 DECEMBER 2005 | 31
INDEPENDENT AUDITORS’ REPORT TO
THE MEMBERS OF TRAFFICMASTER PLC
We have audited the group and parent company financial statements (the “financial statements”) of Trafficmaster Plc for the
year ended 31 December 2005 which comprise the Group Income Statement, the Group and Parent Company Balance Sheets,
the Group Cash Flow Statement, the Group Statement of Recognised Income and Expense and the related notes. These
financial statements have been prepared under the accounting policies set out therein. We have also audited the information in
the Directors’ Remuneration Report that is described as having been audited.
This report is made solely to the company’s members as a body, in accordance with section 235 of the Companies Act 1985.
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 auditor’s report and for no other purpose. To 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 Directors and Auditors 
The directors’ responsibilities for preparing the Annual Report and the group financial statements in accordance with
applicable law and International Financial Reporting Standards (IFRSs) as adopted by the EU, and for preparing the parent
company financial statements and the Directors’ Remuneration Report in accordance with applicable law and UK Accounting
Standards (UK Generally Accepted Accounting Practice) are set out in the Statement of Directors’ Responsibilities on page 30.
Our responsibility is to audit the financial statements and the part of the Directors’ Remuneration Report to be audited in
accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland). 
We report to you our opinion as to whether the financial statements give a true and fair view and whether the financial
statements and the part of the Directors’ Remuneration Report to be audited have been properly prepared in accordance with
the Companies Act 1985 and whether, in addition, the group financial statements have been properly prepared in accordance
with Article 4 of the IAS Regulation. We also report to you if, in our opinion, the Directors’ Report is not consistent with the
financial statements, if the company has not kept proper accounting records, if we have not received all the information and
explanations we require for our audit, or if information specified by law regarding directors’ remuneration and other
transactions is not disclosed. 
We review whether the Corporate Governance Statement reflects the company’s compliance with the nine provisions of the
2003 FRC Combined Code specified for our review by the Listing Rules of the Financial Services Authority, and we report if it
does not. We are not required to consider whether the board’s statements on internal control cover all risks and controls, or
form an opinion on the effectiveness of the group’s corporate governance procedures or its risk and control procedures. 
We read other information contained in the Annual Report and consider whether it is consistent with the audited financial
statements. We consider the implications for our report if we become aware of any apparent misstatements or material
inconsistencies with the financial statements. Our responsibilities do not extend to any other information.  32 | TRAFFICMASTER ANNUAL REPORT AND ACCOUNTS 
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF TRAFFICMASTER PLC CONTINUED
Basis of Audit Opinion 
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing
Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the
financial statements and the part of the Directors’ Remuneration Report to be audited. It also includes an assessment of the
significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the
accounting policies are appropriate to the group’s and company’s circumstances, consistently applied and adequately
disclosed. 
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in
order to provide us with sufficient evidence to give reasonable assurance that the financial statements and the part of the
Directors’ Remuneration Report to be audited are free from material misstatement, whether caused by fraud or other
irregularity or error . In forming our opinion we also evaluated the overall adequacy of the presentation of information in the
financial statements and the part of the Directors’ Remuneration Report to be audited. 
Opinion 
In our opinion: 
● the group financial statements give a true and fair view, in accordance with IFRSs as adopted by the EU, of the state of the
group’s affairs as at 31 December 2005 and of its profit for the year then ended; 
● the group financial statements have been properly prepared in accordance with the Companies Act 1985 and Article 4 of the
IAS Regulation; 
● the parent company financial statements give a true and fair view, in accordance with UK Generally Accepted Accounting
Practice, of the state of the parent company’s affairs as at 31 December 2005; and 
● the parent company financial statements and the part of the Directors’ Remuneration Report to be audited have been
properly prepared in accordance with the Companies Act 1985. 
KPMG Audit Plc
Chartered Accountants
Registered Auditor
1 Waterloo Way
Leicester, LE1 6LP
27 April 2006 YEAR ENDED 31 DECEMBER 2005 | 33
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2005
2005 2004
Notes £000 £000
Revenue 1, 2 42,323 36,613
Cost of sales excluding write-down of inventory (18,748) (15,819)
Write-down of inventory (863) —
Cost of sales (19,611) (15,819)
Gross profit 22,712 20,794
Other operating income 4 255 255
Selling and distribution costs (7,216) (5,593)
Recurring administrative expenses (14,846) (12,973)
Non-recurring administrative income 5 956 —
Non-recurring administrative expenses 5 (866) —
Administrative expenses (14,756) (12,973)
Operating profit excluding write-down of inventory and non-recurring administrative income and expenses 1,768 2,483
Write-down of inventory and non-recurring administrative income and expenses (773) —
Operating profit 2 995 2,483
Gain on redemption of secured senior notes 8 — 2,057
Financial income 8 276 332
Financial expenses 8 (336) (19)
Profit before tax 935 4,853
Taxation 9 (70) 1,148
Profit for the year 865 6,001
Attributable to:
Equity holders of the parent 865 6,001
Minority interest — —
865 6,001
Earnings per ordinary share
— basic 10 0.64p 4.49p
— diluted 10 0.64p 4.37p
All the results relate to continuing operations.
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
for the year ended 31 December 2005
2005 2004
£000 £000
Foreign exchange translation differences 876 (376)
Change in fair value of financial asset 350 —
Income and expenses recognised directly in equity 1,226 (376)
Profit for the year 865 6,001
Total recognised income and expense for the year 24 2,091 5,625
Attributable to:
Equity holders of the parent 2,091 5,625
Minority interest — —
2,091 5,625
There is no tax impact of the items included in the consolidated statement of recognised income and expense.
The adoption of IAS 32 and IAS 39 has had no material impact on the financial statements at 1 January 2005. 34 | TRAFFICMASTER ANNUAL REPORT AND ACCOUNTS 
CONSOLIDATED BALANCE SHEET
as at 31 December 2005
2005 2004
Notes £000 £000
Non-current assets
Property, plant and equipment 11 14,251 12,307
Intangible assets 12 7,232 6,918
Investments in jointly controlled entities 13 116 116
Other financial assets 14 350 —
Lease prepayments 15 1,461 1,469
Deferred tax asset 16 1,078 1,148
24,488 21,958
Current assets
Inventories 17 6,028 6,908
Trade and other receivables 18 17,348 10,553
Cash and cash equivalents 19 — 1,443
23,376 18,904
Total assets 47,864 40,862
Current liabilities
Bank overdraft 19 4,670 —
Trade and other payables 20 9,336 9,747
14,006 9,747
Non-current liabilities
Deferred income 21 1,518 1,078
Provisions 22 1,435 1,400
2,953 2,478
Total liabilities 16,959 12,225
Net assets 30,905 28,637
Equity
Share capital 24 6,743 6,743
Share premium 24 — 94,274
Other reserve 24 1,973 1,973
Foreign exchange translation reserves 24 500 (376)
Fair value reserve 24 350 —
Retained earnings 24 21,377 (73,939)
Total equity attributable to equity holders of the parent 30,943 28,675
Minority interest 24 (38) (38)
Total equity 30,905 28,637
The board of directors approved these financial statements on 27 April 2006 and they were signed on its behalf by:
Tony Eales Nigel Bond
Chief Executive Finance Director YEAR ENDED 31 DECEMBER 2005 | 35
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 2005
2005 2004
Notes £000 £000
Cash flows from operating activities
Profit for the year 865 6,001
Adjustments for:
Depreciation, amortisation and impairment 1,863 2,363
Foreign exchange gains (258) (238)
Financial income (18) (74)
Financial expense 336 19
Taxation 70 (1,148)
Gain on repayment of borrowings including interest waiver — (2,290)
Loss/(gain) on sale of property, plant and equipment 33 (24)
Equity settled share-based payment expenses 177 89
Operating profit before changes in working capital and provisions 3,068 4,698
Increase in trade and other receivables (6,328) (4,105)
Decrease/(increase) in inventories 1,189 (2,593)
Increase in trade and other payables 14 1,845
Cash flows from operations (2,057) (155)
Interest paid (281) (19)
Net cash flows from operating activities (2,338) (174)
Cash flows from investing activities
Proceeds from sale of property, plant and equipment 167 240
Interest received 18 74
Acquisition of property, plant and equipment 11 (2,963) (1,732)
Acquisition of subsidiary, net of cash acquired 28 — 125
Development expenditure acquisition of intangible fixed assets 12 (1,002) (1,784)
Net cash flows from investing activities (3,780) (3,077)
Cash flows from financing activities
Proceeds from the issue of share capital — 3,830
Repayment of borrowings — (6,680)
Net cash flows from financing activities — (2,850)
Net decrease in cash and cash equivalents (6,118) (6,101)
Cash and cash equivalents at 1 January 19 1,443 7,331
Effect of exchange rate fluctuations on cash held 5 213
Cash and cash equivalents at 31 December 19 (4,670) 1,443  36 | TRAFFICMASTER ANNUAL REPORT AND ACCOUNTS 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
1. Accounting Policies
Trafficmaster Plc is a company incorporated in the UK and listed on the London Stock Exchange. 
The group financial statements consolidate those of the company and its subsidiaries (together referred to as the “group”), equity
accounts the group’s jointly controlled entities, and recognises its share of own assets, liabilities, income and expenses in respect of
its jointly controlled operation.
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 1985. The company has
elected to prepare its parent company financial statements in accordance with UK GAAP; these are presented on pages 63 to 72.
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these
group financial statements and in preparing an opening IFRS balance sheet at 1 January 2004 for the purposes of the transition to
Adopted IFRSs. The principal exception is that financial instruments accounting is determined on different bases in 2005 and 2004
due to the transitional provisions of IAS 32 and 39. This has had no material impact upon the financial statements at 1 January 2005.
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.
Transition to Adopted IFRSs
The group is preparing its financial statements in accordance with Adopted IFRSs for the first time and consequently has applied
IFRS 1. An explanation of how the transition to Adopted IFRSs has affected the reported financial position, financial performance and
cash flows of the group is provided in note 32.
IFRS 1 grants certain exemptions from the full requirements of IFRSs in the transition period. The following exemptions have been
taken in these financial statements:
● Business combinations — Business combinations that took place prior to 1 January 2004 have not been restated in accordance
with IFRS 3, ‘Business Combinations’.
● Foreign exchange translation differences — Cumulative translation differences for the group’s foreign operations have been
deemed to be zero at 1 January 2004. Any subsequent disposal of the foreign operation will recognise only those exchange gains
or losses arising from the date of transition.
● Share-based payments — IFRS 2, ‘Share-Based Payments’ has only been applied to awards of share options granted after
7 November 2002.
● Financial instruments — Comparative information for the year ended 31 December 2004 relating to financial instruments falling
within the scope of IAS 32 and IAS 39 has been prepared under UK GAAP.
Adopted IFRSs Not Yet Applied
The following Adopted IFRSs were available for early application but have not yet been applied by the group in these financial
statements:
● IFRS 7, ‘Financial Instruments: Disclosure’ applicable for years commencing on or after 1 January 2007.
● Revision to IAS 21, ‘Amendment — Net Investment in Foreign Operation’ applicable for accounting periods beginning on or after
1 January 2006.
● IAS 39, ‘Financial Instruments, Fair Value Option’, applicable for periods commencing on or after 1 January 2006.
● IAS 1, ‘Amendment — Presentation of Financial Statements: Capital Disclosures’, applicable for accounting periods commencing
on or after 1 January 2007.
● IAS 39, ‘Amendment to IAS 39 and IFRS 4 — Financial Guarantee Contracts’ applicable for accounting periods beginning on or
after 1 January 2006.
The group plans to adopt the above standards in the period in which they become applicable. The directors do not anticipate that the
adoption of these standards will have a material impact on the consolidated financial statements in the period of initial application.
Upon adoption of IFRS 7, the group will disclose additional information about its financial instruments, their significance and the
nature and extent of risks to which they give rise. More specifically, the group will be required to disclose the fair value of its
financial instruments and its risk exposure in greater detail. There will be no effect on reported income or net assets.
Upon adoption of the amendment to IAS 1, the group will disclose additional information about its objectives, policies and process
for managing capital.
Measurement Convention
The financial statements are prepared on the historical cost basis except that certain assets are stated at their fair value. Such
assets relate to financial instruments classified as available-for-sale. YEAR ENDED 31 DECEMBER 2005 | 37
Basis of Consolidation
The consolidated financial statements comprise the financial statements of the parent company and its subsidiaries, together with
the group’s share of the results of its jointly controlled entities, and the share of income, and assets and liabilities of jointly
controlled operations made up to 31 December each year. 
The purchase method of accounting has been adopted. Under this method, the results of subsidiaries purchased or disposed of in
the year are included in the Consolidated Income Statement from or up to the date on which effective control has been obtained or
ceased.
An associate is an entity in which the group has a long-term interest, usually from 20% to 50% of the equity voting rights, and over
which it has the ability to exercise significant influence. A jointly controlled entity is an entity in which the group has a long-term
interest and over which it has the ability to exercise joint control, established by contractual arrangement. Associates and jointly
controlled entities are accounted for in the consolidated financial statements using the equity method. Under this method, the
group’s share of the profits and losses of associates and jointly controlled entities is included in the Consolidated Income Statement.
The group’s investment in associates and jointly controlled entities is included in the Consolidated Balance Sheet at cost plus the
group’s share of retained post-acquisition profits or losses and associated goodwill.
Where a group company is party to a jointly controlled operation, that company includes in its individual financial statements, the
assets that it controls and the liabilities and expenses that it incurs in the course of pursuing the joint operation, plus its share of
the income from the joint operation.
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 identifiable net assets acquired.
The classification and accounting treatment of business combinations that occurred prior to 1 January 2004 has not been
reconsidered in preparing the group’s opening IFRSs balance sheet at 1 January 2004. 
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.
Intangible Assets
Acquired intangible assets (including licences) that are separately identifiable and expected to provide future economic benefit to the
group, are capitalised and amortised on a straight-line basis over their remaining useful lives.
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 if the product or process is technically and commercially feasible and
the group has sufficient resources to complete development. The expenditure capitalised includes direct labour and the cost of
materials and purchased services. 
Other research and development expenditure is recognised in the Income Statement as an expense as incurred. Capitalised
development expenditure is stated at cost less accumulated amortisation and impairment losses. Amortisation is charged on a
straight-line basis over the shorter of the useful life of the product and five years.
Investments
Other equity investments not held for trading, are classified as being available-for-sale and are stated at fair value, with any
resultant gain or loss recognised directly in equity, except for impairment losses and monetary items such as foreign exchange gains
and losses which are recognised in the Income Statement. When these investments are derecognised the cumulative gain or loss,
previously recognised directly in equity is recognised in the Income Statement. Interest under the effective interest rate for interest
bearing available for sale assets is charged throughout the Income Statement.
Property, Plant and Equipment
Property, plant and equipment is 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 its useful life (which is reviewed at least at each financial year end) as follows:
Fixtures, fittings and computer equipment 5 years
Motor vehicles 4 years
Infrastructure 7 years
Freehold building 50 years
Infrastructure relates to a network of nationwide sensors and transmitters that gather and distribute traffic data in the UK, and a
network of paging transmitters and receivers mounted on tall buildings and towers in five cities in the USA.
On 31 December 2005, following a review of the useful economic life of infrastructure, this useful economic life was extended for a
further five years. 38 | TRAFFICMASTER ANNUAL REPORT AND ACCOUNTS 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED
Non-Current Assets Held for Sale and Discontinued Operations
Non-current assets or group of assets (disposal group) are classified as held for sale when their carrying amounts will be recovered
principally through sale. These assets are measured at the lower of carrying amount and fair value less costs to sell, disclosed
separately and not amortised or depreciated.
A component of the group’s business that represents a separate major line of business or geographical area of operations is classified
as a discontinued operation upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier.
IFRS 5, ‘Non-Current Assets Held for Sale and Discontinuing Operations’ has been applied prospectively from 1 January 2005.
Impairment
The carrying amounts of the group’s assets are reviewed at each balance sheet date to determine whether there is any indication of
impairment. If any such indication exists, the assets’ recoverable amount is estimated. For goodwill, intangible assets that have an
indefinite useful life and intangible assets that are not yet available for use, the recoverable amount is estimated at each annual
balance sheet date.
An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable
amount. Impairment losses are recognised in the income statement unless the asset is recorded at a revalued amount in which case
it is treated as a revaluation decrease. 
When a decline in the fair value of an available-for-sale financial asset has been recognised directly in equity and there is objective
evidence that the asset is impaired, the cumulative loss that had been recognised directly in equity is recognised in the Income
Statement even though the financial asset has not been derecognised. The amount of the cumulative loss that is recognised in the
Income Statement is the difference between the acquisition cost and cumulative fair value, less any impairment loss on that
financial asset previously recognised in the Income Statement.
An impairment loss in respect of an equity investment classified as available-for-sale is not reversed through the Income Statement.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, 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 Prepayments
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).
Operating Leases
Rentals under operating leases are charged to the Income Statement on a straight-line basis over the period of the lease. Upfront
payments for acquiring long-term rights of use of land are capitalised and recognised over the lease term as an operating lease
expense in the Income Statement.
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 Income
Statement represents the contributions payable by the group during the year.
Share-Based Payments
The company operates two 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 Income Statement on a straight-line basis over the vesting period, taking into account the number of
options that are expected to be exercised. Fair 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.
The group took advantage of the exemptions available under IFRS 1 and did not value share options granted on or before
7 November 2002. 
Revenue
Revenue represents the amounts (excluding value added tax) derived from the provision of goods and services to third party
customers in the course of the group’s ordinary activities. Revenue is measured at the fair value of consideration received taking into
account any trade discounts and volume rebates.
The group sells certain products bundled with software upgrades and maintenance delivered over a period of up to three years for
consideration in the form of monthly, quarterly or annual subscriptions. Revenue reflects the fair value of the services to the
reporting date as a proportion of the total fair value of the contract spread over the life of the contract. YEAR ENDED 31 DECEMBER 2005 | 39
Deferred revenue represents non-refundable amounts received in advance of the recognition of revenue in the Income Statement. It
is taken to the Income Statement over the period of the subscription or contract period as appropriate.
Foreign Exchange Translation
Transactions 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.
Foreign exchange differences arising on translation are recognised in the Income Statement. 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 (other than goodwill) and liabilities are translated into sterling at the rates of exchange ruling at the balance sheet date
with the resulting exchange differences recognised in reserves;
● items of revenue and expense are translated into sterling at an average exchange rate with the resulting exchange differences
recognised in reserves;
● cash flows are translated into sterling at an average exchange rate;
● exchange gains and losses arising from monetary items that in substance form the net investment in foreign subsidiary are
recognised in reserves;
● all other exchange gains and losses are recognised in the Income Statement in the year in which they arise.
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 IFRSs on 1 January 2004.
Inventories
Inventories are stated at the lower of cost and net realisable value. The amount to recognise as an expense is determined using the
standard cost method which approximates to actual costs.
Taxation
Income tax on the profit or loss for the periods presented comprises current and deferred tax. 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.
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 Income Statement;
● 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 costs 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.  40 | TRAFFICMASTER ANNUAL REPORT AND ACCOUNTS 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED
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. 
As disclosed in note 1, the group has taken advantage of the exemption available in IFRS 1 from the requirement to restate
comparative information in respect of IAS 32 and IAS 39. The comparative information and accounting policy in respect of these
items is presented under UK GAAP. There is no material difference in the UK GAAP accounting policy and those described above.
Trade and Other Receivables
Trade and other receivables are stated at their nominal amount (discounted if material) less impairment losses. They do not carry
any interest.
Trade Payables
Trade payables are not interest bearing and are initially measured at their fair value, being payment or settlement amounts.
Cash and Cash Equivalents
Cash comprises, for the purpose of the Cash Flow Statement, 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 3 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 Expense
Financial expenses and income comprise interest payable, interest receivable on funds invested, discount applicable to provisions
and foreign exchange gains and losses that are recognised in the income statement. Finance income and expense is recognised in
the Income Statement as it accrues, using the effective interest method. 
Provisions
A provision is recognised in the Balance Sheet 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.
Decommissioning
Liabilities for decommissioning 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 Reporting
Segment information is presented in respect of the group’s business and geographical segments. The primary format, business
segments, is based on the group’s management and internal reporting structure.
Inter-segment pricing is determined on an arm’s length basis.
Segment results, assets and liabilities 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 and expenses, and borrowings.
Segment capital expenditure is the total cost incurred during the year to acquire segment assets that are expected to be used for
more than one period.
The group comprises the following main business segments:
● Trafficmaster In-Vehicle Products
● Trafficmaster Services
● USA Fleet Management
● Trafficmaster Technologies (did not have material trade in 2004 and 2005)
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. YEAR ENDED 31 DECEMBER 2005 | 41
2. Segment Reporting continued
Business Segments
In-Vehicle USA Fleet
Products Services Management Total
2005 2004 2005 2004 2005 2004 2005 2004
£000 £000 £000 £000 £000 £000 £000 £000
Total segment revenue 17,132 13,090 10,070 9,019 20,602 16,809 47,804 38,918
Less: inter segment trading (5,481) (2,305) — — — — (5,481) (2,305)
Revenue from external customers 11,651 10,785 10,070 9,019 20,602 16,809 42,323 36,613
Segment results before 
non-recurring items 1,309 2,189 186 536 3,388 2,902 4,883 5,627
Non-recurring items* (1,116) — 408 — — — (708) —
Segment results 193 2,189 594 536 3,388 2,902 4,175 5,627
Unallocated expenses (3,180) (3,144)
Operating profit 995 2,483
Net financial (expenses)/income (60) 2,370
Taxation (70) 1,148
Profit for the year 865 6,001
Segment assets 11,212 11,933 11,738 10,287 20,685 12,903 43,635 35,123
Investment in associates 116 116
Unallocated assets 4,113 5,623
Total assets 47,864 40,862
Segment liabilities 1,411 1,912 3,742 3,928 4,289 3,320 9,442 9,160
Unallocated liabilities 7,517 3,065
Total liabilities 16,959 12,225
Capital expenditure 553 744 1,347 1,508 1,943 1,118 3,843 3,370
Unallocated capital expenditure 122 146
Total capital expenditure 3,965 3,516
Depreciation and amortisation 501 387 1,279 1,047 893 741 2,673 2,175
Unallocated depreciation 
and amortisation 146 188
2,819 2,363
Impairment losses reversed — — 956 — — — 956 —
* Non-recurring items are defined in note 5.
All segments are continuing operations.
Geographical Segments
United Kingdom North America Mainland Europe Total
2005 2004 2005 2004 2005 2004 2005 2004
£000 £000 £000 £000 £000 £000 £000 £000
Total revenue 27,058 21,064 20,602 16,809 144 1,045 47,804 38,918
Less: inter segment trading (5,481) (2,305) — — — — (5,481) (2,305)
Revenue from external customers 21,577 18,759 20,602 16,809 144 1,045 42,323 36,613
Segment assets 27,774 27,694 20,090 12,903 — 265 47,864 40,862
Capital expenditure 2,022 2,398 1,943 1,118 — — 3,965 3,516 42 | TRAFFICMASTER ANNUAL REPORT AND ACCOUNTS 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED
3. Expenses and Auditors’ Remuneration
2005 2004
£000 £000
Included in profit are the following:
Remuneration of the auditors — for audit work 129 108
— for other services 103 39
Depreciation 1,966 1,764
Amortisation of deferred development expenditure and licences 845 591
Amortisation of lease prepayment 8 8
Impairment loss on trade receivables 980 346
Write-down of inventory 863 —
Research and development costs expensed as incurred 513 293
Operating lease rentals — property 1,505 1,053
— other 186 7
The audit fee charged to the company was £65,000 (2004: £55,000) and fees for other services were £60,000 (2004: £37,000).
4. Other Operating Income
2005 2004
£000 £000
Operating lease rentals receivable 255 255
255 255
5. Non-Recurring Administrative Income and Expenses
2005 2004
£000 £000
Included within non-recurring administrative income and expenses are the following:
MG Rover bad debt written off (563) —
Restructuring costs incurred (238) —
Effect of disposal of interest in jointly controlled operation (65) —
Expenses (866) —
Partial reversal of impairment of property, plant and equipment 956 —
Income 956 —
Non-recurring is defined as income or costs that are not expected to be incurred every year. YEAR ENDED 31 DECEMBER 2005 | 43
6. Staff Numbers and Costs
The average number of persons employed by the group (including Executive and Non-Executive Directors) during the year was:
2005 2004
Infrastructure 75 67
Sales and administration 445 361
520 428
The aggregate payroll costs of these persons charged to the Income Statement were as follows:
2005 2004
£000 £000
Wages and salaries 14,590 12,237
Wages and salaries capitalised (1,934) (1,820)
Wages and salaries recognised in the Income Statement 12,656 10,417
Share-based payments (see note 23) 177 89
Social security costs 1,145 703
Pension costs 229 188
14,207 11,397
Pension costs are included within administrative expenses in the Income Statement.
7. Directors’ Emoluments 
Details of directors’ emoluments are shown in the Directors’ Remuneration Report on page 21.
8. Finance Income and Expense
2005 2004
£000 £000
Interest income 18 74
Interest waiver on settlement of secured senior notes — 233
Net foreign exchange gain 258 25
Financial income 276 332
Interest expense (301) (19)
Expense relating to discount applied to provisions (35) —
Financial expense (336) (19)
Classifications of payments and charges as interest payable and similar charges have not been determined on a different basis in
either year following the transitional rules provisions of IAS 32 and IAS 39.
In 2004, the net gain on redemption of secured senior notes relates to the early repayment of the group’s 9% secured senior notes
and accrued interest resulting in a profit of £2,057,000 relating to capital and £233,000 relating to interest, the latter included within
financial income. 44 | TRAFFICMASTER ANNUAL REPORT AND ACCOUNTS 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED
9. Taxation
2005 2004
£000 £000
Recognised in the Income Statement
Deferred tax 70 (1,148)
2005 2004
£000 £000
Reconciliation of effective tax rate
Profit before tax 935 4,853
Tax using UK corporation tax rate of 30% (2004: 30%) 281 1,455
Effects of:
Permanent expenses non-deductible 229 116
Reversal of impairments (392) —
Other permanent adjustments 20 —
Deferred tax assets not recognised (656) (395)
Effects of tax losses utilised (75) (2,324)
Tax losses available to carry forward 663 —
Total tax in the Income Statement 70 (1,148)
Tax losses totalling £34,305,000 (2004: £33,000,000) are available to carry forward against future taxable profits. 
10. Earnings Per Share
Basic earnings per share
The calculation of basic earnings per share at 31 December 2005 was based on the profit attributable to the ordinary shareholders
of Trafficmaster Plc of £865,000 (2004: £6,001,000) and on the weighted average number of ordinary shares in issue during the year
of 134,860,371 (2004: 133,664,735).
Weighted average number of ordinary shares
2005 2004
£000 £000
Issued ordinary shares at 1 January 134,860 125,883
Effects of shares issued in January 2004 — 5,768
Effects of shares issued in April 2004 — 2,014
Weighted average number of ordinary shares at 31 December 134,860 133,665
Diluted earnings per share
The calculation of diluted earnings per share at 31 December 2005 was based on profit attributable to ordinary shareholders of
£865,000 (2004: £6,001,000) and weighted average number of ordinary shares (diluted) outstanding during the year of 135,545,026
(2004: 137,399,083) calculated as follows:
Weighted average number of ordinary shares (diluted)
2005 2004
£000 £000
Weighted average number of ordinary shares at 31 December 134,860 133,665
Effects of shares options in issue 685 3,734
Weighted average number of ordinary shares (diluted) at 31 December 135,545 137,399
The calculation of diluted earnings per share assumes that all associated performance criteria are achieved in full. YEAR ENDED 31 DECEMBER 2005 | 45
11. Property, Plant and Equipment
Fixtures,
fittings 
Freehold Motor and Infra-
building vehicles computers structure Total
£000 £000 £000 £000 £000
Cost
At 1 January 2004 7,138 1,231 5,404 44,778 58,551
Acquisitions 30 221 569 1,437 2,257
Transfers between items 5 — (5) — —
Disposals — (536) (945) (12,727) (14,208)
Effects of movements in foreign exchange — (9) (22) (777) (808)
At 31 December 2004 7,173 907 5,001 32,711 45,792
At 1 January 2005 7,173 907 5,001 32,711 45,792
Acquisitions — 58 824 2,081 2,963
Transfers to intangible assets — — — (1,216) (1,216)
Transfers from intangible assets — — — 287 287
Transfers between items — — (935) 935 —
Disposals — (481) (15) — (496)
Effects of movements in foreign exchange — 16 195 483 694
At 31 December 2005 7,173 500 5,070 35,281 48,024
Depreciation
At 1 January 2004 443 698 3,942 41,212 46,295
Depreciation charge for the year 165 175 274 1,150 1,764
Transfers between items (10) — 10 — —
Disposals — (320) (945) (12,726) (13,991)
Effects of movements in foreign exchange — (8) (43) (532) (583)
At 31 December 2004 598 545 3,238 29,104 33,485
At 1 January 2005 598 545 3,238 29,104 33,485
Depreciation charge for the year 143 77 548 1,198 1,966
Reversal of impairment — — — (956) (956)
Transfer to intangible assets — — — (783) (783)
Transfer between items — — (365) 365 —
Disposals — (282) (14) — (296)
Effects of movements in foreign exchange — 8 155 194 357
At 31 December 2005 741 348 3,562 29,122 33,773
Carrying amounts
At 1 January 2004 6,695 533 1,462 3,566 12,256
At 31 December 2004 6,575 362 1,763 3,607 12,307
At 1 January 2005 6,575 362 1,763 3,607 12,307
At 31 December 2005 6,432 152 1,508 6,159 14,251
Transfers from infrastructure to development costs within intangible fixed assets (note 12) relates to a reclassification of assets at a
cost of £1,216,000 and accumulated depreciation of £783,000 to better reflect the nature of these assets. This equally applies to the
transfer of £287,000 of costs from development costs within intangible fixed assets to infrastructure within property, plant and
equipment.
The directors have reviewed the impairment of the network of nationwide sensors and transmitters (the infrastructure) in the light of
new revenue generating opportunities, mainly through the sale of traffic information derived from the infrastructure and delivered
using acquired RDS TMC technology. This technology was not available to the group at the time of the initial impairment in
December 2002. The review was based upon the analysis of relevant discounted cash flows and resulted in the reversal of the initial
impairment by £956,000. This amount is included as a credit within non-recurring administrative income in the Income Statement.
The directors also considered the useful economic life of the infrastructure which has been extended for a further five years in line
with the relevant cash flows expected in the future. This has had no impact on the depreciation charge in the year.
However, the reversal of impairment and the extension of the useful economic life of the infrastructure will result in a decrease in
the depreciation charge of £149,000 per annum in the next two years and an increase in the depreciation charge of £251,000 
per annum in the following five years.
The title over the freehold building has been assigned as security for the existing overdraft facility at the balance sheet date and for
the new banking arrangements, including a loan and overdraft facility, since the balance sheet date. As part of refinancing its
working capital facilities in February 2006, 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. 46 | TRAFFICMASTER ANNUAL REPORT AND ACCOUNTS 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED
12. Intangible Assets
Development
Goodwill Licences costs Total
£000 £000 £000 £000
Cost
At 1 January 2004 1,699 974 11,817 14,490
Acquisitions through business combinations 1,670 — — 1,670
Other acquisitions — internally developed — — 1,784 1,784
Disposals — — (426) (426)
Effects of movement in foreign exchange — (139) 17 (122)
At 31 December 2004 3,369 835 13,192 17,396
At 1 January 2005 3,369 835 13,192 17,396
Other acquisitions — internally developed — — 1,002 1,002
Transfer from property, plant and equipment — — 1,216 1,216
Transfer to property, plant and equipment — — (287) (287)
Disposals — (685) — (685)
Effects of movement in foreign exchange — 16 1 17
At 31 December 2005 3,369 166 15,124 18,659
Amortisation
At 1 January 2004 — 839 9,587 10,426
Amortisation for the year — 10 581 591
Disposals — — (426) (426)
Effects of movement in foreign exchange — (112) (1) (113)
At 31 December 2004 — 737 9,741 10,478
At 1 January 2005 — 737 9,741 10,478
Amortisation for the year — 11 834 845
Transfer from property, plant and equipment — — 783 783
Disposals — (685) — (685)
Effects of movement in foreign exchange — 6 — 6
At 31 December 2005 — 69 11,358 11,427
Carrying amounts
At 1 January 2004 1,699 135 2,230 4,064
At 31 December 2004 3,369 98 3,451 6,918
At 1 January 2005 3,369 98 3,451 6,918
At 31 December 2005 3,369 97 3,766 7,232
The amortisation charge for the year is included within administrative expenses in the income statement.
Impairment tests for the cash-generating units containing goodwill
The following cash-generating units have significant carrying amounts of goodwill:
2005 2004
£000 £000
USA Fleet Management 1,699 1,699
Trafficmaster Services 1,670 1,670
3,369 3,369 YEAR ENDED 31 DECEMBER 2005 | 47
12. Intangible Assets continued
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 2005, 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 specific risks associated with the cash-generating units. The key assumptions used are as follows:
USA Fleet Trafficmaster
Management Services
Pre-tax discount rate 12% 12%
Year on year growth in free cash flows 6% 6%
Number of annual cash flows considered 5 5
The recoverable amounts for both cash-generating units exceeded their respective carrying amounts at 31 December 2005.
Goodwill arising on acquisitions before the date of transition to IFRS was tested for impairment at the transition date and has been
retained at its previous UK GAAP value.
13. Investments in Jointly Controlled Entities
Investment 
in jointly
controlled
entities
£000 
At 1 January 2004 116
At 31 December 2004 116
At 1 January 2005 116
At 31 December 2005 116
The investment relates to the group’s share of a long term loan of £550,000 less share of liabilities of £434,000 in an equity
accounted jointly controlled entity, RAC Trafficmaster Telematics Ltd in which the group has a 50% interest. The amounts relating 
to this interest are as follows:
2005 2004
£000 £000
Share of current assets 220 148
Share of non-current assets — —
Share of current liabilities (104) (32)
Share of non-current liabilities (550) (550)
At 31 December (434) (434)
Share of revenue 798 688
Share of post-tax profit — — 48 | TRAFFICMASTER ANNUAL REPORT AND ACCOUNTS 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED
13. Investments in Jointly Controlled Entities continued
The principal companies in which the group’s interest at the year end is 20% or more are as follows:
2005 and 2004
Country of Principal Class and %
incorporation activity of shares held
Subsidiary Undertakings
Teletrac Inc. United States of America Telematics Ordinary 100%
Telematica Systems Ltd Great Britain Telematics Ordinary 100%
Trackstar Ltd Great Britain Telematics Ordinary 100%
Trafficmaster Developments Ltd Great Britain Non-trading Ordinary 100%
Trafficmaster Inc. United States of America Non-trading Ordinary 100%
Trafficmaster USA Inc. United States of America Non-trading Ordinary 100%
Exflinsy Ltd Great Britain Non-trading Ordinary 100%
Fleetstar Information Systems SpA Italy Non-trading Ordinary 100%
Trafficmaster BV Netherlands Non-trading Ordinary 100%
Fleetstar Information Systems BV Netherlands Non-trading Ordinary 100%
Protechnica Consultants Ltd Great Britain Non-trading Ordinary 100%
Trafficmaster Online.com Ltd Great Britain Non-trading Ordinary 100%
Beacon Company GmbH Germany Non-trading Ordinary 100%
Trafficmaster Europe GmbH Germany Non-trading Ordinary 90%
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%
Jointly Controlled Entities
Travel News Ltd Great Britain Non-trading Ordinary 50%
RAC Trafficmaster Telematics Ltd Great Britain Telematics Ordinary 50%
14. Other Financial Assets
Non-current assets
2005 2004
£000 £000
Shares in unquoted company classified as available-for-sale 350 —
350 —
With effect from 1 January 2005, when the group adopted IAS 39, the above investment was classified as available-for-sale and
carried at fair value. At 31 December 2004, this investment is included at fully impaired historical cost. The fair value at 1 January
2005 has been estimated at £nil and therefore the adoption of IAS 39 at this date has had no impact on the financial statements.
The fair value of the equity securities available-for-sale relates to the group’s investment in shares in a foreign unquoted company.
The fair value has been measured using the discounted free cash flow method based on the estimated free cash flows over 5 years
and pre-tax discount rate of 15%.
Free cash flows represent operational cash flows before repayment of borrowings and expenditure on business acquisitions, or
disposals and capital expenditure. YEAR ENDED 31 DECEMBER 2005 | 49
15. Lease Prepayment
Leasehold
land
£000
Cost
At 1 January 2004 1,507
At 31 December 2004 1,507
At 1 January 2005 1,507
At 31 December 2005 1,507
Amortisation
At 1 January 2004 30
Amortisation for the year 8
At 31 December 2004 38
At 1 January 2005 38
Amortisation for the year 8
At 31 December 2005 46
Carrying amount
At 1 January 2004 1,477
At 31 December 2004 1,469
At 1 January 2005 1,469
At 31 December 2005 1,461
Since the year end, this asset has been pledged as security for the new short term bank facility (see note 25(e)).
16. Deferred Tax Asset
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Assets Liabilities Net
2005 2004 2005 2004 2005 2004
£000 £000 £000 £000 £000 £000
Tax value of loss carry-forward 
recognised (1,078) (1,148) — — (1,078) (1,148)
Tax assets (1,078) (1,148) — — (1,078) (1,148)
Net of tax liabilities — — — — — —
Net tax assets (1,078) (1,148) — — (1,078) (1,148)
There are no temporary differences in 2005 or 2004 associated with subsidiaries and jointly controlled entities.
Unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect of the following items:
2005 2004
£000 £000
Accelerated capital allowances 107 (520)
Other timing differences (596) (324)
Share-based payment expense (50) —
Tax losses (9,106) (8,754)
(9,645) (9,598)
The group did not recognise deferred tax assets in respect of the above items on the basis that the future economic benefit is
uncertain. 50 | TRAFFICMASTER ANNUAL REPORT AND ACCOUNTS 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED
16. Deferred Tax Asset continued
Movement in deferred tax during the year
Balance Recognised Recognised Balance
1 January in in 31 December
2005 income equity 2005
£000 £000 £000 £000
Tax value of loss carry-forward recognised (1,148) 70 — (1,078)
(1,148) 70 — (1,078)
Movement in deferred tax during the prior year
Balance Recognised Recognised Balance
1 January in in 31 December
2004 income equity 2004
£000 £000 £000 £000
Tax value of loss carry-forward recognised — (1,148) — (1,148)
— (1,148) — (1,148)
17. Inventories
2005 2004
£000 £000
Raw materials and consumables 1,299 3,295
Finished goods for resale 4,729 3,613
6,028 6,908
Inventories to the value of £10,317,000 were recognised as expenses in the year (2004: £9,095,000). This includes the inventory
write-down totalling £863,000 (2004: £nil). All inventories are expected to be recovered within 12 months from the balance sheet
date.
18. Trade and Other Receivables
2005 2004
£000 £000
Trade receivables due from jointly controlled entities 199 33
Other trade receivables and prepayments 17,149 10,520
17,348 10,553
The fair values of trade and other receivables are the same as the carrying values shown above.
All trade and other receivables are expected to be recovered within 12 months of the balance sheet date.
Other trade receivables are shown net of the aggregate impairment provision for losses of £538,000 in 2005 (2004: £230,000). The
charge in the Income Statement for impairment losses relating to trade receivables is disclosed in note 3. YEAR ENDED 31 DECEMBER 2005 | 51
19. Cash and Cash Equivalents/Bank Overdrafts
2005 2004
£000 £000
Bank balances — 1,443
Cash and cash equivalents — 1,443
Bank overdrafts (4,670) —
Cash and cash equivalents in the Cash Flow Statement (4,670) 1,443
20. Trade and Other Payables
2005 2004
£000 £000
Trade payables 2,989 3,847
Non-trade payables and accrued expenses 3,140 3,153
Deferred income — amounts falling due within one year 3,187 2,747
Interest payable 20 —
9,336 9,747
The fair values of trade and other payables are the same as the carrying amounts shown above. All amounts relating to trade and
other payables are expected to be settled within 12 months of the balance sheet date.
21. Deferred Income
2005 2004
£000 £000
Deferred income — amounts falling due after more than one year 1,518 1,078
1,518 1,078
22. Provisions
Asset dismantling obligation
2005 2004
£000 £000
Balance at 1 January 1,400 1,400
Discount applied to provision 35 —
Balance at 31 December 1,435 1,400
The group has made a provision for dismantling and removing the UK 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 particular, the group has assumed that the work will be carried out
using technology and materials that are currently available. The provision is classified as non-current. 52 | TRAFFICMASTER ANNUAL REPORT AND ACCOUNTS 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED
23. Employee Benefits
Pension plans
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 £229,000 (2004: £188,000).
Share-based payments
The company has operated two share option schemes for several years: a Revenue and Customs Approved and an Unapproved
scheme. The terms and conditions of the grants are as follows, whereby all options are settled by physical delivery of shares:
Number of Contractual
Grant date/employees entitled instruments Vesting conditions life of options
Option grant to key management See Directors’ Remuneration
at 18 April 1996 47,648 Report on page 20 10 years
Option grant to key management and See Directors’ Remuneration
senior employees at 4 March 1998 113,168 Report on page 20 10 years
Option grant to key management See Directors’ Remuneration
at 21 September 1998 3,300,000 Report on page 20 10 years
Option grant to key management See Directors’ Remuneration
at 28 September 1998 400,000 Report on page 20 10 years
Option grant to key management See Directors’ Remuneration
at 16 October 2000 62,112 Report on page 20 10 years
Option grant to key management and See Directors’ Remuneration
senior employees at 25 October 2001 607,000 Report on page 20 10 years
Option grant to key management and See Directors’ Remuneration
senior employees at 5 April 2002 880,000 Report on page 20 10 years
Option grant to key management See Directors’ Remuneration 
at 24 September 2002 80,000 Report on page 20 10 years
Option grant to key management and See Directors’ Remuneration
senior employees at 16 April 2003 751,536 Report on page 20 10 years
Option grant to key management See Directors’ Remuneration
at 17 September 2003 50,000 Report on page 20 10 years
Option grant to key management See Directors’ Remuneration
at 16 October 2003 555,000 Report on page 20 10 years
Option grant to key management See Directors’ Remuneration
at 21 October 2003 200,000 Report on page 20 10 years
Option grant to key management and See Directors’ Remuneration
senior employees at 7 April 2004 190,000 Report on page 20 10 years
Option grant to key management and See Directors’ Remuneration 
senior employees at 28 October 2004 720,000 Report on page 20 10 years
Option grant to key management and See Directors’ Remuneration
senior employees at 5 April 2005 435,000 Report on page 20 10 years
Option grant to key management and See Directors’ Remuneration
senior employees at 24 October 2005 400,000 Report on page 20 10 years
Total share options 8,791,464 YEAR ENDED 31 DECEMBER 2005 | 53
23. Employee Benefits continued
The number and weighted average exercise prices of share options is as follows:
Weighted Weighted
average Number average Number
exercise of exercise of
price options price options
2005 2005 2004 2004
Outstanding at the beginning of the year 73.03p 8,973,600 72.53p 8,055,600
Granted during the year 43.55p 835,000 77.61p 918,000
Forfeited during the year 48.51p (1,017,136) ——
Outstanding at the end of year 73.09p 8,791,464 73.03p 8,973,600
Exercisable at the end of the year 89.90p 5,489,928 103.27p 4,960,996
The options outstanding at 31 December 2005 have an exercise price in the range of 8.75p and 563.5p and a weighted average
contractual life of 10 years. All options, once vested, can be exercised commencing on the third anniversary of the grant date to the
end of the contractual life. The performance criteria relating to the 1998 Plan options have not been met.
The fair value of service received in return for share options granted are 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-Scholes model. The following are
the assumptions used in the model for the fair values of options granted in the year:
Options granted
2005 2004
Weighted average share price 43.55p 77.61p
Weighted average exercise price 43.55p 77.61p
Expected life of the options 4 years 4 years
Expected volatility 68% 70%
Risk-free interest rate (based on government bonds) 4.68% 4.73%
Expected dividends £nil £nil
Expected volatility is based on historical volatility measured over the most recent periods commensurate with the expected term of
the options, adjusted in some periods of extreme volatility that are not expected to repeat in the future. These extreme volatilities
occurred between June 2002 and May 2003 coinciding with the group’s major restructuring relating to the withdrawal from the
European markets in particular.
The total expense recognised within administrative costs for the year arising from share-based payments was as follows:
2005 2004
£000 £000
Equity settled share-based payment expense 177 89
177 89
There is a potential deferred tax asset of £50,000 arising from the share-based payment expense in 2005 (2004: nil). This has not
been recognised as the future economic benefit is uncertain. 54 | TRAFFICMASTER ANNUAL REPORT AND ACCOUNTS 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED
24. Capital and Reserves
Reconciliation of movements in capital and reserves
Share Share Other Translation Fair Value Retained Minority Total
Capital Premium Reserves Reserve Reserve Earnings Total Interest Equity
£000 £000 £000 £000 £000 £000 £000 £000 £000
Balance at 
1 January 2004 6,294 90,759 — — — (80,029) 17,024 (38) 16,986
Total recognised 
income and expense — — — (376) — 6,001 5,625 — 5,625
Shares issued 449 3,515 1,973 — — — 5,937 — 5,937
Share-based payments ————— 89 89 — 89
Balance at 
31 December 2004 6,743 94,274 1,973 (376) — (73,939) 28,675 (38) 28,637
Balance at 
1 January 2005 6,743 94,274 1,973 (376) — (73,939) 28,675 (38) 28,637
Total recognised income 
and expense — — — 876 350 865 2,091 — 2,091
Share-based payments————— 177 177 — 177
Cancellation of 
share premium — (94,274) — — — 94,274———
Balance at 
31 December 2005 6,743 — 1,973 500 350 21,377 30,943 (38) 30,905
Share capital
Number of
ordinary shares of 5p each
2005 2004
’000 ’000
In issue at 1 January 134,857 125,880
Issued for cash — 6,292
Issued as purchase consideration on acquisition of a subsidiary — 2,685
In issue at 31 December — fully paid 134,857 134,857
2005 2004
£000 £000
Authorised share capital
160,000,000 ordinary shares of 5 pence each 8,000 8,000
Allotted, called up and fully paid 
134,857,000 ordinary shares of 5 pence each 6,743 6,743
Equity shares classified in shareholders’ funds 6,743 6,743 YEAR ENDED 31 DECEMBER 2005 | 55
24. Capital and Reserves continued
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.
The transitional provisions of IAS 32 and IAS 39 have had no impact upon the classifications within shareholders’ funds due to
different basis of determinations in 2004 and 2005.
Share premium
On 6 July 2005, Trafficmaster Plc received a certification of registration of order of the court for the cancellation of its share
premium account. This resulted in a reduction in the share premium account of £94,274,000 and an increase in retained earnings by
the same amount.
Other reserves
The group accounted for the difference between the fair value and the nominal value of shares used as purchase consideration on
acquisitions within other reserves.
Foreign exchange translation reserve
The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign
operations that are not integral to the operations of the company.
Fair value reserve
The fair value reserve includes the cumulative net change in the fair value of available-for-sale investments until the investment is
derecognised.
25. Financial Instruments
(a) Financial risk management
Foreign currency risk
The group operates internationally and is exposed to foreign exchange risk arising from transactions and borrowings that are
denominated in currencies other than pounds sterling.
Approximately 52% (2004: 26%) of the group’s net assets are in currencies linked with US dollars 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 does not hedge its foreign currency denominated cash flows or investments.
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.
Liquidity risk
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.
Credit risk
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. 
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 Balance Sheet.
Cash flow and fair value interest rate 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 overdrafts (and since
the year end a bank loan facility). An analysis of the currency and interest rate profiles of the group’s borrowings is shown in note
25(d) and 25(c) respectively. In 2004 the group had a fixed interest rate 9% secured loan note denominated in US dollars due for
repayment in October 2004. This was redeemed in January 2004 (see note 8).
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 does not manage its interest rate exposures nor cash flow interest rate risk by using interest rate swap agreements or
other financial instruments. 56 | TRAFFICMASTER ANNUAL REPORT AND ACCOUNTS 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED
25. Financial Instruments continued
Hedging activities
The group does not designate financial instruments as fair value hedges nor cash flow hedges to reduce the exposure of changes in
fair value of recognised assets or liabilities or cash flows.
(b) Fair values of financial instruments
The information in this note for 2005 is prepared under and meets the disclosure requirements of IFRSs. As permitted by IFRS 1; the
company has taken advantage of the exemption allowing it to report comparative information under its previous GAAP that does not
comply with IAS 32 and IAS 39. Accordingly, the information presented for 2004 is prepared under and meets the disclosure
requirements of UK GAAP.
In order to comply with IAS 32 and IAS 39, the comparative information would not be disclosed differently.
Fair 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.
The fair values together with the carrying amounts shown in the balance sheet are as follows:
Carrying Fair Carrying Fair
amount value amount value
2005 2005 2004 2004
£000 £000 £000 £000
Equity securities available-for-sale 350 350 ——
Cash and cash equivalents —— 1,443 1,443
Bank overdraft (4,670) (4,670) ——
(4,320) (4,320) 1,443 1,443
Fair value of the equity securities available-for-sale relates to the group’s investment in shares in a foreign unquoted company. The
fair value has been measured using the discounted free cash flow method based on the estimated free cash flows over five years
and pre-tax discount rate of 15%. Fair values of all other financial assets and liabilities approximate to their carrying values.
(c) Interest rate exposure of financial assets and liabilities
In respect of income-earning financial assets and interest-bearing financial liabilities, the following table indicates their effective
interest rates at the balance sheet date and the periods in which they mature or, if earlier, are repriced.
2005 2004
Effective Effective
interest interest
rate Total 0 to < 1years rate Total 0 to<1years
% £000 £000 % £000 £000
Cash and cash equivalents ——— 3.6% 1,443 1,443
Bank overdrafts 5.8% (4,670) (4,670) ———
(4,670) (4,670) 1,443 1,443
Of the bank overdraft in 2005 of £4,670,000 (2004: cash at bank £1,443,000), £4,629,000 is denominated in sterling (2004: £1,331,000)
and £41,000 in US dollars (2004: £112,000).
Interest rates are floating rates for all above financial instruments determined by reference to the bank base rate plus or minus a
margin.
The group does not have any other interest bearing loans and borrowings other than the bank overdraft. YEAR ENDED 31 DECEMBER 2005 | 57
(d) Currency exposure of financial assets and liabilities
Included within trade payables at 31 December 2005 is approximately £200,000 (2004: £nil) of liabilities denominated in US dollars
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.
(e) Borrowing facilities
Of the total borrowing facilities available to the group, the undrawn committed facilities available were as follows:
2005 2004
£000 £000
Expiring in more than two years, but not more than five years 2,830 5,000
As at 31 December 2,830 5,000
The group had committed facilities of a group bank overdraft facility totalling £7,500,000 in sterling at 31 December 2005 (2004:
£5,000,000), incorporating a bank overdraft, letter of credit facility and revolving credit facility. This facility, originally in place until
August 2009, has been replaced with a new facility totalling £10,000,000 which is in place from February 2006. The new facility
incorporates a £5,000,000 seven year term loan and £5,000,000 short-term facility which can be utilised by way of sterling overdraft,
foreign currency overdraft and standby documentary letter of credit. This new short-term facility is due for review in December 2006.
The existing and new facility post year end are subject to floating rates of interest. The facility at 2004 and 2005 is secured by a first
legal charge over the freehold building and cross guarantees between certain group companies. The post year end increased facility
is secured by a first legal charge over the freehold building and leasehold land, a cross guarantee between certain group companies,
and a guarantee from a subsidiary of £5,000,000. This cross guarantee includes fixed charges over goodwill and uncalled share
capital, all intellectual property, all trade debts and a floating charge over all other assets. 
Borrowings under the facility are for the provision of working capital funding.
Sensitivity analysis
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 2005, it is estimated that a general increase of one percentage point in interest rates would decrease the group’s
profit before tax by approximately £50,000 (2004: £15,000).
It is estimated that a general increase of one percentage point in the value of sterling against other foreign currencies would have
decreased group’s profit before tax by approximately £13,000 for the year ended 31 December 2005 (2004: £41,000).
26. Operating Leases
Total future minimum lease payments under non-cancellable operating lease rentals are payable as follows:
2005 2004
£000 £000
Not later than one year 1,631 1,281
Later than one year and not later than five years 1,304 1,206
Later than five years 17 —
2,952 2,487
The majority of the group’s operating lease commitments totalling £2,150,000 in 2005 (2004: £1,596,000) relate to the hire of offices
and infrastructure sites (a network of paging transmitters and receivers mounted on tall buildings and towers in five cities) in the
USA. Teletrac Inc rents offices in nine metropolitan cities across the USA with contracts that expire between four months and three
years from the balance sheet date. It also leases over 170 infrastructure sites with commitments ranging from one month to six
years from the balance sheet date.
The significant lease commitments in the UK relate to the group’s former headquarters building in Milton Keynes that expires in July
2009 as well as non-cancellable motor vehicle leases with expiry dates from two to twenty nine months from the balance sheet date. 58 | TRAFFICMASTER ANNUAL REPORT AND ACCOUNTS 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED
26. Operating Leases continued
Total future minimum sublease payments expected to be received under non-cancellable subleases at the balance sheet date are as
follows:
2005 2004
£000 £000
Not later than one year 255 255
Later than one year and not later than five years 579 834
834 1,089
The subleases relate to the group’s former headquarters building in Milton Keynes and office space in the freehold building in
Cranfield.
The amounts of lease payment expenses and sublease income are disclosed in notes 3 and 4 respectively.
27. Capital Commitments
Capital commitments at the end of the financial year, for which no provision has been made are as follows:
2005 2004
£000 £000
Contracted — 88
— 88
The capital commitments in 2004 were in respect of intangible assets.
28. Purchase of Subsidiary
On 22 April 2004 the group acquired 100% of the issued share capital of Yeoman Group Plc and its subsidiaries for a consideration,
including costs, of £2,334,000. Details of the acquisition are set out below:
Fair value
£000
Plant and equipment 525
Debtors 284
Cash 351
Creditors due within one year (496)
Net assets 664
Consideration including expenses (2,334)
Goodwill (1,670)
One significant fair value adjustment of £525,000 has been made to recognise equipment in the course of construction. This is
included within infrastructure in the property, plant and equipment note (note 11). All other fair values equate to book values.
The purchase was satisfied by:
£000
Cash 226
Shares (2,684,997 shares issued by Trafficmaster Plc at closing published market price of 78.5p per share) 2,108
Total consideration 2,334
Goodwill reflects the value placed on key management and employees of Yeoman Group Plc taken on as part of the acquisition.
In the twelve months prior to acquisition, provisions of £160,000 were made for reorganisation and restructuring costs and these are
included within creditors above. YEAR ENDED 31 DECEMBER 2005 | 59
28. Purchase of Subsidiary continued
Since acquisition, the acquired group ceased trading as the employees were transferred to Trafficmaster Plc. The impact on the
Income Statement of Trafficmaster Plc for the period post acquisition is not material as the salaries for these employees were
capitalised as part of property, plant and equipment. There were no other significant costs in the Income Statement.
The acquired group contributed to post acquisition operating cash inflows of £63,000 and cash outflows of £266,000 for capital
expenditure. This was paid out of cash acquired of £351,000.
29. Contingent Liabilities
The group has entered into a trade debt guarantee with Barclays Bank Plc to guarantee payments of £75,000 to one of the group’s
major trade suppliers.
Details of guarantees given by the company, on behalf of the group are given in note 48.
Trafficmaster GmbH, a 90% owned subsidiary, was placed into liquidation during 2003. The liquidator has indicated that he may
pursue a legal claim against Trafficmaster Plc for a sum of approximately 4 million euros relating to this liquidation. To date no legal
claims have been lodged and the directors do not believe that any claim, if lodged, would succeed. On this basis the directors believe
the probability of a liability arising in respect of this matter to be remote.
30. Management Judgements and Estimation Uncertainties
In the process of applying the group’s accounting policies, the directors have made the following estimates and judgements which
have the most significant effect on the amounts recognised in the financial statements:
Goodwill
The directors use their judgement to determine the extent to which goodwill has a value that will benefit the performance of the
group over future periods. To 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. In the assessment undertaken in 2005, value in use was derived from discounted five year cash flow
projections using a year on year growth rate of 6% and discount rates relevant to the cost of capital adjusted for risks associated
with the cash-generating unit. The projection period is, in the opinion of the directors, an appropriate period over which to view the
future results of the group’s businesses for this purpose. Changes to the assumptions of discount rates, growth rates, expected
changes to costs and selling prices used in making these forecasts could significantly alter the directors’ assessment of the carrying
value of goodwill.
Property, plant and equipment
It is group policy to depreciate property, plant and equipment on a straight-line basis over their estimated useful lives. This applies
an appropriate matching of the revenue earned with the capital costs of production and delivery of goods and services. A key
element of this policy is the estimate of the useful life applied to each category of property, plant and equipment which, in turn,
determines the annual depreciation charge. Variations in asset lives could impact group profit significantly through an increase or
decrease in the depreciation charge.
The directors use their judgement to determine the extent to which impairments previously booked continue to be relevant. To assist
in making this judgement, the directors undertake an exercise to review such impairment provisions when they believe that
economic conditions may have arisen to increase the impaired value of the asset. In the assessment undertaken in 2005, value in
use was derived from discounted cash flow projections of the cash-generating units over the remaining useful economic life of the
impaired assets. Changes in the assumptions in discount rates, and future projections used in this estimation, could significantly
alter the directors’ assessment of the carrying value of this asset.
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. Provisions are based on the facts available at the time and are also determined by using profiles, based upon past
practice, applied to aged receivables and inventory categories. In estimating the collectability of trade receivables, judgement is
required in 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 a
deterioration in its financial condition, credit ratings, or bankruptcy.
Deferred taxation
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
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.
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. 60 | TRAFFICMASTER ANNUAL REPORT AND ACCOUNTS 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED
30. Management Judgements and Estimation Uncertainties continued
Decommissioning provision
In the UK, the group has obligations to dismantle a network of nationwide sensors located across numerous highways in the
country, at the point that this technology is no longer used. This obligation is not expected to arise for a number of years and the
costs are difficult to predict accurately, particularly as such costs have never previously been incurred, and estimates are based
upon technology and resources currently available. The directors have used their judgement to make a provision in the accounts for
an appropriate amount in respect of the likely cost of such dismantling.
Research and development expenditure
It is group policy to capitalise and amortise research and development expenditure whereby 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 which the directors expect 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 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 significantly
impact group profit through an increase or decrease in the amortisation charge.
Fair value of available-for-sale investments
The directors have estimated the fair value of its share in an unquoted investment based upon future trading performance and
resultant discounted free cash flows over a five year period. Changes to the assumptions particularly relating to growth rates in the
forecasts and discount rates used could significantly alter the directors’ assessment of the fair value of this investment.
31. Related Parties
The group has a related party relationship with its subsidiaries and jointly controlled entities (see note 13). Transactions between
group subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.
During the year the group invoiced to a jointly controlled entity, RAC Trafficmaster Telematics Ltd, a total of £1,470,000 (2004:
£1,255,000) comprising a management charge of £1,255,000 (2004: £1,161,000) and cost recharges of £215,000 (2004: £94,000). The
group also incurred expenses relating to purchases of traffic information from the jointly controlled entity totalling £130,000 (2004:
£115,000). At 31 December 2005 amounts due from RAC Trafficmaster Telematics Ltd stood at £749,000 (2004: £583,000) including a
long-term interest free loan of £550,000 (2004: £550,000) which has no fixed repayment date. The loan is included within investment
in jointly controlled entities and the balance of £199,000 (2004: £33,000) within trade and other receivables.
In addition to the directors’ remuneration disclosed in the Directors’ Remuneration Report on page 21, two senior executives who
attend executive management meetings received salaries and bonuses totalling £189,175 (2004: £184,775) and benefits in kind
amounting to £9,279 (2004: £8,822). The group also contributed a total amount of £14,367 (2004: £12,875) to their pension plans and
they held 566,224 (2004: 566,224) share options.
Under the terms of a consultancy agreement, former Chief Executive, David Martell was paid a salary totalling £43,692 (2004:
£23,384) during the year.
Non-Executive Director, Bill McIntosh was appointed a director of Cyclops (UK) Ltd. in October 2004 and resigned in October 2005,
and also owns shares in this company. During this period, Trafficmaster Plc made sales to Cyclops (UK) Ltd. of £100,000 (2004:
£20,000). Amounts outstanding and included within trade receivables at the year end are £168,000 (2004: £269,000). 
All transactions with related parties were at arms length.
There were no other reportable transactions with related parties during the year.
32. Explanation of Transition to Adopted IFRSs
As stated in note 1, these are the group’s first consolidated financial statements prepared in accordance with Adopted IFRSs.
The accounting policies set out in note 1 have been applied in preparing the financial statements for the year ended 31 December
2005, the comparative information presented in these financial statements for the year ended 31 December 2004 and in the
preparation of an opening IFRS balance sheet at 1 January 2004 (the group’s date of transition).
In preparing its opening IFRS balance sheet, the group has adjusted amounts reported previously in financial statements prepared in
accordance with its old basis of accounting (UK GAAP). An explanation of how the transition from UK GAAP to Adopted IFRSs has
affected the group’s financial position, financial performance and cash flows is set out in the following tables and the notes that
accompany the tables. YEAR ENDED 31 DECEMBER 2005 | 61
32. Explanation of Transition to Adopted IFRSs continued
Reconciliation of equity Effects of Effects of
UK GAAP transition UK GAAP transition
(as to IFRSs (as to IFRSs
restated) 1 Jan 2004 IFRSs restated)31 Dec 2004 IFRSs
Note £000 £000 £000 £000 £000 £000
Assets
Property, plant and equipment a 13,733 (1,477) 12,256 13,776 (1,469) 12,307
Intangible assets b 4,064 — 4,064 6,728 190 6,918
Investment in jointly controlled entities 116 — 116 116 — 116
Lease prepayments a — 1,477 1,477 — 1,469 1,469
Deferred tax asset — — — 1,148 — 1,148
Total non-current assets 17,913 — 17,913 21,768 190 21,958
Inventories 4,483 — 4,483 6,908 — 6,908
Trade and other receivables 6,519 — 6,519 10,553 — 10,553
Cash and cash equivalents 7,331 — 7,331 1,443 — 1,443
Total current assets 18,333 — 18,333 18,904 — 18,904
Total assets 36,246 — 36,246 40,672 190 40,862
Liabilities
Bank overdraft 90 — 90 —— —
Interest-bearing loans and borrowings — — — —— —
Trade and other payables 8,525 — 8,525 9,747 — 9,747
Total current liabilities 8,615 — 8,615 9,747 — 9,747
9% Senior secured notes 8,434 — 8,434 —— —
Deferred income 811 — 811 1,078 — 1,078
Provisions 1,400— 1,400 1,400 — 1,400
Total non-current liabilities 10,645 — 10,645 2,478 — 2,478
Total liabilities 19,260 — 19,260 12,225 — 12,225
Net assets 16,986 — 16,986 28,447 190 28,637
Equity
Issued share capital 6,294 — 6,294 6,743 — 6,743
Share premium c 90,759 — 90,759 94,274 — 94,274
Merger reserve c — — — 1,973 (1,973) —
Other reserve c — — — — 1,973 1,973
Foreign exchange translation reserve d — — — (376) — (376)
Retained earnings f (80,029) — (80,029) (74,129) 190 (73,939)
Total equity attributable to equity holders of the parent 17,024 — 17,024 28,485 190 28,675
Minority interest (38) — (38) (38) — (38)
Total equity 16,986 — 16,986 28,447 190 28,637
Reconciliation of income Effects of
transition IFRS
UK GAAP to IFRS
(as restated) 31 Dec 2004
£000 £000 £000
Revenue 36,613 — 36,613
Cost of sales (15,819) — (15,819)
Gross profit 20,794 — 20,794
Selling and distribution expenses (5,593) — (5,593)
Administrative expenses (12,819) 101 (12,718)
Operating profit before financing costs 2,382 101 2,483
Net gain on redemption of secured senior notes 2,057 — 2,057
Financial income 333 — 333
Financial expenses (20) — (20)
Profit before tax 4,752 101 4,853
Income tax expense 1,148 — 1,148
Profit for the period 5,900 101 6,001 62 | TRAFFICMASTER ANNUAL REPORT AND ACCOUNTS 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED
32. Explanation of Transition to Adopted IFRSs continued
The effects of transition to IFRSs on administrative expenses are analysed as follows:
31 Dec 2004
Note £000
Goodwill amortisation b 190
Share-based payment expense e (89)
Total 101
Restatement
The group has restated the UK GAAP comparative figures for 2004 to make a provision as required by FRS 12 for dismantling and
removing the UK infrastructure (a network of nationwide sensors and transmitters). FRS 12 requires that the estimated costs of
dismantling and removing the asset and restoring the site are included in the initial cost of that asset, and depreciated over the
estimated remaining useful economic life of the asset.
The effect at 1 January 2004 is to increase Provisions by £1,400,000, increase the carrying value of Property, Plant and Equipment by
£84,000 to reflect the depreciated historical cost of this asset, and decrease Retained Earnings by £1,316,000 at 1 January 2004. The
2004 profit has been restated by a reduction of £21,000 being the depreciation charge for the year and a corresponding decrease in
Retained Earnings. 
a) Long leasehold land has been recategorised as Lease Prepayments in accordance with IAS 17. These costs were incurred on the
acquisition of the long leasehold land.
The effect is to decrease the carrying value of Property, Plant and Equipment by 1,477,000 at 1 January 2004 and by £1,469,000 at
31 December 2004 with the corresponding increase included within Lease Prepayments. There is no material effect on Retained
Earnings as a consequence of this transaction.
b) The group has applied IFRS 3 to all business combinations that have occurred since 1 January 2004 (the date of transition to
IFRSs). Goodwill on all business combinations is not amortised under IFRSs, but is tested annually for impairment.
The goodwill amortisation charge (presented within Administrative Expenses) has been written back, the effect being to increase
Intangible Assets by £190,000 at 31 December 2004 with the corresponding increase in Retained Earnings.
c) The group accounted for the difference between the fair value and the nominal value of shares used as a purchase consideration
in acquisitions, within Merger Reserves rather than Share Premium Account. Under IFRSs, the difference between the nominal value
of shares issued and fair value is included within Other Reserves.
The effect is to decrease Merger Reserve and increase Other Reserve by £1,973,000 at 31 December 2004.
d) Cumulative translation differences that arose prior to the date of transition to IFRSs at 1 January 2004 in respect of all foreign
entities are deemed to be zero in accordance with the exemptions available under IFRS 1. Translation differences that arose after 
1 January 2004 have been presented as a separate component of equity.
e) The company has operated two share option schemes for several years: a Revenue and Customs Approved and an Unapproved
scheme. The terms and conditions of these schemes and grants are disclosed in the group financial statements. In accordance with
the transitional provisions in IFRS 1 and IFRS 2 the recognition and measurement principles in IFRS 2 have not been applied to the
share options granted prior to 7 November 2002. The share options granted after 7 November 2002 have been recognised and
measured in accordance with IFRS 2 and the fair value of options has been determined using the Black-Scholes formula. The group
accounted for the share options at their intrinsic value under UK GAAP. This has reduced the profit for the year ended 31 December
2004 by £89,000.
f) The effect of the above IFRSs adjustments on retained earnings is as follows:
1 Jan 2004 31 Dec 2004
Description Note £000 £000
Goodwill amortisation b — 190
Total adjustments — 190
The share-based payment adjustment has had no impact on reserves as the corresponding credit to the charge in the Income
Statement is to Retained Earnings.
The transition has not had any material impact on the group’s cash flows. YEAR ENDED 31 DECEMBER 2005 | 63
COMPANY BALANCE SHEET
for the year ended 31 December 2005
2005 2004
(as restated)
Notes £000 £000 £000 £000
Fixed assets
Intangible assets 35 3,332 3,451
Tangible assets 36 11,467 10,238
Investments 37 5,700 1,111
20,499 14,800
Current assets
Stocks 38 2,942 4,622
Debtors due within one year 39 4,975 3,314
Other debtors due after one year 39 12,867 12,074
Debtors 39 17,842 15,388
Cash at bank and short-term deposits — 598
20,784 20,608
Creditors: Amounts falling due within one year 40 (10,201) (5,599)
Net current assets 10,583 15,009
Total assets less current liabilities 31,082 29,809
Creditors: Amounts falling due after more than
one year 41 (335) (207)
Provisions for liabilities 42 (1,435) (1,400)
Net assets 29,312 28,202
Capital and reserves
Called up share capital 44 6,743 6,743
Share premium account 45 — 94,274
Profit and loss account 45 22,569 (72,815)
Equity shareholders’ funds 29,312 28,202
The board of directors approved these financial statements on 27 April 2006 and they were signed on its behalf by:
Tony Eales Nigel Bond
Chief Executive Finance Director
COMPANY RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS
for the year ended 31 December 2005
2005 2004
(as restated)
£000 £000
Profit for the financial year 583 710
Other recognised gains and losses relating to the year 350 —
Issue of ordinary share capital — 3,964
Credit in relation to share-based payments 177 89
Net addition to shareholders’ funds 1,110 4,763
Opening equity shareholders’ funds (originally £29,539,000 before deducting
prior year adjustments of £1,337,000) 28,202 23,439
Closing equity shareholders’ funds 29,312 28,202
Prior year adjustments are explained in more detail in note 49. 64 | TRAFFICMASTER ANNUAL REPORT AND ACCOUNTS 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
33. Accounting Policies
The following accounting policies have been applied consistently in dealing with items which are considered material in relation to
the financial statements, except as noted below.
In these financial statements the following new standards have been adopted for the first time: 
FRS 20, ‘Share-Based Payments’;
FRS 21, ‘Events After the Balance Sheet Date’; 
FRS 23, ‘The Effects of Changes in Foreign Exchange Rates’; 
FRS 25, ’Financial Instruments: Presentation and Disclosure’;
FRS 26, ‘Financial Instruments: Measurement’; and
FRS 28, ‘Corresponding Amounts’.
The accounting policies under these new standards are set out below together with an indication of the effects of their adoption. 
The corresponding amounts in these financial statements are, other than those covered by the exception permitted by FRS 25,
restated in accordance with the new policies. FRS 25 permits the corresponding amounts not to be restated and the company has
adopted this approach. The financial instruments policy set out below provides further details of the 2005 and 2004 bases. The
adoption of FRS 25 has had no material impact on the financial statements at 1 January 2005 and no changes have been required to
be booked as a result of the adoption of FRS 25.
The adoption of FRS 20 is explained in the accounting policy note for Share-Based payments, and in the Reconciliation of
Movements in Shareholders Funds.
The adoption of FRS 21 and FRS 23 has had no impact on these financial statements.
The adoption of FRS 26 has had no impact on the financial statements at 1 January 2005 as it was applied prospectively from that
date.
FRS 28, ‘Corresponding Amounts’ has had no material effect as it imposes the same requirements for comparatives as hitherto
required by the Companies Act 1985.
Basis of Preparation
The financial statements have been prepared in accordance with the Companies Act 1985, applicable UK Accounting Standards, and
under the historical cost accounting rules with the exception of available for sale financial assets which are measured at fair value. 
Under section 230(4) of the Companies Act 1985 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 Trafficmaster Plc, a company registered in the United
Kingdom. Consequently, the company has taken advantage of the exemption from preparing a cashflow statement under the terms
of FRS 1 (revised 1996).
The company has taken advantage of the exemption contained in FRS 8 between 90% owned group companies and has therefore not
disclosed transactions or balances with entities which form part of the group.
Investments
In the company’s financial statements, investments in subsidiary undertakings, associates and joint ventures are stated at cost less
any impairment in value. 
From 1 January 2005, the company has adopted FRS 26, ‘Financial Instruments: Measurement’. Other equity investments not held
for trading, are stated at fair value, with any resultant gain or loss recognised in equity, except for impairment losses, and in the
case of monetary items such as foreign exchange gains or losses which are recognised in the Profit and Loss Account. When these
investments are derecognised the cumulative gain or loss previously recognised directly in equity is recognised in the Profit and Loss
Account. Interest under the effective interest rate for interest bearing available-for-sale assets is charged through the Profit and
Loss Account. Prior to the adoption of FRS 26, other equity trade investments were stated at historical cost less any impairment 
in value. YEAR ENDED 31 DECEMBER 2005 | 65
33. Accounting Policies continued
Tangible Fixed Assets and Depreciation
Depreciation is provided by the company 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:
Leases and leasehold improvements — Over the period of the lease 
Fixtures, fittings and computer equipment — 5 years
Motor vehicles — 4 years
Infrastructure — 7 years
Freehold building — 50 years
No depreciation is provided on long leasehold land.
Infrastructure relates to a network of nationwide sensors and transmitters that gather and distribute traffic data.
On 31 December 2005, following a review of the useful economic life of infrastructure, this useful economic life was extended for a
further five years.
Operating 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 the Profit and
Loss Account represents the contributions payable by the company during the financial year.
Share-Based Payments
The company has adopted FRS 20, ‘Share-Based Payments’ which represents a change of accounting policy with regards to the
accounting treatment of share options issued under the company’s share option schemes. Under FRS 20 the share options are
accounted for in the financial statements at their fair value at the grant date and charged to the Profit and Loss Account over their
vesting period with the corresponding entry in reserves. Fair value is measured using the Black-Scholes model. Previously, the
company accounted for the share options at their intrinsic value. The company took advantage of the exemptions available under
FRS 20 and did not value share options granted on or before 7 November 2002.
Turnover and Deferred Revenue
Turnover represents the amounts (excluding value added tax) derived from the provision of goods and services to third party
customers. The company sells certain products bundled with software upgrades and maintenance delivered over periods of up to
three years for consideration in the form of a monthly or annual subscription. Turnover reflects the fair value of the services to its
reporting date as a proportion of the total fair value of the contract. Deferred revenue represents non-refundable amounts received
in advance of the recognition of revenue in the Profit and Loss Account. It is taken to the Profit and Loss Account over the period of
the subscription or contract period as appropriate. 
Foreign Currencies
Transactions 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. 66 | TRAFFICMASTER ANNUAL REPORT AND ACCOUNTS 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED
33. Accounting Policies continued
Stocks
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.
Decommissioning
Liabilities for decommissioning 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 fixed assets 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.
Taxation
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 profit and loss” are stated at fair value
and all changes in fair value are recognised immediately in the Profit and Loss Account;
● 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 costs 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. The company’s principal financial instruments are borrowings for the purposes
of funding operating activities.
As disclosed above, the adoption of FRS 25 and FRS 26 has had no material impact on the measurement nor disclosures in these
financial statements. 
Cash and Short-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. YEAR ENDED 31 DECEMBER 2005 | 67
34. Staff Numbers and Costs
The average number of persons employed by the company (including Executive and Non-Executive Directors) during the year was:
2005 2004
Infrastructure 18 20
Sales and administration 277 229
295 249
The aggregate payroll costs of these persons were as follows:
2005 2004
(as restated)
£000 £000
Wages and salaries 6,981 5,979
Share-based payments 177 89
Social security costs 705 620
Pension costs 170 130
8,033 6,818
Detail of directors’ emoluments are shown in the Directors’ Remuneration Report on page 21.
35. Intangible Fixed Assets
Development
costs Total
£000 £000
Cost
At 1 January 2005 13,192 13,192
Additions 1,002 1,002
Transfers to tangible fixed assets (287) (287)
At 31 December 2005 13,907 13,907
Amortisation
At 1 January 2005 9,741 9,741
Charge for the year 834 834
At 31 December 2005 10,575 10,575
Net book value
At 31 December 2005 3,332 3,332
At 31 December 2004 3,451 3,451
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. 68 | TRAFFICMASTER ANNUAL REPORT AND ACCOUNTS 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED
36. Tangible Fixed Assets (as restated)
Long
leasehold Fixtures,
land and fittings 
freehold Motor and Infra-
buildings vehicles computers structure Total
£000 £000 £000 £000 £000
Cost
At 1 January 2005 8,679 471 2,582 28,864 40,596
Additions — 41 712 266 1,019
Transfers from intangible fixed assets — — — 287 287
Disposals — (210) — — (210)
At 31 December 2005 8,679 302 3,294 29,417 41,692
Depreciation
At 1 January 2005 635 411 1,774 27,538 30,358
Charge for the year 151 37 362 482 1,032
Reversal of impairment — — — (956) (956)
Disposals — (209) — — (209)
At 31 December 2005 786 239 2,136 27,064 30,225 
Net book value
At 31 December 2005 7,893 63 1,158 2,353 11,467 
At 31 December 2004 8,044 60 808 1,326 10,238
All land and buildings relate to the Head Office at Cranfield.
The directors have reviewed the impairment of the network of UK nationwide sensors and transmitters (the infrastructure) in the
light of new revenue generating opportunities, mainly through the sale of traffic information derived from the infrastructure and
delivered using acquired RDS TMC technology. This technology was not available to the company at the time of the initial impairment
in December 2002. The review was based upon the analysis of relevant discounted cash flows and resulted in the reversal of the
initial impairment by £956,000. The directors also considered the useful economic life of the infrastructure which has been extended
for a further five years in line with the relevant cash flows expected in the future. This has had no impact on the depreciation charge
in the year. However, the reversal of impairment and the extension of the useful economic life of the infrastructure will result in a
decrease in the depreciation charge of £149,000 per annum in the next two years and increase in the depreciation charge of
£251,000 per annum in the following five years.
The title over the freehold building has been assigned as security for the existing overdraft facility at the balance sheet date and for
the new banking arrangements, including a loan and overdraft facility, since the balance sheet date. As part of refinancing its
working capital facilities in February 2006, 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:
2005 2004
£000 £000
Freehold building 6,386 6,537
Long leasehold land 1,507 1,507
7,893 8,044 YEAR ENDED 31 DECEMBER 2005 | 69
37. Investments
Other
Shares in investments Loans to
group Participating (other than participating
undertakings interests loans) Interests Total
£000 £000 £000 £000 £000
Cost
At 1 January 2005 28,233 1,391 3,913 550 34,087
Additions 4,239——— 4,239
At 31 December 2005 32,472 1,391 3,913 550 38,326 
Provisions
At 1 January 2005 28,172 891 3,913 — 32,976
Reversal of impairment — — (350) — (350)
At 31 December 2005 28,172 891 3,563 — 32,626 
Net book value
At 31 December 2005 4,300 500 350 550 5,700 
At 31 December 2004 61 500 — 550 1,111
Details of the principal companies in which the company’s interest at the end of the year was 20% or more is disclosed in note 13.
The directors have reviewed the impairment of the company’s investment in the shares of Mediamobile, an unquoted company
incorporated in France. The review was triggered by improved trading in recent periods, favourable changes in market conditions
and significantly improved expected future trading performance, and resulted in the reversal of a previous impairment to the fair
value of £350,000. The fair value has been measured using the discounted free cash flow method based on the estimated free cash
flows over five years and pre-tax discount rate of 15%. This investment is classed as available-for-sale and the increase in fair value
has been reflected in reserves in accordance with FRS 26. The fair value at 1 January 2005 has been estimated at £nil and therefore
the adoption of FRS 26 has had no impact on the financial statements.
The addition to shares in group undertakings  relates to the capitalisation of long term debt in an existing wholly owned subsidiary.
38. Stocks
2005 2004
£000 £000
Raw materials and consumables 1,299 2,938
Finished goods for resale 1,643 1,684
2,942 4,622
39. Debtors
2005 2004
£000 £000
Trade debtors 4,473 3,050
Amounts owed by group undertakings 11,860 11,067
Amounts owed by joint ventures 199 33
Deferred tax asset 1,007 1,007
Prepayments and accrued income 303 231
17,842 15,388
Included within amounts due from group undertakings are debts due after more than one year amounting to £11,860,000 (2004:
£11,067,000).
The deferred tax asset is expected to be recovered after more than one year from the balance sheet date. 70 | TRAFFICMASTER ANNUAL REPORT AND ACCOUNTS 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED
40. Creditors: Amounts falling due within one year
2005 2004
£000 £000
Bank overdraft 4,730 —
Trade creditors 1,944 2,770
Amounts due to group undertakings 276 293
Other taxes and social security 1,546 880
Accruals 653 490
Deferred income 1,052 1,166
10,201 5,599
The bank overdraft is secured by a legal charge on the freehold building and a cross guarantee with certain group companies.
41. Creditors: Amounts falling due after more than one year
2005 2004
£000 £000
Deferred income 335 207
335 207
Deferred income relates to subscriptions received from customers in respect of future journey management services.
42. Provision for Liabilities 
(a) Deferred taxation
2005 2004
£000 £000
Asset at 1 January (1,007) —
Charge/(credit) to the profit and loss account for the year — —
Asset at 31 December (1,007) (1,007)
The elements of deferred taxation are as follows:
Amount provided Amount unprovided
2005 2004 2005 2004
£000 £000 £000 £000
Accelerated capital allowance — — (439) (683)
Short-term timing differences — — (15) (37)
Share-based payment expense — — (50) —
— — (504) (720)
Less losses (1,007) (1,007) (5,977) (5,599)
(1,007) (1,007) (6,481) (6,319)
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.
Other deferred tax asset not recognised in 2004 and 2005 have not been recognised on the basis that the future economic benefits is
uncertain. YEAR ENDED 31 DECEMBER 2005 | 71
42. Provision for Liabilities  continued
(b) Other provisions
Asset
dismantling obligation
2005 2004
(as restated)
£000 £000
Balance at 1 January 1,400 1,400
Discount applied to provision 35 —
Balance at 31 December 1,435 1,400
The company has made a provision for dismantling and removing the UK 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 Payments
The company has adopted FRS 20, in these financial statements, as explained in notes 33 and 49. The disclosures relating to the
share based payments are included in the group accounts on pages 52 and 53.
44. Called up Share Capital
2005 2004
£000 £000
Authorised:
160,000,000 ordinary shares of 5 pence each 8,000 8,000
Allotted, called up and fully paid:
134,857,000 ordinary shares of 5 pence each 6,743 6,743
There is a contingent right to allot a total of 8,791,464 (2004: 8,973,600) 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
2014. The exercise prices range from 8.75p to 563.5p per share. Directors’ options are set out on page 22 of this report.
Number Number Number
1998 Plan Approved Unapproved Total
At 1 January 2005 3,300,000 862,282 4,811,318 8,973,600
Granted — — 835,000 835,000
Forfeited — (15,000) (1,002,136) (1,017,136)
At 31 December 2005 3,300,000 847,282 4,644,182 8,791,464
45. Reserves
Share premium Profit and
account loss Total
£000 £000 £000
At 1 January 2005 as previously stated 94,274 (71,478) 22,796
Prior year adjustment (as explained in note 49) — (1,337) (1,337)
At beginning of year as restated 94,274 (72,815) 21,459
Profit for the financial year — 583 583
Other recognised gains and losses for the year — 350 350
Credit in respect of share based payments — 177 177
Cancellation of share premium (94,274) 94,274 —
31 December 2005 — 22,569 22,569
On 6 July 2005, Trafficmaster Plc received a certification of registration of order of the court for the cancellation of its share
premium account. This resulted in a reduction on the share premium account of £94,274,000 and an increase in retained earnings
by the same amount. 72 | TRAFFICMASTER ANNUAL REPORT AND ACCOUNTS 
NOTES FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED
46. Financial Commitments
Land Land 
and buildings Other and buildings Other
2005 2005 2004 2004
£000 £000 £000 £000
(a) Annual commitments under non-cancellable operating leases
Operating leases, which expire:
In less than one year 66 15 60 6
In the second to fifth years inclusive 140 150 140 57
206 165 200 63
2005 2004
£000 £000
(b) Capital commitments
Capital expenditure contracted — 88
The capital commitments in 2004 were in respect of intangible fixed assets.
47. Related Party Transactions
The company’s related party transactions are the same as disclosed for the group in note 31 on page 60.
48. Contingent Liabilities
The company has entered into a trade debt guarantee with Barclays Bank Plc to guarantee  payments of £75,000 to one of the
company’s major trade suppliers.
The company is party to a cross guarantee with respect to the bank borrowings of certain group companies. At 31 December 2005
and 2004 the bank balances of the subsidiaries which are party to this guarantee were not overdrawn.
Trafficmaster GmbH, a 90% owned subsidiary, was placed into liquidation during 2003. The liquidator has indicated that he may
pursue a legal claim against Trafficmaster Plc for a sum of approximately 4 million euros relating to this liquidation. To date no legal
claims have been lodged, and the directors do not believe that any claim, if lodged, would succeed. On this basis the directors
believe the probability of a liability arising in respect of this matter to be remote.
49. Prior Year Adjustments
During the year, the company adopted FRS 20, ‘Share-Based Payments’ which has resulted in a prior year adjustment. The effect of
the change of accounting policy is to decrease the company’s profit by £89,000 in 2004. The change has had no impact on the
retained earnings or opening reserves at 1 January 2004 as the corresponding entry to the profit and loss account charge is a credit
to reserves. The adoption of FRS 20 has not therefore resulted in a change in shareholders funds.
The company has not previously recognised a liability under FRS 12, ‘Provisions for Liabilities and Charges’ in respect of obligations
for dismantling and removing its nationwide network of sensors and transmitters (UK Infrastructure) and restoring the sites on
which this plant is located. The 2004 financial statements have been restated to include a provision of £1,400,000 for the estimated
future cost of dismantling and removing the infrastructure, fixed assets have been increased by £63,000 at 1 January 2004 to reflect
the depreciated historical cost of infrastructure and the profit for the year reduced by £21,000 to reflect the depreciation charge for
the year. This has resulted in a reduction in retained earnings at 1 January 2005 of £1,337,000 (1 January 2004: £1,316,000). YEAR ENDED 31 DECEMBER 2005 | 73
SHAREHOLDER NOTES 74 | TRAFFICMASTER ANNUAL REPORT AND ACCOUNTS 
SHAREHOLDER NOTES CONTINUED 02 | TRAFFICMASTER ANNUAL REPORT AND ACCOUNTS
CONTENTS
03 HIGHLIGHTS
05 CHAIRMAN’S STATEMENT
07 CHIEF EXECUTIVE’S STATEMENT
12 BOARD OF DIRECTORS
14 REGISTERED OFFICE AND ADVISORS
15 DIRECTORS’ REPORT
19 DIRECTORS’ REMUNERATION REPORT
23 CORPORATE GOVERNANCE
30 STATEMENT OF DIRECTORS’ RESPONSIBILITIES
31 INDEPENDENT AUDITORS’ REPORT
33 CONSOLIDATED INCOME STATEMENT
33 CONSOLIDATED STATEMENT OF RECOGNISED
INCOME AND EXPENSE
34 CONSOLIDATED BALANCE SHEET
35 CONSOLIDATED CASH FLOW STATEMENT
36 NOTES TO THE FINANCIAL STATEMENTS
63 COMPANY BALANCE SHEET
64 NOTES TO THE FINANCIAL STATEMENTS
Trafficmaster, a leading supplier of intelligent vehicle tracking 
and navigation solutions, announces its results for the year ended
31st December 2005. TRAFFICMASTER ANNUAL REPORT AND ACCOUNTS
YEAR ENDED 31 DECEMBER 2005
TRAFFICMASTER ANNUAL REPORT AND ACCOUNTS                                               YEAR ENDED 31 DECEMBER 2005
Trafficmaster Plc
Martell House
University Way
Cranfield
Bedfordshire
MK43 0TR
www.trafficmaster .co.uk