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
wwwtrafficmaster couk 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 £423m 2004 £366m
t eletrac revenues increased by 23 to £206m 2004 £168m
uk revenues increased by 10 to £217m 2004 £198m
operating profit – £18m 2004 £25m before
and £10m 2004 £25m after nonrecurring items
strong improvement in operating profit in h2 over h1 – 
£18m vs £0028m before nonrecurring items
and £15m vs loss £05m after nonrecurring 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 holidaymakers 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 its 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 trafficmasters technology and 
market knowhow 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 uptodate 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 £0028m in the first half trafficmaster
recorded full year operating profits before nonrecurring
items of £18m 2004 £25m
revenues for the full year increased 16 to £423m compared
to £366m in 2004 driven by a 23 revenue increase in
teletrac and a 10 increase in uk revenues
net borrowings at year end were £47 million compared with
£38 million at 30 june 2005 cash balances were £14 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 £206 million 2004 £168
million and increased operating profits 17 from £29 million
to £34 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 50000 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 highvalue highfeature 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 marketleading 
invehicle products and offboard services technologies
as a result three new business units have been created 
in the uk trafficmaster invehicle 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 invehicle products
trafficmaster invehicle 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 £117 million 2004 £108 million
the operating profit before nonrecurring items for this
division reduced to £13 million from £22 million and from
£22 million to £02 million after nonrecurring items due to
increased marketing costs in the first half of 2005
pat gallagher director of invehicle products has been in
the invehicle products industry for over 20 years having 
worked at a senior level in cobra and renault before 
joining trafficmaster in 1999
invehicle 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 brandbuilding
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 24 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 invehicle platform can deliver class leading services 
for navigation stolen vehicle tracking safety camera warning
emergencybreakdown call usage based insurance and
traffic information services this allows trafficmaster 
invehicle 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 uptodate 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 £101 million
2004 £90 million the division reported an operating profit
of £02 million 2004 £05 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 invehicle products traffic
information and offboard 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
onbreak times as well as vehicle speed improving vehicle and driver security were also concerns”
teletrac enables builders firstsource to better coordinate the ondemand routing changes
that occur during the day and improve response times  board of directors
colin walsh
nonexecutive chairman
colin was appointed as trafficmasters chairman in june
2004  he previously served as a nonexecutive 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 reorganised into three business
units trafficmaster technologies trafficmaster services and
trafficmaster invehicle 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 videoon
demand venture that he developed from startup 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
nonexecutive 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 cochair of the retail forum ltd and chairman
of the society of motor manufacturers and traders smmt
car section committee
bill mcintosh
nonexecutive director
bill was finance director at trafficmaster from 1994 until 
he resigned in september 2001 since then he has been a
nonexecutive 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 
nonexecutive and monitor director of cyclops uk ltd and is
an accredited small business adviser with his local
enterprise trust assisting startup 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
nonexecutive director
ian is one of the cofounders 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
£935000 2004 £4853000 on group revenue of £42323000 2004 £36613000 and a group gross profit of £22712000 2004
£20794000 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
costeffectiveness 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 883636 2100728
bill mcintosh 104248 104248
colin walsh 200000 100000
tony eales 10000 10000
nigel bond 10000 10000
stuart berman 10000 10000
adrian joseph resigned 10 november 2005 — — 
ian coomber 15000 —
 included within the interest of ian williams are 794532 2004 794532 shares held by air continental securities ltd in
which mr williams has a onethird 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 1217092 shares
on 18 march 2005 at 56p per share 16  trafficmaster annual report and accounts 
directors’ report continued
mr ian coomber acquired 15000 shares on 8 november 2005 at 31p per share
mr colin walsh acquired 100000 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 2775p 31 december 2004 595p the highest price during the year was
6475p and the lowest price during the year was 2500p
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 10000000 742
standard life group plc 4857979 360
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 managementtreasury 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 nonuk
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 boardapproved 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 £1256981 at that time they will also seek to renew their existing authority to allot for
cash up to 5 £337150 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 nonexecutive 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 daytoday 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 nonexecutive 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 twelvemonth 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 abinapf 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 nonexecutive 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
nonexecutive directors
the nonexecutive directors receive fees for their services the executive directors determine the remuneration of the non
executive directors
the nonexecutive 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 300000 share options throughout the year 
directors seeking reelection
in accordance with the articles of association stuart berman and nigel bond are required to seek reelection at the next
annual general meeting
as recommended by the combined code nonexecutive directors who have been in office for more than nine years will stand
for reelection on an annual basis on this basis colin walsh bill mcintosh and ian williams will be seeking reelection 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 longterm
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 8791464 2004 8973600 options
have been awarded to a total of fiftyeight 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
nonexecutive 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 fiveyear 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
311204 issued lapsed 311205 price period
bill mcintosh
1998 plan 300000 — — 300000 £1053 210901200908
adrian joseph
approved scheme 72272 — — 72272 £04125 211006–201013
unapproved scheme 127728 — — 127728 £04125 211006–201013
unapproved scheme 75000 — — 75000 £0835 281007–271014
tony eales
approved scheme 28500 — — 28500 £1053 210901–200908
unapproved scheme 371500 — — 371500 £1053 210901–200908
unapproved scheme 100000 — — 100000 £052 251004–241011
unapproved scheme 250000 — — 250000 £0235 050405–040412
unapproved scheme 110000 — — 110000 £042 161006–151013
unapproved scheme 75000 — — 75000 £0835 281007–271014
nigel bond
approved scheme 57692 — — 57692 £052 251004–241011
unapproved scheme 42308 — — 42308 £052 251004–241011
unapproved scheme 250000 — — 250000 £0235 050405–040412
unapproved scheme 110000 — — 110000 £042 161006–151013
unapproved scheme 75000 — — 75000 £0835 281007–271014
stuart berman
approved scheme 57692 — — 57692 £052 251004–241011
unapproved scheme 42308 — — 42308 £052 251004–241011
unapproved scheme 250000 — — 250000 £0235 050405–040412
unapproved scheme 110000 — — 110000 £042 161006–151013
unapproved scheme 75000 — — 75000 £0835 281007–271014
total 2580000 — — 2580000
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
noncompliance
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 nonexecutive 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 nonexecutive
directors to be independent in character and judgement as a consequence the remuneration committee does not solely
comprise of independent nonexecutive directors the audit committee does not comprise of at least three independent
nonexecutive 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 nonexecutive directors with effect from this annual general meeting all nonexecutive directors who have served
nine years or more will stand for reelection annually  
the chairman has initiated a process with a view to appointing additional nonexecutive directors to the board during
the coming year and it is intended that the longer standing nonexecutive directors will be progressively replaced as
these appointments are effected it is intended that at least one new nonexecutive director will be appointed this
calendar year and one or two of the existing nonexecutive 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
mediumterm 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 longerterm 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 daytoday business of the group the chairman facilitates the effective contribution of nonexecutive
directors and constructive relations between executive and nonexecutive 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 daytoday 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 nonexecutive 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 nonexecutive 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 nonexecutive 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 nonexecutive directors other than bill mcintosh who resigned as a fulltime 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 crossdirectorships 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 nonexecutive 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 facetoface 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
reelection
subject to the company’s articles of association the companies acts and satisfactory performance evaluation nonexecutive
directors stand for reelection every three years in addition nonexecutive directors who have served for more than nine
years are put forward for annual reelection
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 nonexecutive 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 wwwtrafficmaster couk 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 nonfinancial 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
nonfinancial 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 crossfunctional 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 na
nigel bond
finance director 11 11 na na
stuart berman
executive director 11 11 na na
adrian joseph
executive director 9 9 na na
ian coomber
nonexecutive director 11 11 3 3 2 2
bill mcintosh
nonexecutive director 11 11 3 3 2 2
ian williams
nonexecutive 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
noncommittee 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 cashbased 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 nonexecutive
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 nonexecutive 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 nonaudit 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 nonaudit 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 nonaudit 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 nonaudit 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 nonaudit 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 42323 36613
cost of sales excluding writedown of inventory 18748 15819
writedown of inventory 863 —
cost of sales 19611 15819
gross profit 22712 20794
other operating income 4 255 255
selling and distribution costs 7216 5593
recurring administrative expenses 14846 12973
nonrecurring administrative income 5 956 —
nonrecurring administrative expenses 5 866 —
administrative expenses 14756 12973
operating profit excluding writedown of inventory and nonrecurring administrative income and expenses 1768 2483
writedown of inventory and nonrecurring administrative income and expenses 773 —
operating profit 2 995 2483
gain on redemption of secured senior notes 8 — 2057
financial income 8 276 332
financial expenses 8 336 19
profit before tax 935 4853
taxation 9 70 1148
profit for the year 865 6001
attributable to
equity holders of the parent 865 6001
minority interest — —
865 6001
earnings per ordinary share
— basic 10 064p 449p
— diluted 10 064p 437p
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 1226 376
profit for the year 865 6001
total recognised income and expense for the year 24 2091 5625
attributable to
equity holders of the parent 2091 5625
minority interest — —
2091 5625
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
noncurrent assets
property plant and equipment 11 14251 12307
intangible assets 12 7232 6918
investments in jointly controlled entities 13 116 116
other financial assets 14 350 —
lease prepayments 15 1461 1469
deferred tax asset 16 1078 1148
24488 21958
current assets
inventories 17 6028 6908
trade and other receivables 18 17348 10553
cash and cash equivalents 19 — 1443
23376 18904
total assets 47864 40862
current liabilities
bank overdraft 19 4670 —
trade and other payables 20 9336 9747
14006 9747
noncurrent liabilities
deferred income 21 1518 1078
provisions 22 1435 1400
2953 2478
total liabilities 16959 12225
net assets 30905 28637
equity
share capital 24 6743 6743
share premium 24 — 94274
other reserve 24 1973 1973
foreign exchange translation reserves 24 500 376
fair value reserve 24 350 —
retained earnings 24 21377 73939
total equity attributable to equity holders of the parent 30943 28675
minority interest 24 38 38
total equity 30905 28637
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 6001
adjustments for
depreciation amortisation and impairment 1863 2363
foreign exchange gains 258 238
financial income 18 74
financial expense 336 19
taxation 70 1148
gain on repayment of borrowings including interest waiver — 2290
lossgain on sale of property plant and equipment 33 24
equity settled sharebased payment expenses 177 89
operating profit before changes in working capital and provisions 3068 4698
increase in trade and other receivables 6328 4105
decreaseincrease in inventories 1189 2593
increase in trade and other payables 14 1845
cash flows from operations 2057 155
interest paid 281 19
net cash flows from operating activities 2338 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 2963 1732
acquisition of subsidiary net of cash acquired 28 — 125
development expenditure acquisition of intangible fixed assets 12 1002 1784
net cash flows from investing activities 3780 3077
cash flows from financing activities
proceeds from the issue of share capital — 3830
repayment of borrowings — 6680
net cash flows from financing activities — 2850
net decrease in cash and cash equivalents 6118 6101
cash and cash equivalents at 1 january 19 1443 7331
effect of exchange rate fluctuations on cash held 5 213
cash and cash equivalents at 31 december 19 4670 1443  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
● sharebased payments — ifrs 2 ‘sharebased 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 availableforsale 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 longterm 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 longterm
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 postacquisition 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 straightline 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
straightline 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 availableforsale 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 straightline
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
noncurrent assets held for sale and discontinued operations
noncurrent 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 ‘noncurrent 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 cashgenerating 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 availableforsale 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 availableforsale 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 straightline basis over the period of the lease upfront
payments for acquiring longterm 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
sharebased 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 straightline basis over the vesting period taking into account the number of
options that are expected to be exercised fair value is measured using the blackscholes 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 nonrefundable 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 nonmonetary 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 shortterm 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 pretax 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
intersegment 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 invehicle 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
invehicle 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 17132 13090 10070 9019 20602 16809 47804 38918
less inter segment trading 5481 2305 — — — — 5481 2305
revenue from external customers 11651 10785 10070 9019 20602 16809 42323 36613
segment results before 
nonrecurring items 1309 2189 186 536 3388 2902 4883 5627
nonrecurring items 1116 — 408 — — — 708 —
segment results 193 2189 594 536 3388 2902 4175 5627
unallocated expenses 3180 3144
operating profit 995 2483
net financial expensesincome 60 2370
taxation 70 1148
profit for the year 865 6001
segment assets 11212 11933 11738 10287 20685 12903 43635 35123
investment in associates 116 116
unallocated assets 4113 5623
total assets 47864 40862
segment liabilities 1411 1912 3742 3928 4289 3320 9442 9160
unallocated liabilities 7517 3065
total liabilities 16959 12225
capital expenditure 553 744 1347 1508 1943 1118 3843 3370
unallocated capital expenditure 122 146
total capital expenditure 3965 3516
depreciation and amortisation 501 387 1279 1047 893 741 2673 2175
unallocated depreciation 
and amortisation 146 188
2819 2363
impairment losses reversed — — 956 — — — 956 —
 nonrecurring 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 27058 21064 20602 16809 144 1045 47804 38918
less inter segment trading 5481 2305 — — — — 5481 2305
revenue from external customers 21577 18759 20602 16809 144 1045 42323 36613
segment assets 27774 27694 20090 12903 — 265 47864 40862
capital expenditure 2022 2398 1943 1118 — — 3965 3516 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 1966 1764
amortisation of deferred development expenditure and licences 845 591
amortisation of lease prepayment 8 8
impairment loss on trade receivables 980 346
writedown of inventory 863 —
research and development costs expensed as incurred 513 293
operating lease rentals — property 1505 1053
— other 186 7
the audit fee charged to the company was £65000 2004 £55000 and fees for other services were £60000 2004 £37000
4 other operating income
2005 2004
£000 £000
operating lease rentals receivable 255 255
255 255
5 nonrecurring administrative income and expenses
2005 2004
£000 £000
included within nonrecurring 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 —
nonrecurring 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 nonexecutive 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 14590 12237
wages and salaries capitalised 1934 1820
wages and salaries recognised in the income statement 12656 10417
sharebased payments see note 23 177 89
social security costs 1145 703
pension costs 229 188
14207 11397
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 £2057000 relating to capital and £233000 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 1148
2005 2004
£000 £000
reconciliation of effective tax rate
profit before tax 935 4853
tax using uk corporation tax rate of 30 2004 30 281 1455
effects of
permanent expenses nondeductible 229 116
reversal of impairments 392 —
other permanent adjustments 20 —
deferred tax assets not recognised 656 395
effects of tax losses utilised 75 2324
tax losses available to carry forward 663 —
total tax in the income statement 70 1148
tax losses totalling £34305000 2004 £33000000 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 £865000 2004 £6001000 and on the weighted average number of ordinary shares in issue during the year
of 134860371 2004 133664735
weighted average number of ordinary shares
2005 2004
£000 £000
issued ordinary shares at 1 january 134860 125883
effects of shares issued in january 2004 — 5768
effects of shares issued in april 2004 — 2014
weighted average number of ordinary shares at 31 december 134860 133665
diluted earnings per share
the calculation of diluted earnings per share at 31 december 2005 was based on profit attributable to ordinary shareholders of
£865000 2004 £6001000 and weighted average number of ordinary shares diluted outstanding during the year of 135545026
2004 137399083 calculated as follows
weighted average number of ordinary shares diluted
2005 2004
£000 £000
weighted average number of ordinary shares at 31 december 134860 133665
effects of shares options in issue 685 3734
weighted average number of ordinary shares diluted at 31 december 135545 137399
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 7138 1231 5404 44778 58551
acquisitions 30 221 569 1437 2257
transfers between items 5 — 5 — —
disposals — 536 945 12727 14208
effects of movements in foreign exchange — 9 22 777 808
at 31 december 2004 7173 907 5001 32711 45792
at 1 january 2005 7173 907 5001 32711 45792
acquisitions — 58 824 2081 2963
transfers to intangible assets — — — 1216 1216
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 7173 500 5070 35281 48024
depreciation
at 1 january 2004 443 698 3942 41212 46295
depreciation charge for the year 165 175 274 1150 1764
transfers between items 10 — 10 — —
disposals — 320 945 12726 13991
effects of movements in foreign exchange — 8 43 532 583
at 31 december 2004 598 545 3238 29104 33485
at 1 january 2005 598 545 3238 29104 33485
depreciation charge for the year 143 77 548 1198 1966
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 3562 29122 33773
carrying amounts
at 1 january 2004 6695 533 1462 3566 12256
at 31 december 2004 6575 362 1763 3607 12307
at 1 january 2005 6575 362 1763 3607 12307
at 31 december 2005 6432 152 1508 6159 14251
transfers from infrastructure to development costs within intangible fixed assets note 12 relates to a reclassification of assets at a
cost of £1216000 and accumulated depreciation of £783000 to better reflect the nature of these assets this equally applies to the
transfer of £287000 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 £956000 this amount is included as a credit within nonrecurring 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 £149000 per annum in the next two years and an increase in the depreciation charge of £251000 
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 1699 974 11817 14490
acquisitions through business combinations 1670 — — 1670
other acquisitions — internally developed — — 1784 1784
disposals — — 426 426
effects of movement in foreign exchange — 139 17 122
at 31 december 2004 3369 835 13192 17396
at 1 january 2005 3369 835 13192 17396
other acquisitions — internally developed — — 1002 1002
transfer from property plant and equipment — — 1216 1216
transfer to property plant and equipment — — 287 287
disposals — 685 — 685
effects of movement in foreign exchange — 16 1 17
at 31 december 2005 3369 166 15124 18659
amortisation
at 1 january 2004 — 839 9587 10426
amortisation for the year — 10 581 591
disposals — — 426 426
effects of movement in foreign exchange — 112 1 113
at 31 december 2004 — 737 9741 10478
at 1 january 2005 — 737 9741 10478
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 11358 11427
carrying amounts
at 1 january 2004 1699 135 2230 4064
at 31 december 2004 3369 98 3451 6918
at 1 january 2005 3369 98 3451 6918
at 31 december 2005 3369 97 3766 7232
the amortisation charge for the year is included within administrative expenses in the income statement
impairment tests for the cashgenerating units containing goodwill
the following cashgenerating units have significant carrying amounts of goodwill
2005 2004
£000 £000
usa fleet management 1699 1699
trafficmaster services 1670 1670
3369 3369 year ended 31 december 2005  47
12 intangible assets continued
the impairment tests for both cashgenerating 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’ longterm 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 cashgenerating units the key assumptions used are as follows
usa fleet trafficmaster
management services
pretax 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 cashgenerating 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 £550000 less share of liabilities of £434000 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 noncurrent assets — —
share of current liabilities 104 32
share of noncurrent liabilities 550 550
at 31 december 434 434
share of revenue 798 688
share of posttax 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 nontrading ordinary 100
trafficmaster inc united states of america nontrading ordinary 100
trafficmaster usa inc united states of america nontrading ordinary 100
exflinsy ltd great britain nontrading ordinary 100
fleetstar information systems spa italy nontrading ordinary 100
trafficmaster bv netherlands nontrading ordinary 100
fleetstar information systems bv netherlands nontrading ordinary 100
protechnica consultants ltd great britain nontrading ordinary 100
trafficmaster onlinecom ltd great britain nontrading ordinary 100
beacon company gmbh germany nontrading ordinary 100
trafficmaster europe gmbh germany nontrading ordinary 90
yeoman group plc great britain nontrading ordinary 100
yeoman navigation systems ltd great britain nontrading ordinary 100
yeoman cambridge plc great britain nontrading ordinary 100
jointly controlled entities
travel news ltd great britain nontrading ordinary 50
rac trafficmaster telematics ltd great britain telematics ordinary 50
14 other financial assets
noncurrent assets
2005 2004
£000 £000
shares in unquoted company classified as availableforsale 350 —
350 —
with effect from 1 january 2005 when the group adopted ias 39 the above investment was classified as availableforsale 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 availableforsale 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 pretax 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 1507
at 31 december 2004 1507
at 1 january 2005 1507
at 31 december 2005 1507
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 1477
at 31 december 2004 1469
at 1 january 2005 1469
at 31 december 2005 1461
since the year end this asset has been pledged as security for the new short term bank facility see note 25e
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 carryforward 
recognised 1078 1148 — — 1078 1148
tax assets 1078 1148 — — 1078 1148
net of tax liabilities — — — — — —
net tax assets 1078 1148 — — 1078 1148
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
sharebased payment expense 50 —
tax losses 9106 8754
9645 9598
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 carryforward recognised 1148 70 — 1078
1148 70 — 1078
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 carryforward recognised — 1148 — 1148
— 1148 — 1148
17 inventories
2005 2004
£000 £000
raw materials and consumables 1299 3295
finished goods for resale 4729 3613
6028 6908
inventories to the value of £10317000 were recognised as expenses in the year 2004 £9095000 this includes the inventory
writedown totalling £863000 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 17149 10520
17348 10553
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 £538000 in 2005 2004 £230000 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 equivalentsbank overdrafts
2005 2004
£000 £000
bank balances — 1443
cash and cash equivalents — 1443
bank overdrafts 4670 —
cash and cash equivalents in the cash flow statement 4670 1443
20 trade and other payables
2005 2004
£000 £000
trade payables 2989 3847
nontrade payables and accrued expenses 3140 3153
deferred income — amounts falling due within one year 3187 2747
interest payable 20 —
9336 9747
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 1518 1078
1518 1078
22 provisions
asset dismantling obligation
2005 2004
£000 £000
balance at 1 january 1400 1400
discount applied to provision 35 —
balance at 31 december 1435 1400
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 longterm 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 noncurrent 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 £229000 2004 £188000
sharebased 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 dateemployees entitled instruments vesting conditions life of options
option grant to key management see directors’ remuneration
at 18 april 1996 47648 report on page 20 10 years
option grant to key management and see directors’ remuneration
senior employees at 4 march 1998 113168 report on page 20 10 years
option grant to key management see directors’ remuneration
at 21 september 1998 3300000 report on page 20 10 years
option grant to key management see directors’ remuneration
at 28 september 1998 400000 report on page 20 10 years
option grant to key management see directors’ remuneration
at 16 october 2000 62112 report on page 20 10 years
option grant to key management and see directors’ remuneration
senior employees at 25 october 2001 607000 report on page 20 10 years
option grant to key management and see directors’ remuneration
senior employees at 5 april 2002 880000 report on page 20 10 years
option grant to key management see directors’ remuneration 
at 24 september 2002 80000 report on page 20 10 years
option grant to key management and see directors’ remuneration
senior employees at 16 april 2003 751536 report on page 20 10 years
option grant to key management see directors’ remuneration
at 17 september 2003 50000 report on page 20 10 years
option grant to key management see directors’ remuneration
at 16 october 2003 555000 report on page 20 10 years
option grant to key management see directors’ remuneration
at 21 october 2003 200000 report on page 20 10 years
option grant to key management and see directors’ remuneration
senior employees at 7 april 2004 190000 report on page 20 10 years
option grant to key management and see directors’ remuneration 
senior employees at 28 october 2004 720000 report on page 20 10 years
option grant to key management and see directors’ remuneration
senior employees at 5 april 2005 435000 report on page 20 10 years
option grant to key management and see directors’ remuneration
senior employees at 24 october 2005 400000 report on page 20 10 years
total share options 8791464 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 7303p 8973600 7253p 8055600
granted during the year 4355p 835000 7761p 918000
forfeited during the year 4851p 1017136 ——
outstanding at the end of year 7309p 8791464 7303p 8973600
exercisable at the end of the year 8990p 5489928 10327p 4960996
the options outstanding at 31 december 2005 have an exercise price in the range of 875p and 5635p 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 blackscholes 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 4355p 7761p
weighted average exercise price 4355p 7761p
expected life of the options 4 years 4 years
expected volatility 68 70
riskfree interest rate based on government bonds 468 473
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 sharebased payments was as follows
2005 2004
£000 £000
equity settled sharebased payment expense 177 89
177 89
there is a potential deferred tax asset of £50000 arising from the sharebased 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 6294 90759 — — — 80029 17024 38 16986
total recognised 
income and expense — — — 376 — 6001 5625 — 5625
shares issued 449 3515 1973 — — — 5937 — 5937
sharebased payments ————— 89 89 — 89
balance at 
31 december 2004 6743 94274 1973 376 — 73939 28675 38 28637
balance at 
1 january 2005 6743 94274 1973 376 — 73939 28675 38 28637
total recognised income 
and expense — — — 876 350 865 2091 — 2091
sharebased payments————— 177 177 — 177
cancellation of 
share premium — 94274 — — — 94274———
balance at 
31 december 2005 6743 — 1973 500 350 21377 30943 38 30905
share capital
number of
ordinary shares of 5p each
2005 2004
’000 ’000
in issue at 1 january 134857 125880
issued for cash — 6292
issued as purchase consideration on acquisition of a subsidiary — 2685
in issue at 31 december — fully paid 134857 134857
2005 2004
£000 £000
authorised share capital
160000000 ordinary shares of 5 pence each 8000 8000
allotted called up and fully paid 
134857000 ordinary shares of 5 pence each 6743 6743
equity shares classified in shareholders’ funds 6743 6743 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 £94274000 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 availableforsale 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 interestbearing 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
25d and 25c 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 availableforsale 350 350 ——
cash and cash equivalents —— 1443 1443
bank overdraft 4670 4670 ——
4320 4320 1443 1443
fair value of the equity securities availableforsale 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 pretax 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 incomeearning financial assets and interestbearing 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 to1years
 £000 £000  £000 £000
cash and cash equivalents ——— 36 1443 1443
bank overdrafts 58 4670 4670 ———
4670 4670 1443 1443
of the bank overdraft in 2005 of £4670000 2004 cash at bank £1443000 £4629000 is denominated in sterling 2004 £1331000
and £41000 in us dollars 2004 £112000
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 £200000 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 2830 5000
as at 31 december 2830 5000
the group had committed facilities of a group bank overdraft facility totalling £7500000 in sterling at 31 december 2005 2004
£5000000 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 £10000000 which is in place from february 2006 the new facility
incorporates a £5000000 seven year term loan and £5000000 shortterm facility which can be utilised by way of sterling overdraft
foreign currency overdraft and standby documentary letter of credit this new shortterm 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 £5000000 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 shortterm 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 £50000 2004 £15000
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 £13000 for the year ended 31 december 2005 2004 £41000
26 operating leases
total future minimum lease payments under noncancellable operating lease rentals are payable as follows
2005 2004
£000 £000
not later than one year 1631 1281
later than one year and not later than five years 1304 1206
later than five years 17 —
2952 2487
the majority of the group’s operating lease commitments totalling £2150000 in 2005 2004 £1596000 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 noncancellable 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 noncancellable 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 1089
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 £2334000 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 2334
goodwill 1670
one significant fair value adjustment of £525000 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 2684997 shares issued by trafficmaster plc at closing published market price of 785p per share 2108
total consideration 2334
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 £160000 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 £63000 and cash outflows of £266000 for capital
expenditure this was paid out of cash acquired of £351000
29 contingent liabilities
the group has entered into a trade debt guarantee with barclays bank plc to guarantee payments of £75000 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 cashgenerating 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 straightline 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 cashgenerating 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 availableforsale 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 £1470000 2004
£1255000 comprising a management charge of £1255000 2004 £1161000 and cost recharges of £215000 2004 £94000 the
group also incurred expenses relating to purchases of traffic information from the jointly controlled entity totalling £130000 2004
£115000 at 31 december 2005 amounts due from rac trafficmaster telematics ltd stood at £749000 2004 £583000 including a
longterm interest free loan of £550000 2004 £550000 which has no fixed repayment date the loan is included within investment
in jointly controlled entities and the balance of £199000 2004 £33000 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 £189175 2004 £184775 and benefits in kind
amounting to £9279 2004 £8822 the group also contributed a total amount of £14367 2004 £12875 to their pension plans and
they held 566224 2004 566224 share options
under the terms of a consultancy agreement former chief executive david martell was paid a salary totalling £43692 2004
£23384 during the year
nonexecutive 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 £100000 2004
£20000 amounts outstanding and included within trade receivables at the year end are £168000 2004 £269000 
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 restated31 dec 2004 ifrss
note £000 £000 £000 £000 £000 £000
assets
property plant and equipment a 13733 1477 12256 13776 1469 12307
intangible assets b 4064 — 4064 6728 190 6918
investment in jointly controlled entities 116 — 116 116 — 116
lease prepayments a — 1477 1477 — 1469 1469
deferred tax asset — — — 1148 — 1148
total noncurrent assets 17913 — 17913 21768 190 21958
inventories 4483 — 4483 6908 — 6908
trade and other receivables 6519 — 6519 10553 — 10553
cash and cash equivalents 7331 — 7331 1443 — 1443
total current assets 18333 — 18333 18904 — 18904
total assets 36246 — 36246 40672 190 40862
liabilities
bank overdraft 90 — 90 —— —
interestbearing loans and borrowings — — — —— —
trade and other payables 8525 — 8525 9747 — 9747
total current liabilities 8615 — 8615 9747 — 9747
9 senior secured notes 8434 — 8434 —— —
deferred income 811 — 811 1078 — 1078
provisions 1400— 1400 1400 — 1400
total noncurrent liabilities 10645 — 10645 2478 — 2478
total liabilities 19260 — 19260 12225 — 12225
net assets 16986 — 16986 28447 190 28637
equity
issued share capital 6294 — 6294 6743 — 6743
share premium c 90759 — 90759 94274 — 94274
merger reserve c — — — 1973 1973 —
other reserve c — — — — 1973 1973
foreign exchange translation reserve d — — — 376 — 376
retained earnings f 80029 — 80029 74129 190 73939
total equity attributable to equity holders of the parent 17024 — 17024 28485 190 28675
minority interest 38 — 38 38 — 38
total equity 16986 — 16986 28447 190 28637
reconciliation of income effects of
transition ifrs
uk gaap to ifrs
as restated 31 dec 2004
£000 £000 £000
revenue 36613 — 36613
cost of sales 15819 — 15819
gross profit 20794 — 20794
selling and distribution expenses 5593 — 5593
administrative expenses 12819 101 12718
operating profit before financing costs 2382 101 2483
net gain on redemption of secured senior notes 2057 — 2057
financial income 333 — 333
financial expenses 20 — 20
profit before tax 4752 101 4853
income tax expense 1148 — 1148
profit for the period 5900 101 6001 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
sharebased 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 £1400000 increase the carrying value of property plant and equipment by
£84000 to reflect the depreciated historical cost of this asset and decrease retained earnings by £1316000 at 1 january 2004 the
2004 profit has been restated by a reduction of £21000 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 1477000 at 1 january 2004 and by £1469000 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 £190000 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 £1973000 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 blackscholes 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 £89000
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 sharebased 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 3332 3451
tangible assets 36 11467 10238
investments 37 5700 1111
20499 14800
current assets
stocks 38 2942 4622
debtors due within one year 39 4975 3314
other debtors due after one year 39 12867 12074
debtors 39 17842 15388
cash at bank and shortterm deposits — 598
20784 20608
creditors amounts falling due within one year 40 10201 5599
net current assets 10583 15009
total assets less current liabilities 31082 29809
creditors amounts falling due after more than
one year 41 335 207
provisions for liabilities 42 1435 1400
net assets 29312 28202
capital and reserves
called up share capital 44 6743 6743
share premium account 45 — 94274
profit and loss account 45 22569 72815
equity shareholders’ funds 29312 28202
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 — 3964
credit in relation to sharebased payments 177 89
net addition to shareholders’ funds 1110 4763
opening equity shareholders’ funds originally £29539000 before deducting
prior year adjustments of £1337000 28202 23439
closing equity shareholders’ funds 29312 28202
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 ‘sharebased 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 sharebased 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 2304 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 availableforsale 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 straightline 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 straightline 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
sharebased payments
the company has adopted frs 20 ‘sharebased 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 blackscholes 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 nonrefundable 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 shortterm 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 nonexecutive 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 6981 5979
sharebased payments 177 89
social security costs 705 620
pension costs 170 130
8033 6818
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 13192 13192
additions 1002 1002
transfers to tangible fixed assets 287 287
at 31 december 2005 13907 13907
amortisation
at 1 january 2005 9741 9741
charge for the year 834 834
at 31 december 2005 10575 10575
net book value
at 31 december 2005 3332 3332
at 31 december 2004 3451 3451
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 8679 471 2582 28864 40596
additions — 41 712 266 1019
transfers from intangible fixed assets — — — 287 287
disposals — 210 — — 210
at 31 december 2005 8679 302 3294 29417 41692
depreciation
at 1 january 2005 635 411 1774 27538 30358
charge for the year 151 37 362 482 1032
reversal of impairment — — — 956 956
disposals — 209 — — 209
at 31 december 2005 786 239 2136 27064 30225 
net book value
at 31 december 2005 7893 63 1158 2353 11467 
at 31 december 2004 8044 60 808 1326 10238
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 £956000 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 £149000 per annum in the next two years and increase in the depreciation charge of
£251000 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 6386 6537
long leasehold land 1507 1507
7893 8044 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 28233 1391 3913 550 34087
additions 4239——— 4239
at 31 december 2005 32472 1391 3913 550 38326 
provisions
at 1 january 2005 28172 891 3913 — 32976
reversal of impairment — — 350 — 350
at 31 december 2005 28172 891 3563 — 32626 
net book value
at 31 december 2005 4300 500 350 550 5700 
at 31 december 2004 61 500 — 550 1111
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 £350000 the fair value has been measured using the discounted free cash flow method based on the estimated free cash
flows over five years and pretax discount rate of 15 this investment is classed as availableforsale 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 1299 2938
finished goods for resale 1643 1684
2942 4622
39 debtors
2005 2004
£000 £000
trade debtors 4473 3050
amounts owed by group undertakings 11860 11067
amounts owed by joint ventures 199 33
deferred tax asset 1007 1007
prepayments and accrued income 303 231
17842 15388
included within amounts due from group undertakings are debts due after more than one year amounting to £11860000 2004
£11067000
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 4730 —
trade creditors 1944 2770
amounts due to group undertakings 276 293
other taxes and social security 1546 880
accruals 653 490
deferred income 1052 1166
10201 5599
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 1007 —
chargecredit to the profit and loss account for the year — —
asset at 31 december 1007 1007
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
shortterm timing differences — — 15 37
sharebased payment expense — — 50 —
— — 504 720
less losses 1007 1007 5977 5599
1007 1007 6481 6319
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 1400 1400
discount applied to provision 35 —
balance at 31 december 1435 1400
the company has made a provision for dismantling and removing the uk infrastructure a network of nationwide sensors and
transmitters because of the longterm 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 sharebased 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
160000000 ordinary shares of 5 pence each 8000 8000
allotted called up and fully paid
134857000 ordinary shares of 5 pence each 6743 6743
there is a contingent right to allot a total of 8791464 2004 8973600 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 875p to 5635p 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 3300000 862282 4811318 8973600
granted — — 835000 835000
forfeited — 15000 1002136 1017136
at 31 december 2005 3300000 847282 4644182 8791464
45 reserves
share premium profit and
account loss total
£000 £000 £000
at 1 january 2005 as previously stated 94274 71478 22796
prior year adjustment as explained in note 49 — 1337 1337
at beginning of year as restated 94274 72815 21459
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 94274 94274 —
31 december 2005 — 22569 22569
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 £94274000 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 noncancellable 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 £75000 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 ‘sharebased 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 £89000 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 £1400000 for the estimated
future cost of dismantling and removing the infrastructure fixed assets have been increased by £63000 at 1 january 2004 to reflect
the depreciated historical cost of infrastructure and the profit for the year reduced by £21000 to reflect the depreciation charge for
the year this has resulted in a reduction in retained earnings at 1 january 2005 of £1337000 1 january 2004 £1316000 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
wwwtrafficmaster couk


Summary:
 financial highlights
revenues up 16 to £423m 2004 £366m
t eletrac revenues increased by 23 to £206m 2004 £168m
uk revenues increased by 10 to £217m 2004 £198m
operating profit – £18m 2004 £25m before
and £10m 2004 £25m after nonrecurring items
strong improvement in operating profit in h2 over h1 – 
£18m vs £0028m before nonrecurring items
and £15m vs loss £05m after nonrecurring 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 holidaymakers 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 its 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