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CSX2022
ANNUAL REP ORT
TRAFFIC TECHNOLOGIES LTD
ABN 21 080 415 407
AND CONTROLLED ENTITIES
ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED 30 JUNE 2022
ABN 21 080 415 407
Traffic Technologies Ltd.
address. 31 Brisbane Street, Eltham Victoria 3095 Australia
PO Box 828, Eltham Victoria 3095 Australia
phone. + 61 3 9430 0222 facsimile. + 61 3 9430 0244
web. www.trafficltd.com.au
Traffic Technologies Ltd and Controlled Entities
Chairman’s Letter
Dear Shareholder,
On behalf of the Board of Directors, it is my pleasure to enclose the Annual Report of Traffic Technologies Ltd
(Traffic Technologies, or the Company) for the financial year ended 30 June 2022.
It has been a year of tremendous achievements for our Company in the face of global and industry-wide
headwinds. These include: continued revenue growth, significant contract wins, new tier-1 clients, growth in our
order book, increasing traction of our ‘SmartCity’ technology into a significant and nascent global market
opportunity, a backlog of locked-in revenue which underpins a strong start to FY23 and a strong balance sheet
which has been managed with considerable discipline to weather the global disruptions of supply-chains,
inflationary pressures and rising funding costs.
Traffic Technologies today is trusted by government and some of Australia’s largest infrastructure builders as the
market leader for delivering traffic solutions to improve the safety and efficiency of traffic on our roads. Our
Company occupies this “client-preferred” position because of our established history, trusted quality and
continually evolving differentiated solutions. Our products and services – from hardware and software solutions
to install and service – change driver behaviour, improve safety for the community, enhance transport efficiency
and lower traffic’s deleterious impact on our environment. The market we operate in is large, growing and
attractive, with strong secular tailwinds; and I believe we are well positioned to access this opportunity and provide
a strong return on your invested capital.
We see a substantial growth opportunity in the application of ‘SmartCity’ technology in the management of road
infrastructure and community safety, and have continued to invest in state-of-the-art ‘SmartCity’ IoT-enabled
products which road authorities around the world are increasingly employing to manage traffic flows. Our
products are world-class, powered by the latest traffic management software. Our road sign, traffic signals,
electronic signage, LED street lights and traffic controller businesses, continue to be market leaders in both the
Australian and export markets around the world.
As funding costs in the market increase, a key focus continues to be the reduction of debt and the associated
interest cost. In late 2021, we completed a $7.2 million capital raising which enabled us to repay $6.0 million of
the ADM Capital debt, including interest. In addition, in February 2022, we refinanced our working capital facilities
to provide a more flexible working capital solution to finance the next stage of the Company’s growth. The
refinancing of the Group’s debt has strengthened the Group’s balance sheet. We are continuing to work on a
strategy to refinance the remaining debt facilities with ADM Capital and First Samuel.
Along with my fellow Directors, I would like to thank shareholders for their continued support of the Group.
Mark Hardgrave
Chairman
ABN 21 080 415 407
Traffic Technologies Ltd.
address. 31 Brisbane Street, Eltham Victoria 3095 Australia
PO Box 828, Eltham Victoria 3095 Australia
phone. + 61 3 9430 0222 facsimile. + 61 3 9430 0244
web. www.trafficltd.com.au
Traffic Technologies Ltd and Controlled Entities
Managing Director’s Operating and Financial Review
Dear Shareholder,
Operating Result
The Group has reported the following result for the financial year ended 30 June 2022:
Sales revenue
Earnings before Interest, Tax, Depreciation
and Amortisation (EBITDA)
Depreciation and Amortisation Expense
Earnings before Interest and Tax (EBIT)
Finance Costs
Net (Loss)/Profit After Tax (NPAT)
Year to
30 June 2022
Year To
30 June 2021
$’m
53.8
4.1
(2.3)
1.7
(2.2)
(0.5)
$’m
52.3
4.5
(2.2)
2.3
(2.1)
0.2
Operating revenue increased to $54m for the year to 30 June 2022 (2021: $52m). This was achieved despite timing
delays caused by global disruptions to the supply chain for electronic and hardware equipment; estimated to have
delayed the timing of revenue realisation from contracted work for FY22 by c.$7m. The Company continues to
assiduously manage this with our suppliers through prepayments and other initiatives given our strong pipeline of
new customer contracts.
Over the course of the year and in line with the Company’s strategy, the Company secured over $35m in new term
contracts, a substantial increase of 60% from the previous year. Recent orders have included additional Smart
City, LED street lights for power authorities, the supply of intelligent traffic control equipment for a multinational
ASX listed company and a contract to supply the Company’s Smart City software for the road network in Qatar
prior to the commencement of the FIFA World Cup.
Management has assessed the impact of COVID-19 on the Company, the main impact being an increase in raw
material costs and timing delays caused by industry-wide disruptions to the worldwide supply chain for electronic
and hardware equipment. The Company is actively managing this with our suppliers through prepayments and
other initiatives and with our customers, through passing on the increased supply costs and growing the pipeline
of new customer contracts. The Company has also had to contend with local disruptions caused by lockdowns,
closures in the construction industry, staff absences due to COVID and international travel restrictions affecting
our export markets. Operating revenue would have been approximately c.$7m higher had the Company not been
affected by these issues. The Company nevertheless continued operating in all States and Territories throughout
the pandemic through careful adherence to their COVID-related requirements.
Despite these challenges, demand for the Company’s products and services has seen a significant increase with
the upturn in road infrastructure expenditure announced by Federal and State governments and following several
recent contract wins. The Company currently has over $19m in forward orders, a year-on-year increase of 52%,
and over $35m in term contracts an increase of 60% from previous year – both amongst the highest in the
Company’s history to kick-off the start to a new financial year.
Net assets were $14.4m at 30 June 2022 compared to $8.3m at 30 June 2021, with increased inventory of $3.0m
and receivables of $1.8m levered to manage the market disruptions of COVID.
Net debt, excluding liabilities associated with capitalised property leases, was $11.2m at 30 June 2022, compared
to $11.8m at 30 June 2021. The Company repaid $6m of the ADM facility, including interest, from the capital
raising in late 2021, funded by the Company’s capital raise in Q2 of $7.2m through a rights issue and placement
to sophisticated and institutional investors. In addition, the Company refinanced its working capital facilities in
February 2022; this enabled the Company to draw down additional funds to prepay overseas suppliers for parts
required to fulfil the growth in customer orders. The Company continues to explore options to refinance debt and
reduce finance costs.
Net operating cash outflows were $0.6m for the year (2021: inflow $0.9m). Receipts from customers for the year
were $56.7m. Interest paid in the year was $1.7m. Cash utilisation included the prepayment of overseas suppliers
to secure parts required to fulfil the Company’s growing pipeline of new customer contracts. The Company
expects to see the benefit of these imported components reflected in sales of the Company's products in the
months ahead.
Net investing cash outflow was $3.1m for the year (2021 $2.8m), including the payment of $0.8m of instalments
towards the purchase of businesses acquired in the previous financial year and investment in the development of
the Company’s Smart City software and product portfolio.
Net financing cash inflow was $2.1m for the year (2021: $0.9m), including capital raising proceeds of $7.2m,
payment of share issue costs, proceeds from the new working capital facility, part repayment of the ADM loan,
repayment of the previous working capital facility, repayment of finance leases and payment of borrowing costs.
Review of Operations
The Company continues to be the major participant in the “Intelligent Transport Systems” market in Australia
where the Company’s proprietary “Traffic SmartCity Technology” (TST) platform, developed for the road industry,
councils and power authorities, enables the integration of street lights and other traffic management equipment
to a central control/management system via remote “Internet of Things” (IoT) sensors.
Integration of urban traffic controllers into the Company’s “Traffic SmartCity Technology” (TST) platform” is pivotal
to the next phase of the Company’s expansion where the in-house design and manufacture of this highly technical
Smart City equipment is scaled for the benefit of communities across Asia, Middle East and South America. The
Company is well placed for future improvements in cities requiring “Smart City technology”, where the urban
traffic controller is automated to regulate the sequencing and timing of traffic signals by monitoring vehicular and
pedestrian demands and adjusting to meet these requirements.
The Company is Australia’s largest accredited provider and installer involved in traffic signals, urban traffic
controllers, street lighting, and electronic speed sign installation and maintenance; and is fully approved for
installation work by the Department of Transport in Victoria servicing several term maintenance contracts with
local councils across Victoria.
The Company is a key supplier to the road signage market across Australia, with customers including State road
authorities, local councils and construction companies. The Company’s signage products are distributed from
depots around Australia with manufacturing focused in Victoria, Western Australia and the Northern Territory.
Business Strategies and Prospects
We have continued to invest in research and development with a major emphasis being the deployment and
implementation of our “Smart City” platform, “TST”. The system continues to gain traction across several States
in particular with local councils and large-scale infrastructure projects. Through data analytics, customers are able
to make informed decisions in real time making roads safer, greener, and adaptable to the needs of communities.
These outcomes have led to an increase in adoption of recurring annuity revenue with new and current contracts
where the focus has moved to a SaaS with annual subscription and service fees.
The Company’s LED streetlight business has seen significant growth with our “Smart City”-ready lighting products;
scaled across Australia and now entering the UK. Future earnings are underpinned by a number of recent contract
wins, long term supply contracts and orders from State and local government agencies and power companies. The
Company’s recently released next-generation LED street lights for roads, streets and tunnels, operate more
efficiently with significantly reduced energy consumption. These next generation of solar-run “smarter and
greener” luminaires will change the nature of Australian roadways and provide Australians with the critical social
benefits of safety our products provide in an economically and environmental sustainability way.
The newly acquired businesses in the previous financial year have been positive contributors to the Company.
L&M has enhanced the capability within the Company to undertake installation and maintenance work and has
opened a new channel to market for our IoT devices and traffic management products. L&M has enabled the
Company to win larger infrastructure projects including level crossing removals and freeway upgrades within the
Intelligent Transport sector. The iTS business, involved in the design, development and manufacture of electronic
infrastructure signage and software, has developed state-of-the-art products which directly interact with the
Company’s “Smart City Platform” TST. This allows the Company to further expand into the lucrative Intelligent
Transport sector, expanding the Company’s ability to supply sophisticated “Smart City” ready electronic signage
across Australia.
Outlook
The Company is well positioned to benefit in the years ahead from increased investment by government on
infrastructure programs. The new products being developed by the Company and the Company’s diversification
program into “Smart Cities” IoT and software are generating annuity streams of income from SaaS subscription
and service fees. Reduction in finance costs remains a continued focus, as do operating efficiency initiatives such
as savings from consolidation of manufacturing. We expect a positive contribution in the year ahead from these
strategic initiatives and a strong order book.
I would like to thank all shareholders for their ongoing support, our staff for their relentless commitment to the
Company and our financiers who have supported the Company during these challenging times.
Con Liosatos
Managing Director
CORPORATE INFORMATION
This annual report covers both Traffic Technologies Ltd (ABN 21 080 415 407) and its subsidiaries. The Group’s
functional and presentation currency is AUD ($).
A description of the Group’s operations and of its principal activities is included in the operating and financial review
in the Directors’ Report.
Directors
Mr. Mark Hardgrave
Mr. Con Liosatos
Mr. Tim Fry
Company Secretary & Chief Financial Officer
Mr. Peter Crafter
Registered Office & Principal Place of Business
Traffic Technologies Ltd
31 Brisbane Street
Eltham VIC 3095
Share Register
Computershare Investor Services Pty Limited
Yarra Falls, 452 Johnston Street
Abbotsford VIC 3067
Tel: 1300 850 505
Traffic Technologies Ltd shares are listed on the Australian Securities Exchange (stock code: “TTI”).
Lawyers
K&L Gates
Level 25
525 Collins Street
Melbourne VIC 3000
Bankers
Westpac Banking Corporation
Level 6
150 Collins Street
Melbourne VIC 3000
Auditors
Grant Thornton
Collins Square, Tower 5
727 Collins Street
Melbourne VIC 3008
Traffic Technologies Ltd and Controlled Entities
Financial Report for the year ended 30 June 2022
CONTENTS
Page No.
Directors’ Report
Auditor’s Independence Declaration
Corporate Governance Statement
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
ASX Additional Information
Independent Audit Report
6
14
15
16
17
18
19
20
47
48
50
Traffic Technologies Ltd
Directors’ Report
Your Directors submit their report for the year ended 30 June 2022.
DIRECTORS
The names and details of the Company’s Directors in office during the financial year and until the date of this
report are as follows. Directors were in office for the entire period unless otherwise stated.
Mr. Mark W Hardgrave (Age 64) B Com ACA MAICD
Independent Non-Executive Chairman. Appointed January 2013.
Mr. Hardgrave has a corporate advisory and investment management background. He is also a Non-Executive
Director of ASX listed company Pental Limited and was previously a Director of ASX-listed Forbidden Foods
Limited. He was co-founder and former Joint Managing Director of M&A Partners. Mr. Hardgrave was also
previously Chief Executive Officer of Bennelong Group, which specialises in listed equities, property and private
equity. Earlier in his career he worked in senior roles in a number of investment groups including Brencorp Group,
Merrill Lynch and Thorney Investment Group. Mr. Hardgrave holds a Bachelor of Commerce degree from the
University of Queensland. He is a chartered accountant and a member of the Australian Institute of Company
Directors. Mr. Hardgrave was appointed non-executive Chairman of the Company in November 2020.
Mr. Con L Liosatos (Age 60) MAICD
Managing Director. Appointed April 2003.
Mr. Liosatos has over 35 years’ experience in the construction industry, including over 26 years in the lighting
industry specialising in research and design. He also has 18 years’ experience in the traffic industry. He has been
involved with major design and manufacturing projects for clients such as MCG Lighting, Etihad Stadium, the
Melbourne Sport and Aquatic Centre and the Vodafone Arena. He led the VicRoads LED Signals Upgrade, Hong
Kong Highways Department (Bus and Roadway Interchange) Upgrade and the WA Main Roads LED Signals
Upgrade. Mr. Liosatos has owned and managed a multinational project lighting company, Moonlighting Pty Ltd.
Mr. Liosatos has qualifications in Mechanical Design and Lighting Engineering. Mr. Liosatos was Chairman of the
ITS World Congress 2016 Sponsorship Committee and is active on Australian Standards AS 2144 and AS 1158.
Mr. Liosatos is the Managing Director of Traffic Technologies Ltd. Mr. Liosatos is a member of the Risk and
Corporate Governance committees. Mr. Liosatos has not served as a director of any other listed companies
during the three years to June 2022.
Mr. Peter Timothy James Fry (Age 58) GAICD
Independent Non-Executive Director. Appointed November 2020.
Mr. Fry is an experienced financial professional with established achievements in enabling operational change
and improved business outcomes for both internal and external stakeholders. He is currently Chairman of Delre
National Food Group and an independent non-executive director of Cloud Paper Group. Previously he was Group
Chief Financial Officer of Noske Logistics Group and then Group Financial Controller of Bulla Dairy Foods. Before
relocating from the UK to Australia in 2010, Mr. Fry held senior financial positions in the UK, including as Finance
Director of Servomex Group Ltd and Seal Analytical Ltd. He holds an accountancy and finance qualification from
the University of Sussex in the UK and is a Graduate Member of the Australian Institute of Company Directors.
Mr. Fry is Chairman of the Audit, Risk, Nomination & Remuneration and Corporate Governance committees. Mr.
Fry has not served as a director of any other listed companies during the three years to June 2022.
6
Traffic Technologies Ltd
Directors’ Report
DIRECTORS SKILLS AND EXPERIENCE
The following table shows the skills sets of each of the Board members:
Mark Hardgrave
Con Liosatos
Tim Fry
Corporate Governance
Traffic Management & Infrastructure
ASX Listed Companies
Human Resources
Legal
Finance
Commercial
Manufacture/assembly
Government Contracts
Information Technology
COMPANY SECRETARY
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
Mr. Peter K Crafter (Age 65) LL.B (Hons.) MBA FCA CA MCT FAICD FGIA FCG
Company Secretary and Chief Financial Officer. Appointed Company Secretary March 2004; appointed Chief
Financial Officer October 2007.
Mr. Crafter is a Chartered Accountant in both Australia and the UK and qualified Corporate Treasurer with
extensive experience in financial management including several years with KPMG and Touche Ross in the United
Kingdom. He holds an honours degree in Law from the University of London and an MBA from Heriot-Watt
University, Scotland. He was appointed Chief Financial Officer and Company Secretary of Traffic Technologies Ltd
in March 2004 and retired as Chief Financial Officer in February 2006. He was reappointed Chief Financial Officer
of Traffic Technologies Ltd in October 2007.
SHARE OPTIONS
As at the date of this report, there were no unissued ordinary shares of the Company under option.
DIVIDENDS
The Directors do not recommend the payment of a dividend for the financial year ended 30 June 2022 (2021: Nil).
OPERATING AND FINANCIAL REVIEW
Traffic Technologies is Australia’s premier traffic solutions company. Established in 2004 and listed on ASX in 2005,
the Company’s head office is in Eltham, Victoria with offices in all states of Australia and one office in England.
The Group specialises in “Smart City” control systems, LED road and street lights along with the design, manufacture
and installation of traffic signals, traffic controllers, pedestrian countdown timers, electronic road signs, emergency
telephones and road lighting products. The Group also supplies a wide range of directional and regulatory traffic
signs and traffic control products to road traffic authorities, municipal councils and construction companies. The
Group’s ITS (‘Intelligent Transport Systems’) business focuses on the design, development, manufacture and supply
of electronic road signage and software systems to customers across Australia.
7
Traffic Technologies Ltd
Directors’ Report
REVIEW AND RESULTS OF OPERATIONS
A review of the operations and activities of the Company during the financial year and the results of those operations
are set out in the Chairman’s Letter and the Managing Directors’ Operating and Financial Review.
MATERIAL BUSINESS RISKS
The material business risks faced by the Group that could have a significant impact on the financial prospects of the
Group and how the Group manages these risks include:
•
•
•
•
•
•
•
•
•
•
•
Supply chain disruption and freight forwarding delays due to the COVID-19 pandemic and associated
lockdowns, including disruptions to the worldwide supply chain for electronic and hardware equipment - the
Group is actively managing this with our suppliers through prepayments and other initiatives given our strong
pipeline of new customer contracts.
Changes or delays in Federal or State government expenditure on road infrastructure – the Group maintains
regular contact with State road authorities to ensure that it can plan the resources required for major projects
as far ahead as possible or allow for the deferral of major projects in times of economic slowdown.
Adverse change in economic conditions affecting demand for the Group’s products or services – the Group
plans as far ahead as possible to adjust its cost base in times of economic uncertainty.
Inflationary pressures affecting the cost of raw materials and componentry – the Group constantly monitors
its cost base and implements cost savings and operating efficiencies where possible.
COVID-19 – although there have been supply chain delays, the Group has been able to continue trading during
the pandemic having implemented a variety of measures including enhanced hygiene, social distancing, COVID
Safe plans and other measures to ensure that it can keep operating.
Technological obsolescence – the Group works closely with road traffic authorities and incurs significant
research and development expenditure to ensure that its products are state-of-the-art and competitive.
Foreign exchange risk - a decrease in the Australian dollar exchange rate can affect import prices: the Group
purchases components from a number of overseas countries denominated in US dollars and other currencies.
Conversely, an increase in the Australian dollar exchange rate can affect export opportunities as the Group
sells its products to a number of countries around the world. The Group has a foreign exchange exposure
through its term loan which is denominated in US dollars and a forward exchange contract has been taken out
to hedge its currency exposure.
Availability of financing facilities – the Group is reliant on the continued availability of its financing facilities in
order to conduct its operations. The Group ensures compliance with its facility agreements and negotiates
extensions to its financing facilities when required.
Competition – the Group maintains its competitive position by investing in research and development to
ensure its products are state-of the-art and by ensuring its products are priced competitively.
Cyber security – the Group is addressing cyber security as part of its risk management strategy in the light of
recent well-publicised breaches and increased risk in this area. Measures have included enhanced security
over the Group’s systems, stronger authentication controls and additional training for all computer users.
Climate change – the Group is not significantly exposed to climate change issues unless a carbon tax is
reintroduced. A significant number of the Group’s products use LED technology which is energy saving and
reduces greenhouse gas emissions.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
The Company conducted a capital raising in late 2021, raising a total of $7.2m at 3 cents per share, through a rights
issue and placements to sophisticated and institutional investors. Following the capital raising, the Company repaid
$6m of the ADM Capital facility, including interest. The Company refinanced its working capital facilities in February
2022.
8
Traffic Technologies Ltd
Directors’ Report
SIGNIFICANT EVENTS AFTER REPORTING DATE
Subsequent to balance date there have been no significant events which have affected the operations of the Group.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
Likely developments in the operations of the entity and the expected results of those operations are set out in the
Chairman’s Letter and the Managing Directors’ Operating and Financial Review.
ENVIRONMENTAL REGULATION AND PERFORMANCE
The Group’s operations are not regulated by any significant environmental regulations under a law of the
Commonwealth or of a State or Territory. There have been no known significant breaches of the Group’s compliance
with environmental regulations.
INDEMNIFICATION AND INSURANCE OF DIRECTORS, OFFICERS AND AUDITORS
During the year, the Group paid premiums of $147,400 in respect of a Directors’ and Officers’ insurance policy
insuring Directors and Officers in respect of claims which may be brought against them. The contract of insurance
prohibits disclosure of the nature of the liability. The Company has not otherwise, during or since the end of the
financial year, except to the extent permitted by law, indemnified or agreed to indemnify an officer or auditor of the
Company or any related body corporate against a liability incurred as such by an officer or auditor.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings
on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of
taking responsibility on behalf of the Company for all or part of those proceedings.
9
Traffic Technologies Ltd
Directors’ Report
REMUNERATION REPORT (AUDITED)
The Company’s remuneration policy is to ensure that the level of remuneration paid to key personnel is market
competitive and will attract and retain the skills and expertise required.
Non-executive Directors
Total remuneration for non-executive directors for FY22 was $183,066. Non-executive director remuneration
packages comprised only Directors’ fees plus statutory superannuation and were set within the limits set out in the
Company’s constitution. Currently this limit is set at $400,000 per annum and can only be changed at a general
meeting.
Executive Director
Mr. Con Liosatos, Managing Director, received total remuneration of $536,298 in FY22, including statutory
superannuation.
Key Management Personnel
Key Management Personnel (KMP) of the Company are defined as those persons having authority and responsibility
for planning, directing and controlling all activities of the Company, directly or indirectly, including any director
(whether executive or otherwise) of the Company.
Performance-based Remuneration
Performance based components of an executive’s remuneration seek to align the executive’s reward with the
achievement of the Company's long-term objectives and the creation of shareholder value over the short and long
term. The relevant performance-based components are a short-term incentive based on the Company’s financial
performance exceeding budget targets for the financial year and a long-term incentive based on the Company's
share price performance exceeding the ASX 300 small ordinaries index for the relevant period.
No performance-based remuneration was paid or payable to key management personnel for the year (2021: nil).
A summary of the Company’s performance for the past five years is set out below:
Net profit/(loss) $’000)
($488)
$201
($13,829)
$1,263
$6,072
2022
2021
2020
2019
2018
EPS (cents)
Share price (cents)
Employment Contracts
(0.08)
1.5
0.04
4.0
(2.87)
1.8
0.26
2.4
1.88
3.3
The Managing Director, Mr. Liosatos, and the Company Secretary and Chief Financial Officer, Mr. Peter Crafter, are
employed under rolling employment contracts. Employment may be terminated by the giving, by either party, of
twelve months’ notice, or by the payment or forfeiture of an equivalent amount of pay in lieu of notice from any
monies owing. The Company retains the right to terminate the contract at any time without notice in the case of
serious misconduct.
10
Traffic Technologies Ltd
Directors’ Report
Interest in Shares
Directors’ interests in the shares of the Company were:
Directors
Mr. Mark Hardgrave
Mr. Con Liosatos
Mr. Tim Fry
Executive
Mr. Peter Crafter
Total
Balance at
1 July 2021
Acquired through
On-Market Trades
Rights
Issue
Balance at
30 June 2022
3,215,054
500,000
2,250,538
5,965,592
33,726,923
1,950,000
8,105,714
43,782,637
-
10,000
-
-
-
-
-
10,000
36,951,977
2,450,000
10,356,252
49,758,229
Transactions with Directors or Director-related entities
An entity associated with the Company's Managing Director, Mr. Con Liosatos has arranged a bank guarantee of
$500,000 to provide security for purchases by the Group from an overseas supplier. The Company has agreed to
indemnify the entity in the event that the bank guarantee is called upon by the overseas supplier. After the on-
charge of interest costs and bank charges at the same rate, no profit has been made by the related party.
11
Traffic Technologies Ltd
Directors’ Report
REMUNERATION OF KEY MANAGEMENT PERSONNEL
Short-term benefits
Post-employment
benefits
Termination
Benefits
Salary & fees
$
Non-monetary
$
Cash
Bonus
$
Superannuation
$
$
Long-term
benefits
Long service
leave
$
Share based
payments
Options
$
Total
$
%
Performance
related
Year to 30 June 2021
Non-executive Directors
Mr. Mark Hardgrave
Mr. Tim Fry (appointed 26 Nov 2020)
Mr. Garry Lowrey (retired 25 Nov 2020)
Executives
Mr. Con Liosatos
Mr. Peter Crafter
Total
Year to 30 June 2022
Non-executive Directors
Mr. Mark Hardgrave
Mr. Tim Fry
Executives
Mr. Con Liosatos
Mr. Peter Crafter
Total
END OF AUDITED REMUNERATION REPORT
12
87,847
34,354
45,281
492,962
247,921
908,365
108,674
57,750
492,827
247,921
907,172
-
-
-
16,759
17,390
34,149
-
-
15,971
19,714
35,685
-
-
-
-
-
-
-
-
-
-
-
8,346
3,263
4,302
25,000
23,552
64,463
10,867
5,775
27,500
24,792
68,934
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9,237
4,841
14,078
-
-
10,524
5,349
15,873
-
-
96,193
37,617
49,583
543,958
-
-
293,704
- 1,021,055
-
-
-
119,541
63,525
546,822
297,776
- 1,027,664
-
-
-
-
-
-
-
-
-
-
Traffic Technologies Ltd
Directors’ Report
DIRECTORS’ MEETINGS
The number of meetings of Directors (including meetings of committees of Directors) held during the financial year
and the number of meetings attended by each Director was as follows:
Directors’
Meetings
Audit
Committee
Risk Committee
Nomination &
Remuneration
Committee
Corporate
Governance
Committee
Number
eligible to
attend
Number
attended
Number
eligible
to attend
Number
attended
Number
eligible
to attend
Number
attended
Number
eligible
to attend
Number
attended
Number
eligible
to attend
Number
attended
Mr. Mark Hardgrave
Mr. Con Liosatos
Mr. Tim Fry
12
12
12
12
12
12
2
2
2
2
2
2
4
4
4
4
4
4
2
2
2
2
2
2
1
1
1
1
1
1
ROUNDING
The amounts contained in this report and in the financial report have been rounded to the nearest $1,000 (unless
otherwise stated) under the option available to the Company under ASIC Corporations (Rounding
in
Financial/Directors’ Reports) Instrument 2016/191. The Company is an entity to which the Instrument applies.
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the auditor’s independence declaration in relation to the audit for the financial year is provided
immediately following this report.
Signed in accordance with a resolution of the Directors.
Mr. Mark Hardgrave
Independent Non-Executive Chairman
29 August 2022
Melbourne
13
Grant Thornton Audit Pty Ltd
Level 22 Tower 5
Collins Square
727 Collins Street
Melbourne VIC 3008
GPO Box 4736
Melbourne VIC 3001
T +61 3 8320 2222
Auditor’s Independence Declaration
To the Directors of Traffic Technologies Limited
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit
of Traffic Technologies Limited for the year ended 30 June 2022, I declare that, to the best of my knowledge and
belief, there have been:
a no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the
audit; and
b no contraventions of any applicable code of professional conduct in relation to the audit.
Grant Thornton Audit Pty Ltd
Chartered Accountants
M J Climpson
Partner
Melbourne, 29 August 2022
www.grantthornton.com.au
ACN-130 913 594
Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Limited ABN 41 127 556 389 ACN 127 556 389.
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or
refers to one or more member firms, as the context requires. Grant Thornton Australia Limited is a member firm of Grant Thornton International Ltd (GTIL).
GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member
firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one
another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127
556 389 ACN 127 556 389 and its Australian subsidiaries and related entities. Liability limited by a scheme approved under Professional Standards
Legislation.
14
w
Traffic Technologies Ltd
Corporate Governance Statement
The Board and management of Traffic Technologies Ltd are committed to conducting the Group’s business in an
ethical manner and in accordance with the highest standards of corporate governance. The Company has adopted
and has substantially complied with the ASX Corporate Governance Principles and Recommendations (Fourth
Edition) (Recommendations) to the extent appropriate to the size and nature of the Group’s operations.
The Company has prepared a statement which sets out the corporate governance practices that were in operation
throughout the financial year for the Company, identifies any Recommendations that have not been followed and
provides reasons for not following such Recommendations (Corporate Governance Statement). The Corporate
Governance Statement was approved by the Board on 29 August 2022.
The Company’s Corporate Governance Statement
(www.trafficltd.com.au).
is available for review on the Company’s website
15
Traffic Technologies Ltd and Controlled Entities
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended 30 June 2022
Note
Consolidated
Consolidated
2022
$’000
53,750
120
2,987
(33,840)
(15,803)
(1,300)
(40)
(1,811)
(2,333)
2021
$’000
52,330
999
2,059
(32,151)
(14,900)
(1,094)
(34)
(2,675)
(2,223)
1,730
2,311
(2,214)
(2,106)
(484)
(4)
(488)
-
(488)
Cents
(0.08)
(0.08)
205
(4)
201
-
201
Cents
0.04
0.04
2
2
3
3
3
3
4
5
5
Revenue
Other income
Changes in inventories of finished goods and work in progress
Raw materials and consumables used
Employee benefits expense
Occupancy costs
Advertising and marketing expense
Other expenses
Depreciation and amortisation expense
Earnings before interest and tax (EBIT)
Finance costs
Net (loss)/profit for the year before income tax
Income tax expense
Net (loss)/profit for the year
Other comprehensive income
Total comprehensive (loss)/income for the year
(Loss)/earnings per share
- Basic (cents per share)
- Diluted (cents per share)
The accompanying notes form part of these financial statements.
16
Traffic Technologies Ltd and Controlled Entities
Consolidated Statement of Financial Position as at 30 June 2022
Note
Consolidated
Consolidated
2022
$’000
2021
$’000
18
6
7
8
9
10
11
12
15
12
15
16
1,012
11,774
15,163
27,949
2,251
1,144
10,799
14,194
2,602
9,927
12,176
24,705
1,749
1,144
9,796
12,689
42,143
37,394
11,285
12,157
3,221
26,663
861
233
1,094
10,724
11,259
3,158
25,141
3,709
204
3,913
27,757
29,054
14,386
8,340
61,289
(46,903)
14,386
54,755
(46,415)
8,340
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Total Current Assets
Non-Current Assets
Property, plant and equipment
Goodwill
Intangible assets
Total Non-Current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Interest bearing loans and borrowings
Provisions
Total Current Liabilities
Non-Current Liabilities
Interest bearing loans and borrowings
Provisions
Total Non-Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Accumulated losses
TOTAL EQUITY
The accompanying notes form part of these financial statements.
17
Traffic Technologies Ltd and Controlled Entities
Consolidated Statement of Changes in Equity
For the year ended 30 June 2022
Consolidated
At 1 July 2020
Profit for the year
Other comprehensive income
Total comprehensive income for the year
At 30 June 2021
Loss for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Placement
Rights issue
Shortfall placement
Share issue costs
At 30 June 2022
Contributed
Equity
$’000
Accumulated
Losses
$’000
Total
$’000
54,755
(46,616)
8,139
-
-
-
201
-
201
54,755
(46,415)
201
-
201
8,340
(488)
-
(488)
-
(488)
(488)
-
-
-
-
2,170
3,400
1,629
(665)
-
-
-
2,170
3,400
1,629
(665)
61,289
(46,903)
14,386
The accompanying notes form part of these financial statements.
18
Traffic Technologies Ltd and Controlled Entities
Consolidated Statement of Cash Flows
For the year ended 30 June 2022
Note
Consolidated
Consolidated
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Income tax paid
Acquisition costs
Net cash from operating activities
18
Cash flows from investing activities
Proceeds from sale of plant and equipment
Purchase of property, plant and equipment
Purchase of intangible assets
Purchase of businesses
Net cash from investing activities
Cash flows from financing activities
Proceeds from issues of equity securities
Transaction costs relating to issues of equity securities
Proceeds from borrowings
Repayment of borrowings
Repayment of finance leases
Payment of borrowing costs
Net cash from financing activities
2022
$'000
56,746
(55,624)
-
(1,686)
(4)
-
(568)
29
(173)
(2,193)
(762)
(3,099)
7,198
(665)
7,857
(11,039)
(953)
(321)
2,077
2021
$'000
55,596
(53,344)
12
(1,389)
(4)
(9)
862
56
(247)
(1,824)
(764)
(2,779)
-
-
1,726
(44)
(799)
-
883
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of the financial
year
Cash and cash equivalents at end of the financial year
18
(1,590)
(1,034)
2,602
1,012
3,636
2,602
The accompanying notes form part of these financial statements.
19
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
Traffic Technologies Ltd (the Company) is a company limited by shares incorporated in Australia whose shares are
publicly traded on the Australian Securities Exchange (ASX).
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) Basis of Preparation
This financial report is a general-purpose financial report that has been prepared in accordance with the
requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative
pronouncements of the Australian Accounting Standards Board (AASB) and AASB Interpretations. The consolidated
financial statements of Traffic Technologies Ltd and its subsidiaries also comply with International Financial
Reporting Standards (IFRS) as issued by the International Accounting Standards Board. The financial report has been
prepared on an accruals basis and under the historical cost convention.
The financial report covers Traffic Technologies Ltd and its subsidiaries (the Group). Traffic Technologies Ltd is a for
profit Australian listed public company limited by shares, incorporated and domiciled in Australia. The nature and
operations and principal activities of the Group are described in the Directors’ Report. The following is a summary
of material accounting policies adopted by the Group in the preparation and presentation of the financial report.
The accounting policies have been consistently applied, unless otherwise stated.
b) New Standards Adopted by the Group
The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by
the Australian Accounting Standards Board (‘AASB’) that are mandatory for the current reporting period. Any new
or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
c) Going concern
The financial statements have been prepared on a going concern basis, which assumes continuity of normal business
activities and the realisation of assets and the settlement of liabilities in the ordinary course of business. Accordingly,
the financial statements do not include any adjustments relating to the recoverability and classification of recorded
assets or to the amounts and classification of liabilities that might be necessary should the consolidated entity not
continue as a going concern, except for the classification of the ADM and First Samuel loan facilities as current
liabilities.
The ADM loan facility falls due on 30 September 2022 and the First Samuel loan facility falls due on 18 October 2022.
Because this is less than 12 months after the balance date of 30 June 2022, there is material uncertainty that may
cast significant doubt whether the Group can continue as a going concern if this loan is not refinanced by that date.
In assessing the appropriateness of the going concern concept the following factors have been taken into
consideration by the Directors:
•
•
•
The consolidated entity was able to continue trading throughout COVID-19 lockdown periods.
The consolidated entity is expected to continue to generate positive earnings before interest, tax,
depreciation and amortisation (EBITDA) in the 2023 financial year.
The Directors are working on a strategy to refinance the remaining debt facilities with ADM Capital and
First Samuel.
20
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
d) Basis of consolidation
The consolidated financial statements incorporate all of the assets, liabilities and results of the parent (Traffic
Technologies Ltd) and all of the subsidiaries. Subsidiaries are entities the parent controls. The parent controls an
entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability
to affect those returns through its power over the entity. Subsidiaries are consolidated from the date on which
control is obtained by the Group. The consolidation of a subsidiary is discontinued from the date that control ceases.
Intercompany transactions, balances and unrealised gains or losses on transactions between group entities are fully
eliminated on consolidation. Accounting policies of subsidiaries have been changed and adjustments made where
necessary to ensure uniformity of the accounting policies adopted by the Group.
Business combinations are accounted for using the acquisition method. The acquisition method of accounting
involves recognising at acquisition date, separately from goodwill, the identifiable assets acquired, the liabilities
assumed and any non-controlling interest in the acquiree. The identifiable assets acquired and the liabilities assumed
are measured at their acquisition date fair values.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition
date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability
will be recognised in the statement of comprehensive income. If the contingent consideration is classified as equity,
it will not be remeasured. Transaction costs incurred in relation to business combinations are recognised as
expenses in profit or loss when incurred. The acquisition of a business may result in the recognition of goodwill or
a gain from a bargain purchase.
e) Significant accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions
that affect the reported amounts in the financial statements. Management continually evaluates its judgements and
estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its
judgements and estimates on historical experience and other factors it believes to be reasonable under the
circumstances. Management has identified the following critical accounting policies for which significant
judgements, estimates and assumptions are made. Actual results may differ from these estimates under different
assumptions and conditions and may materially affect financial results or the financial position reported in future
periods.
Impairment testing of non-financial assets
The Group assesses impairment of all assets at each reporting date by evaluating conditions specific to the Group
and to the particular asset that may lead to impairment. These include product and manufacturing performance,
technology, economic and political environments and future product and service delivery expectations. If an
impairment trigger exists the recoverable amount of the asset is determined. Goodwill and intangible assets that
are not yet available for use are tested annually, or more frequently if events or changes in circumstances indicate
impairment. Impairment testing involves value in use calculations, which incorporate a number of key estimates and
assumptions.
Capitalised development costs
Development costs are only capitalised by the Group when the Group can demonstrate the technical feasibility of
completing the intangible asset so that it will be available for use or sale, its intention to complete and its ability to
use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete
the development and the ability to measure reliably the expenditure attributable to the intangible asset during its
development.
21
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Taxation
The Group's accounting policy for taxation requires management's judgement as to the types of arrangements
considered to be a tax on income in contrast to an operating cost. Judgement is also required in assessing whether
deferred tax assets and certain deferred tax liabilities are recognised in the statement of financial position. Deferred
tax assets, capital losses and temporary differences, are recognised only where it is considered more likely than not
that they will be recovered, which is dependent on the generation of sufficient future taxable profits. Assumptions
about the generation of future taxable profits depend on management's estimates of future cash flows. Judgements
are also required about the application of income tax legislation.
Allowance for impairment loss on receivables
Where receivables are outstanding beyond the normal trading terms, the likelihood of recovery of these receivables
is assessed by management. Debts that are considered to be uncollectible are written off when identified.
Estimation of useful lives of assets
The estimation of useful lives of assets has been based on historical experience (for plant and equipment), lease
terms (for leased equipment) and turnover policies (for motor vehicles). In addition, the condition of assets is
assessed at least once a year and considered against the remaining useful life. Adjustments to useful life are made
when considered necessary. Any change in the useful life or residual lives is treated as a change in accounting
estimate and recognised in the statement of comprehensive income.
Maintenance warranties
In determining the level of the provision required for warranties, the Group has made judgements in respect of the
expected performance of the products and any liability resulting from installation works. Historical experience and
current knowledge of the performance of products has been used in determining this provision.
f) Revenue
Revenue from contracts with customers is recognised when control of the goods or services are transferred to the
customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for
those goods or services.
Sale of goods
Revenue from sale of goods is recognised when control of the goods is transferred to the customer at an amount
that reflects the consideration to which the Group expected to be entitled in exchange for those goods.
Rendering of services
Revenue is recognised in the accounting period in which the services are rendered. For fixed-price contracts,
revenue is recognised based on the actual service provided to the end of the reporting period as a proportion of the
total services to be provided (performance obligations satisfied over time). When the contract outcome cannot be
estimated reliably, revenue is recognised only to the extent of the expenses recognised that are recoverable.
Interest income
Interest income is recognised as interest accrues using the effective interest method. This is a method of calculating
the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective
interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the
financial asset to the net carrying amount of the financial asset.
Finance and other income
Finance and other income are recognised when the right to receive the income is established.
22
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
g) Finance costs
Finance costs are recognised according to the effective interest rate method which is the rate that discounts
estimated future cash payments through the estimated life of the financial liability to the amortised cost of the
financial liability.
h)
Income tax
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be
recovered from or paid to the taxation authorities. Current income tax expense charged to profit or loss is the tax
payable on taxable income. Current and deferred income tax expense/(income) is charged or credited outside profit
or loss when the tax relates to items that are recognised outside profit or loss.
Deferred income tax assets are recognised for all deductible temporary differences, to the extent that is probable
that taxable profit will be available against which the deductible temporary differences and the carry forward of
unused tax credits can be utilised. The carrying amount of deferred income tax assets is reviewed at each balance
date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all
or part of the deferred income tax asset to be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the
asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively
enacted at the balance date.
i) Cash and cash equivalents
Cash and cash equivalents in the statement of financial position comprise cash at bank and in hand and short-term
deposits with an original maturity of three months or less. For the purposes of the statement of cash flows, cash
and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.
j)
Trade and other receivables
The Group makes use of a simplified approach in accounting for trade and other receivables and records the loss
allowance at the amount equal to the expected lifetime credit losses. In using this practical expedient, the Group
uses its historical experience, external indicators and forward-looking information to calculate expected credit losses
using a provision matrix. The Group assesses impairment of trade receivables on a collective basis as they possess
credit risk characteristics based on the number of days past due. An estimate for doubtful debts is made when
collection of the full amount is no longer probable. Bad debts are written off when identified.
k)
Inventories
Inventories are valued at the lower of cost and net realisable value.
Costs incurred in bringing each product to its present location and condition are accounted for as follows:
•
•
Raw materials – purchase cost on a first-in, first-out basis.
Finished goods and work-in-progress – cost of direct materials and labour and a proportion of variable and fixed
manufacturing overheads based on normal operating capacity but excluding borrowing costs.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of
completion and the estimated costs necessary to make the sale.
23
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
l) Property, plant and equipment
Property, plant and equipment is stated at historical cost less accumulated depreciation.
Depreciation is calculated on a straight-line basis over the estimated useful life of the specific assets as follows:
2021
-
2022
Lease term
Right-of-use assets
Plant and equipment
1 to 15 years
1 to 15 years
m) Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net
identifiable assets of the acquired subsidiary at the date of acquisition.
Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. The Group
assesses impairment of all assets at each reporting date by evaluating conditions specific to the Group and to the
particular asset that may lead to impairment. These include product and manufacturing performance, technology,
economic and political environments and future product and service delivery expectations. If an impairment exists
the recoverable amount of the asset is determined. Impairment testing involves value in use calculations, which
incorporate a number of key estimates and assumptions.
n)
Impairment of goodwill
An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable
amount. Recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes
of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash
inflows that are largely independent of the cash inflows from other assets or groups of assets (cash-generating units).
o)
Intangible assets
Intangible assets are carried at cost less accumulated amortisation and any accumulated impairment losses.
Development costs
Research costs are expensed as incurred. An intangible asset arising from development expenditure on an internal
project is recognised only when the Group can demonstrate the technical feasibility of completing the intangible
asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how
the asset will generate future economic benefits, the availability of resources to complete the development and the
ability to measure reliably the expenditure attributable to the intangible asset during its development. Following the
initial recognition of the development expenditure, the cost model is applied requiring the asset to be carried at
cost less any accumulated amortisation and accumulated impairment losses. Any expenditure so capitalised is
amortised over the period of expected benefit from the related project which is generally 5 years (2021: 5 years).
The amortisation is recognised in the statement of comprehensive income in the line item ‘depreciation and
amortisation expense’.
Software costs
Software costs are carried at cost less any accumulated amortisation and any accumulated impairment losses.
Purchased software development is assessed to have a finite life and is amortised over a period of 1-4 years (2021:
1-4 years).
24
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Patents and trademarks
Patents and trademarks are initially measured at cost. Following initial recognition, intangible assets are carried at
cost less any accumulated amortisation and any accumulated impairment losses. Patents and trademarks are
assessed to have a finite life and are amortised over a period of 5 years (2021: 5 years).
p)
Impairment testing of intangible assets
Intangible assets that are not yet available for use are not subject to amortisation but are tested annually for
impairment or more frequently if events or changes in circumstances indicate that they might be impaired. Other
assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount
exceeds its recoverable amount. Recoverable amount is the higher of an asset's fair value less costs to sell and value
in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are
separately identifiable cash inflows that are largely independent of the cash inflows from other assets or groups of
assets (cash-generating units). Assets have been allocated to the signals and controllers cash-generating units.
q) Trade and other payables
Trade and other payables are carried at amortised cost due to their short-term nature and are not discounted. They
represent liabilities for goods and services provided to the Group prior to the end of the financial year that are
unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these
goods and services. The amounts are unsecured and are usually paid within 60 days of recognition. Trade payables
are non-interest bearing and are normally settled on 30–60-day terms.
r)
Interest-bearing loans and borrowings
Interest-bearing loans and borrowings are initially recognised at the fair value of the consideration received less
directly attributable transaction costs. After initial recognition, interest-bearing loans and borrowings are
subsequently measured at amortised cost using the effective interest rate method. Fees paid on the establishment
of loan facilities that are yield related are included as part of the carrying amount of the interest-bearing loans and
borrowings. Interest-bearing loans and borrowings are classified as current liabilities unless the Group has an
unconditional right to defer settlement of the liability for at least 12 months after balance date.
s) Leases
For any new contracts entered into, the Group considers whether a contract is, or contains a lease. A lease is defined
as ‘a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time
in exchange for consideration’. To apply this definition the Group assesses whether the contract meets three key
evaluations which are whether:
The contract contains an identified asset, which is either explicitly identified in the contract or implicitly
specified by being identified at the time the asset is made available to the Group.
The Group has the right to obtain substantially all of the economic benefits from use of the identified asset
throughout the period of use, considering its rights within the defined scope of the contract.
The Group has the right to direct the use of the identified asset throughout the period of use. The Group
assesses whether it has the right to direct ‘how and for what purpose’ the asset is used throughout the period
of use.
•
•
•
25
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
At lease commencement date, the Group recognises a right-of-use asset and a lease liability on the balance sheet.
The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any
initial direct costs incurred by the Group, an estimate of any costs to dismantle and remove the asset at the end of
the lease and any lease payments made in advance of the lease commencement date (net of any incentives
received).
The Group depreciates right-of-use assets on a straight-line basis from the lease commencement date to the earlier
of the end of the useful life of the right-of-use asset or the end of the lease term. The Group also assesses the right-
of-use asset for impairment when such indicators exist.
At the commencement date, the Group measures the lease liability at the present value of the lease payments
unpaid at that date, discounted using the interest rate implicit in the lease, if that rate is readily available, or the
Group’s incremental borrowing rate.
Lease payments included in the measurement of the lease liability are made up of fixed payments (including in
substance fixed), variable payments based on an index or rate, amounts expected to be payable under a residual
value guarantee and payments arising from options reasonably certain to be exercised.
Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It is
remeasured to reflect any reassessment or modification, or if there are changes in in-substance fixed payments.
The Group has elected to account for short-term leases and leases of low-value assets using the practical expedients.
Instead of recognising a right-of-use asset and lease liability, payments in relation to these are recognised as an
expense in profit or loss on a straight-line basis over the lease term.
t) Derivative financial instruments
Derivatives are only used for economic hedging purposes and not speculative instruments. Derivatives are classified
as held for trading and accounted for at fair value through profit or loss unless they are designated as hedges. They
are presented as current assets or liabilities if they are expected to be settled within 12 months after the end of the
reporting year. Because the derivatives used by the Group are not traded in an active market, fair value is
determined using valuation techniques which maximise the use of observable market data and do not rely on entity-
specific estimates. The fair value of foreign currency forward contracts is determined using forward exchange rates
at balance sheet date. The fair value of derivatives is estimated at the amount that the Group would receive or pay
to terminate the contract at the end of the reporting period taking into account current market conditions (volatility
and appropriate yield curve) and the current creditworthiness of the counterparties.
26
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
u) Provisions
Employee benefits
Provision is made for the Group’s obligation for short-term employee benefits. Short-term employee benefits are
benefits that are expected to be settled wholly before 12 months after the end of the annual reporting period in
which the employees render the related service. Provision is made for employees’ long service leave entitlements
not expected to be settled wholly within 12 months after the end of the annual reporting period in which the
employees render the related service; such long-term employee benefits are presented as non-current provisions
in its statement of financial position, except where the Group does not have an unconditional right to defer
settlement for at least 12 months after the end of the reporting period, in which case the obligations are presented
as current provisions.
Warranty provision
A provision has been recognised for expected warranty claims on products supplied by the Group, based on current
sales levels, current information available about past returns and repairs and the warranty period for products sold.
Based on past experience, the Group does not expect the full balance of the current provision to be settled within
12 months. However, as the Group does not have an unconditional right of deferral, the balance is presented as
current.
27
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
2. REVENUE
Revenue
Sale of goods – recognised at point in time
Sale of services – recognised over period of time
Other revenue
Revenue from contracts with customers
Other income
Net profit/(loss) on disposal of fixed assets
Net exchange gain on foreign currency borrowings
Cash boost (COVID-19 Federal Government incentive)
Other income
Total other income
3. EXPENSES
Employee related expenses
Wages and salaries
Superannuation (defined contribution)
Other employee benefits expense
Other expenses
Administrative costs
Public company costs
Impairment loss on financial assets
Loss on derivatives held for trading
Depreciation and amortisation expenses
Depreciation
Amortisation
Total depreciation and amortisation expenses
Finance costs
Interest on loans
Lease interest
Borrowing costs
Total finance costs
28
Consolidated
2022
$’000
Consolidated
2021
$’000
48,927
4,685
138
53,750
21
-
-
99
120
47,424
4,846
60
52,330
(7)
420
500
86
999
Consolidated
2022
$’000
Consolidated
2021
$’000
11,874
1,186
2,743
15,803
1,496
315
-
-
1,811
1,142
1,191
2,333
1,758
135
321
2,214
11,174
1,078
2,648
14,900
1,693
350
164
468
2,675
1,011
1,212
2,223
1,908
166
32
2,106
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
4.
INCOME TAX
Income Tax Expense
The major components of income tax expense are:
Statement of Comprehensive Income
Current income tax
Current income tax charge
Deferred income tax
Relating to origination and reversal of temporary differences
Income tax expense reported in the statement of comprehensive income
Reconciliation of aggregate tax expense and tax expense
calculated per the statutory tax rate
Accounting profit/(loss) before income tax
Income tax expense/(benefit) at the Group’s statutory income tax rate of
30% (2021: 30%)
Non-deductible expenditure
Non-assessable income
Non-refundable foreign tax
Prior year under/over provision
Net benefit of R&D tax incentive
Set-off of deferred tax liability
Recognition of previously unrecognised tax losses
Aggregate income tax expense
Consolidated
2022
$’000
Consolidated
2021
$’000
4
-
4
(484)
(145)
23
-
4
(61)
486
(188)
(115)
4
4
-
4
205
61
24
(150)
4
(45)
296
(186)
-
4
Deferred Tax Balances
Statement of Financial Position
Statement of Profit or Loss
Consolidated
2022
$’000
Consolidated
2021
$’000
Consolidated
2022
$’000
(2,614)
15
(93)
76
1,022
14
18
(4)
32
-
40
118
(1,376)
1,376
-
(2,430)
27
(103)
95
1,080
14
17
-
32
-
40
41
(1,187)
1,187
-
(184)
(12)
10
(19)
(58)
-
1
(4)
-
-
-
77
(189)
189
-
Consolidated
2021
$’000
(113)
(5)
60
35
153
-
12
-
(177)
3
(169)
15
(186)
186
-
Temporary differences
Intangible assets
Right of use assets
Plant and equipment
Inventory
Employee provisions
Warranty provisions
Credit notes
Prepayments
Doubtful debts
Foreign exchange
Other capital expenditure
Other accruals and provisions
Deferred tax liability
Set-off of deferred tax assets and liabilities
Net deferred tax assets and liabilities
29
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
4. INCOME TAX (continued)
The following tax losses have not been recognised as a deferred tax asset:
Tax losses – revenue
Tax losses – capital
Potential tax benefit at 30.0%
Carried forward tax offsets
Unrecognised deferred tax assets
Consolidated
2022
$’000
Consolidated
2021
$’000
-
-
-
1,280
1,280
1,202
-
361
890
1,251
Tax Consolidation
Traffic Technologies Ltd and its 100% owned Australian resident subsidiaries formed a tax consolidated group with
effect from 1 July 2005 and are therefore taxed as a single entity from that date. The head entity within the tax
consolidated group is Traffic Technologies Ltd. Each wholly owned subsidiary of Traffic Technologies Ltd is a member
of the tax consolidated group, as identified at note 20.
Tax Funding Arrangements and Tax Sharing Agreements
The Group has entered into a tax funding agreement that sets out its funding obligations of the tax consolidated
group in respect of tax amounts. Contributions to fund the current tax liabilities are payable in accordance with the
tax funding agreement and reflect the timing of the head entity’s obligation to make payments for the tax liabilities
to the relevant taxation authority.
5. EARNINGS PER SHARE
Basic earnings per share is calculated as net profit/(loss) attributable to members of the parent entity divided by the
weighted average number of ordinary shares. Diluted earnings per share is calculated as net profit/loss attributable
to members of the parent entity divided by the weighted average number of ordinary shares and dilutive potential
ordinary shares. The following reflects the income and share data used in the basic and diluted earnings per share
computations:
Earnings used in calculating earnings per share
For basic and diluted earnings per share:
Consolidated
Consolidated
2022
$’000
2021
$’000
Net (loss)/profit attributable to ordinary equity holders of the parent
(488)
201
Weighted average number of shares
Weighted average number of ordinary shares used in calculating basic
earnings per share
Weighted average number of ordinary shares adjusted for the effect of
dilution
Consolidated
2022
Thousands
Consolidated
2021
Thousands
620,218
620,218
482,225
482,225
There are no instruments excluded from the calculation of diluted earnings per share that could potentially dilute
earnings per share in the future because they are anti-dilutive for 2022 (2021: nil).
30
Consolidated
2022
$’000
Consolidated
2021
$’000
9,418
(106)
9,312
1,447
697
318
11,774
5,857
2,469
1,092
9,418
104
2
-
106
7,165
(104)
7,061
1,899
577
390
9,927
5,471
1,529
165
7,165
397
164
(457)
104
Consolidated
2022
$’000
Consolidated
2021
$’000
6,501
284
2,234
6,144
15,163
4,934
172
1,894
5,176
12,176
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
6.
TRADE AND OTHER RECEIVABLES
Trade receivables
Allowance for impairment loss
Prepaid stock
Other prepayments
Other receivables
Ageing of trade receivables:
Due within 30 days
Overdue up to 30 days
Overdue more than 30 days
Movement in provision for impairment loss:
Balance at the beginning of the year
Charge for the year
Amounts written off as uncollectible
Balance at the end of the year
7.
INVENTORIES
Raw materials
Work in progress
Sub-assemblies
Finished goods
31
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
8. PROPERTY, PLANT AND EQUIPMENT
Consolidated
Right-of-Use
Assets
Equipment
$’000
Right-of-Use
Assets
Property
$’000
Plant &
Equipment
$’000
Movement in carrying amounts
At 1 July 2020 net book value
Acquisition of businesses
Additions
Disposals
Depreciation expense
At 30 June 2021 net book value
Additions
Disposals
Depreciation expense
At 30 June 2022 net book value
Carrying amounts
At 30 June 2021
Cost
Accumulated depreciation
Carrying amounts at 30 June 2021
At 30 June 2022
Cost
Accumulated depreciation
Carrying amounts at 30 June 2022
351
50
68
(59)
(95)
315
435
(7)
(115)
628
640
(325)
315
1,068
(440)
628
1,118
-
62
-
(689)
491
1,044
-
(792)
743
2,037
(1,546)
491
2,492
(1,749)
743
850
166
158
(4)
(227)
943
173
(1)
(235)
880
8,439
(7,496)
943
8,456
(7,576)
880
Total
$’000
2,319
216
288
(63)
(1,011)
1,749
1,652
(8)
(1,142)
2,251
11,116
(9,367)
1,749
12,016
(9,765)
2,251
The Group’s property, plant and equipment is pledged as security against the Group’s borrowings - see note 12.
Leased assets are pledged as security for the related lease liabilities – see note 13.
32
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
9. GOODWILL
Carrying amounts of goodwill allocated
to each cash-generating unit
Signals
Carrying amount brought forward
Acquisition
Carrying amount carried forward
Installation and maintenance
Carrying amount brought forward
Acquisition
Carrying amount carried forward
Total carrying amount
Consolidated
2022
$’000
Consolidated
2021
$’000
18
-
18
1,126
-
1,126
1,144
-
18
18
-
1,126
1,126
1,144
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net
identifiable assets of the acquired subsidiary at the date of acquisition. Following initial recognition, goodwill is
measured at cost less any accumulated impairment losses. The Group conducts an annual internal review of asset
values, which is used as a source of information to assess for any indicators of impairment. External factors, such as
changes in expected future processes, technology and economic conditions, are also monitored to assess for
indicators of impairment. If any indication of impairment exists, an estimate of the asset's recoverable amount is
calculated.
33
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
10. INTANGIBLE ASSETS
Consolidated
Movement in carrying amounts
At 1 July 2020 net book value
Acquisition of businesses
Additions
Amortisation
At 30 June 2021 net book value
Additions
Amortisation
At 30 June 2022 net book value
Carrying amounts
At 30 June 2021
Cost
Accumulated amortisation
Carrying amounts at 30 June 2021
At 30 June 2022
Cost
Accumulated amortisation
Carrying amounts at 30 June 2022
Development
Costs
$’000
Software Costs
$’000
Patents &
Trademarks
$’000
9,109
-
1,630
(1,019)
9,720
2,015
(994)
10,741
18,946
(9,226)
9,720
20,961
(10,220)
10,741
22
7
176
(165)
40
156
(175)
21
2,152
(2,112)
40
2,308
(2,287)
21
46
-
18
(28)
36
23
(22)
37
549
(513)
36
573
(536)
37
Total
$’000
9,177
7
1,824
(1,212)
9,796
2,194
(1,191)
10,799
21,647
(11,851)
9,796
23,842
(13,043)
10,799
34
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
10.
INTANGIBLE ASSETS (continued)
Goodwill and intangible assets that are not yet available for use are not subject to amortisation but are tested
annually for impairment or more frequently if events or changes in circumstances indicate that they might be
impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's
carrying amount exceeds its recoverable amount. Recoverable amount is the higher of an asset's fair value less costs
to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which
there are separately identifiable cash inflows that are largely independent of the cash inflows from other assets or
groups of assets (cash-generating units).
The recoverable amount of each cash-generating unit has been determined based on a value in use calculation using
cash flow projections based on financial budget forecasts prepared by management covering a one-year period,
with the following key assumptions:
Growth rate beyond budget period (years 2-5)
Growth rate beyond 5 years
Pre-tax discount rate (WACC)
2022
5%
3%
13.3%
2021
5%
3%
14.1%
The key assumptions used in the value in impairment calculations represent management’s best estimates at 30
June 2022. There are no reasonably possible changes in any of the key assumptions that would result in an
impairment write-down in each cash-generating unit.
The Group performed impairment testing at 30 June 2022 and 30 June 2021. Management has considered the
sensitivity of value in use calculations to changes in assumptions. There was no impairment of intangible assets at
those dates.
11. TRADE AND OTHER PAYABLES
Trade creditors
Sundry creditors and accruals
Consolidated Consolidated
2021
$’000
2022
$’000
6,927
4,358
11,285
5,539
5,185
10,724
35
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
12. INTEREST BEARING LOANS AND BORROWINGS
Current borrowings
Term facility (ADM Capital)
Note facility (First Samuel)
Debtor & trade finance facility (Timelio)
Debtor & trade finance facility (Octet Finance)
Equipment lease liabilities
Property lease liabilities
Non-current borrowings
Note facility (First Samuel)
Equipment lease liabilities
Property lease liabilities
Financing facilities available
Total facilities at reporting date
Term debt facility (ADM Capital)
Debtor & trade finance facility (Timelio)
Debtor & trade finance facility (Octet)
Note facility (First Samuel)
Bank guarantee facility (Westpac)
Facilities used at reporting date
Term debt facility (ADM Capital)
Debtor & trade finance facility (Timelio)
Debtor & trade finance facility (Octet)
Note facility (First Samuel)
Bank guarantee facility (Westpac)
Facilities unused at reporting date
Term debt facility (ADM Capital)
Debtor & trade finance facility (Timelio)
Debtor & trade finance facility (Octet)
Note facility (First Samuel)
Bank guarantee facility (Westpac)
36
Consolidated
2022
$’000
Consolidated
2021
$’000
1,274
3,500
6,907
-
113
363
12,157
-
431
430
861
1,274
9,000
-
3,500
265
14,039
1,274
6,907
-
3,500
181
11,862
-
2,093
-
-
84
2,177
6,274
-
-
4,382
107
496
11,259
3,500
124
85
3,709
6,274
-
5,500
3,500
265
15,539
6,274
-
4,382
3,500
153
14,309
-
-
1,118
-
112
1,230
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
12.
INTEREST BEARING LOANS AND BORROWINGS (continued)
Terms and conditions relating to the above financial instruments
Lender
ADM Capital
Facility Amount (AUD)
$1.3m
Timelio
$9.0m
First Samuel
$3.5m
Facility Type
Interest
Expiry
Security
Term loan
19%
Debtor & trade finance
Note deed
8.9% + fees
11%
30 September 2022
No fixed term expiry
18 October 2022
First ranking charge
Second ranking charge over
trade receivables
Second ranking charge
First ranking charge over
trade receivables
Third ranking charge
Currency of loan
USD
Hedging
FX Derivative
(see note 14)
AUD
-
AUD
-
37
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
13. LEASE LIABILITIES
Current
Equipment leases
Property leases
Non-current
Equipment leases
Property leases
Total
Lease liability commitments payable
Less than one year
Later than one year but less than five years
Less future finance charges
Total lease liabilities
Consolidated
2022
$’000
Consolidated
2021
$’000
113
363
476
431
430
861
1,337
589
947
1,536
(199)
1,337
107
496
603
124
85
209
812
658
224
882
(70)
812
Lease payments not recognised as a liability
The Group has elected not to recognise a lease liability for short-term leases (leases with an expected term of 12
months or less) or for leases of low value assets. Payments made under such leases are expensed on a straight-line
basis. The expense relating to payments not included in the measurement of the lease liability is as follows:
Short-term property lease expense
14. DERIVATIVE FINANCIAL INSTRUMENT
Derivative financial liability for foreign currency forward contracts
Consolidated
2022
$’000
Consolidated
2021
$’000
767
631
2022
$’000
-
2021
$’000
-
The derivative financial instrument is used to hedge the foreign currency exposure on the loan from ADM Capital
(refer note 12). There was no liability at 30 June 2022 (2021: nil) because the derivative financial instrument was
extinguished on balance date.
38
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
15. PROVISIONS
Current
Employee benefits
Warranty provision
Non-current
Employee benefits
16. CONTRIBUTED EQUITY
Ordinary shares
At 30 June 2021
Placement
Rights issue
Shortfall placement
Share issue costs
At 30 June 2022
Consolidated
2022
$’000
Consolidated
2021
$’000
3,174
47
3,221
3,111
47
3,158
233
204
No. of
Shares ‘000
482,225
72,333
113,320
54,292
-
$’000
54,755
2,170
3,400
1,629
(665)
722,170
61,289
Ordinary shares have the right to receive dividends as declared and, in the event of a winding up of the Company,
to participate in the proceeds from the sale of all surplus assets in proportion to the number and amounts paid up
on shares held. Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the
Company.
a) Placement
On 3 November 2021 the Company completed a placement to sophisticated and institutional investors of ordinary
shares at an issue price of $0.03 per share, with such shares issued on and ranking for dividends after 10 November
2021.
b) Rights issue
On 3 December 2021 the Company completed a rights issue at an issue price of $0.03 per share on the basis of seven
shares for every ten fully paid ordinary shares held, with such shares issued on and ranking for dividends after 10
December 2021.
c)
Shortfall placement
On 10 December 2021 the Company completed a placement to sophisticated and institutional investors of ordinary
shares following the rights issue at an issue price of $0.03 per share, with such shares issued on and ranking for
dividends after 15 December 2021.
39
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
17. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Financial risk management objectives and policies
The Group’s principal financial instruments comprise term loan facilities, debtor and trade finance facilities,
equipment and property leases, hire purchase contracts, forward contracts to purchase foreign currency and cash
and short-term deposits. The totals for each category of financial instruments are as follows:
Financial assets
Cash and cash equivalents
Trade and other receivables
Total financial assets
Financial liabilities
Trade and other payables
Financial liabilities at amortised cost
Total financial liabilities
Fair values
Consolidated
2022
$’000
Consolidated
2021
$’000
1,012
11,854
12,866
2,602
9,927
12,529
(11,365)
(13,018)
(24,383)
(10,724)
(14,968)
(25,692)
The carrying amount of financial assets and liabilities recorded in the financial statements represents their respective
fair values, determined in accordance with the accounting policies disclosed in note 1 to the financial statements.
The Group manages its exposure to key financial risks, including interest rate and currency risk in accordance with
the Group's financial risk management policy. The objective of the policy is to support the delivery of the Group's
financial targets whilst protecting future financial security. The Group has various financial assets and liabilities such
as trade receivables and trade payables, which arise directly from its operations. It is the Group’s policy that no
trading in financial instruments shall be undertaken. The carrying amount of financial assets and financial liabilities
recorded in the financial statements represents their respective fair values. The main risks arising from the Group’s
financial instruments are interest rate risk, credit risk, liquidity risk and foreign currency risk.
Interest rate risk
The Group's exposure to market interest rates relates primarily to the Group's long-term debt obligations. At
balance date the Group had the following financial assets and liabilities exposed to market interest rate risk:
Financial assets
Cash and cash equivalents
Total financial assets
Financial liabilities
Loan facilities
Debtor and trade finance
Equipment lease liabilities
Property lease liabilities
Total financial liabilities
40
Consolidated
2022
$’000
Consolidated
2021
$’000
1,012
1,012
2,602
2,602
(4,774)
(6,907)
(544)
(793)
(13,018)
(9,774)
(4,382)
(231)
(581)
(14,968)
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
17. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
The Group’s exposure to market risk for changes in interest rates relates primarily to the Group’s long-term debt
and debtor and trade finance obligations. At 30 June 2022 47% of the Group's borrowings were at a fixed rate of
interest (2021: 71%). Details of the Group’s debt are disclosed in note 12.
The Group constantly analyses its interest rate exposure. Within this analysis consideration is given to potential
renewals of existing positions, alternative financing, alternative hedging positions and the mix of fixed and variable
interest rates.
Credit risk
The Group trades only with recognised, creditworthy third parties and, as such, collateral is not requested nor is it
the Group's policy to securitise its trade and other receivables. It is the Group's policy that all customers who wish
to trade on credit terms are subject to credit verification procedures including an assessment of their independent
credit rating, financial position, past experience and industry reputation.
Risk limits are set for each individual customer in accordance with parameters set by the Board. These risk limits are
regularly monitored.
Receivables balances are monitored on an ongoing basis with the result that the Group's exposure to bad debts is
not significant. For transactions that are not denominated in the functional currency of the relevant operating unit,
the Group does not offer credit terms without the specific approval of senior management.
There are no significant concentrations of credit risk within the Group.
Liquidity risk
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of
current working capital, term loans, debtor and trade finance and lease liabilities.
Maturity analysis of financial liabilities
Year ended 30 June 2022
Payables
Interest bearing loans & borrowings
Finance lease liabilities
Bank guarantees
Total financial liabilities
Year ended 30 June 2021
Payables
Interest bearing loans & borrowings
Finance lease liabilities
Bank guarantees
Total financial liabilities
41
≤ 6
months
$’000
6-12
months
$’000
11,285
12,220
589
-
24,094
10,724
11,377
329
-
22,430
-
363
474
-
837
-
423
329
-
752
1 – 5
years
$’000
-
385
474
181
1,040
-
3,705
224
153
4,082
> 5
years
$’000
Total
$’000
-
-
-
-
-
-
-
-
-
-
11,285
12,968
1,537
181
25,971
10,724
15,505
882
153
27,264
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
17. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Foreign exchange risk
Exposure to foreign exchange risk arises where the Group purchases certain components denominated in foreign
currency. The Group’s borrowing facility with ADM Capital is denominated in US dollars. To manage the risk
associated with the exposure of this balance to exchange rate fluctuations the Group entered into a foreign currency
forward contract. This foreign currency forward contract is accounted for as held for trading with gains (losses)
recognised in the statement of comprehensive income. The exchange gain or loss on foreign currency transactions
is recognised directly in the statement of comprehensive income. The Group's exposure to foreign currency risk on
its foreign currency borrowings and associated forward exchange contracts, expressed in Australian dollars, was as
follows:
ADM Capital - Loan (USD exposure)
Forward exchange contracts (USD exposure)
Sensitivity Analysis
2022
$’000
1,274
2021
$’000
6,274
-
-
At 30 June 2022 53% of the Group's borrowings were at a variable rate of interest (2021: 29%). If interest rates
were to increase or decrease by 1%, the net change in finance costs would be approximately $35,000 (2021:
$21,000).
The Group is primarily exposed to changes in the US dollar exchange rate. The sensitivity of profit or loss to changes
in the exchange rates arises mainly from US dollar-denominated financial instruments is illustrated in the table
below.
Impact on post tax profit and equity
US/$exchange rate – increase 5%
US/$exchange rate – decrease 5%
2022
$’000
(100)
86
2021
$’000
(447)
391
The Group has taken out a forward exchange contract to hedge its foreign currency exposure associated with the
US dollar denominated loan from ADM Capital (see note 14).
42
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
18. NOTES TO THE STATEMENT OF CASH FLOWS
Reconciliation of cash
Cash at bank and on hand
Reconciliation of (loss)/profit after tax to net cash flows from operations
Net (loss)/profit
Adjustments for:
Depreciation, amortisation of non-current assets
(Profit)/loss on sale of fixed assets
Foreign exchange gain
Amortisation of capitalised borrowing costs
Doubtful debts expense
Stock obsolescence (benefit)/expense
Changes in assets and liabilities:
(Increase)/decrease in trade and other receivables
(Increase)/decrease in inventories
Increase/(decrease) in trade and other payables
Increase/(decrease) in provisions
Net cash from operating activities
Consolidated
2022
$’000
1,012
Consolidated
2021
$’000
2,602
(488)
201
2,333
(21)
(7)
-
-
(64)
(2,299)
(2,987)
2,874
91
(568)
2,223
7
(265)
32
164
53
(2,063)
(2,059)
2,140
429
862
Non-cash financing and investing activities
During the year the Group acquired property, plant and equipment (excluding right-of-use assets) with an aggregate
value of $435,012 (2021: $43,000) by means of leases.
43
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
19. CLAIMS AND CONTINGENCIES
Guarantees
The Company is party to a deed of cross guarantee with its wholly-owned subsidiaries. The extent to which an
outflow of funds will be required is dependent on the future operations of the entities that are party to the deed of
cross guarantee. No liability is expected to arise. The deed of cross guarantee will continue to operate indefinitely.
As detailed in note 12, the Company is party to finance facility agreements with its financiers to which the Company’s
subsidiaries are guarantors. The extent to which an outflow of funds will be required is dependent on the risk of
default under the finance facility agreement. The Directors do not expect default to occur.
20. SUBSIDIARIES
The consolidated financial statements include the financial statements of Traffic Technologies Ltd and the
subsidiaries listed in the following table.
Principal
Place of
Business
Principal Activity
Ownership
Held by
2022
%
Interest
the Group
2021
%
Name of Subsidiary
Traffic Technologies Signal & Hardware
Division Pty Ltd
Traffic Technologies Traffic Management
Division Pty Ltd
De Neefe Pty Ltd
Traffic Technologies Traffic Hire Pty Ltd
Sunny Sign Company Pty Ltd
Pro-Tech Traffic Management Pty Ltd
KJ Aldridge Investments Pty Ltd
Aldridge Traffic Group Pty Ltd
Excelsior Diecasting Pty Limited
Aldridge Traffic Systems Pty Ltd
Aldridge Plastics Pty Ltd
Australia
Non-trading
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Non-trading
Manufacture signs
Non-trading
Manufacture signs
Non-trading
Non-trading
Non-trading
Non-trading
Manufacture signals,
streetlights etc.
Non-trading
Quick Turn Circuits Pty Ltd
Australia Manufacture controllers
Traffic Technologies International Limited
Hong Kong
Telensa Pty Ltd
Telensa Australia Pty Ltd
L&M Traffic Services Pty Ltd
Australia
Australia
Australia
Non-trading
Non-trading
Non-trading
Installation &
maintenance
44
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
21. RELATED PARTY TRANSACTIONS
a) Transactions with Shareholders
First Samuel Limited (one of the Company’s lenders – see note 12) holds 37,175,675 ordinary shares in the Company.
b) Transactions with Directors or Director-related entities
An entity associated with the Company's Managing Director, Mr. Con Liosatos has arranged a bank guarantee of
$500,000 to provide security for purchases by the Group from an overseas supplier. The Company has agreed to
indemnify the entity in the event that the bank guarantee is called upon by the overseas supplier. After the on-
charge of interest costs and bank charges at the same rate, no profit has been made by the related party.
22. SUBSEQUENT EVENTS
Subsequent to balance date there have been no significant events which have affected the operations of the Group.
23. AUDITOR’S REMUNERATION
Amounts received or due and receivable by:
Half Year Review – Shine Wing Australia
Half Year Review – Grant Thornton
Final Audit – Grant Thornton
Total
24. KEY MANAGEMENT PERSONNEL DISCLOSURES
Consolidated
2022
$
Consolidated
2021
$
-
28,000
71,000
99,000
35,000
-
67,000
102,000
a) Compensation of Key Management Personnel
Details of the nature and amount of each element of the remuneration of key management personnel are disclosed
in the Remuneration Report section of the Directors’ Report.
Compensation by Category:
Key Management Personnel
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Total
Consolidated
2022
$
Consolidated
2021
$
942,857
68,934
15,873
1,027,664
942,514
64,463
14,078
1,021,055
b) Shares issued on exercise of remuneration options
No shares have been issued to key management personnel as a result of the exercise of remuneration options.
c) Option holdings of Key Management Personnel
There were no share options outstanding at 30 June 2022 or at the date of this report (2021: nil). No shares have
been issued to key management personnel as a result of the exercise of remuneration options.
d) Loans to Key Management Personnel
There were no loans to key management personnel.
45
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
25. SEGMENT INFORMATION
The Group has only one operating segment: Traffic Products. The Group’s chief operating decision maker (the
Managing Director) reviews financial information on a consolidated basis and makes strategic decisions based on
this consolidated information.
Major customers
Revenue from government agencies accounted for 26% of sales (2021: 30%). Revenue from the largest non-
government customer accounted for 6% (2021: 7%) of sales.
Geographical information
The Group operates predominately in Australia.
Revenue by geographic location:
Australia
Overseas
Total
All the Group’s non-current assets are located in Australia.
26. PARENT ENTITY DISCLOSURES
Current assets
Total assets
Current liabilities
Total liabilities
Issued capital
Retained earnings
Total shareholders’ equity
Loss of the parent entity
Total comprehensive income of the parent entity
Guarantees entered into by the parent entity in relation to debts
of its subsidiaries
46
Consolidated
Consolidated
2022
$’000
48,674
5,076
53,750
2021
$’000
47,178
5,152
52,330
2022
$’000
3,169
51,012
66,326
71,165
61,289
(81,442)
(20,153)
(3,598)
(3,598)
6,907
2021
$’000
2,503
50,332
63,621
73,421
54,755
(77,844)
(23,089)
(3,840)
(3,840)
4,382
Traffic Technologies Ltd
Directors’ Declaration
For the year ended 30 June 2022
DIRECTORS’ DECLARATION
The Directors of the Company declare that:
1.
The consolidated financial statements and notes of Traffic Technologies Ltd are in accordance with the
Corporations Act 2001 and:
a) comply with Australian Accounting Standards and the Corporations Regulations 2001; and
b) give a true and fair view of the consolidated entity’s financial position as at 30 June 2022 and of its
performance for the year ended on that date.
2.
3.
4.
The Company has included in the notes to the financial statements an explicit and unreserved statement of
compliance with International Financial Reporting Standards.
In the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its
debts as and when they become due and payable.
The Directors have been given the declarations by the Managing Director and Chief Financial Officer required
by section 295A of the Corporations Act 2001.
The members of the Closed Group identified in note 20 are parties to the deed of cross guarantee under which each
company guarantees the debts of the others. At the date of this declaration there are reasonable grounds to believe
that the companies which are parties to this deed of cross guarantee will as a consolidated entity be able to meet
any obligations or liabilities to which they are, or may become, subject to, by virtue of the deed of cross guarantee
described in note 19.
This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of
the Directors by:
On behalf of the Board
Mark Hardgrave
Chairman
Melbourne
29 August 2022
47
ASX Additional Information
As at 11 August 2022
Additional information required by the Australian Securities Exchange and not shown elsewhere in this report is as
follows. The information is current as at 11 August 2022.
a)
Distribution of Shareholdings
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Holdings less than a marketable parcel
b)
Twenty Largest Shareholders
Ordinary Shares
Number of
Holders
158
Number of
Shares
23,080
34
41
87,234
360,092
604
27,656,500
527 694,043,282
1,364 722,170,188
482
5,800,505
Name
RSAM INVESTMENTS PTY LTD
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