A N N U A L R E P O R T
TRAFFIC TECHNOLOGIES LTD
ABN 21 080 415 407
AND CONTROLLED ENTITIES
ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED 30 JUNE 2023
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 2023.
Whilst operating revenue improved during the year ended 30 June 2023, EBITDA has been impacted by higher
input costs, the depreciation in the Australian dollar which has increased the cost of imported components,
significantly higher freight costs and supply chain delays. Delays on government funded road projects have also
affected the Company’s results.
In light of the weaker than expected result for the year and the increase in interest rates which has impacted the
discount rate used in the impairment calculation, we have reviewed the carrying value of intangible assets in the
balance sheet. The Board has therefore considered it prudent to record an impairment provision against the value
of intangible assets in the 30 June 2023 financial statements. This has unfortunately resulted in a net loss for the
financial year.
With a strong order book, the Company expects to deliver an improved result in the 2024 financial year. Demand
for the Company’s products and services is well placed with the increased infrastructure spend of government and
local councils, due to our position as the largest, most established and proactively innovative traffic solutions
provider in Australia.
With our focus on safety and innovative safety systems, the Company delivers innovative and cutting-edge
Intelligent Transport solutions, Street Lighting and Traffic Signal related systems and technology to government,
councils and stakeholders. The Company is well placed to continually service both state and local government in
addressing the challenges of today and into the future. Our products and services – from hardware and software
solutions to install and service – improve road safety, enhance transport efficiency and lower the impact on our
environment.
During the year, the Company refinanced its debt facilities with a 3-year $10 million invoice finance facility and a
$5 million trade finance facility with Earlypay Ltd and extended the balance of the term loan with First Samuel to
December 2025. We recognise however that debt remains high and is a constraint on the Company’s share price.
Cash flow and the reduction of debt will therefore continue to be a key focus for management and the Board in
the year ahead. The Board continues to explore ways to improve shareholder value, including through potential
relationships with third parties.
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 2023:
Sales revenue
Earnings before Interest, Tax, Depreciation
and Amortisation and Impairment (Adjusted
EBITDA)
Depreciation and Amortisation Expense
Impairment Expense
Earnings before Interest and Tax (EBIT)
Finance Costs
Net Loss After Tax (NPAT)
Year to
30 June 2023
Year To
30 June 2022
$’m
58.0
2.1
(2.2)
(6.0)
(6.1)
(1.8)
(7.9)
$’m
53.8
4.1
(2.3)
-
1.7
(2.2)
(0.5)
Trading revenue increased to $58m for the year to 30 June 2023 (2022: $54m). However, EBITDA was impacted
by higher input costs, the depreciation in the Australian dollar which has increased the cost of imported
components, significantly higher freight costs and supply chain delays along with delays in major projects. Finance
costs were lower compared to the previous year following the repayment of the ADM debt in the previous year,
whilst NPAT for the year was a loss of $7.9m (2022: loss $0.5m), after taking account of an impairment provision.
Despite these challenges, demand for the Company’s products and services has seen a significant increase with
the upturn in road infrastructure programs announced by Federal and State governments and following several
recent contract wins.
The Company has a strong order book with term contracts extending up to 5 years. During the year the Company
secured extensions of several of its contracts with power authorities for the supply of its Smart City LED streetlights
as well as a contract to install streetlights throughout Tasmania. During the financial year the Company also
supplied its Smart City Bus Priority software for the 2022 World Cup in Qatar, where the software creates a digital
copy of a virtual representation of the road network enabling more efficient traffic management across multiple
transport systems with the latest “Special Priority Engine.”
Whilst government mandated lockdowns are now behind us, raw material costs and world-wide supply chain
delays for electronic and hardware equipment continue to be a significant factor. The Company is actively
managing this with several suppliers through prepayments and other initiatives.
Net assets were $6.5m at 30 June 2023 compared to $14.4m at 30 June 2022. The reduction in net assets in 2023
reflects the net loss for the year and the impairment provision recorded as at 30 June 2023. Inventory continues
to be maintained at a relatively high level to mitigate the impact of supply chain delays and ongoing market
disruptions brought on by previous COVID years.
Net debt, excluding liabilities associated with capitalised property leases, was $10.9m at 30 June 2023, compared
to $11.2m at 30 June 2022. During the year the Company refinanced its debt facilities with a new 3-year $10
million invoice finance facility and $5 million trade finance facility along with the extension of a term loan to
December 2025.
Net operating cash inflows were $3.4m for the year (2022: outflow $0.6m). Receipts from customers for the year
were $64.8m (2022: $56.7m). Interest paid in the year was $1.5m (2022: $1.7m). Cash flow continues to be
affected by the need to prepay overseas suppliers to secure parts required to fulfil the Company’s 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 $1.6m for the year (2022 outflow $3.1m), including investment to expand and
develop the Company’s Smart City software and product portfolio. The Company received net proceeds of $0.7m
on the disposal of a property in Tasmania which has been used to retire debt and net financing cash outflow was
$1.7m for the year (2022: inflow $2.1m).
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 streetlights 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 one of Australia’s largest accredited provider and installer involved in traffic signals, urban traffic
controllers, street lighting, street and road signage and electronic speed sign installation and maintenance; and is
fully approved for installation in several states.
Business Strategies and Prospects
The Company has transitioned from being purely a manufacturer and supplier of traffic management products to
an integrated supplier of products, services and software applications to the road industry and government.
With the continued investment 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
with local councils and large-scale infrastructure projects. Through data analytics, customers can 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 continues to experience significant growth with our “Smart City”- ready lighting products, scaled
across Australia and now entering the UK, with future earnings underpinned by long-term customer contracts and
orders from state and local government agencies and power companies.
The expansion into the lucrative Intelligent Transport sector has given the Company the ability to supply
sophisticated “Smart City” ready electronics and software across Australia, whilst bolstering the Company’s
signage business which provides access to councils, road authorities and contractors across the country. The
additional capability within the Company to undertake installation and maintenance work has opened new
channels to market for our IoT devices and traffic management products.
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 years ahead from these
strategic initiatives, a strong order book and long-term customer term contracts.
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
Mr. Luke Donnellan (appointed 20 December 2022)
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 2023
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
45
46
48
Traffic Technologies Ltd
Directors’ Report
Your Directors submit their report for the year ended 30 June 2023.
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 Hardgrave (Age 65) 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 Liosatos (Age 61) 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 has not served as a director of any
other listed companies during the three years to June 2023.
Mr. Tim Fry (Age 59) 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 has not served as a director of any other listed companies during the three years to June 2023.
Mr. Luke Donnellan (Age 57) GAICD
Independent Non-Executive Director. Appointed December 2022.
Mr. Donnellan is a former Member of the Victorian Parliament. He was a Labor Party member of the Victorian
Legislative Assembly from 2002 to 2022, representing Narre Warren North. He was the Minister for Child
Protection and the Minister for Disability, Ageing and Carers in the Second Andrews Ministry from December
2018 until October 2021. He also served as the Minister for Roads and Road Safety and Minister for Ports in
the First Andrews Ministry from December 2014 to December 2018. Mr. Donnellan received a Bachelor of
Commerce from the University of Melbourne in 1987. Mr. Donnellan was appointed a director of ASX listed
Future First Technologies Ltd in July 2023.
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
Luke Donnellan
Corporate Governance
Traffic Management & Infrastructure
ASX Listed Companies
Human Resources
Legal
Finance
Commercial
Manufacture/assembly
Government Contracts
Information Technology
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
COMPANY SECRETARY Mr. Peter Crafter (Age 66) 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 2023 (2022: 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 streetlights 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, local 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 Group 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, 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.
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.
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.
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.
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 addresses 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.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
The Company refinanced its facilities with Earlypay Ltd in 2023.
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 Group and the expected results of those operations are set out in the
Chairman’s Letter and the Managing Directors’ Operating and Financial Review.
8
Traffic Technologies Ltd
Directors’ Report
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 $188,972 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 FY23 was $218,015. 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 $537,329 in FY23, 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 (2022: nil).
A summary of the Company’s performance for the past five years is set out below:
Net profit/(loss) $’000)
($7,889)
($488)
$201
($13,829)
$1,263
2023
2022
2021
2020
2019
EPS (cents)
Share price (cents)
Employment Contracts
(1.08)
(0.08)
1.1
1.5
0.04
4.0
(2.87)
1.8
0.26
2.4
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:
Balance at
1 July 2022
Acquired through
On-Market Trades
Other
Balance at
30 June 2023
Directors
Mr. Mark Hardgrave
5,965,592
-
Mr. Con Liosatos
Mr. Tim Fry
Mr. Luke Donnellan
Executive
Mr. Peter Crafter
Total
43,782,637
1,530,000
-
-
10,000
-
-
49,758,229
1,530,000
-
-
-
-
-
-
5,965,592
45,312,637
-
10,000
51,288,229
Transactions with Directors or Director-related entities
Managing Director Mr. Liosatos and Chairman Mr. Hardgrave have provided unsecured loans of $100,000 each to
the Company; the loans are repayable on 28 February 2025 and carry an interest rate of 13%. In addition, an
entity associated with Mr. Con Liosatos has provided a short-term loan of $500,000 to the Company. After the on-
charge of interest costs and bank charges, no profit has been made by the related party.
Inventory was purchased from an entity associated with Mr. Liosatos amounting to $14,704 (2022: nil), with
$14,704 included in trade payables at 30 June 2023 (2022: nil).
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 2022
Non-executive Directors
Mr. Mark Hardgrave
Mr. Tim Fry
Executives
Mr. Con Liosatos
Mr. Peter Crafter
Total
Year to 30 June 2023
Non-executive Directors
Mr. Mark Hardgrave
Mr. Tim Fry
Mr. Luke Donnellan (appointed 20
December 2022)
Executives
Mr. Con Liosatos
Mr. Peter Crafter
Total
END OF AUDITED REMUNERATION REPORT
12
108,674
57,750
492,827
247,921
907,172
108,674
57,750
30,874
495,192
247,921
940,411
-
-
15,971
19,714
35,685
-
-
-
14,637
27,071
41,708
-
-
-
-
-
-
-
-
-
-
-
10,867
5,775
27,500
24,792
68,934
11,411
6,064
3,242
27,500
26,032
74,249
-
-
-
-
-
-
-
-
-
-
-
-
-
10,524
5,349
15,873
-
-
-
12,293
6,089
18,382
-
-
-
119,541
63,525
546,822
297,776
- 1,027,664
-
-
-
120,085
63,814
34,116
549,622
307,113
- 1,074,750
-
-
-
-
-
-
-
-
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
Mr. Luke Donnellan
13
13
13
7
13
13
13
7
2
2
2
1
2
2
2
1
4
4
4
2
4
4
4
2
1
1
1
1
1
1
1
1
1
1
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
24 August 2023
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 2023, 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
Michael Climpson
Partner
Melbourne, 24 August 2023
www.grantthornton.com.au
ACN-130 913 594
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14
w
Traffic Technologies Ltd
Corporate Governance Statement
The Board of Directors 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
complied with
(Fourth Edition)
the ASX Corporate Governance Principles and Recommendations
(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
during the financial year ended 30 June 2023. The Corporate Governance Statement was approved by the Board on
24 August 2023.
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 2023
Note
Consolidated
Consolidated
2023
$’000
58,048
697
(91)
(36,881)
(15,847)
(1,596)
(36)
(2,205)
(2,170)
(6,000)
2022
$’000
53,750
120
2,987
(33,840)
(15,803)
(1,300)
(40)
(1,811)
(2,333)
-
(6,081)
1,730
(1,805)
(2,214)
(7,886)
(484)
(3)
(4)
(7,889)
(488)
-
-
(7,889)
(488)
Cents
(1.08)
(1.08)
Cents
(0.08)
(0.08)
2
2
3
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
Impairment expense
Earnings/(loss) before interest and tax (EBIT)
Finance costs
Net loss for the year before income tax
Income tax expense
Net loss for the year
Other comprehensive income
Total comprehensive (loss)/income for the year
Loss 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 2023
Note
Consolidated
Consolidated
2023
$’000
2022
$’000
17
6
7
8
9
10
11
12
14
12
14
15
1,182
10,007
15,072
26,261
2,504
-
7,140
9,644
1,012
11,774
15,163
27,949
2,251
1,144
10,799
14,194
35,905
42,143
12,709
9,383
3,207
25,299
3,935
211
4,146
11,285
12,157
3,221
26,663
861
233
1,094
29,445
27,757
6,460
14,386
61,252
(54,792)
6,460
61,289
(46,903)
14,386
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
Contributed
Equity
$’000
Accumulated
Losses
$’000
54,755
(46,415)
Total
$’000
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
-
-
-
(7,889)
(7,889)
-
-
(7,889)
(7,889)
(37)
-
61,252
(54,792)
(37)
6,460
Traffic Technologies Ltd and Controlled Entities
Consolidated Statement of Changes in Equity
For the year ended 30 June 2023
Consolidated
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
Loss for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Share issue costs
At 30 June 2023
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 2023
Note
Consolidated
Consolidated
2023
$'000
64,843
(59,953)
13
(1,488)
(3)
3,412
747
(61)
(2,248)
(23)
(1,585)
-
(37)
9,013
2022
$'000
56,746
(55,624)
-
(1,686)
(4)
(568)
29
(173)
(2,193)
(762)
(3,099)
7,198
(665)
7,857
(9,391)
(11,039)
(909)
(333)
(1,657)
170
1,012
1,182
(953)
(321)
2,077
(1,590)
2,602
1,012
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Income tax paid
Net cash from operating activities
17
Cash flows from investing activities
Proceeds from sale of property, 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
Net increase/(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
17
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 2023
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. The consolidated entity has significantly reduced its exposure to debt; however, it
continues to be reliant on external funding facilities to ensure it can pay its debts as and when they fall due. Although
the Directors are confident that necessary funding facilities will remain in place for the foreseeable future, this
represents a material uncertainty that may cast doubt regarding going concern.
In assessing the appropriateness of the going concern concept the following factors have been taken into
consideration by the Directors:
•
The trading results for the period were affected by increased costs (including unfavourable foreign
exchange movements) which could not be recouped through immediate sales price rises, and supply chain
delays impacting workflow. Margins are expected to improve in future periods.
• A significant part of the loss for the financial year ended 30 June 2023 related to the non-cash impairment
•
provision against goodwill and intangible assets.
The consolidated entity is expected to generate positive earnings before interest, tax, depreciation and
amortisation (EBITDA) in the 2024 financial year.
The consolidated entity has a strong order book and long-term customer term contracts.
•
• During the year the Company refinanced its facilities with a 36-month $10 million invoice finance facility
and $5 million trade finance facility with Earlypay Ltd and extended the balance of the term loan with First
Samuel to December 2025.
20
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2023
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
d) Basis of consolidation
The consolidated financial statements comprise the financial statements of the parent entity (Traffic Technologies
Ltd) and its subsidiaries. Subsidiaries are consolidated from the date on which control is obtained by the Group and
cease to be consolidated 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 are consistent with the accounting policies adopted by the Group.
Business combinations are accounted for using the acquisition method. The acquisition method involves recognising
at acquisition date 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 is 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 are
recognised in the statement of comprehensive income. 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 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 2023
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Recognition of deferred tax assets
The extent to which deferred tax assets, temporary differences and tax losses are recognised is based on an
assessment whether future taxable profits will be available to offset deductible temporary differences and tax loss
carry-forwards.
Allowance for impairment loss on receivables
Where receivables are outstanding beyond the normal trading terms, the likelihood of recovery of these receivables
is assessed. 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 is based on historical experience (for plant and equipment) and lease terms
(for leased assets). In addition, the condition of assets is assessed 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, judgements are made 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 is used in determining this provision.
f)
Revenue
Revenue from the sale of goods and the rendering of services is recognised as follows. To determine whether to
recognise revenue, the Group follows a 5-step process:
Identifying the contract with a customer;
Identifying the performance obligations;
1.
2.
3. Determining the transaction price;
4. Allocating the transaction price to the performance obligations; and
5. Recognising revenue when performance obligations are satisfied.
Revenue is recognised either at a point in time or over time as the Group satisfies performance obligations by
transferring the goods or services to its customers, as follows:
Sale of goods
Revenue from the 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.
Other income
Other income is 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 2023
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
g)
Finance costs
Finance costs are recognised using 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 are measured at the amount expected to be recovered from or paid to the taxation
authorities. Current income tax expense is the tax payable on taxable income, after taking account of tax losses and
other tax credits.
Deferred income tax assets are recognised for deductible temporary differences, unused tax losses and tax credits,
to the extent that is probable that taxable profit will be available against which the deductible temporary differences,
unused tax losses and 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 comprise cash at bank and in hand and short-term deposits with an original maturity of
three months or less.
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.
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 – weighted average cost.
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 2023
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:
Right-of-use assets: lease term
Plant and equipment: 10 years.
Office equipment: 5 years
Motor vehicles: 10 years
Leasehold improvements: 10 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. 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). 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)
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.
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.
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.
24
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2023
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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).
o)
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 30-60 days of recognition.
p)
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.
q)
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.
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.
At the lease 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.
25
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2023
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Lease payments included in the measurement of the lease liability are made up of fixed payments, 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.
r)
Provisions
Employee benefits
Provision is made for the Group’s liability for employee benefits arising from services rendered by employees to
reporting date. Employee benefits expected to be settled wholly within one year are measured at the amounts
expected to be paid when the liability is settled plus related on-costs. All other employee benefit liabilities are
measured at the present value of the estimated future cash outflows to be made for those benefits.
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.
26
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2023
2. REVENUE AND OTHER INCOME
Revenue
Sale of goods – recognised at point in time
Sale of services – recognised over time
Other revenue
Revenue from contracts with customers
Other income
Net profit on disposal of fixed assets
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
Depreciation, amortisation and impairment expenses
Depreciation
Amortisation
Impairment
Total depreciation amortisation and impairment expenses
Finance costs
Interest on loans
Lease interest
Borrowing costs
Amortisation of capitalised transaction costs
Total finance costs
27
Consolidated
2023
$’000
Consolidated
2022
$’000
53,008
4,879
161
58,048
681
16
697
48,927
4,685
138
53,750
21
99
120
Consolidated
2023
$’000
Consolidated
2022
$’000
11,606
1,295
2,946
15,847
1,834
277
94
2,205
1,120
1,050
6,000
8,170
1,488
191
80
46
1,805
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
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2023
4.
INCOME TAX
Income Tax Expense
Current income tax
Deferred income tax
Income tax expense reported in the statement of comprehensive income
Reconciliation of income tax expense applicable to accounting loss
before income tax calculated at the statutory tax rate to aggregate income
tax expense
Accounting loss before income tax
Income tax benefit at the Group’s statutory income tax rate of 30% (2022:
30%)
Non-deductible expenditure
Other deductible expenditure
Non-refundable foreign tax
Prior year under/over provision
Net benefit of R&D tax incentive
Set-off of deferred tax liability
Unrecognised DTA on current year tax losses
Aggregate income tax expense
Deferred Tax Balances
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
Statement of Financial Position
Consolidated
2022
$’000
Consolidated
2023
$’000
(2,978)
1
(81)
75
1,011
14
19
-
56
-
30
134
(1,719)
1,719
-
(2,614)
15
(93)
76
1,022
14
18
(4)
32
-
40
118
(1,376)
1,376
-
28
Consolidated
2023
$’000
Consolidated
2022
$’000
3
-
3
(7,886)
(2,366)
1,821
(2)
3
(9)
626
(344)
274
3
4
-
4
(484)
(145)
23
-
4
(61)
486
(303)
-
4
Statement of Profit or Loss
Consolidated
Consolidated
2023
$’000
2022
$’000
(184)
(12)
10
(19)
(58)
-
1
(4)
-
-
-
77
(189)
189
-
(364)
(14)
12
(1)
(11)
-
1
4
24
-
(10)
16
(343)
343
-
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2023
4. INCOME TAX (continued)
The following tax losses have not been recognised as a deferred tax asset:
Carried forward tax offsets
Unrecognised deferred tax assets
Consolidated
2023
$’000
Consolidated
2022
$’000
1,726
1,726
1,280
1,280
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 19.
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
2023
$’000
2022
$’000
Net loss attributable to ordinary equity holders of the parent
(7,889)
(488)
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
2023
Thousands
Consolidated
2022
Thousands
733,355
733,355
620,218
620,218
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 2023 (2022: nil).
29
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2023
6.
TRADE AND OTHER RECEIVABLES
Trade receivables
Allowance for credit loss
Prepaid stock
Other prepayments
Other receivables
Ageing of trade receivables:
1- 30 days
31-60 days
61-90 days
91 days and over
Movement in provision for credit loss:
Balance at the beginning of the year
Charge for the year
Amounts recovered during the year
Amounts written off as uncollectible
Balance at the end of the year
Consolidated
2023
$’000
Consolidated
2022
$’000
8,339
(186)
8,153
671
640
543
10,007
5,942
1,562
440
395
8,339
106
94
(1)
(13)
186
9,418
(106)
9,312
1,447
697
318
11,774
5,857
2,469
882
210
9,418
104
2
-
-
106
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, the Group’s credit loss experience over the previous five years and the overall
quality of the Group’s trade receivables.
7.
INVENTORIES
Raw materials
Work in progress and sub-assemblies
Finished goods
Consolidated
2023
$’000
Consolidated
2022
$’000
6,230
2,958
5,884
15,072
6,501
2,518
6,144
15,163
Raw materials comprise stock items and components purchased for use in the manufacturing process. Work in
progress and sub-assemblies comprise partially manufactured goods at various stages of the manufacturing process.
Finished goods are completed goods available for sale.
30
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2023
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 2021 net book value
Additions
Disposals
Depreciation expense
At 30 June 2022 net book value
Additions
Disposals
Depreciation expense
At 30 June 2023 net book value
Carrying amounts
At 30 June 2022
Cost
Accumulated depreciation
Carrying amounts at 30 June 2022
At 30 June 2023
Cost
Accumulated depreciation
Carrying amounts at 30 June 2023
315
435
(7)
(115)
628
52
-
(115)
565
1,068
(440)
628
1,121
(556)
565
491
1,044
-
(792)
743
1,326
-
(814)
1,255
2,492
(1,749)
743
3,817
(2,562)
1,255
943
173
(1)
(235)
880
60
(66)
(190)
684
8,456
(7,576)
880
8,180
(7,496)
684
Total
$’000
1,749
1,652
(8)
(1,142)
2,251
1,438
(66)
(1,119)
2,504
12,016
(9,765)
2,251
13,118
(10,614)
2,504
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.
31
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2023
9. GOODWILL
Carrying amounts of goodwill allocated
to each cash-generating unit
Signals
Carrying amount brought forward
Less: Impairment expense (see note 10)
Carrying amount carried forward
Installation and maintenance
Carrying amount brought forward
Less: Impairment expense (see note 10)
Carrying amount carried forward
Total carrying amount
Impairment of Goodwill and Intangible Assets
Consolidated
2023
$’000
Consolidated
2022
$’000
18
(18)
-
1,126
(1,126)
-
-
18
-
18
1,126
-
1,126
1,144
The Group performed impairment testing as at 30 June 2023 and 30 June 2022. Management has considered the
sensitivity of value in use calculations to changes in assumptions.
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 Group identified three cash-generating units (CGU’s) which are Signals, Installation and Maintenance, and
Controllers. Signals CGU specialises in the design, manufacture and installation of traffic signals, portable roadside
technology, variable message signs (VMS) emergency telephones and road lighting. Controllers CGU develops and
manufactures traffic controllers. Installation and maintenance CGU provides installation and maintenance traffic
products.
The recoverable amount of each cash-generating unit has been determined based on a value in use calculation using
post-tax cash flow projections based on financial budget revenue forecasts prepared by management covering a
one-year period, with the following key assumptions for all three CGU’s referred to below:
Growth rate beyond budget period (years 2-5)
Growth rate beyond 5 years
Post-tax discount rate (WACC)
2023
5%
3%
16.3%
2022
5%
3%
13.3%
As at 30 June 2023, the market capitalisation of the Group was below the book value of its equity and operating
profit from the CGU’s was lower than budget, indicating potential impairment of goodwill and intangible assets. The
Group calculated the recoverable amount of each CGU at that date and recognised an impairment expense ($6.0m)
against the carrying value of goodwill and intangible assets so that each CGU was measured at its recoverable
amount.
32
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2023
9. GOODWILL (continued)
The CGU’s affected by impairment testing were:
Signals - $2.3m impairment of development costs (see notes 9 and 10)
Installation and maintenance – $1.1m impairment of goodwill (see note 9)
Controllers – $2.6m impairment of development costs and software costs (see note 10)
.
10. INTANGIBLE ASSETS
Development
Costs
$’000
Software
Costs
$’000
Patents &
Trademarks
$’000
9,720
2,015
(994)
10,741
1,996
(861)
(4,855)
7,021
20,961
(10,220)
10,741
22,955
(15,934)
7,021
40
156
(175)
21
232
(170)
(1)
82
2,308
(2,287)
21
2,540
(2,458)
82
36
23
(22)
37
20
(20)
-
37
573
(536)
37
593
(556)
37
Total
$’000
9,796
2,194
(1,191)
10,799
2,248
(1,051)
(4,856)
7,140
23,842
(13,043)
10,799
26,088
(18,948)
7,140
Consolidated Consolidated
2022
$’000
2023
$’000
9,066
3,643
12,709
6,927
4,358
11,285
Consolidated
Movement in carrying amounts
At 1 July 2021 net book value
Additions
Amortisation
At 30 June 2022 net book value
Additions
Amortisation
Impairment
At 30 June 2023 net book value
Carrying amounts
At 30 June 2022
Cost
Accumulated amortisation
Carrying amounts at 30 June 2022
At 30 June 2023
Cost
Accumulated amortisation
Carrying amounts at 30 June 2023
11. TRADE AND OTHER PAYABLES
Trade creditors
Sundry creditors and accruals
33
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2023
12. INTEREST BEARING LOANS AND BORROWINGS
Consolidated
2023
$’000
Consolidated
2022
$’000
Note
Current borrowings
Term loan (ADM Capital)
Debtor & trade finance facility (Early Pay)
Debtor & trade finance facility (Timelio)
Term loan (First Samuel)
Unsecured loan (Directors)
Equipment lease liabilities
Property lease liabilities
Non-current borrowings
Trade finance facility (Early Pay)
Term loan (First Samuel)
Unsecured loans (Directors)
Equipment lease liabilities
Property lease liabilities
Capitalised borrowing costs
Financing facilities available
Total facilities at reporting date
Term debt facility (ADM Capital)
Debtor & trade finance facility (Timelio)
Debtor & trade finance facility (Early Pay)
Term loan (First Samuel)
Unsecured loans (Directors)
Bank guarantee facility (Westpac)
Facilities used at reporting date
Term debt facility (ADM Capital)
Debtor & trade finance facility (Timelio)
Debtor & trade finance facility (Early Pay)
Term loan (First Samuel)
Unsecured loans (Directors)
Bank guarantee facility (Westpac)
Facilities unused at reporting date
Term debt facility (ADM Capital)
Debtor & trade finance facility (Timelio)
Debtor & trade finance facility (Early Pay)
Term loan (First Samuel)
Unsecured loans (Directors)
Bank guarantee facility (Westpac)
34
13
13
13
13
-
7,258
-
1,000
500
158
467
9,383
840
2,000
200
390
791
(286)
3,935
-
-
14,000
3,000
700
254
17,954
-
-
8,098
3,000
700
254
12,052
-
-
5,902
-
-
-
5,902
1,274
-
6,907
3,500
-
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
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2023
12.
INTEREST BEARING LOANS AND BORROWINGS (continued)
Terms and conditions relating to the above financial instruments
Lender
Facility Amount
Early Pay
$14.0m+
First Samuel
Unsecured loans
$3.0m+
$0.7m
Facility Type
Debtor & trade finance
Term loan
Related party loans
Interest
Expiry
Security
11.1%-12.65% + fees
12%
13%
17 January 2026
15 December 2025
28 February 2025
First ranking charge
Second ranking charge
Unsecured
+ First Samuel loan reducing to $2.0m in July and October 2023 with a further $1.0m to be refinanced by Early Pay.
Previous facilities with ADM Capital and Timelio were extinguished during the year.
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
Lease payments not recognised as a liability
Consolidated
2023
$’000
Consolidated
2022
$’000
158
467
625
390
791
1,181
1,806
815
1,375
2,190
(384)
1,806
113
363
476
431
430
861
1,337
589
947
1,536
(199)
1,337
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:
Shot-term property lease expense
35
Consolidated
2023
$’000
Consolidated
2022
$’000
669
767
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2023
14. PROVISIONS
Current
Employee benefits
Warranty provision
Non-current
Employee benefits
15. CONTRIBUTED EQUITY
Ordinary shares
At 30 June 2022
Placement
Share issue costs
At 30 June 2023
Consolidated
2023
$’000
Consolidated
2022
$’000
3,160
47
3,207
3,174
47
3,221
211
233
No. of
Shares ‘000
722,170
35,500
-
$’000
61,289
-
(37)
757,670
61,252
In March 2023 the Company entered into an At-The-Market (ATM) subscription facility with Dolphin Corporate
Investments (DCI). The ATM facility provides TTI with up to $3,000,000 of standby equity over the next 3 years. The
Company issued DCI with 35,500,000 shares as collateral under the ATM agreement from its LR7.1 capacity at nil
consideration to DCI. The Company may, at any time, buy back the collateral shares for no consideration (subject to
shareholder approval).
In the event the Company utilises the ATM facility, the Company is able to set its own floor price and the final issue
price will be calculated as the greater of the floor price set or a 5.5% discount to the Volume Weighted Average Price
(VWAP) achieved by DCI over a period of the Company’s election and sole discretion.
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.
36
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2023
16. 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, 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
2023
$’000
Consolidated
2022
$’000
1,182
10,007
11,189
1,012
11,854
12,866
(12,709)
(13,318)
(26,027)
(11,365)
(13,018)
(24,383)
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
Capitalised borrowing costs
Total financial liabilities
37
Consolidated
2023
$’000
Consolidated
2022
$’000
1,182
1,182
1,012
1,012
(3,700)
(8,098)
(548)
(1,258)
286
(13,318)
(4,774)
(6,907)
(544)
(793)
-
(13,018)
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2023
16. 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 2023 61% of the Group's borrowings were at a variable rate of
interest (2022: 53%). 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 2023
Payables
Interest bearing loans & borrowings
Finance lease liabilities
Bank guarantees
Total financial liabilities
Year ended 30 June 2022
Payables
Interest bearing loans & borrowings
Finance lease liabilities
Bank guarantees
Total financial liabilities
38
≤ 6
months
$’000
6-12
months
$’000
12,709
9,089
313
-
22,111
11,285
12,220
589
-
24,094
-
360
313
-
673
-
363
474
-
837
1 – 5
years
$’000
-
3,464
1,181
254
4,899
-
385
474
181
1,040
> 5
years
$’000
Total
$’000
-
-
-
-
-
-
-
-
-
-
12,709
12,913
1,807
254
27,683
11,285
12,968
1,537
181
25,971
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2023
16. 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.
Sensitivity Analysis
The following table illustrates sensitivities to the Group’s exposure to changes in interest rates on borrowings and
exchange rates on purchases.
Year ended 30 June 2023
+/- 1% change in interest rates
+/- 5% change in AUD/USD exchange rate
Year ended 30 June 2022
+/-1% change in interest rates
+/- 5% change in AUD/USD exchange rate
Profit/(loss)
Equity
$’000
$’000
+/- 81
+/- 81
+/- 1,228
+/- 1,228
+/- 72
+/- 72
+/- 978
+/- 978
39
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2023
17. NOTES TO THE STATEMENT OF CASH FLOWS
Reconciliation of cash
Cash at bank and on hand
Reconciliation of loss after tax to net cash flows from operations
Net loss
Adjustments for:
Depreciation and amortisation of non-current assets
Impairment of goodwill and intangible assets
Profit on sale of fixed assets
Foreign exchange loss/(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
2023
$’000
1,182
Consolidated
2022
$’000
1,012
(7,889)
(488)
2,170
6,000
(681)
(4)
46
94
(3)
1,768
91
1,856
(36)
3,412
2,333
-
(21)
(7)
-
-
(64)
(2,299)
(2,987)
2,874
91
(568)
Non-cash financing and investing activities
During the year the Group acquired property, plant and equipment (excluding property right-of-use assets) with an
aggregate value of $52,122 (2022: $435,012) by means of leases.
18. CLAIMS AND CONTINGENCIES
Guarantees
The Company was a party to a deed of cross guarantee with its wholly-owned subsidiaries. However, none of the
subsidiaries meet the large companies threshold. At this stage, the deed has no effect. 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.
40
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2023
19. 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
2023
%
Interest
the Group
2022
%
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
100
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
41
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2023
20. RELATED PARTY TRANSACTIONS
Transactions with Shareholders
First Samuel Limited (one of the Company’s lenders – see note 12) holds 36,947,085 ordinary shares in the
Company.
Transactions with Directors or Director-related entities
Managing Director Mr. Liosatos and Chairman Mr. Hardgrave have provided unsecured loans of $100,000 each to
the Company; the loans are repayable on 28 February 2025 and carry an interest rate of 13%. In addition, an
entity associated with Mr. Con Liosatos has provided a short-term loan of $500,000 to the Company. After the on-
charge of interest costs and bank charges, no profit has been made by the related party.
Inventory was purchased from an entity associated with Mr. Liosatos amounting to $14,704 (2022: nil), with
$14,704 included in trade payables at 30 June 2023 (2022: nil).
21. SUBSEQUENT EVENTS
Subsequent to balance date there have been no significant events which have affected the operations of the Group.
22. AUDITOR’S REMUNERATION
Amounts received or due and receivable by:
Grant Thornton, for the audit of the financial report
Consolidated
2023
$
Consolidated
2022
$
108,500
99,000
42
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2023
23. KEY MANAGEMENT PERSONNEL DISCLOSURES
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
2023
$
Consolidated
2022
$
982,119
74,249
18,382
1,074,750
942,857
68,934
15,873
1,027,664
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 2023 or at the date of this report (2022: 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.
43
Traffic Technologies Ltd and Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2023
24. 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.
Revenue from government agencies accounted for 21% of sales (2022: 26%). Revenue from the largest non-
government customer accounted for 9% (2022: 6%) of sales.
The Group operates predominately in Australia.
Revenue by geographic location:
Australia
Overseas
Total
25. 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
Consolidated
Consolidated
2023
$’000
53,910
4,138
58,048
2022
$’000
48,674
5,076
53,750
2023
$’000
4,787
52,723
72,571
76,055
61,252
(84,584)
(23,332)
(3,141)
(3,141)
9,740
2022
$’000
3,169
51,012
66,326
71,165
61,289
(81,442)
(20,153)
(3,598)
(3,598)
6,907
44
Traffic Technologies Ltd
Directors’ Declaration
For the year ended 30 June 2023
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 2023 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.
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
24 August 2023
45
ASX Additional Information
As at 11 August 2023
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 2023.
a)
Distribution of Shareholdings
Ordinary Shares
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
Name
Number of
Holders
157
30
39
549
499
1,274
530
Number of
Shares
22,205
80,148
343,292
25,416,914
731,807,629
757,670,188
8,116,885
1
2
3
4
5
6
7
8
9
RSAM INVESTMENTS PTY LTD
FIRST SAMUEL LTD ACN 086243567
DOLPHIN CORPORATE INVESTMENTS PTY LTD
ANNLEW INVESTMENTS PTY LTD
MR LAMBROU LIOSATOU*
MR ROBERT SCOTT ANTHONY MINNEY
MR PETER GEOFFREY HOLLICK + MS HELEN THERESE PATTINSON
BROWNLOW PTY LTD
BANNABY INVESTMENTS PTY LTD
10
LIOSATOS SUPERANNUATION PTY LTD *
11 GP MANAGEMENT P/L
12 MR MOHAMMED ABOU-EID
13
CLAPSY PTY LTD
14 MRS TRUDI MILNE
15 DOLPHIN CAPITAL PARTNERS PTY LTD
16 MORGRAE PTY LTD
17
BERKSHIRE NOMINEES PTY LTD
18 MR MORGAN LITTLEWOOD
19 HEDDERWICK PTY LTD
20 MR VINCENT GALANTE + MRS RUTH ELIZABETH LEAMING
Total
* Associated with Directors.
46
No. of Shares
% Held
50,148,883
36,947,085
35,500,000
34,400,000
27,950,475
20,257,821
6.62%
4.88%
4.69%
4.54%
3.69%
2.67%
20,000,000
2.64%
17,722,499
17,606,063
17,362,162
16,174,890
15,500,000
14,848,359
12,500,000
12,000,000
11,500,000
11,064,003
8,006,343
6,569,139
6,446,356
2.34%
2.32%
2.29%
2.13%
2.05%
1.96%
1.65%
1.58%
1.52%
1.46%
1.06%
0.87%
0.85%
392,504,078
51.80%
ASX Additional Information
As at 11 August 2023
c)
Substantial Shareholders (greater than 5%)
Holder Name
Mr. Robert Minney
Mr. Con Liosatos
d)
Voting Rights
All ordinary shares carry one vote per share without restriction.
e) Ordinary shares subject to voluntary escrow restrictions
None.
Ordinary Shares
Number
70,406,704
45,312,637
%
9.29
5.98
47
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
Independent Auditor’s Report
To the Members of Traffic Technologies Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Traffic Technologies Limited (the Company) and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 30 June 2023, the
consolidated statement of profit or loss and other comprehensive income, consolidated statement of
changes in equity and consolidated statement of cash flows for the year then ended, and notes to the
consolidated financial statements, including a summary of significant accounting policies, and the Directors’
declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
2001, including:
a giving a true and fair view of the Group’s financial position as at 30 June 2023 and of its performance for
the year ended on that date; and
b complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section
of our report. We are independent of the Group in accordance with the auditor independence requirements
of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled
our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
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.
48
w
Material uncertainty related to going concern
We draw attention to Note 1(c) in the financial statements, which indicates that the Group has incurred a trading
loss and continues to be reliant on external funding. As stated in Note 1(c), these events or conditions, along with
other matters as set forth in Note 1(c), indicate that a material uncertainty exists that may cast doubt on the
Group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial report of the current period. These matters were addressed in the context of our audit of the financial
report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters.
In addition to the matter described in the Material uncertainty related to going concern section, we have
determined the matters described below to be the key audit matters to be communicated in our report.
Key audit matter
How our audit addressed the key audit matter
Impairment of goodwill and intangible assets
(Note 9, 10)
As at 30th June 2023, prior to the recorded
provision for impairment, the Group carried
goodwill at $1,144,000, capitalised development
costs at $11,874,000, patents and trademarks at
$38,900 and software costs at $83,400 at 30 June
2023.
Management recorded a provision for impairment
of intangible assets of $6,000,000 which
comprises impairment of goodwill of $1,144,000,
development costs of $4,855,000 and software
costs of $1,000.
AASB 136 Impairment of Assets prescribes
Goodwill to be assessed for impairment annually
by Management and, in addition, requires
Management to perform annual impairment testing
for intangible assets not yet available for use.
Per AASB 136, management must allocate non-
financial assets, including goodwill and other
intangible assets, to CGUs for impairment testing.
Management evaluates each CGU for impairment
by comparing the carrying amount with the
recoverable amount. The recoverable amount is
determined by the higher value of its fair value less
costs of disposal and its value-in-use.
The Group determined the recoverable amount
using a discounted cash flow model (value-in-use).
This method involves making significant estimates
and judgements, including forecasting future cash
flows.
This area is a key audit matter due to the
significant balance carried by the Group and the
complexity, subjectivity, and estimation uncertainty
involved in estimating the recoverable amount.
Our procedures included, amongst others:
• Understanding and documenting Management’s process
and controls related to the assessment of impairment,
including Management’s identification of CGUs and the
calculation of the recoverable amount for each CGU;
• Evaluating the value-in-use models against the
requirements of AASB 136;
• Evaluate Management’s assessment of impairment
indicators for intangible assets previously capitalised;
• Evaluating Management’s value-in-use models by:
−
Testing the mathematical accuracy of the
calculations;
− Challenging the appropriateness of Management’s
revenue and cost forecasts including comparing the
forecast cash flows to historical growth rates
achieved;
−
−
Assessing management’s estimates and
judgements for growth rates applied; and
Assessing the appropriateness of discount rates
applied to forecasted future cash flows.
• Performing sensitivity analysis on the significant inputs
and assumptions within the models; and
• Comparing the recorded impairment provision to the
model and evaluating if it is reasonable;
• Assessing the adequacy of financial statement
disclosures
• Assessing the appropriateness of discount rates applied
to forecasted future cash flows. We have tested that the
discount rate used is within the range advised by our
Corporate Finance expert for this group, adjusted for
movements in the cash rate during the year.
49
Grant Thornton Audit Pty Ltd
Capitalised development costs (Note 10)
The Group capitalises costs directly attributable to
traffic product development in accordance with
AASB 138 Intangible Assets.
Development costs are directly attributable to the
development of new products are capitalised and
presented as intangible assets on the consolidated
statement of financial position. The carrying
development costs as at 30 June 2023 amounts to
$11,874,000.
Judgement is required in determining whether the
costs meet the capitalisation criteria under AASB
138 Intangible Assets. The measurement of
capitalised development costs by the Group is
based on the time and overhead costs associated
with individuals employed by the Group for the
specific purpose of developing new products.
Capitalised development costs are amortised over
a useful life of five years.
Product development is core to the Group’s
operations, and it is a key asset on the Group’s
consolidated statement of financial position. Given
the subjectivity and judgement applied by the
Group to meet the requirements of AASB 138 with
respect to capitalisable expenditure, we
determined this area a key audit matter.
Our procedures included, amongst others:
• Obtaining an understanding of internal processes and
controls, including reviewing Management’s
capitalisation policy for compliance with AASB 138;
• Testing a sample of costs capitalised in the year and
vouching to supporting documentation against the
criteria of AASB 138;
• Evaluating the Group’s position that the underlying
assets are in the development phase, are technically
feasible, will generate probable future economic
benefits, and the ability to bring the asset to completion
for use or sale, amongst other requirements of AASB
138;
•
Inquiring of Management to understand the nature and
status of key projects;
• Assessing Management’s useful economic life
determination, including amortisation charge for
consistency with accounting policies adopted; and
• Assessing the adequacy of financial statement
disclosures.
Information other than the financial report and auditor’s report thereon
The Directors are responsible for the other information. The other information comprises the information included
in the Group’s annual report for the year ended 30 June 2023, but does not include the financial report and our
auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report or our knowledge
obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the financial report
The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the Directors determine is necessary to enable the preparation of the financial report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the Directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
50
Grant Thornton Audit Pty Ltd
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and
Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1_2020.pdf.This
description forms part of our auditor’s report.
Report on the remuneration report
Opinion on the remuneration report
We have audited the Remuneration Report included in pages 10 to 12 of the Directors’ report for the year
ended 30 June 2023.
In our opinion, the Remuneration Report of Traffic Technologies Limited, for the year ended 30 June 2023
complies with section 300A of the Corporations Act 2001.
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
Grant Thornton Audit Pty Ltd
Chartered Accountants
Michael Climpson
Partner
Melbourne, 24 August 2023
51
Grant Thornton Audit Pty Ltd
Traffic Technologies Ltd
31 Brisbane Street
Eltham 3095
Victoria, Australia
* Applicable
Sites
P: +61 3 9430 0222
F: +61 3 9430 0244
E: tt@trafficltd.com.au
trafficltd.com.au