Annual / Quarterly Financial Statement • Jul 16, 2008
Annual / Quarterly Financial Statement
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Fiscal year 2007/2008
| Consolidated Financial Statements as of 31 March 2008 | |
|---|---|
| (extract from the Annual Report for fi scal year 2007/08) | |
| • Mangement Report |
2 |
| • Statement of all Members of the Management Board pursuant to Section 82 Para. 4 No. 3 BörseG (Austrian Stock Exchange Act) |
15 |
| • Consolidated Financial Statements as of 31 March 2008 |
16 |
| • Auditor's Report |
64 |
This document is a partial translation into English of the annual fi nancial report ("Jahresfi nanzbericht") made in the original in German. The German document is authoritative. In particular, this document includes not all information on the stand alone fi nancial statements of Kapsch Traffi cCom AG contained in the German original.
After the global economy had been growing by an average of 5 % p.a. in real terms within the past fi ve years, economic growth began to slow down in 2007 with +4.7 %. This slowdown was caused by the economic crisis in the U.S. The real estate bubble burst, and stock market prices fell sharply. The fi nancial system of the U.S. and other countries are in deep crisis, which as a result of the close interdependency of international capital markets has repercussions also on other economic regions. Nevertheless, a global economic crisis is currently not likely.
In 2007, the U.S. economic data with a GDP growth of 2.2 % remained well below the prior year fi gure. For 2008, a further slowdown of U.S. growth to around 1 % is expected. In the past months, U.S. key interest rates were lowered signifi cantly from 5.25 % to 2.00 %. The U.S. unemployment rate rose to around 5 % by the end of 2007. In 2007, the U.S. dollar continued to be under strong pressure from the Euro. The EUR/USD ratio had already reached 1.60, and was around 1.54 at the balance sheet date as of 31 March 2008.
The economic growth in the emerging countries will also slow down due to the direct and indirect close interdependency with demand in the U.S., however, domestic demand in these countries and trade relations between them have grown signifi cantly stronger in the recent past. This rising consumer demand and investments in infrastructure mitigate the decrease in foreign demand. In China, after another record growth of +11.4 % in 2007, growth for 2008 is still expected to be high at +9.5 %.
In 2007, the economy in the Euro zone (EU-15) grew by 2.6 % in terms of real GDP – a positive development, yet still below the prior year level. Despite a relatively positive start into the year, a slowdown of economic growth to around 1.6 % is expected for 2008. Consumer demand in 2007 lagged well behind expectations due to the fact that the increase in income remained far below the rise in prices. Despite decreasing unemployment and after the effects from the increase in German VAT have eased, consumer demand is not expected to recover in 2008, since, on the one hand, individual countries might be affected by the slump in the real estate market and consumer confi dence in general fell sharply. In 2007, the unemployment rate in the Euro zone could again be reduced signifi cantly from 7.5 % to 7.1 %. In the current year 2008, a further reduction is expected. Beginning in 2009, however, unemployment is again expected to increase.
In 2007, the infl ation rate rose primarily as a result of rising prices for food and energy to around 3.2 % – however it is expected to ease in the second half of 2008. The new EU member states are less affected by crisis in the international fi nancial markets and the slowdown of the global economy and reported growth of 6 % also in 2007, which was supported primarily by strong consumer and investment demand. Even though considerable risks arise with regard to the high indebtedness of private households and sharp price increases, GDP is expected to grow by more than 5 % in 2008 and 2009. Key interest rates of the ECB have been raised gradually until June 2007 to 4.0 %, where they remained until the balance sheet date as of 31 March 2008 despite the ongoing reductions in the U.S. prime interest rate.
In Austria the economic growth rate of 3.4 % was again well above the level of Euro zone countries in 2007. In addition to the mainstay for many years – the growth in exports –, industrial investments also increased signifi cantly in 2007. Only the growth of private consumption slowed down once again over the prior year – primarily as a result of the signifi cantly higher infl ation. In Austria, a slowdown of economic growth of 2.1 % in real terms is expected for 2008. This has to be regarded as a consequence of the fi nancial market crisis originating from the U.S. real estate markets. The duration and scope of the crisis can currently not be estimated in full, which makes forecasting more diffi cult.
The growth in exports, which is additionally affected by the weak U.S. dollar as well as industrial production and investments, is slowing down considerably. Consumer demand, primarily as a result of signifi cantly higher prices, could not increase, either. In 2007, the labour market again improved signifi cantly. Thus, in 2007 the unemployment rate in Austria decreased from 4.7 % to 4.4 % (Eurostat) or from 6.8 % to 6.2 % (national), respectively. This trend is expected to continue in 2008. Infl ation rose to 2.2 % in 2007 and will continue to rise in 2008 (forecast 2.9 %).
According to analyses of the EU (European Union 2006, "Energy & Transport in Figures"), total freight traffi c increased by 2.8 % p.a. and in the aggregate by 31.3 % between 1995 and 2005. The rise in road freight traffi c amounted to 3.3 % p.a. and in the aggregate by 37.9 %. Despite political pressure, efforts to shift freight traffi c to rail and/or waterways failed.
For the TEN-V (Trans-European road Network), which in 2005 at a total length of 84,700 km accounted for approximately a quarter of the total primary road network, yet carried 40 % of the road freight traffi c, an average extension of 4,800 km p.a. is expected until 2020, 3,500 km of which are made up by existing roads. High investment requirements have been determined in particular for the new member states and the transport corridors to these countries. In its "White Paper: European transport policy for 2010" the European Commission estimated that investment costs until 2020 will amount to EUR 600 billion. The rising number of vehicles requires additional funds in order to maintain the existing infrastructure and expand it accordingly to meet the growing needs. Analysts, such as Frost & Sullivan, June 2004, assume that in the foreseeable future each country in Western Europe will have tolling systems in place. In Eastern European countries, in addition to electronic toll collection, paper vignette solutions will also be used. In addition to DSRC-(dedicated short-range communication) based systems, which operates on the CEN 5.8 GHz standard, satellite-based systems based on GNSS/GSM are expected. Considerable growth potential is also expected from the video-based automatic number plate recognition (ANPR) technology for the enforcement and road user charging/tolling of urban environments.
In urban environments, efforts are being made to reduce environmental pollution and traffi c through city charging/tolling systems. In 2003, London introduced a toll for the London City area and, by own accounts, traffi c could as a result be reduced by 15 %. A tender for the upgrade of the system is currently underway. Other major cities in the U.K. also consider introducing city charging/ tolling systems. In particular, Italy is trying to counter the environmental pollution in the cities with automated access restrictions to the historic city centers.
The volume of traffi c is rising not only in Europe, but as a general trend worldwide. Particularly in Asian countries increased demand for additional ETC lanes in previously traditional manual tolling systems is expected. With 3.38 million km in 2004, the road network in India ranks among the largest in the world. Only 2 % thereof account for national highways, that however, carry 40 % of the road freight traffi c. In China, 52,000 km of highways were constructed between 1992 and 2002 and an additional 200,000 km are planned.
The high funding requirements for the maintenance of the road infrastructure in the U.S. (Standard & Poor's research estimates that until 2020 USD 92 billion would have to be spent each year for the maintenance of highways and bridges and an additional USD 125.6 billion for their improvement) will lead to changed business models and the emergence of private concession models in the near future. Whereas in Europe DSRC technology prevails, which operates in the 5.8 GHz range, ETC systems in North America currently operate at a frequency of 915 MHz based on proprietary protocols. It is expected that the U.S. will gradually switch to a frequency of 5.9 GHz. The communication standard 5.9 GHz WAVE (Wireless Access in the Vehicular Environment), apart from the tolling application, is designed to be used in car-to-car communication to improve traffi c safety, expand traffi c telematics solutions and for infotainment as well as entertainment. These developments will probably allow European manufacturers to increasingly penetrate the North American market.
In the fi scal year 2007/08, Kapsch Traffi cCom Group, with revenues slightly down, was able to increase the operating result (EBIT) from EUR 26.9 million by 30 % to EUR 34.9 million.
In the Road Solution Projects (RSP) segment, revenues at EUR 47.0 million were signifi cantly below the prior year fi gure of EUR 105.0 million. Kapsch Traffi cCom Group sees the reasons for this mainly being due to the volatility affecting the project business in general and the Road Solution Projects (RSP) business segment in particular, as well as due to major projects not being awarded or delayed, as a consequence of which in the past fi scal year no major project comparable to the nationwide electronic truck tolling system in the Czech Republic could be acquired or realized.
In the Services, System Extensions, Components Sales (SEC) segment, revenue could be increased from EUR 80.6 million by 60 % to EUR 128.80 million. This increase is particularly due to recurring revenues from the technical and commercial operation of the nationwide electronic truck tolling system in the Czech Republic, as well as a high volume of components sales, most notably onboard units (OBUs). At approximately 2.5 million, sales of OBUs more than doubled from the 1.2 million in the previous fi scal year.
The fi scal year 2007/08 was characterized by the successful initial public offering in June 2007. Considerable interest in the company and the 3.7 million shares offered (including greenshoe shares) resulted in the offering being 14-times oversubscibed. At an offer price of EUR 32 per share, the shares could be sold at the upper end of the price range.
In the past fi scal year, Kapsch Traffi cCom Group could continue its international expansion with fi rst-time orders in New Zealand and South Africa, as well as major projects in Chile and Australia and the completion of the fi rst project in India:
One of the largest contracts for Kapsch TrafficCom Group is for the expansion of the nationwide electronic truck tolling system in the Czech Republic. The negotiations between the Czech Ministry of Transport (CZ MoT) and the consortium led by Kapsch TrafficCom AG were concluded on 28 December 2007. According to an amendment to the contract, it is intended to expand the system in phase II to around 1,000 km of highways and expressways, the expansion of which will be started by the end of 2017 at the latest. As of 1 January 2008, the Kapsch consortium has already put into operation 37 toll gantries on approximately 180 km of first-class roads. According to the current planning of the CZ MoT, distance-related tolling is planned to be extended to vehicles with more than 3.5 tons as early as 1 January 2009. Kapsch TrafficCom will adjust the existing tolling system. The number of on-board units (OBUs) necessary for this implementation has already been supplied in the past fiscal year. In connection with the expanded use of the existing tolling system, the Kapsch consortium was assigned to implement the technological interface for a future satellite-based toll collection on first-, second- and third-class roads as well as to supply the interface for telematics applications and to implement the application of lane traffic control on highway D1. Furthermore, the contract for the provision of services was extended to 10 years.
In the fi scal year 2007/08, the operating result (EBIT) rose by 30 % from EUR 26.9 million to EUR 34.9 million. With revenues slightly down (EUR 185.7 million compared to EUR 198.6 million), the EBIT margin increased from 14 % to 19 %.
The marked decline in cost of material and other production services (EUR 78.7 million compared to EUR 93.8 million in the prior year) mainly refl ects the decrease in revenues in the material-intensive RSP segment. The increase in staff costs primarily results from the higher number of staff due to the maintenance and operation of the Czech truck tolling system as well as the provision of capacities for major projects that were still at the proposal stage as of the balance sheet date.
The fi nancial result increased from EUR 0.2 million to EUR 7.9 million and refl ects the fi nancial situation changed by the successful initial public offering. In addition, it also includes income from currency translation differences amounting to EUR 7.4 million.
The result before taxes amounted to EUR 42.8 million (2006/07: EUR 27 million), the result after taxes amounted to EUR 32 million (2006/07: EUR 20.3 million).
From a segment perspective, the past fi scal year showed markedly different developments. Upcoming major projects in Central and Eastern Europe, which due to delays were still in the tender process or subject to preparation of a new tender, resulted in a decline in revenues and EBIT in the Segment Road Solution Projects (RSP) segment.
At the same time, revenues and the result in the Services, System Extensions, Components Sales (SEC) segment could be increased signifi cantly. The technical and commercial operation of the nationwide electronic truck tolling system in the Czech Republic and signifi cantly higher sales of components, most notably of on-board units (OBUs), contributed heavily to this development.
| Revenue by segment (share in revenues) | 2007/08 | 2006/07 | +/- % | 2005/06 | ||||
|---|---|---|---|---|---|---|---|---|
| Road Solution Projects (RSP) | ||||||||
| Revenues | in million EUR | 47.0 | 25 % | 105.0 | 53 % | -55 % | 18.7 | 16 % |
| EBIT | in million EUR | 6.3 | 11.6 | -46 % | 2.7 | |||
| Services, System Extentions, Component Sales (SEC) | ||||||||
| Revenues | in million EUR | 128.8 | 69 % | 80.6 | 41 % | 60 % | 76.2 | 66 % |
| EBIT | in million EUR | 29.1 | 15.8 | 84 % | 13.5 | |||
| Others (OTH) | ||||||||
| Revenues | in million EUR | 10.0 | 5 % | 13.0 | 7 % | -23 % | 21.3 | 18 % |
| EBIT | in million EUR | -0.4 | -0.5 | -12 % | 1.1 |
Whereas the RSP segment at a share of 53 % in total revenues was the mainstay of revenues in the past fi scal year, this distribution markedly shifted towards the SEC segment (69 % share in revenue) in the fi scal year 2007/08.
| Revenue by region (share in revenues) | 2007/08 | 2006/07 | +/- % | 2005/06 | ||||
|---|---|---|---|---|---|---|---|---|
| Central and Eastern Europe (incl. Austria) | in million EUR | 124.2 | 67 % | 157.3 | 79 % | -21 % | 68.4 | 59 % |
| Western Europe | in million EUR | 17.6 | 9 % | 12.9 | 6 % | 36 % | 18.9 | 16 % |
| Americas | in million EUR | 18.8 | 10 % | 15.4 | 8 % | 22 % | 9.4 | 8 % |
| Rest of World | in million EUR | 25.2 | 14 % | 13.0 | 7 % | 94 % | 19.5 | 17 % |
The analysis of revenues by region illustrates the international expansion of Kapsch Traffi cCom Group. In the fi scal year 2007/08 the share in revenues of the regions Americas and Rest of World could be raised signifi cantly.
In the past fi scal year, the balance sheet total of Kapsch Traffi cCom Group increaded by 31 % from EUR 227.2 million to EUR 298.4 million. Apart from a signifi cant increase in trade receivables (EUR +58.4 million), this was primarily due to the signifi cant increase in cash and cash equivalents (EUR +27.2 million). Due to this increase, the net debt in the amount of EUR -12.5 million as of 31 March 2007 could be transformed into net assets in the amount of EUR 28.4 million as of 31 March 2008.
On the liabilities side, the extension of the balance sheet is primarily refl ected in equity. In the past fi scal year equity grew by EUR 87.8 million to EUR 133.4 million (31 March 2007: EUR 45.6 million). Apart from the profi t for the year, this was particularly due to the successful initial public offering, in the course of which the share capital was raised by EUR 2.2 million and the capital reserve by EUR 64.8 million. Kapsch Traffi cCom Group thus showed an equity ratio of 45 % as of the balance sheet date 31 March 2008 (31 March 2007: 20 %).
In the fi scal year 2007/08, the cash fl ow from operating activities could be improved to EUR -10.5 million (2006/07: EUR -38.8 million). However, due to the strong increase in trade receivables and the reduction of trade payables, most notably in connection with the project in the Czech Republic, it was still negative.
With investments in property, plant and equipment and intangible assets of EUR 4.0 million (2006/07: EUR 2.3 million), the company had an overall free cash fl ow of EUR -14.8 million (2006/07: EUR -39.1 million).
Due to purchases of securities, the cash fl ow from investing activities was also negative. Due to the high cash fl ow from fi nancing activities as a result of the initial public offering, the total amount of cash and cash equivalents increased by EUR 27.2 million to EUR 47.4 million, which is available to the company for further expansion.
The toll transaction rate is a ratio for the accuracy and reliability of a tolling system. It shows the number of successful transactions in relation to all potential toll collection transactions of vehicles equipped with a functioning on-board unit (OBU). A high toll transaction rate translates to maximum toll revenue.
In 2007, the average toll transaction rate of the existing truck tolling system in Austria amounted to 99.7 %.1
During the same period, the average performance rate of the nationwide electronic system in the Czech Republic (phase I) was approximately 97.5 %.1
1 Calculation of the average performance rate is based on methodologies agreed with the respective customer comparisons of average performance rates in different projects are therefore limited.
In the fi scal year 2007/08, the average number of personnel in the Kapsch Traffi cCom Group amounted to 791 persons. As of 31 March 2008, 824 persons were employed.
The Group places great importance on the continued training and education of its employees. In this context, not only is professional education and training promoted, but also seminars and training sessions for the development of one's own personality or ability to work in a team are offered. Within the framework of the Kapsch Academy, training sessions tailored to the particular needs of employees are offered. Selected employees are prepared for their future tasks by a management trainee program.
The Group has a job rotation program in place to promote the international exchange of staff between the locations in Austria, Sweden and Argentina.
Depending on the years of service and profi ts, the company pays contributions for its employees to an external pension fund.
Furthermore, Kapsch Traffi cCom Group currently has a profi t participation program in place, by which the company provides its staff with the opportunity to share in the profi t of the Kapsch Traffi c Com Group.
Kapsch Traffi cCom AG is certifi ed pursuant to OHSAS 18001 for occupational health and safety and has implemented the necessary measures in its internal processes.
There are valid certifi cates for quality pursuant to ISO 9001 and environment pursuant to ISO 14001. For the future, it is planned to meet the social responsibility, in particular to use natural resources even more economically and responsibly.
Living up to its socio-political responsibility, the entire Kapsch Group supports – organized by Kapsch AG – a number of contemporary art and cultural institutions or projects and selected training initiatives, as well as extensive social measures. The company shows this attitude not only to the outside. Employees of Kapsch Traffi cCom Group also appreciate this sustained social responsibility of the company which is manifested in the form of many programs and measures.
As a technology company, Kapsch Traffi cCom Group operates in an ever changing environment. Risks are therefore part of its day-to-day business. Risk for the company means the possibility of divergence from company objectives; thus, the risk concept includes positive (chances) as well as negative (risks) divergences from planned objectives.
In the fi scal year 2007/08, risk management was positioned as a separate function within fi nances of Kapsch Traffi cCom AG. Under the responsibility of a central risk manager, risk management in institutionalized processes collects and analyses all relevant chances and risks of the Group's projects and provides the basis for the timely planning and implementation of control measures. It is planned to gradually develop risk management into a company-wide chance and risk management. The primary objective in this
context is not to avoid risks, but to deal with risks in a controlled and deliberate manner and to recognize and realize opportunities as they arise in time in order to make a valuable contribution to the management of the company.
The material risks of the Group and the respective risk management measures are briefl y explained below:
A major portion of the revenues of Kapsch Traffi cCom Group is generated in the Road Solutions Projects (RSP) segment. In this segment, the Group regularly participates in tenders for the implementation and operation of large electronic toll collection (ETC) systems. On the one hand, there is the risk that tenders in which the Group participates or plans to participate are delayed or withdrawn, e.g., as a result of political changes or appeals or legal actions by unsuccessful bidders. On the other hand, there is the risk that Kapsch Traffi cCom Group does not succeed for technological, fi nancial, formal or other reasons with offers for new projects. Follow-up revenues from maintenance agreements and from the technical operation also depend on the successful participation in tenders for ETC systems.
The strategy of Kapsch Traffi cCom Group is aimed at reducing the volatility of sales/revenues through increased geographic diversifi cation and increased diversifi cation of the product portfolio.
In connection with the implementation of ETC systems, Kapsch Traffi cCom Group is most of the times obliged by contract to issue performance guarantees. Since ETC systems are frequently sophisticated and technologically complex systems and have to be implemented within a short time frame, system and product defects can occur due to the limited time available for tests. In case the guaranteed performance levels are not achieved or deadlines exceeded, penalties usually have to be paid. A signifi cant delay in a project or failure to achive guarantees performance levels in a project would also reduce the chances of success in future tenders for ETC systems.
Kapsch Traffi cCom Group applies risk management methods and risk management procedures in order to guard against risks associated with projects.
In numerous ETC systems, the awarding authorities are public authorities. Framework and service contracts in connection with tolling projects may include terms and conditions which are not negotiable in a tender process and which may be disadvantageous for Kapsch Traffi cCom Group. Moreover, in the case of long-term contracts, the margins earned can also differ from the original calculations due to changes in costs. Liabilities arising from contracts of the Group may include liabilities regarding customers' loss of profi t, product liabilities and other liabilities.
While Kapsch Traffi cCom Group aims to include appropriate limitations to its liability in contracts, there can, however, be no guarantee that suffi cient limitations to its liability are contained in all contracts or that they can be enforced under applicable law.
The leading market position of Kapsch Traffi cCom Group is, to a large extent, based on its ability to develop state-of-the-art, effi cient and reliable systems, components and products. In order to maintain its technological leadership, Kapsch Traffi cCom Group invests a considerable portion of its revenues in research and development activities. However, if the Group does not succeed in developing new systems, components and products, this can be detrimental to the competitive position of Kapsch Traffi cCom Group. Since its innovation leadership is, to a large extent, based on technology, the company's internal know-how and intellectual property, the global increase in product piracy and reverse engineering may have negative effects on the Group. In addition, any default in protecting these technologies may have a negative impact on the competitive position of the Group. On the other hand, ETC systems, components, products or services could infringe on intellectual property rights of third parties.
Kapsch Traffi cCom Group places great importance on the protection of technologies and the company's internal know-how, e.g., by means of patents and non-disclosure agreements with other parties. In order to avoid legal action and court proceedings, Kapsch Traffi cCom Group permanently monitors potential intellectual property rights infringements.
One of the strategic objectives of Kapsch Traffi cCom Group is to grow internationally both organically and through selected acquisitions and joint ventures. In the implementation of this strategy, the Group acquired several companies worldwide and integrated them into the Group. However, a number of challenges remain in connection with this growth strategy and it cannot be guaranteed that the objectives and synergies will be fully reached in all future acquisitions and joint ventures.
The Group maintains branches, offi ces and subsidiaries in several countries outside the Euro zone. A considerable part of revenues and costs is not denominated in Euro, but in the currencies of the respective foreign companies. Although the Group, if required, aims to hedge the net currency position of the individual contract, currency fl uctuations may result in losses from changes in exchange rates in the consolidated fi nancial statements (transaction risk). In addition, risks arise from the translation of foreign separate fi nancial statements into the group currency, the euro (translation risk). Changes in exchange rates may also result in a change in the competitive position of Kapsch Traffi cCom Group.
Under project fi nancing, variable interest rates are also regularly entered into, which are tied to market interest rates (Euribor, Pribor etc.). In this context, Kapsch Traffi cCom Group is exposed to interest rate risks. Kapsch Traffi cCom Group hedges against interest rate risks, if material, through appropriate fi nancial instruments.
The success of Kapsch Traffi cCom Group depends heavily on key personnel with long years of experience in the traffi c telematics industry. Moreover, in the current strong growth phase of the Group, its ability to recruit qualifi ed staff and, to integrate them into the company and retain them in the long term is crucial. The loss of key personnel, any problems with personnel and diffi culties in the recruitment of personnel may adversely affect the success of the Group.
Kapsch Traffi cCom Group has implemented a number of measures to deal with personnel risks, such as incentive schemes, training opportunities, etc. In addition, employees were offered shares at a preferential price in the initial public offering under an employee participation program. A considerable number of employees made use of this opportunity.
The market for ETC systems is infl uenced by numerous statutory provisions at the EU level as well as of the level of national legislation. There is the risk that certain provisions, such as data protection laws or environmental and safety requirements will have a negative impact on Kapsch Traffi cCom Group.
As a technology group, Kapsch Traffi cCom Group is exposed to typical IT risks relating to security, confi dentiality and availability of data. For this reason, Kapsch Traffi cCom AG has implemented an IT risk management system set according to the corporate risk and IT security application method (CRISAM) and has been certifi ed pursuant to ISO 27001 (Information Security Management).
From a current perspective, no risks have been identifi ed that could endanger the going concern of Kapsch Traffi cCom Group. Increasing geographic diversifi cation, the diversifi cation of its product portfolio, together with a rising portion of recurring revenues (further growth of the Segments Services, System Extensions, Components Sales segment) are planned to further reduce risk concentrations in the future.
Kapsch Traffi cCom Group has a network of research and development centers in Vienna (Austria), Jönköping (Sweden) and Buenos Aires (Argentina). The research and development activities are coordinated by the headquarters in Vienna. As of 31 March 2008, Kapsch Traffi cCom Group, including project management for development projects, quality assurance and tests, documentation and certifi cation, employed more than 170 engineers.
Research and development activities are crucial for the Group with regard to achieving its strategic objectives. Successful research is the basis for the ongoing enhancement of existing products and systems and the continuous reduction of production, installation, operation and maintenance costs – signifi cant factors for maintaining the technological and competitive edge.
Kapsch Traffi cCom Group focuses its activities primarily on new, innovative applications and applied research and development for all kinds of telematics solutions. The research and development activities in some areas are complemented by joint projects and close cooperation with universities, public and private institutes and technology and research companies.
Research costs are recognized as expense. The same applies to development costs, unless IFRS criteria for the recognition as intangible assets are satisfi ed. As the income statement is presented by nature of expense, research and development costs are recognized in various items of the income statement, in particular under cost of material and other production services, staff costs and other operating expenses.
Assuming that economies worldwide continue to perform satisfactorily, and given the growing interest around the world in road traffi c telematics solutions, we take a thoroughly optimistic view of our future prospects. The fi scal year 2008/09 will be shaped by participation in tenders and by project awards in Hungary, Slovenia, Italy, Portugal, France, the U.K., in the Middle East, in the Asian-pacifi c region, South Africa, Argentina, and in the U.S.A.
In Slovakia, the tender of a nationwide electronic tolling system was continued in February 2008 after two claims had been settled. The tender comprises the installation of a multi-lane free fl ow (MLFF) ETC system including its operation for a period of 13 years. The planned system extends to include vehicles of more than 3.5 tons and a road network of approximately 2,400 kilometres. Operation is planned to commence on 1 January 2009. The submission of the offers and the opening of the offers took place on 13 March
On 2 April 2008, Kapsch Traffi cCom Holding Corp., Delaware, and Kapsch Traffi cCom U.S., Delaware, were incorporated in the U.S.
On 15 May 2008, Kapsch Traffi cCom AG and the Italian Busi Impianti Group announced their cooperation. These two companies, as part of a joint venture, establish the company Kapsch-Busi S.p.A., domiciled in Bologna. The new company will focus on the market for urban traffi c solutions in Italy. Busi Impianti is spinning of the business unit, including an aggregate of 10 employees; Kapsch Traffi cCom Group complements the team through its own personnel. Kapsch Traffi cCom AG will hold a share of 67 % in the joint venture.
Vienna, 16 May 2008
Mag. Georg Kapsch Ing. Erwin Toplak
Chief Executive Offi cer Member of the Management Board
Statement of all Members of the Management Board pursuant to Section 82 Para. 4 No. 3 BörseG (Austrian Stock Exchange Act)
As members of the Board we hereby declare to the best of our knowledge that the consolidated fi nancial statements give a true and fair view of the assets, liabilities, fi nancial position and profi t or loss of the group as required by the applicable accounting standards and that the group management report gives a true and fair view of the development and performance of the business and the position of the group, together with a description of the principal risks and uncertainties the group faces.
Mag. Georg Kapsch Ing. Erwin Toplak
Chief Executive Offi cer Member of the Management Board
| all amounts in EUR | Note | 2007/08 | 2006/07 |
|---|---|---|---|
| Continuing Operations | |||
| Revenue | (1) | 185,734,678 | 198,600,787 |
| Other operating income | (2) | 5,194,394 | 1,061,182 |
| Changes in fi nished and unfi nished goods and work in progress | (3) | 6,667,081 | -2,156,353 |
| Cost of material and other production services | (4) | -78,647,198 | -93,842,865 |
| Staff costs | (5) | -46,969,222 | -39,825,015 |
| Amortization of intangible assets and depreciation of property, plant and equipment | (6) | -4,092,312 | -3,883,015 |
| Other operating expenses | (7) | -32,967,747 | -33,051,839 |
| Operating result | 34,919,674 | 26,902,882 | |
| Finance income | (8) | 13,898,949 | 3,196,028 |
| Finance costs | (8) | -6,009,417 | -3,002,111 |
| Financial result | (8) | 7,889,532 | 193,917 |
| Result from associates | (13) | -51,152 | -133,434 |
| Profi t before income taxes | 42,758,054 | 26,963,365 | |
| Income taxes | (9) | -10,698,610 | -6,693,949 |
| Profi t for the year from continuing operations after taxes | 32,059,444 | 20,269,416 | |
| Discontinued Operations | |||
| Loss for the year from discontinued operations | (30) | 0 | -2,311,032 |
| Profi t for the year | 32,059,444 | 17,958,384 | |
| Attributable to: | |||
| Equity holders of the Company | 30,412,759 | 18,127,839 | |
| Minority interests | 1,646,685 | -169,455 | |
| 32,059,444 | 17,958,384 | ||
| Earnings per share from the profi t for the year of continuing operations attributable to the equity holders of the Company (in EUR per share) |
(31) | 2.60 | 2.04 |
| all amounts in EUR Note |
31 March 2008 | 31 March 2007 |
|---|---|---|
| ASSETS | ||
| Non-current assets | ||
| Property, plant and equipment (11) |
6,191,728 | 6,147,502 |
| Intangible assets (12) |
8,593,152 | 9,269,453 |
| Shares in associates (13) |
0 254,065 |
|
| Other non-current fi nancial assets and investments (14) |
3,405,449 | 3,619,452 |
| Other non-current assets (15) |
55,005,342 | 81,693,693 |
| Deferred tax assets – due from tax group leader (22) |
2,399,361 | 1,280,535 |
| Deferred tax assets – non-tax group (22) |
4,880,464 | 7,379,024 |
| 80,475,496 | 109,643,724 | |
| Current assets | ||
| Inventories (16) |
25,734,379 | 19,899,763 |
| Trade receivables and other current assets (17) |
135,837,086 | 77,460,457 |
| Other current fi nancial assets (14) |
8,895,252 | 0 |
| Cash and cash equivalents (18) |
47,428,544 | 20,183,189 |
| 217,895,261 | 117,543,409 | |
| Total assets | 298,370,757 | 227,187,133 |
| EQUITY | ||
| Capital and reserves attributable to equity holders of the Company | ||
| Share capital (19) |
12,200,000 | 10,000,000 |
| Capital reserve | 70,077,111 | 5,325,259 |
| Currency translation differences | 220,011 | 914,309 |
| Fair value valuation reserve (20) |
-971,375 | -114,371 |
| Consolidated retained earnings and other reserves | 49,727,838 | 29,130,494 |
| 131,253,585 | 45,255,691 | |
| Minority interests | 2,123,011 | 339,556 |
| Total equity | 133,376,596 | 45,595,247 |
| LIABILITIES | ||
| Non-current liabilities | ||
| Non-current fi nancial liabilities (21) |
10,581,243 | 10,522,559 |
| Liabilities from post-employment benefi ts to employees (23) |
14,088,937 | 14,552,388 |
| Non-current provisions (26) |
1,693,548 | 1,684,408 |
| Other non-current liabilities (24) |
26,149,682 | 26,885,607 |
| Deferred income tax liabilities – due to tax group leader (22) |
1,607,668 | 1,150,153 |
| Deferred income tax liabilities- non-tax group (22) |
447,171 | 1,315,542 |
| 54,568,249 | 56,110,657 | |
| Current liabilities | ||
| Trade and other current payables | 39,049,926 | 40,524,113 |
| Other liabilities and deferred income (25) |
29,485,680 | 42,248,566 |
| Current tax payables | 6,258,677 | 5,123,170 |
| Current fi nancial liabilities (21) |
17,381,784 | 22,123,633 |
| Current provisions (26) |
18,249,845 | 15,461,747 |
| Total liabilities | 110,425,912 | 125,481,229 |
| 164,994,161 | 181,591,886 | |
| Total equity and liabilities | 298,370,757 | 227,187,133 |
| all amounts in EUR | |||||||
|---|---|---|---|---|---|---|---|
| Attributable to equity holders of the Company | Minority interests | Total equity |
|||||
| Share capital |
Capital reserve |
Currency transla tion differences |
Fair value reserve |
Consolidated retained earnings and other re serves |
|||
| Carrying amount at 31 March 2006 | 10,000,000 | 5,325,259 | 1,272,251 | -57,258 | 21,722,141 | 788,868 | 39,051,261 |
| Currency translation differences | 0 | 0 | -357,942 | 0 | 0 | -3,305 | -361,247 |
| Fair value gains/losses realized | 0 | 0 | 0 | 1,250 | 0 | 0 | 1,250 |
| Fair value gains/losses (net of tax) | 0 | 0 | 0 | -58,363 | 0 | 0 | -58,363 |
| Net income/expense recognized directly in equity |
-357,942 | -57,113 | -3,305 | -418,360 | |||
| Acquisition of minority interest | 0 | 0 | 0 | 0 | -719,486 | -276,552 | -996,038 |
| Dividend for 2005/06 | 0 | 0 | 0 | 0 | -10,000,000 | -10,000,000 | |
| Profi t for the year | 0 | 0 | 0 | 0 | 18,127,839 | -169,455 | 17,958,384 |
| Carrying amount at 31 March 2007 | 10,000,000 | 5,325,259 | 914,309 | -114,371 | 29,130,494 | 339,556 | 45,595,247 |
| Currency translation differences | 0 | 0 | -694,298 | 0 | 0 | 136,770 | -557,528 |
| Fair value gains/losses realized | 0 | 0 | 0 | -51,817 | 0 | -51,817 | |
| Fair value gains/losses (net of tax) | 0 | 0 | 0 | -805,187 | 0 | -805,187 | |
| Net income/expense recognized directly in equity |
-694,298 | -857,004 | 136,770 | -1,414,532 | |||
| Capital increase from initial public offering |
2,200,000 | 0 | 0 | 0 | 0 | 0 | 2,200,000 |
| Premium from initial public offering less expenses relating to the initial |
|||||||
| public offering | 0 | 64,751,852 | 0 | 0 | 0 | 0 | 64,751,852 |
| Effects of business combinations | 0 | 0 | 0 | 0 | 184,585 | 0 | 184,585 |
| Dividend for 2006/07 | 0 | 0 | 0 | 0 | -10,000,000 | 0 | -10,000,000 |
| Profi t for the year | 0 | 0 | 0 | 0 | 30,412,759 | 1,646,685 | 32,059,444 |
| Carrying amount at 31 March 2008 | 12,200,000 | 70,077,111 | 220,011 | -971,375 | 49,727,838 | 2,123,011 | 133,376,596 |
| all amounts in EUR Note |
31 March 2008 | 31 March 2007 |
|---|---|---|
| Cash fl ows from operating activities | ||
| Operating result | 34,919,674 | 26,902,882 |
| Adjustments for non-cash items and other reconciliations: | ||
| Depreciation and amortization (6) |
4,092,312 | 3,883,015 |
| Increase/decrease in obligations for post-employment benefi ts (23) |
-463,451 | -663,647 |
| Change in other non-current liabilities and provisions (24) |
9,141 | 111,733 |
| Increase in trade receivables (non-current) (15) |
26,679,092 | -81,684,434 |
| Increase in trade payables (non-current) (24) |
-663,820 | 26,813,502 |
| Other (net) 1 | 6,364,155 | 394,230 |
| 70,937,103 | -24,242,719 | |
| Changes in net current assets: | ||
| Increase/decrease in trade receivables and other assets (17) |
-59,810,410 | -45,653,414 |
| Increase/decrease in inventories (16) |
-5,834,616 | 3,012,764 |
| Increase/decrease in trade payables and other current payables | -10,615,016 | 26,595,995 |
| Increase/decrease in current provisions (26) |
3,848,830 | 8,804,927 |
| -72,411,212 | -7,239,728 | |
| Cash fl ow from operations | -1,474,109 | -31,482,447 |
| Interest received (8) |
2,082,913 | 1,262,033 |
| Interest payments (8) |
-3,940,442 | -2,537,592 |
| Net payments of income taxes | -7,445,292 | -4,018,557 |
| Net cash fl ow from operating activities – continuing operations | -10,776,930 | -36,776,563 |
| Net cash fl ow from operating activities – discontinued operations (30) |
257,992 | -1,991,409 |
| Net cash fl ow from operating activities – total | -10,518,938 | -38,767,972 |
1 In the fi scal year 2007/08 this item mainly relates to currency translation differences (CZK/EUR).
| all amounts in EUR | Note | 31 March 2008 | 31 March 2007 |
|---|---|---|---|
| Cash fl ows from investing activities | |||
| Purchase of property, plant and equipment | (11) | -3,441,286 | -1,994,756 |
| Purchase of non-current intangible assets | (12) | -582,231 | -305,934 |
| Purchase of securities and investments | (14) | -30,548,455 | -4,375 |
| Payments for acquisition of companies (net of cash acquired) | (28) | -74,790 | -1,880,438 |
| Payments for acquisition of a minority interest | 0 | -996,038 | |
| Payments for the acquisition of shares in companies consolidated at equity | (13) | 0 | -387,500 |
| Proceeds from the sale of shares in subsidiaries | 1,090,909 | 5,013 | |
| Proceeds from the disposal of property, plant and equipment and intangible assets | 1,156,499 | 170,131 | |
| Proceeds from the sale of securities | 20,800,756 | 125,251 | |
| Net cash fl ow from investing activities – continuing operations | -11,598,598 | -5,268,646 | |
| Net cash fl ow from investing activities – discontinued operations | (30) | 0 | 1,444,923 |
| Net cash fl ow from investing activities – total | -11,598,598 | -3,823,723 | |
| Cash fl ows from fi nancing activities | |||
| Contributions from shareholders | 65,802,469 | 0 | |
| Dividends paid to company shareholders | -13,500,000 | -6,500,000 | |
| Increase/decrease in other non-current fi nancial liabilities | (21) | 758,684 | 9,785,559 |
| Increase/decrease in current fi nancial liabilities | (21) | -4,275,183 | 13,591,002 |
| Net cash fl ow from fi nancing activities – continuing operations | 48,785,970 | 16,876,561 | |
| Net cash fl ow from fi nancing activities – discontinued operations | (30) | -1,166,666 | -233,334 |
| Net cash fl ow from fi nancing activities – total | 47,619,304 | 16,643,227 | |
| Net decrease/increase in cash and cash equivalents | 25,501,768 | -25,948,468 | |
| Change in cash and cash equivalents | |||
| Cash and cash equivalents at beginning of year | (18) | 20,183,189 | 46,725,330 |
| Net decrease/increase in cash and cash equivalents | 25,501,768 | -25,948,468 | |
| Exchange gains/losses on cash and cash equivalents | 1,743,507 | -593,673 | |
| Cash and cash equivalents at end of year | (18) | 47,428,544 | 20,183,189 |
Kapsch Traffi cCom Group is an international supplier of innovative road traffi c telematics solutions.
The business activities of the Kapsch Traffi cCom Group are subdivided into the following three segments:
The Road Solution Projects segment relates to the installation of road traffi c telematics solutions.
The Services, System Extensions, Components Sales segment relates to the sale of services (maintenance and operations) and components in the area of road traffi c telematics solutions.
The Others segment relates to non-core business activities conducted by Kapsch Components. In this segment, Kapsch Traffi cCom Group offers engineering solutions, electronic manufacturing and logistics services to affi liated entities and third parties.
Effective as of March 8, 2007, the Group disposed of signifi cantly all of its railway communication business that was previously included in the Services, System Extensions, Components Sales segment. In accordance with IFRS 5, the result (all revenues and costs) attributable to the disposed railway communication business in the periods under review is shown as "discontinued operations".
DATAX HandelsgmbH, Vienna, is the ultimate parent of Kapsch Group. Until June 2007 KAPSCH-Group Beteiligungs GmbH, Vienna, a wholly-owned subsidiary of DATAX HandelsgmbH, had been the sole shareholder of the parent company Kapsch Traffi cCom AG.
In June 2007 KAPSCH-Group Beteiligungs GmbH reduced its share in Kapsch Traffi cCom AG to 69.67 % through an initial public offering.
The parent company Kapsch Traffi cCom AG is a joint stock corporation incorporated and domiciled in Vienna, Austria. The address of its registered offi ce is A-1120 Vienna, Wagenseilgasse 1. Since 26 June 2007 the shares of the parent company have been listed in the Prime Market segment of the Vienna Stock Exchange.
The following subsidiaries are part of the consolidated group:
1 newly established in the fi scal year 2007/08
The majority interests in VTI Industrials (Pty) Ltd., Germiston, South Africa, and ArtiBrain Software Entwicklungsgesellschaft mbH, Vienna, were acquired in the fiscal year 2007/08 (see Note 28).
The principal accounting policies applied in the preparation of these consolidated fi nancial statements are set out below:
Pursuant to § 245a UGB the consolidated fi nancial statements as of 31 March 2008 have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU). Presentation currency is the Euro (EUR). The consolidated fi nancial statements as of 31 March 2008 are prepared under the historical cost convention, with the exception of
available-for-sale securities and derivative fi nancial instruments, which are measured at fair value at the balance sheet date.
The preparation of the consolidated fi nancial statements in conformity with IFRS requires the use of estimates and assumptions which infl uence the amount and presentation of assets and liabilities reported at the balance sheet date, and income and expenses recorded during the reporting period. Although these estimates are made by the Management Board to the best of their knowledge and are based on current transactions, actual fi gures may differ from these estimates. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are material to the consolidated fi nancial statements are disclosed in Note 21.
The IASB (International Accounting Standards Board) published a number of changes to existing standards as well as new standards and interpretations which are mandatory for the fi nancial year ended 31 March 2008. These standards also have to be applied in the EU and relate to the following issues:
The IASB and IFRIC adopted further standards or amendments to standards and interpretations which are not yet mandatory for the fi scal year ended 31 March 2008 and which have not yet been adopted by the Company. The following regulations had been adopted by the EU by the time these consolidated fi nancial statements were prepared and published in the offi cial journal:
• IFRS 8 Operating Segments (mandatory for accounting periods beginning on or after 1 January 2009). The effect of these regulations cannot yet be estimated reliably.
The following standards or amendments to standards and interpretations were adopted by the IASB or IFRIC, however, by the time these consolidated fi nancial statements were prepared, they had not yet been adopted by the EU:
• IAS 32Financial Instruments Disclosures and IAS1 Presentation of Financial Statements (revised; mandatory for accounting periods beginning on or after 1 January 2009).
The effect of these regulations cannot yet be estimated reliably.
The consolidated fi nancial statements were prepared by the management board on the undersigned date and released for issue. The entity fi nancial statements of the parent company, which have been included in the consolidated fi nancial statements after transition to the applicable accounting standards, have not yet been approved by the supervisory board. The supervisory board and, in the event of presentation at the general meeting of shareholders, the general meeting of shareholders could amend the entity fi nancial statements in a way that may affect the presentation of the consolidated fi nancial statements.
Subsidiaries are entities in which the Group has a direct or indirect shareholding of more than one half of the voting rights or over which it otherwise has the power to govern the fi nancial and operating policies. Such subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. All intra-group balances and transactions are eliminated. Accounting policies of subsidiaries are changed where necessary to ensure consistency with the policies adopted by the Group.
The Group applies a policy of treating transactions with minority interests as transactions with equity owners of the Group. For purchases from minority interests, the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is deducted from equity. Gains or losses on disposals to minority interests are also recorded in equity. For disposals to minority interests, differences between any proceeds received and the relevant share of minority interests are also recorded in equity.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus the costs directly attributable to the acquisition. Identifi able assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group's share of the identifi able net assets acquired is recorded as goodwill and disclosed under intangible assets. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in the income statement.
Goodwill is tested annually for impairment, as well as when there are indications of impairment. If an impairment requirement is identifi ed, goodwill will be reduced immediately by the amount of the impairment. Impairment losses on goodwill are not reversed.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefi t from the business combination in which the goodwill arose.
Associates are accounted for by the equity method. Associates are companies in which the group has signifi cant infl uence, but not
control, generally accompanied by shareholding of between 20% and 50% of the voting rights The Group's share of its associates' post-acquisition profi ts or losses is recognized in the income statement and its share of post-reserve movements is recognized in reserves. Goodwill on acquisition of associates is included in the investment in associates, net of any impairment losses.
The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Group's share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognize further losses, unless it has incurred obligations or made payments on behalf of the associate.
Signifi cant unrealized gains from transactions between the Group and associates are eliminated to the extent of the Group's interest in the associates. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Intra-group receivables and payables, income, expenses and intermediary results, if any, are eliminated unless they are deemed immaterial for the presentation of the Group's net worth, fi nancial situation and profi tability.
In accordance with IAS 21, fi nancial statements of foreign subsidiaries which are included in the consolidated fi nancial statements are translated as follows:
Income statements of foreign subsidiaries are translated into the Group's functional currency at average exchange rates of the reporting periods, balance sheets at the prevailing mean exchange rate at the balance sheet date. Exchange differences arising from the translation of the net investment in foreign entities are recognized in shareholders' equity under "Currency translation differences". When a foreign operation is sold, such exchange differences are recognized in the income statement as part of the gain or loss on disposal of shares in foreign entities.
Goodwill and fair value write-ups arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognized in the income statement. Non-cash items in the balance sheet are translated at historical exchange rates, non-cash items which were recognized at their lower net realizable value are translated at the exchange rate prevailing at the time of measurement.
Material fi nancial instruments presented in the balance sheet include "cash and cash equivalents", "securities", "fi nancial assets and investments", "receivables and payables" and "loans". For the accounting and measurement policies applicable for these items refer to the explanation of the respective balance sheet item.
The Group's activities expose it to a variety of fi nancial risks, particularly foreign exchange risk, interest rate risk and credit risk. The Group's risk management focuses on the unpredictability of fi nancial markets and seeks to minimize potential adverse effects on the Group's fi nancial performance. The Group does not employ hedge accounting as envisaged by IAS 39.
Foreign exchange risk is the risk arising from fl uctuations in the value of fi nancial instruments, other balance sheet items (e. g. receivables and payables) and/or cash fl ows due to exchange rate fl uctuations. In particular, foreign exchange risk exists where business transactions are made or could arise in the normal course of business in a currency other than the company's functional currency (referred to as foreign currency below).
The group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the Czech Crown. Customer orders are invoiced mainly in the respective local currencies of the group companies. Only in case the Group expects to be exposed to signifi cant foreign exchange risk, major orders denominated in foreign currencies are hedged by forward foreign exchange contracts.
If the exchange rate of the stated currencies as of 31 March 2008 (31 March 2007) had changed by the percentage rate ("volatility") stated below, the profi ts before tax, provided all other variables had remained unchanged, would have been higher or lower, respectively, by the following amounts.
| Currency | Volatility | Hypothetical impact on result in TEUR | ||
|---|---|---|---|---|
| 2007/08 | 2006/07 | |||
| CZK | 10 % | 8,022 | 4,895 |
Interest rate risk is the risk arising from fl uctuations in the value of fi nancial instruments, other balance sheet items (e. g. receivables and payables) and/or cash fl ows due to fl uctuations in the market interest rates.
For fi xed-interest balance sheet items, the risk comprises the present value risk. In case the market rate for the fi nancial instrument fl uctuates, either a profi t or a loss may result if the fi nancial instrument is sold prior to maturity.
For variable-interest balance sheet items, the risk relates to the cash fl ow. With variable-interest fi nancial instruments, adjustments in the interest rates may result from changes in the market rates. Such changes would entail changes in interest payments. Variable-interest (both short-term and long-term) fi nancial liabilities account for the major part of fi nancial interest balance sheet items. If the market interest rate had been 100 basis points higher (lower) at 31 March 2008, this, as in the prior year, would not have had a material impact on the result of the Group. At the balance sheet date, no fi nancial derivatives were used.
As part of the Group's risk management policy, the Group only deals with recognized creditworthy third parties, and implements policies to ensure that the Group sells to customers with appropriate credit histories. In addition, the Group monitors its receivables balances on an ongoing basis in order to limit its exposure to bad debts. Certain of the Group's policies limit the amount of its credit exposure to any fi nancial institution, depending on the rating of the institution.
Prudent liquidity risk management shall involve securing the availability of suffi cient cash and cash equivalents as well as the possibility of funding through the availability of adequate credit lines. Providing for adequate liquidity is statutory for every company under Austrian commercial law. The Group provides for its liquidity through available credit lines.
The objectives of the Group with respect to capital management, on the one hand, include securing its going concern in order to be able to provide the equity holders with dividends and the other stakeholders with appropriate services, and on the other hand, maintaining an optimal capital structure.
The Group monitors its capital based on net gearing, calculated from the ratio of net debt (net credit) to equity. Net debt (net credit) includes non-current and current fi nancial liabilities less cash and cash equivalents, bank balances and current securities.
| in TEUR | 2007/08 | 2006/07 |
|---|---|---|
| Non-current fi nancial liabilities | 10,581 | 10,523 |
| Current fi nancial liabilities | 17,382 | 22,124 |
| Total fi nancial liabilities | 27,963 | 32,646 |
| Cash on hand and at banks | 47,429 | 20,183 |
| Current securities | 8,895 | 0 |
| Net debt (net credit) | -28,361 | 12,463 |
| Equity | 133,377 | 45,595 |
| Net gearing | n/a | 27 % |
At the balance sheet date 31 March 2008, mainly due to the initial public offering carried out in 2007, the Company had a net credit (excess of cash and cash equivalents, bank balances and current securities over fi nancial liabilities) so that the net gearing cannot be calculated. The net credit is retained with regard to planned acquisitions.
Research expenditure is recognized as an expense as incurred. Costs incurred on development projects (relating to the design and testing of new or improved products) are recognized as intangible assets when the following criteria are fulfi lled:
Other development expenditures that do not meet these criteria are recognized as an expense as incurred. Development costs previously recognized as an expense are not recognized as an asset in a subsequent period. Capitalized development costs are recorded as intangible assets and amortized from the point at which the asset is ready for use on a straight-line basis over its useful life, not exceeding three years.
Development assets are tested for impairment annually, in accordance with IAS 36.
Acquisition costs of computer software, industrial property and similar rights are capitalized and amortized systematically over their useful lives ranging from 4 to 30 years. The carrying amount of each intangible asset is tested for impairment in case a triggering event occurs.
Financial assets recognized under non-current assets include available-for-sale securities only. Available-for-sale securities are carried at fair value. Unrealized gains and losses arising from the changes in fair value are recognized in equity under a separate item.
The difference arising on the sale of fi nancial assets between the proceeds and the carrying amounts is taken through profi t or loss. Additionally, the amount recognized in equity is taken through profi t or loss. All acquisitions and sales are recognized at the respective date of the transaction; transaction costs are included in acquisition costs.
At each balance sheet date the group assesses whether there is objective evidence of impairment of each signifi cant individual fi nancial asset or group of fi nancial assets. If such evidence exists, the group accounts for that impairment and the amounts previously recognized in equity are removed from equity and recognized in profi t or loss. The amount of the impairment is measured as the difference between the carrying amount and the present value of the estimated future cash fl ows.
If in subsequent periods the fair value of the impaired fi nancial instruments increases and that increase can be directly related to an event occurring after the impairment was recognized in profi t or loss, the group reverses the impairment loss. In case of debt instruments the reversal is recognized in profi t or loss, in case of equity instruments it is recognized directly in equity.
Other available-for-sale investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are carried at cost less impairment.
At each balance sheet date the Group assesses whether there is objective evidence that a fi nancial asset or a group of fi nancial assets is impaired.
Derivative instruments do not qualify for hedge accounting and are accounted for at fair value through profit or loss. Changes in the fair value of these derivative financial instruments are recognized immediately in the income statement within other gains/ (losses) – net.
Property, plant and equipment is carried at cost less accumulated depreciation. Depreciation is charged on a straight line basis over the expected useful lives of the assets.
The useful lives range between 3 to 26 years for plants and buildings on leasehold land, 4 to 20 years for technical equipment and machinery and 3 to 10 years for other equipment, factory and offi ce equipment.
Impairment is charged for the difference between the recoverable amount and the carrying amount of an asset. The recoverable amount represents the higher of fair value less cost to sell or value in use of an asset. For purposes of impairment testing, the assets are grouped down to the lowest level where separate cash fl ows are identifi able.
The difference between the proceeds from the sale of property, plant and equipment and their carrying amount is taken through profi t or loss and recognized in the operating result.
Leasing agreements by which the Group as lessee assumes substantially all risks and rewards associated with the use of an asset are accounted for as fi nance leases.
The respective assets are capitalized under non-current assets at the lower of the net present value of minimum lease payments or the fair value of the leased asset and are depreciated over their expected useful lives or shorter lease term, if applicable. The difference between the minimum lease payments and the accrued net present value is recognized as deferred interest expense. The interest component is spread over the term of the lease using the effective interest rate method.
Leases in which a signifi cant portion of the risks and rewards of ownership are retained by the lessor are classifi ed as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease.
Government grants with regard to assets relate to purchased long-term assets (technical equipment) and are deferred and taken through profi t or loss over the estimated useful life of the respective asset.
Other government grants received as compensation for expenses or losses already incurred are immediately taken through profi t or loss.
Inventories are stated at the lower of cost and net realizable value. Cost is determined using the weighted average cost method. The cost of fi nished goods and work in progress comprises design costs, raw materials, direct labour, other direct costs and related production overheads (based on normal operating capacity). It excludes borrowing costs. Net realizable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.
The Group accounts for construction contracts in accordance with IAS 11. When the outcome of a construction contract can be estimated reliably and it is probable that the contract will be profi table, contract revenue is recognized over the period of the contract. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognized as an expense immediately. The construction progress is represented by the ratio of costs incurred by the balance sheet date and the estimated total costs for the respective project.
The carrying amount results from comparing the total of accumulated costs incurred by the balance sheet date plus the profi t calculated according to the percentage of completion method (prorated) or loss (in full) on the respective construction contract to the invoiced amounts. The balance is recognized either under current assets (amounts due from customers for contract work) or under current liabilities (amounts due to customers for contract work).
Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset's carrying amount and the present value of estimated future cash fl ows, discounted at the effective interest rate. The amount of the provision is recognized in the income statement.
For the presentation of the cash fl ow statement cash and cash equivalents include cash in hand, deposits held at call and other cash at banks. Overdrafts are recognized in the balance sheet under current fi nancial liabilities.
Provisions are set up when the Group has a present legal or constructive obligation to third parties as a result of past events, it is
probable that an outfl ow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made.
Provisions for warranties, liabilities for construction fl aws, serial and systems problems mainly serve as coverage for obligations for free repairs and replacement deliveries, in accordance with the general sales and delivery conditions or due to individual agreements and are measured using rates based on past experience regarding direct labour and material costs incurred, overheads, replacement deliveries or rebates. A provision is recognized for the best estimate of the costs of defects to be rectifi ed under the warranty for products sold before the balance sheet date.
The Group provides various post-employment benefi ts to employees and other long-term benefi ts either based on individual agreements or in accordance with local labour law provisions.
For the calculation of liabilities arising from pension obligations and severance payments in accordance with IAS 19 the projected unit credit method is used. According to this method, post-employment costs for employee benefi ts are recognized in the income statement in such a way that scheduled costs are spread over the employees' years of service on the basis of an expert opinion by a qualifi ed actuary, who completely remeasures the schemes annually. The obligation for pension payments and severance payments is calculated as the present value of future benefi ts using an interest rate based on the average yield on industrial bonds of the same maturity. Actuarial gains and losses exceeding the corridor (= up to 10 % of benefi t obligation or 10 % of plan assets, if any, at beginning of period) are charged to the income statement over the average remaining service of the active staff.
Contributions paid by the Group under a defi ned contribution pension scheme are charged to the income statement under staff costs in the period in which they occur.
For the calculation of liabilities arising from obligations for anniversary bonuses in accordance with IAS 19 the projected unit credit method is used. Anniversary bonuses are special lump-sum payments stipulated in the Collective Agreement and dependent on compensation and years of service. Eligibility is determined by a certain number of service years. The calculation of liabilities arising from obligations for anniversary bonuses is performed similar to the calculation for liabilities arising of severance payments, however without taking the corridor method into consideration.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated fi nancial statements. However, if the deferred income tax arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profi t or loss, it is not accounted for. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.
Deferred income tax assets are recognized to the extent that it is probable that future taxable profi t will be available against which the temporary differences can be utilized.
The consolidated fi nancial statements of Kapsch Traffi cCom AG as of 31 March 2008 prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU and with section 245a (1) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations the German original is valid.
Temporary differences mainly arise in connection with depreciation (amortization) periods of non-current assets, provisions for pension benefi ts, other post-employment benefi ts, differences regarding the measurement of receivables and payables and tax loss carryforwards.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not be reversed in the foreseeable future.
In March 2005, the major Austrian group companies of the entire Kapsch Group formed a tax group according to Sec. 9 of the Austrian Corporate Income Tax Act. The group taxation regime applies for the respective entities effective from the tax year 2005 (i.e. fi scal year 2004/2005). Tax group leader is KAPSCH-Group Beteiligungs GmbH, the parent of this group. Principally, this entity is the only entity which has tax receivables or tax liabilities. Tax group members, such as the Austrian companies in the Kapsch Traffi cCom Group, merely refl ect receivables or liabilities with the tax group leader and not with tax authorities. Any tax loss incurred by a member of the tax group prior to the effective date of the tax group is not available for utilization by the leader of the tax group. Such tax losses are only available for utilization against future taxable income by the entity in which they initially arose.
Accordingly, deferred taxes arising in entities which are members of the tax group and where the right of set-off of taxable income and losses exists are shown as "deferred tax assets – due from group leader" or "deferred tax liabilities – due to group leader". Those deferred tax effects arising in periods prior to the formation of the tax group or representing tax losses from periods prior to the formation of the tax group are shown as deferred tax assets or deferred tax liabilities.
Liabilities are recognized at amortized cost using the effective interest rate method. Liabilities denominated in foreign currencies are measured at the current rate at the balance sheet date. Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized cost using the effective interest rate method; borrowing costs are charged to the income statement in the period in which they are incurred.
Contingent liabilities occur for two reasons. For one, they comprise possible obligations that arise from past events and whose existence will be confi rmed by uncertain future events that are at least partly beyond an entity's control. For another, they comprise present obligations that fail to meet general or special recognition standards (i.e. the amount of settlement of an obligation cannot be measured with suffi cient reliability or an outfl ow of resources to settle the obligations is not deemed probable).
The Group discloses contingent liabilities unless the possibility of an outfl ow of resources embodying economic benefi ts is remote, but – in accordance with IFRS – fails to recognize them.
In accordance with IAS 18 revenue is recognized in the income statement upon delivery when the signifi cant risks and rewards of
ownership of the goods are transferred to the customer, net of discounts and eliminated sales within the Group. Sales of services are recognized in the accounting period in which the services are rendered, by reference to completion of the specifi c transaction assessed on the basis of the actual service provided as a proportion of the total services to be provided.
Revenue for construction contracts is recognized in accordance with the "percentage-of-completion method", provided the conditions under IAS 11 are met.
Other revenue is recognized by the Group as follows:
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by defi nition, rarely equal the related actual results.
In particular estimates and assumptions regarding revenue recognition have a signifi cant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next fi nancial year.
The Group uses the percentage-of-completion method in accounting for its construction contracts. Use of the percentage-ofcompletion method requires the Group to estimate the expected profi t mark-up for the construction contract. Sensitivity analyses on assumptions made by Management indicate that no material effect is to be expected, if the actual fi nal results should deviate by 10% from estimates. The analysis of assumptions made in the past as well as of actual profi t mark-ups showed that the estimates had been reliable up to now.
Further areas where assumptions and estimates are signifi cant to the consolidated fi nancial statements, are capitalized goodwill, inventories, deferred taxes and provisions for warranties. Sensitivity analyses of the assumptions made by management in connection with capitalized goodwill, inventories, deferred taxes and provisions for warranties indicate that no material effect will arise if the actual fi nal outcomes were to differ by 10% from the estimates made.
A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns which are different from those of other business segments.
A geographical segment is engaged in providing products or services within a particular economic environment that are subject to risks and returns which are different from those of segments operating in other economic environments.
Figures in the disclosure notes are presented in euro thousands (TEUR) unless otherwise stated.
The segment results for the fi scal year ended 31 March 2008 are as follows (in EUR million):
| Road Solution Projects |
Services, System Extensions, Components Sales |
Others | Consolidated Group | |
|---|---|---|---|---|
| Revenue | 47.0 | 128.8 | 10.0 | 185.7 |
| Operating result | 6.3 | 29.1 | -0.4 | 34.9 |
| Results from associates | -0.1 | |||
| Financial result | 7.9 | |||
| Profi t before income taxes | 42.8 | |||
| Income taxes | -10.7 | |||
| Profi t for the year | 32.1 | |||
| Profi t attributable to minority interests | 1.6 | |||
| Consolidated profi t | 30.4 |
The segment results for the fi scal year ended 31 March 2007 are as follows (in EUR million):
| Road Solution Projects |
Services, System Extensions, Components Sales |
Others | Consolidated Group | |
|---|---|---|---|---|
| Revenue | 105.0 | 80.6 | 13.0 | 198.6 |
| Operating result | 11.6 | 15.8 | -0.5 | 26.9 |
| Results from associates | -0.1 | |||
| Financial result | 0.2 | |||
| Profi t before income taxes | 27.0 | |||
| Income taxes | -6.7 | |||
| Profi t from continuing operations: | 20.3 | |||
| Loss from discontinued operations: | -2.3 | -2.3 | ||
| Profi t for the year | 18.0 | |||
| Loss attributable to minority shareholder | -0.2 | |||
| Consolidated profi t | 18.1 |
Inter-segment transfers or transactions are entered into under normal commercial terms and conditions that would also be available to unrelated third parties.
The segment assets and liabilities as of 31 March 2008 and capital expenditure, depreciation and amortization and other non-casheffective expenses from continuing operations for the period then ended are as follows (in EUR million):
| Road Solution Projects |
Services, System Extensions, Components Sales |
Others | Consolidated Group | |
|---|---|---|---|---|
| Assets | 144.2 | 79.3 | 7.9 | 231.4 |
| Unallocated assets | 67.0 | |||
| Total assets | 298.4 | |||
| Liabilities | 54.5 | 63.4 | 17.1 | 135.0 |
| Unallocated liabilities | 30.0 | |||
| Total liabilities | 165.0 | |||
| Capital expenditure | 0.2 | 4.3 | 0.5 | 4.9 |
| Depreciation and amortization | 0.4 | 3.1 | 0.6 | 4.1 |
| Other non-cash-effective expenses | 0.1 | 0.3 | 0.0 | 0.4 |
The segment assets and liabilities as of 31 March 2007 and capital expenditure, depreciation and amortization and other non-casheffective expenses from continuing operations for the period then ended are as follows (in EUR million):
| Road Solution Projects |
Services, System Extensions, Components Sales |
Others | Consolidated Group | |
|---|---|---|---|---|
| Assets | 125.4 | 60.7 | 8.7 | 194.7 |
| Unallocated assets | 32.5 | |||
| Total assets | 227.2 | |||
| Liabilities | 79.5 | 47.7 | 19.2 | 146.4 |
| Unallocated liabilities | 35.2 | |||
| Total liabilities | 181.6 | |||
| Capital expenditure | 0.1 | 2.1 | 0.1 | 2.3 |
| Depreciation and amortization | 0.5 | 2.7 | 0.7 | 3.9 |
| Other non-cash-effective expenses | 0.0 | 0.4 | 0.1 | 0.5 |
Secondary segment reporting is based on geographical regions. Revenues are segmented by customer location and asset-related fi gures by the company's own location:
The fi gures for the fi scal year ended 31 March 2008 are as follows (in EUR million):
| Western Europe | Central and Eastern Europe |
Americas | Rest of World | Consolidated Group |
|
|---|---|---|---|---|---|
| Revenues | 17.6 | 124.2 | 18.8 | 25.2 | 185.7 |
| Assets | 43.2 | 247.5 | 4.5 | 3.2 | 298.4 |
| Capital expenditure | 0.6 | 3.4 | 0.1 | 0.8 | 4.9 |
The fi gures for the fi scal year ended 31 March 2007 are as follows (in EUR million):
| Western Europe | Central and Eastern Europe |
Americas | Rest of World | Consolidated Group |
|
|---|---|---|---|---|---|
| Revenues | 12.9 | 157.3 | 15.4 | 13.0 | 198.6 |
| Assets | 35.5 | 185.6 | 5.2 | 0.9 | 227.2 |
| Capital expenditure | 0.3 | 1.7 | 0.3 | 0.0 | 2.3 |
Austria is included in the region "Central and Eastern Europe". The region "Americas" includes North- and South-America, the region "Rest of World" includes Asia, Australia and Africa.
| 2007/08 | 2006/07 | |
|---|---|---|
| Income from the sale of non-current assets | 25 | 1 |
| Income from costs recharged | 2,741 | 0 |
| Income from subsidies and government grants | 2,197 | 855 |
| Other | 231 | 205 |
| 5,194 | 1,061 |
| 2007/08 | 2006/07 | |
|---|---|---|
| Change in unfi nished goods and work in progress | 8,320 | -1,855 |
| Change in fi nished goods | -1,653 | -301 |
| 6,667 | -2,156 |
In the fi scal year 2007/08 change in fi nished and unfi nished goods and work in progress attributable to discontinued operations amounted to TEUR 0 (2006/07: TEUR -167).
| 2007/08 | 2006/07 | |
|---|---|---|
| Cost of material | 32,939 | 30,765 |
| Cost of production services | 45,708 | 63,078 |
| 78,647 | 93,843 |
| 2007/08 | 2006/07 | |
|---|---|---|
| Wages | 2,258 | 2,781 |
| Salaries and other remunerations | 33,060 | 26,985 |
| Expenses for social security and payroll-related taxes and contributions | 9,995 | 8,484 |
| Expenses for termination benefi ts (see Note 23) | 498 | 525 |
| Expenses for pensions (see Note 23) | 474 | 631 |
| Contributions to pension funds and other external funds (see Note 23) | 116 | 108 |
| Fringe benefi ts | 569 | 311 |
| 46,969 | 39,825 |
At 31 March 2008 the number of staff amounted to 824 persons (31 March 2007: 774 persons) and averaged 791 persons in the fi scal year 2007/08 (2006/07: 727).
| 2007/08 | 2006/07 | |
|---|---|---|
| Depreciation of property, plant and equipment | 2,286 | 1,761 |
| Amortization of other intangible assets | 1,437 | 1,775 |
| Expenses from low-value assets written-off | 369 | 347 |
| 4,092 | 3,883 |
In the fi scal year 2007/08 depreciation and amortization expense attributable to discontinued operations amounted to TEUR 0 (2006/07: TEUR 707).
| 2007/08 | 2006/07 | |
|---|---|---|
| Rental expenses | 3,671 | 2,612 |
| Legal and consulting fees | 9,222 | 8,926 |
| Impairment of receivables | 307 | 416 |
| Marketing and advertising expenses | 3,595 | 3,234 |
| Travel expenses | 2,859 | 2,342 |
| Maintenance | 1,409 | 1,324 |
| Communication and IT expenses | 2,343 | 1,837 |
| Training costs | 575 | 335 |
| Losses on disposal of non-current assets | 93 | 48 |
| Insurance costs | 694 | 911 |
| Licence and patent expenses | 1,156 | 1,117 |
| Offi ce expenses | 394 | 335 |
| Taxes and charges | 404 | 1,126 |
| Adjustment provision for warranties | -28 | 389 |
| Commissions and other fees | 3,751 | 3,845 |
| Transport costs | 625 | 713 |
| Automobile expenses | 1,113 | 814 |
| Other | 785 | 2,728 |
| 32,968 | 33,052 |
The item "Other" includes membership dues, bank charges, warranties and guarantees as well as other administrative and selling expenses.
| 2007/08 | 2006/07 | |
|---|---|---|
| Interest and similar income: | ||
| Interest income from bank deposits and loans granted | 1,697 | 1,120 |
| Income from securities | 386 | 144 |
| Income from interest accretion of long-term receivables | 3,278 | 795 |
| Gains from the disposal of fi nancial assets | 1,113 | 0 |
| Currency translation differences | 7,425 | 1,137 |
| 13,899 | 3,196 | |
| Interest and similar expenses: | ||
| Interest expense | -3,917 | -2,537 |
| Expense from interest accretion of long-term payables | -999 | -210 |
| Losses on disposals and write-down of fi nancial assets,investments and securities | -23 | 0 |
| Currency translation differences | -1,070 | -255 |
| -6,009 | -3,002 | |
| 7,890 | 194 |
| 2007/08 | 2006/07 | |
|---|---|---|
| Current tax expense | -7,942 | -5,989 |
| Deferred tax expense from offsetting the costs of the initial public offering against capital reserves | -1,149 | 0 |
| Deferred tax assets/liabilities (see Note 22) | -1,608 | -705 |
| Total | -10,699 | -6,694 |
| Thereof income/(expense) from group taxation | -27 | -307 |
The reasons for the difference between the arithmetic tax expense/(income) based on the Austrian corporate income tax rate of 25 % and the recognized tax expense/(income) are as follows:
| 2007/08 | 2006/07 | |
|---|---|---|
| Profi t before income taxes – continuing and discontinued operations | 42,758 | 24,652 |
| Arithmetic tax income/(expense) based on a tax rate of 25 % (2006/07: 25 %) | -10,689 | -6,163 |
| Different foreign tax rates | -558 | -361 |
| Tax allowances claimed and other permanent tax differences | 748 | 241 |
| Expenses not subject to tax and other differences | -200 | -410 |
| Recognized tax income/(expense) | -10,699 | -6,694 |
For further information on deferred tax assets and liabilities see Note 22.
| 2007/08 | 2006/07 | |
|---|---|---|
| Available-for-sale fi nancial assets | ||
| Other non-current fi nancial assets and investments | 3,405 | 3,619 |
| Other current fi nancial assets | 8,895 | 0 |
| 12,300 | 3,619 | |
| Loans and receivables | ||
| Other non-current assets | 55,005 | 81,694 |
| Trade receivables and other current assets | 135,837 | 77,460 |
| Cash and cash equivalents | 47,429 | 20,183 |
| 238,271 | 179,337 | |
| Financial liabilities at (amortized) cost | ||
| Non-current fi nancial liabilities | 10,581 | 10,522 |
| Other non-current liabilities | 26,150 | 26,885 |
| Trade payables and other current liabilities | 39,049 | 40,524 |
| Other liabilities and deferred income | 29,486 | 42,249 |
| Current fi nancial liabilities | 17,382 | 22,124 |
| 122,648 | 142,304 |
Financial instruments are recognized in the income statement with the following net results:
| 2007/08 | 2006/07 | |
|---|---|---|
| Available-for-sale fi nancial assets | 1,476 | 144 |
| Loans and receivables | 11,330 | 2,797 |
| Financial liabilities at (amortized) cost | -4,916 | -2,747 |
| 7,890 | 194 |
| Real estate, land and buildings |
Technical equipment and machinery |
Other equipment, factory and offi ce equipment |
Total | |
|---|---|---|---|---|
| Carrying amount at 31 March 2006 | 1,495 | 2,851 | 2,010 | 6,356 |
| Currency translation differences | 1 | 8 | -49 | -40 |
| Change in consolidated entities | 0 | 15 | 93 | 108 |
| Additions | 325 | 497 | 1,237 | 2,060 |
| Disposals | -5 | -46 | -199 | -251 |
| Scheduled depreciation | -374 | -870 | -842 | -2,086 |
| Carrying amount at 31 March 2007 | 1,442 | 2,455 | 2,250 | 6,148 |
| Acquisition/production cost | 5,394 | 23,862 | 14,435 | 43,691 |
| Accumulated depreciation | -3,951 | -21,407 | -12,185 | -37,544 |
| Carrying amount at 31 March 2007 | 1,442 | 2,455 | 2,250 | 6,148 |
| Currency translation differences | 19 | -6 | 58 | 71 |
| Change in consolidated entities | 0 | 0 | 18 | 18 |
| Additions | 284 | 1,027 | 2,130 | 3,441 |
| Disposals | -198 | -36 | -965 | -1,199 |
| Scheduled depreciation | -346 | -888 | -1,052 | -2,286 |
| Carrying amount at 31 March 2008 | 1,201 | 2,551 | 2,439 | 6,192 |
| Acquisition/production cost | 5,481 | 21,695 | 13,339 | 40,515 |
| Accumulated depreciation | -4,279 | -19,144 | -10,900 | -34,323 |
| Carrying amount at 31 March 2008 | 1,201 | 2,551 | 2,439 | 6,192 |
| Capitalized develop ment costs |
Concessions and rights |
Goodwill | Total | |
|---|---|---|---|---|
| Carrying amount at 31 March 2006 | 856 | 2,041 | 6,173 | 9,071 |
| Currency translation differences | 16 | 14 | 0 | 30 |
| Change in consolidated entities | 0 | 2,543 | 0 | 2,543 |
| Additions | 0 | 306 | 0 | 306 |
| Disposals | 0 | -583 | 0 | -583 |
| Scheduled amortization | -613 | -1,485 | 0 | -2,098 |
| Carrying amount at 31 March 2007 | 260 | 2,836 | 6,173 | 9,269 |
| Acquisition/production cost | 7,794 | 7,433 | 6,173 | 21,400 |
| Accumulated amortization | -7,534 | -4,597 | 0 | -12,130 |
| Carrying amount at 31 March 2007 | 260 | 2,836 | 6,173 | 9,269 |
| Currency translation differences | -28 | -272 | 0 | -300 |
| Change in consolidated entities | 0 | 503 | 0 | 503 |
| Additions | 210 | 372 | 0 | 582 |
| Disposals | 0 | -25 | 0 | -25 |
| Scheduled amortization | -332 | -1,106 | 0 | -1,437 |
| Carrying amount at 31 March 2008 | 111 | 2,309 | 6,173 | 8,593 |
| Acquisition/production cost | 7,918 | 7,245 | 6,173 | 21,337 |
| Accumulated amortization | -7,807 | -4,936 | 0 | -12,744 |
| Carrying amount at 31 March 2008 | 111 | 2,309 | 6,173 | 8,593 |
The goodwill results from the acquisition of the respective shares of Kapsch Traffi cCom AB, Jönköping, Sweden (formerly: Saab Combitech AB).
For the purpose of impairment testing, goodwill was allocated to two cash-generating units (CGU) ("Road Solution Projects – Swedish entity" and "Services, System Extensions, Components Sales – Swedish entity"). The following assumptions were made:
| Road Solution Projects – Swedish entity |
Services, System Extensions, Components Sales – Swedish entity |
|
|---|---|---|
| The carrying amount of goodwill allocated to the unit | TEUR 2,469 | TEUR 3,704 |
| The carrying amount of intangible assets with indefi nite useful lives allocated to the unit |
TEUR 0 | TEUR 0 |
| Determination of recoverable amount of CGU | Value in use | Value in use |
• Management has based its determination on the assumption that realistically possible changes in key assumptions on which the recoverable amount is based, will not result in the carrying amount of goodwill of the CGU exceeding the recoverable amount of the CGU.
• Management has based its determination on the assumption that realistically possible changes in key assumptions on which the recoverable amount is based, will not result in the carrying amount of goodwill of the CGU exceeding the recoverable amount of the CGU.
Development costs relate to expenses in the area of traffi c-control systems, which in accordance with IAS 38 are capitalized and amortized over 3 years once the assets are available for commercial use. Additional research and development costs of the Group in the fi scal year 2007/08 amounted to EUR 14.8 million (2006/07: EUR 16.4 million). In the fi scal year 2007/08 EUR 5.4 million thereof (2006/07: EUR 5.9 million) was project-specifi c development costs and charged to the customer. The remaining amount of EUR 9.4 million (2006/07: EUR 10.5 million) was recognized as an expense.
Other non-current intangible assets are amortized systematically over their useful lives (concessions and rights 5–30 years, rights to computer software 4–10 years).
Shares in associates developed as follows:
| 2007/08 | 2006/07 | |
|---|---|---|
| Carrying amount at 31 March – prior year | 254 | 0 |
| Acquisition | 387 | |
| Disposal | -203 | 0 |
| Share of profi t/loss (after tax) | -51 | -133 |
| Carrying amount at 31 March – reporting year | 0 | 254 |
Shares in associates refer to an investment in ArtiBrain Software Entwicklungsgesellschaft mbH, Vienna. The Group held 50% of the shares until December 2007. In December 2007 the Group took over the remaining 50% of the shares in the company (see Note 28).
| 2007/08 | 2006/07 | |
|---|---|---|
| Other non-current fi nancial assets and investments | 3,405 | 3,619 |
| Other current fi nancial assets | 8,895 | 0 |
| 12,300 | 3,619 |
| Short term fi nancial assets | Available-for-sale securities |
Available-for-sale investments |
Total |
|---|---|---|---|
| Carrying amount at 31 March 2006 | 3,817 | 0 | 3,817 |
| Additions | 0 | 4 | 4 |
| Disposals | -126 | 0 | -126 |
| Change in fair value | -76 | 0 | -76 |
| Carrying amount at 31 March 2007 | 3,615 | 4 | 3,619 |
| Additions | 549 | 0 | 549 |
| Disposals | -724 | 0 | -724 |
| Change in fair value | -38 | 0 | -38 |
| Carrying amount at 31 March 2008 | 3,401 | 4 | 3,405 |
| Other current fi nancial assets | Available-for-sale securities |
Available-for-sale investments |
Total |
|---|---|---|---|
| Carrying amount at 31 March 2006 | 0 | 0 | 0 |
| Additions | 0 | 0 | 0 |
| Disposals | 0 | 0 | 0 |
| Change in fair value | 0 | 0 | 0 |
| Carrying amount at 31 March 2007 | 0 | 0 | 0 |
| Additions | 30,000 | 0 | 30,000 |
| Disposals | -20,074 | 0 | -20,074 |
| Change in fair value | -1,031 | 0 | -1,031 |
| Carrying amount at 31 March 2008 | 8,895 | 0 | 8,895 |
At 31 March 2008 available-for-sale securities relate to government and bank bonds as well as shares in investments funds. Available-for-sale securities are measured at prevailing market rates, unrealized gains and losses from price fl uctuations are recognized in equity as a separate position (see Note 20).
At 31 March 2008 other investments classifi ed as available-for-sale relate to a 12.5 % investment in ATC Austrian Technology Corporation GmbH, Vienna.
| 2007/08 | 2006/07 | |
|---|---|---|
| Truck tolling system Czech Republic (phase I) | 37,462 | 81,693 |
| Truck tolling system Czech Republic (phase II) | 17,543 | 0 |
| 55,005 | 81,693 |
Other non-current assets relate to trade receivables (long-term) that are due from the Czech Ministry of Transport for the installation of phase I and phase II of the Czech truck tolling system. As in the prior year, they fall due between 1 and 5 years as of the balance sheet date.
Long-term receivables were discounted on the basis of cash fl ows using an interest rate of 5.00% (for that part which was funded by external loans) and an interest rate for alternative investments of 2.89 % (for that part which was funded by internal cash fl ows of the Group). Thus, the fair values approximate the carrying amounts.
Gross cash fl ows of other non-current assets are as follows:
| 2007/08 | 2006/07 | |
|---|---|---|
| Up to 1 year | 0 | 0 |
| Between 1 and 2 years | 50,733 | 51,987 |
| Between 2 and 3 years | 7,476 | 34,658 |
| 58,209 | 86,645 |
Long-term receivables in the amount of TEUR 55,005 (2006/07: TEUR 81,684) were pledged as collateral to banks (see Note 21).
| 2007/08 | 2006/07 | |
|---|---|---|
| Purchased parts and merchandise, at acquisition cost | 7,023 | 7,856 |
| Unfi nished goods and work in progress, at production cost | 13,614 | 5,294 |
| Finished goods, at production cost | 5,097 | 6,750 |
| 25,734 | 19,900 |
Individual inventory items were impaired, when necessary, to their net realizable values. The valuation adjustment included in inventories amounts to TEUR 5,652 (2006/07: TEUR 3,851).
| 2007/08 | 2006/07 | |
|---|---|---|
| Trade receivables, less allowance for bad debt | 118,721 | 63,964 |
| Gross amount due from customers for contract work | 5,561 | 6,405 |
| Prepayments made | 2,074 | 513 |
| Receivables from tax authorities (other than income tax) | 4,361 | 2,109 |
| Other receivables and prepaid expenses | 5,120 | 4,469 |
| 135,837 | 77,460 |
Valuation allowances relating to trade receivables developed as follows:
| 2007/08 | 2006/07 | |
|---|---|---|
| Balance at 31 March of the prior year | 280 | 1,586 |
| Addition | 1,147 | 53 |
| Utilization | 0 | -949 |
| Disposal | -192 | -410 |
| Balance at 31 March of the reporting year | 1,235 | 280 |
Maturity structure of trade receivables:
| 2007/08 | 2006/07 | |
|---|---|---|
| Not yet due | 107,408 | 55,678 |
| Overdue, but not impaired | ||
| less than 60 days | 996 | 2,364 |
| more than 60 days | 10,317 | 5,922 |
| 118,721 | 63,964 |
The fair values as well as gross cash fl ows in the next fi scal year approximate the carrying amounts. There is no concentration of credit risk with respect to trade receivables, as the Group generally has a large number of customers worldwide. Trade receivables (short-term) relating to the installation of phase I and phase II of the Czech truck tolling system in the amount of TEUR 64,244 (2006/07: TEUR 28,448) and to the operation and maintenance of the system in the amount of TEUR 16,911 (2006/07: TEUR 10,773) are due from the Czech Ministry of Transport.
Trade receivables in an amount of TEUR 64,244 (2006/07: TEUR 54,760) were pledged as collateral to banks (see Note 21).
Amounts due from customers for contract work detail as follows:
| 2007/08 | 2006/07 | |
|---|---|---|
| Construction costs incurred plus recognized gains | 5,561 | 6,405 |
| Less amounts billed and prepayments received | 0 | 0 |
| 5,561 | 6,405 |
| 2007/08 | 2006/07 | |
|---|---|---|
| Cash on hand | 9 | 38 |
| Deposits held with banks | 47,419 | 20,145 |
| 47,429 | 20,183 |
The carrying amounts of this item also represent cash and cash equivalents at the end of the reporting period as presented in the cash fl ow statement.
| 2007/08 | 2006/07 | |
|---|---|---|
| Carrying amount at 31 March of fi scal year | 12,200 | 10,000 |
The registered share capital of the company amounts to EUR 12,200,000. The share capital is fully paid in. The total authorized number of ordinary shares is 12,200,000. The shares are ordinary bearer shares and have no par value.
The Company in the initial public offering in June 2007 issued 2,200,000 new shares at an issue price of EUR 32 per share.
| 2007/08 | 2006/07 | |
|---|---|---|
| Carrying amount at 31 March of prior year | -114 | -57 |
| Gains (losses) taken through profi t or loss | -52 | 1 |
| Unrealized gains (losses) in current period | -1,091 | -77 |
| Profi t taxes on unrealized gains/losses (Note 22) | 286 | 20 |
| Carrying amount at 31 March of fi scal year | -971 | -114 |
| 2007/08 | 2006/07 | |
|---|---|---|
| Current | ||
| Short-term loans | 11,238 | 17,368 |
| Loans for project fi nancing | 6,144 | 3,060 |
| Other | 0 | 1,696 |
| 17,382 | 22,124 | |
| Non-current | ||
| Loans for project fi nancing | 9,830 | 9,179 |
| Other | 751 | 1,343 |
| 10,581 | 10,522 | |
| Total | 27,963 | 32,646 |
The non-current liabilities mature in 1 to 5 years. The fair values and the gross cash fl ows of non-current fi nancial liabilities are as follows:
| 2007/08 | 2006/07 | |
|---|---|---|
| Carrying amount | 10,581 | 10,522 |
| Fair value | 9,787 | 10,269 |
| Gross cash fl ows | ||
| Up to 1 year | 0 | 0 |
| Between 1 and 2 years | 10,852 | 6,412 |
| Between 2 and 3 years | 0 | 5,249 |
| 10,852 | 11,661 |
The fair values and the gross cash fl ows of current fi nancial liabilities approximate the carrying amounts. Interest rates on current and non-current fi nancial liabilities are as follows:
| 2007/08 | 2006/07 | |
|---|---|---|
| Total fi nancial liabilities: | ||
| carrying fi xed interest rates | 557 | 420 |
| carrying variable interest rates | 27,406 | 32,226 |
| 27,963 | 32,646 | |
| Average interest rates: | ||
| Short-term loans | 4,95 – 5,64 % | 3,75 – 5,25 % |
| Loans for project fi nancing | 5,38 – 6,25 % | 4,80 % |
| Other | 2,00 – 8,75 % | 1,62 – 3,85 % |
Other non-current assets amounting to TEUR 55,005 (2006/07: TEUR 81,684), trade receivables (short-term) amounting to TEUR 64,244 (2006/07: TEUR 54,760) and securities amounting to TEUR 3,401 (2006/07: TEUR 3,615) were pledged as collateral for guarantees issued by banks and for loans granted. A bill of exchange amounting to TEUR 1,425 (2006/07: TEUR 1,425) was issued for an export promotion credit.
| 2007/08 | 2006/07 | |
|---|---|---|
| Deferred tax assets – due from tax group leader | 2,399 | 1,281 |
| Deferred tax assets – non-tax group | 4,881 | 7,379 |
| 7,280 | 8,660 | |
| Deferred tax liabilities – due to tax group leader | 1,608 | 1,150 |
| Deferred tax liabilities – non-tax group | 447 | 1,316 |
| 2,055 | 2,466 | |
| Total | 5,226 | 6,194 |
Deferred taxes due to tax loss carryforwards and other temporary differences deductible in the future are recognized only to the extent of their potential realization. In these consolidated fi nancial statements tax loss carryforwards amounting to EUR 0.1 million (2006/07: EUR 0.1 million) have not been recognized, because it was uncertain whether there would be suffi cient taxable profi ts available against which to offset them. All other deferred tax assets have been recognized in the respective group companies as future deductible items.
Deferred tax assets/liabilities are attributable to the following positions:
| 31 March 2006 | Change in consolidated enti ties |
Taken through profi t or loss |
Taken through equity |
Currency translation differences |
31 March 2007 | |
|---|---|---|---|---|---|---|
| Deferred tax assets | ||||||
| Tax loss carryforwards | 6,855 | 0 | -2,741 | 0 | 0 | 4,114 |
| Provisions disallowed for tax purposes | 1,091 | 0 | -83 | 0 | -1 | 1,007 |
| Depreciation disallowed for tax purposes | 0 | 0 | 0 | 0 | 0 | 0 |
| Other | 661 | 0 | 2,864 | 20 | -6 | 3,539 |
| 8,608 | 0 | 40 | 20 | -7 | 8,660 | |
| Deferred tax liabilities | ||||||
| Special depreciation/amortization of | ||||||
| non-current assets | 0 | 0 | 0 | 0 | 0 | 0 |
| Other | 839 | 889 | 745 | 0 | -7 | 2,466 |
| 839 | 889 | 745 | 0 | -7 | 2,466 | |
| Total change | 7,769 | -889 | -705 | 20 | 0 | 6,194 |
| 31 March 2007 | Change in consolidated enti ties |
Taken through profi t or loss |
Taken through equity |
Currency translation differences |
31 March 2008 | |
|---|---|---|---|---|---|---|
| Deferred tax assets | ||||||
| Tax loss carryforwards | 4,114 | 0 | -1,901 | 0 | 0 | 2,213 |
| Provisions disallowed for tax purposes | 1,007 | 0 | -33 | 0 | 6 | 980 |
| Depreciation disallowed for tax purposes | 0 | 0 | 13 | 0 | 1 | 14 |
| Other | 3,539 | 1 | -4 | 286 | 253 | 4,074 |
| 8,660 | 0 | -1,925 | 286 | 260 | 7,280 | |
| Deferred tax liabilities | ||||||
| Special depreciation/amortization of | ||||||
| non-current assets | 0 | 0 | 0 | 0 | 0 | 0 |
| Other | 2,466 | 0 | -317 | 0 | -94 | 2,055 |
| 2,466 | 0 | -317 | 0 | -94 | 2,055 | |
| Total change | 6,194 | 1 | -1,608 | 286 | 354 | 5,226 |
Amounts recognized in the balance sheet:
| 2007/08 | 2006/07 | |
|---|---|---|
| Severance payments | 5,001 | 5,305 |
| Pension benefi ts | 9,088 | 9,247 |
| 14,089 | 14,552 |
The obligation to set up a provision for termination benefi ts is based on the respective labour law.
Liabilities for retirement benefi ts recognized at the balance sheet date relate to retirees only. All pension agreements are based on past service cost and are not covered by external plan assets (funds). In addition, contributions are paid to an external pension fund for employees of the Group (see Note 5).
For the valuation of severance payments and pension benefi t obligations an interest rate of 5.25 % (2006/07: 5.0%), was used and for compensation increases a rate of 3 % (2006/07: 2.5 %). In addition, the calculation was based on the earliest possible statutory retirement age including transition provisions and using the mortality tables of Pagler & Pagler 1999. Pension increases were estimated at 2–3 % (2006/07: 2–3 %).
The following amounts are recognized in the income statement as expenses for termination benefi ts:
| 2007/08 | 2006/07 | |
|---|---|---|
| Current service cost | 177 | 208 |
| Interest expense | 280 | 291 |
| Actuarial losses | 41 | 26 |
| Total, included in staff costs (Note 5) | 498 | 525 |
| Change in liabilities recognized in the balance sheet: | ||
| Carrying amount at 31 March of prior year | 5,305 | 5,979 |
| Total expense according to the table above | 498 | 525 |
| Payments | -802 | -1,199 |
| Carrying amount at 31 March of fi scal year | 5,001 | 5,305 |
| Actuarial present value of obligations (defi ned benefi t obligation) | 5,949 | 6,072 |
| Unrecognized actuarial gains/losses | -948 | -767 |
| Amount recognized in the balance sheet | 5,001 | 5,305 |
The following amounts are recognized in the income statement as expenses for retirement benefi ts:
| 2007/08 | 2006/07 | |
|---|---|---|
| Current service cost | 0 | 0 |
| Interest expense | 474 | 631 |
| Total, included in staff costs (Note 5) | 474 | 631 |
| Change in liabilities recognized in the balance sheet: | ||
| Carrying amount at 31 March of prior year | 9,247 | 9,236 |
| Total expense according to the table above | 474 | 631 |
| Payments | -633 | -620 |
| Carrying amount at 31 March of fi scal year | 9,088 | 9,247 |
| Actuarial present value of obligations (defi ned benefi t obligation) | 9,558 | 9,792 |
| Unrecognized actuarial gains/losses | -470 | -545 |
| Amount recognized in the balance sheet | 9,088 | 9,247 |
| 2007/08 | 2006/07 | |
|---|---|---|
| Truck tolling system Czech Republic (phase I) | 17,796 | 26,550 |
| Truck tolling system Czech Republic (phase II) | 8,274 | 0 |
| Other | 80 | 335 |
| 26,150 | 26,885 |
Other non-current liabilities in the amount of TEUR 26,070 relate to trade payables (long-term) due to subcontractors for the installation of the Czech truck tolling system. As in the prior year, these liabilities are due in more than 1 year and less than 5 years as of the balance sheet date. These non-current liabilities were discounted on the basis of cash fl ows using discount rates that correspond to those rates applied in discounting non-current receivables from the Czech truck tolling system (see Note 15). Thus, the fair values approximate the carrying amounts.
The gross cash fl ows of other non-current liabilities are as follows:
| 2007/08 | 2006/07 | |
|---|---|---|
| Less than 1 year | 0 | 0 |
| Between 1 and 2 years | 22,532 | 13,050 |
| Between 2 and 3 years | 4,647 | 14,914 |
| 27,179 | 27,964 |
| 2007/08 | 2006/07 | |
|---|---|---|
| Amounts due to customers for contract work | 4,625 | 16,294 |
| Prepayments received | 2,368 | 1,536 |
| Non-current employee liabilities | 8,606 | 8,168 |
| Liabilities to tax authorities (other than income tax) | 5,459 | 4,068 |
| Other liabilities and deferred income | 8,428 | 12,182 |
| 29,486 | 42,248 |
Amounts due to customers for contract work detail as follows:
| 2007/08 | 2006/07 | |
|---|---|---|
| Construction costs incurred plus recognized gains | -3,392 | -2,555 |
| Less amounts billed and prepayments received | 8,017 | 18,849 |
| 4,625 | 16,294 |
| 2007/08 | 2006/07 | |
|---|---|---|
| Non-current | 1,694 | 1,684 |
| Current | 18,250 | 15,462 |
| 19,944 | 17,146 |
| 31 March 2006 |
Change in consolidated entities |
Utilization/ disposal |
Addition | Currency translation differences |
31 March 2007 | |
|---|---|---|---|---|---|---|
| Obligations from anniversary bonuses | 620 | 0 | -173 | 10 | 0 | 457 |
| Costs of dismantling and removing assets | 1,176 | 0 | -46 | 0 | 0 | 1,130 |
| Other | 0 | 97 | 0 | 0 | 0 | 97 |
| Non-current provisions, total | 1,796 | 97 | -219 | 10 | 0 | 1,684 |
| Warranties | 3,711 | 0 | -331 | 762 | 23 | 4,165 |
| Losses from pending transactions and rework | 793 | 0 | -793 | 881 | 0 | 881 |
| Legal fees, costs of litigation and contract risks | 5 | 0 | 0 | 2,856 | 20 | 2,881 |
| Other | 2,714 | 0 | -1,417 | 6,236 | 2 | 7,535 |
| Current provisions, total | 7,223 | 0 | -2,541 | 10,735 | 45 | 15,462 |
| Total | 9,019 | 97 | -2,760 | 10,745 | 45 | 17,146 |
| 31 March 2007 |
Change in consolidated entities |
Utilization/ disposal |
Addition | Currency translation differences |
31 March 2008 | |
|---|---|---|---|---|---|---|
| Obligations from anniversary bonuses | 457 | 20 | -40 | 27 | 0 | 464 |
| Costs of dismantling and removing assets | 1,130 | 0 | 0 | 0 | 0 | 1,130 |
| Other | 97 | 0 | -0 | 0 | 2 | 99 |
| Non-current provisions, total | 1,684 | 20 | -40 | 27 | 2 | 1,694 |
| Warranties | 4,165 | 0 | -941 | 913 | -8 | 4,128 |
| Losses from pending transactions and rework | 881 | 0 | -273 | 302 | 0 | 910 |
| Legal fees, costs of litigation and contract risks | 2,881 | 0 | -2,881 | 6,415 | 473 | 6,888 |
| Other | 7,535 | 10 | -5,021 | 3,696 | 104 | 6,324 |
| Current provisions, total | 15,462 | 10 | -9,117 | 11,326 | 568 | 18,250 |
| Total | 17,146 | 30 | -9,157 | 11,353 | 570 | 19,944 |
The provision for anniversary bonuses relates to non-current entitlements by employees based on collective labour agreement provisions. The valuation was based on an interest rate of 5.25 % (2006/07: 5.0%), the earliest possible statutory retirement age including transition provisions and using the mortality tables of 1999, increases in salary were considered at 3 % (2006/07: 2.5 %).
As manufacturer, dealer and service provider the Group issues product warranties at the time of sale to its customers. Usually, under the terms of the warranty contract, the Group has the obligation to repair or replace manufacturing or software defects that become apparent within the period under guarantee.
In case the Group expects warranty claims on products sold or services rendered during the period under guarantee, a corresponding provision will be set up in the fi nancial statements. Based on the expectation that the majority of the expenditure will be incurred in the short or medium term, the best estimate for the cost of warranty is used for the recognition of the provision. Likewise, historical data is taken into account in the calculation of the amount of the provision. According to past experience, it is probable that there will be claims under the warranties.
The provision for losses from pending transactions and re-work was set up on the basis of expected losses from construction contracts recognized at the balance sheet date.
Other provisions mainly include provisions for commissions and bonuses, credits receivable, discounts granted to customers and legal and consulting fees.
The Group's contingent liabilities primarily result from major projects in the area of traffi c control. Other commitments mainly relate to contract and warranty bonds, bank guarantees, performance und bid bonds, sureties and acceptance of guarantees for subsidiaries vis-à-vis third parties. Details of contingent liabilities and other commitments are as follows:
| 2007/08 | 2006/07 | |
|---|---|---|
| Contract, warranty, performance and bid bonds | ||
| City Highway Santiago | 860 | 15,358 |
| City Highway Sydney and Melbourne | 2,377 | 7,901 |
| Truck Tolling System Austria | 12,500 | 12,500 |
| Truck Trolling System Czech Republic | 48,899 | 89,424 |
| Tolling project New Zealand | 2,101 | 0 |
| Other | 4,306 | 4,658 |
| 71,043 | 129,841 | |
| Bank guarantees | 3,290 | 12,179 |
| Sureties | 25 | 30 |
| 74,359 | 142,050 |
In the fi scal year 2006/07 the Group acquired 100% of the shares in DPS Automation S.A., Buenos Aires, Argentina (subsequently renamed to Kapsch Traffi cCom Argentina S.A.). The share purchase agreement includes an additional variable element for the purchase price (earn-out model) based on future sales of software licences owned by the acquired entity within 5 years upon closing. This contingent consideration can not yet be estimated reliably, as the sales of the respective licences are completely dependent upon how successful group companies are at winning further contracts for road tolling systems.
Financial obligations from lease contracts:
The future payments from non-cancellable obligations from rental and operating lease contracts are presented below:
| 2007/08 | 2006/07 | |
|---|---|---|
| Up to 1 year | 4.471 | 3.836 |
| Between 1 and 5 years | 5.370 | 3.416 |
| Over 5 years | 2 | 0 |
| 9.843 | 7.252 |
By share purchase agreement dated 26 April 2007 the Group acquired 100% of the shares in VTI Industrial (Pty) Ltd, Germiston, South Africa.
| Cash paid | 209 |
|---|---|
| Fair value of net assets acquired | 209 |
| Goodwill | 0 |
The assets and liabilities arising from the acquisition are as follows:
| Fair value | Acquiree's carrying amount | |
|---|---|---|
| Intangible assets | 145 | 0 |
| Property, plant and equipment | 2 | 2 |
| Receivables and other assets | 70 | 70 |
| Cash and cash equivalents | 46 | 46 |
| Payables, other liabilities and accruals | -54 | -54 |
| Net assets acquired | 209 | 64 |
The acquired company in South Africa contributed revenues of TEUR 52 and a net income of TEUR 21 to the Group for the period from 1 May 2007 to 31 March 2008. If the acquisition had occurred on 1 April 2007, there would not have been a signifi cant change in revenue or profi t of the Group.
By assignment agreement dated 5 December 2007 the Group acquired an additional 50% of the shares in ArtiBrain Software EntwicklungsgesellschaftmbH, Vienna, which up to then had been an associate (see Note 13). The Group now holds 100% of the shares.
| Goodwill | 0 |
|---|---|
| Fair value of net assets acquired | 488 |
| Cash paid (including historical start-up costs of TEUR 388) | 488 |
The assets and liabilities arising from the acquisition are as follows:
| Fair value | Acquiree's carrying amount | |
|---|---|---|
| Intangible assets | 453 | 371 |
| Property, plant and equipment | 18 | 18 |
| Receivables and other assets | 294 | 294 |
| Cash and cash equivalents | 65 | 65 |
| Payables, other liabilities and accruals | -343 | -343 |
| Net assets acquired | 488 | 406 |
The acquired company contributed revenues of TEUR 118 and a net loss of TEUR -467 to the Group for the period from 1 January 2008 to 31 March 2008. If the acquisition had occurred on 1 April 2007, there would not have been a signifi cant change in revenue or profi t of the Group.
The following transactions were performed with related companies or persons:
From January 2005 onwards, the company provides services to the Group in the area of group consolidation and legal advice. Expenses incurred by the Group in the fi scal year 2007/08 amounted to TEUR 599 (2006/07: TEUR 157), TEUR 318 thereof was a oneoff charge for additional services in connection with the preparation and implementation of the initial public offering of Kapsch Traffi cCom AG. Furthermore, the company invoices insurance costs (directors & offi cers liability insurance) to the Group in the amount of TEUR 11 (2006/07: TEUR 10).
In August 2003 the company issued a parental guarantee to the group company Kapsch Traffi cCom AB, Jönköping, Sweden, in the amount of EUR 11.1 million. The company was released from the guarantee obligation in April 2006. In December 2005 the company issued a parental guarantee to FöreningsSparbanken AB, Stockholm, Sweden, in favor of the group company Kapsch Traffi cCom AB, Jönköping, Sweden, in the amount of EUR 19.1 million. The annual fee for the assumption of the liability is 0.5 % of the guaranteed amount. Expenses incurred by the Group in the fi scal year 2007/08 amounted to TEUR 96 (2006/07: TEUR 96).
In January 2007 KAPSCH-Group Beteiligungs GmbH issued an unconditional and irrevocable fi rst demand payment guarantee up to EUR 40 million with respect to the payment obligations of Kapsch Traffi cCom Construction & Realization spol.s.r.o.. Prague, resulting from the credit and guarantee facilities agreement granted by Ceskoslovenska Obchodni Banka A.S., Prague, Bank Austria Creditanstalt AG, Vienna und Raiffeisen Zentralbank Österreich AG, Vienna, for the delivery and operation of the Czech truck tolling system. The annual fee for the assumption of the liability is 0.5 % of the actual guaranteed amount. Expenses incurred by the Group in the fi scal year 2007/08 amounted to TEUR 209 (2006/07: TEUR 0).
KAPSCH-Group Beteiligungs GmbH acts as the tax group leader in a tax group formed in March 2005, of which Austrian subsidiaries of this Group are members. Accordingly, all post-formation tax effects of the group companies which are tax group members are considered to be related party transactions (see Note 9 and 22).
The company provides services to the Group in the area of legal advice. Expenses incurred by the Group in the fi scal year 2007/08 amounted to TEUR 0 (2006/07: TEUR 10).
In connection with the use of the KAPSCH trademark and logo the company invoices licence fees to the Group. The licence fee amounts to 0.5 % of all third-party sales of the Group, whereby the annual minimum fee is TEUR 250. Expenses incurred by the Group in the fi scal year 2007/08 amounted to TEUR 750 (2006/07: TEUR 924).
Activities in the area of corporate development, public relations, sponsoring and other marketing activities are carried out centrally by Kapsch Aktiengesellschaft for all group companies. Cost allocated to the Group in the fi scal year 2007/08 amounted to TEUR 447 (2006/07: TEUR 541).
Furthermore, the company invoices management and consulting services (including costs for the chairman of the board of the company, Georg Kapsch, and costs for consulting services of certain supervisory board members of the company) to the Group. Expenses incurred by the Group in the fi scal year 2007/08 amounted to TEUR 1,257 (2006/07: TEUR 874), TEUR 382 thereof was a one-off charge for additional services in connection with the preparation and implementation of the initial public offering of Kapsch Traffi cCom AG.
Kapsch Aktiengesellschaft has entered into various insurance contracts covering all group companies. The cost allocated to the Group in the fi scal year 2007/08 amounted to TEUR 253 (2006/07: TEUR 175).
The company provides human resources services (payroll services, administration, recruiting, advice on labour law and human resources development) to the Group. Expenses incurred by the Group in the fi scal year 2007/08 amounted to TEUR 786 (2006/07: TEUR 606).
The company leases telephone and IT equipment (hardware and software) to the Group and provides call centre services and IT support. Expenses incurred by the Group in the fi scal year 2007/08 amounted to TEUR 1,643 (2006/07: TEUR 1,487).
The company provides maintenance services on behalf of Kapsch Traffi cCom AG, Vienna, for the project "Truck Tolling System Austria". Expenses incurred by the Group in the fi scal year 2007/08 TEUR 1,999 (2006/07: TEUR 1,622).
The company delivered hardware (in particular IT equipment) and provided other services for the project "Truck Tolling System Czech Republic". Expenses incurred by the Group in the fi scal year 2007/08 amounted to TEUR 496 (2006/07: TEUR 3,741).
Furthermore, the company renders maintenance services to the Austrian National Railways on behalf of Kapsch Traffi cCom AG, Vienna. Expenses incurred by the Group in the fi scal year 2007/08 amounted to TEUR 59 (2006/07: TEUR 412).
The company provides IT, EDP and telephone services to the Group in the amount of TEUR 192 (2006/07: TEUR 0), as well as other services in the amount of TEUR 180 (2006/07: TEUR 0).
The Group invoices consulting services, in particular on public relations, to the company. Income of the Group resulting from these services in the fi scal year 2007/08 totalled TEUR 60 (2006/07: TEUR 56).
In the fi scal year 2007/08 the Group assigned the NMC project to the company. Income of the Group resulting from this totalled TEUR 216.
Kapsch Components KG provides logistic services to the company. Income of the Group resulting from these services in the fi scal year 2007/08 totalled TEUR 100 (2006/07: TEUR 107).
The company provided installation and other services in connection with the "Truck Tolling System Austria". Expenses incurred by the Group in the fi scal year 2007/08 amounted to TEUR 0 (2006/07: TEUR 379).
Furthermore the company rendered services in connection with the "Truck tolling system Czech Republic". Expenses incurred by the Group in the fi scal year 2007/08 amounted to TEUR 0 (2006/07: TEUR 176).
The Group provides services in the area of public relations to the company. Income of the Group resulting from this service in the fi scal year 2007/08 amounted to TEUR 83 (2006/07: TEUR 77).
The company provides support services regarding the accounting system "Navision" to the Group. Expenses incurred by the Group in the fi scal year 2007/08 amounted to TEUR 0 (2006/07: TEUR 53).
Kapsch Components KG provides logistic services to the company. Income of the Group resulting from these services in the fi scal year 2007/08 totalled TEUR 1,102 (2006/07: TEUR 1,254).
Kapsch Components KG produces various components for the company. Income of the Group resulting from the sale of these components in the fi scal year 2007/08 totalled TEUR 711 (2006/07: TEUR 3,555).
In January 2007 Kapsch CarrierCom AG issued an unconditional and irrevocable fi rst demand payment guarantee up to EUR 9 million with respect to the payment obligations of Kapsch Traffi cCom Construction & Realization spol.s.r.o.. Prague, resulting from the credit and guarantee facilities agreement granted by Ceskoslovenska Obchodni Banka A.S., Prague, Bank Austria Creditanstalt AG, Vienna und Raiffeisen Zentralbank Österreich AG, Vienna, for the delivery and operation of the Czech truck tolling system. The annual fee for the assumption of the liability is 1.5 % of the actual guaranteed amount. The fi rst portion of the respective credit and guarantee facilities was drawn end of March 2007. Expenses incurred by the Group in the fi scal year 2007/08 amounted to TEUR 135. (2006/07: TEUR 6).
The company assisted the Group in the tender process for the truck-tolling system in the Czech Republic (in particular regarding advertising activities and consulting services). Expenses incurred by the Group in the fi scal year 2007/08 totalled TEUR 0 (2006/07: TEUR 103).
The company provided further consulting services to the Group. Expenses incurred by the Group in the fi scal year 2007/08 amounted to TEUR 0 (2006/07: TEUR 5).
In the fi scal year 2007/08 an agreement could be reached with the company on waiving a potential success fee for the procurement of a tolling project in Argentina in the form of a one-off payment amounting to TEUR 400 (2006/07: TEUR 0).
The managing directors of Kapsch Immobilien GmbH are members of the supervisory board of Kapsch Traffi cCom AG.
In 1997, Kapsch Components KG, as lessee, has entered into a frame lease agreement with Kapsch Immobilien GmbH, as lessor, regarding the premise in Wagenseilgasse 1, Vienna, Austria, assuming the frame lease agreement from Kapsch Aktiengesellschaft, the original lessee. The frame lease agreement has neither been signed by Kapsch Components KG nor Kapsch Immobilien GmbH, but nonetheless the parties regard the very basic provisions contained in the frame lease agreement to be binding upon them. The frame lease agreement was terminated and ends on 31 December 2008. The various parts of these premises are sub-leased by Kapsch Components KG within the consolidated group as well as to related companies.
Lease expenses incurred by the Group from this contract amounted to TEUR 1,181 in the fi scal year 2007/08 (2006/07: TEUR 1,129).
Lease income of the Group resulting from the sub-lease to related parties in the fiscal year 2007/08 totalled TEUR 379 (2006/07: TEUR 505).
Services are usually negotiated with related parties on a cost-plus basis. Goods are bought and sold on the basis of the price lists in force with non-related parties.
Liabilities for pension benefi ts include pension obligations (pensions in payment) to the widow of Dr. Karl Kapsch, a former board member of Kapsch Aktiengesellschaft.
The following table provides an overview of receivables from and payables due to related parties at the respective balance sheet dates:
| 31 March 2008 | 31 March 2007 | |
|---|---|---|
| Parent company | ||
| Trade receivables and other assets | 379 | 406 |
| Trade payables and other payables | 522 | 3,635 |
| Affi liated companies | ||
| Trade receivables and other assets | 444 | 586 |
| Trade payables and other payables | 466 | 4,710 |
| Other related parties | ||
| Trade receivables and other assets | 0 | 0 |
| Trade payables and other payables | 12 | 12 |
Effective as of 8 March 2007, the Group disposed of its railway communication business that primarily included mobile train cab radios and related applications based on GSM-R technology (sale to Funkwerk Systems Austria GmbH, Vienna, by means of an asset deal). Activities in this business formed part of the Services, System Extensions, Components Sales segment.
As a result of the sale, the Group applied IFRS 5.
a) Analysis of the result of discontinued operations
| 2007/08 | 2006/07 | |
|---|---|---|
| Revenues | 0 | 7,071 |
| Expenses | 0 | -9,381 |
| Profi t from discontinued operations – before and after tax | 0 | -2,311 |
| 2007/08 | 2006/07 | |
|---|---|---|
| Operating result | 0 | -2,318 |
| Adjustments for non-cash items and other reconciliations | 0 | 197 |
| Changes in current assets: | ||
| Increase/decrease in trade receivables and other assets | 1,441 | 1,294 |
| Increase/decrease in inventories | 0 | 485 |
| Increase/decrease in trade payables and other current payables | -122 | -1,613 |
| Increase/decrease in current provisions | -1,061 | -12 |
| 258 | 154 | |
| Interest received | 0 | 66 |
| Interest payments | 0 | -90 |
| Net cash fl ow from operating activities – discontinued operations | 252 | -1,991 |
| Cash fl ow used in investing activities | ||
| Purchases of property, plant and equipment | 0 | -65 |
| Proceeds from disposal of assets | 0 | 1,510 |
| Net cash fl ow used in investing activities – discontinued operations | 0 | 1,445 |
| Cash fl ow used in fi nancing activities | ||
| Increase/decrease in other non-current fi nancial liabilities | -700 | -467 |
| Increase/decrease in current fi nancial liabilities | -467 | 233 |
| Net cash fl ow used in fi nancing activities discontinued operations | -1,167 | -233 |
| Net cash fl ow from discontinued operations | -909 | -779 |
Earnings per share (basic earnings) is calculated by dividing the profi t attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year, excluding, if any, ordinary shares purchased by the Company and held as treasury shares.
At 31 March 2008, as in the prior year, no treasury shares were held by the Company.
| 2007/08 | 2006/07 | |
|---|---|---|
| Continuing Operations: | ||
| Profi t attributable to equity holders of the Company (in EUR) 1 | 30,412,759 | 20,438,871 |
| Weighted average number of ordinary shares | 11,683,060 | 10,000,000 |
| Basic earnings per share (expressed in EUR per share) | 2.60 | 2.04 |
| Discontinued Operations: | ||
| Loss attributable to equity holders of the Company (in EUR) | 0 | -2,311,032 |
| Weighted average number of ordinary shares | 11,683,060 | 10,000,000 |
| Basic earnings per share (expressed in EUR per share) | 0 | -0.23 |
1 Losses attributable to minority shareholders in the periods under review refer to continuing operations only.
Kapsch Traffi cCom AG and the Italian Busi Impianti Group announced their cooperation on 15 May 2008. The two companies will establish Kapsch-Busi S.p.A., domiciled in Bologna, under a joint venture. The new company will focus on the Italian traffi c telematics market in the urban area. Busi Impianti will outsource the respective business unit, including a group of about 10 employees, Kapsch Traffi cCom will complement the team by own personnel. Kapsch Traffi cCom will hold a share of 67 % in the joint venture.
The consolidated group companies are listed in the notes to the consolidated fi nancial statements under the item "consolidated group". The parent company Kapsch Traffi cCom AG, Vienna, with the exception of Kapsch Telematic Services GmbH, Vienna, Kapsch Telematic Services Kft., Budapest, Kapsch Telematic Services spol. s r.o., Prague, Kapsch Traffi cCom Construction & Realization spol. s r.o., Prague, Kapsch Telematic Services SK s.r.o., Bratislava, and Kapsch Telematic Services GmbH, Berlin, directly or indirectly holds 100 % of the shares in the fully consolidated subsidiaries. With regard to additional disclosures in accordance with § 265 (2) 1 UGB for Kapsch Telematic Services GmbH, Vienna, Kapsch Telematic Services Kft., Budapest, Kapsch Telematic Services spol. s r.o., Prague, and Kapsch Traffi cCom Construction & Realization spol. s r.o., Prague, Kapsch Telematic Services SK s.r.o., Bratislava, and Kapsch Telematic Services GmbH, Berlin, the protection-of-interest clause pursuant to § 265 (3) UGB was applied.
The average number of staff in the fi scal year 2007/08 was 716 salaried employees and 75 waged workers (2006/07: 606 salaried employees and 121 waged workers).
Costs for the chairman of the board are, among others, included in the cross-charge of management and consulting services from Kapsch Aktiengesellschaft (see Note 29). Regarding the total emoluments of the other member of the management board, the protection-of-interest clause of § 266 No. 7 UGB is applied.
No remunerations were paid to supervisory board members.
As in the previous years, no advances or loans were granted to members of the management and supervisory board, nor any guaranties issued in their favor.
In the fi scal year 2007/08 the following persons served as management board members:
Mag. Georg Kapsch (Chief Executive Offi cer) Ing. Erwin Toplak
In the fi scal year 2007/08 the following persons served on the supervisory board:
Dr. Franz Semmernegg (Chairman) Dr. Kari Kapsch (Deputy-Chairman) Mag. Elisabeth Kapsch
Delegated by the works council: Ing. Christian Windisch Dipl.-Ing. Werner Dreschl
Authorized for issue:
Vienna, 16 May 2008
Mag. Georg Kapsch Ing. Erwin Toplak
Chief Executive Offi cer Member of the Management Board
We have audited the accompanying consolidated fi nancial statements of Kapsch Traffi cCom AG, Vienna, for the fi nancial year from 1 April 2007 to 31 March 2008. These consolidated fi nancial statements comprise the balance sheet as of 31 March 2008, and the income statement, statement of changes in equity and cash fl ow statement for the year ended 31 March 2008, and a summary of signifi cant accounting policies and other explanatory notes.
Management is responsible for the preparation and fair presentation of these consolidated fi nancial statements in accordance with International Financial Reporting Standards as adopted by the EU. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of fi nancial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
Our responsibility is to express an opinion on these consolidated fi nancial statements based on our audit. We conducted our audit in accordance with laws and regulations applicable in Austria and in accordance with International Standards on Auditing, issued by the International Auditing and Assurance Standards Board (IAASB) of the International Federation of Accountants (IFAC). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the fi nancial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated fi nancial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the consolidated fi nancial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated fi nancial statements. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
Our audit did not give rise to any objections. Based on the results of our audit in our opinion, the consolidated fi nancial statements present fairly, in all material respects, the fi nancial position of the group as of 31 March 2008, and of its fi nancial performance and its cash fl ows for the fi nancial year from 1 April 2007 to 31 March 2008 in accordance with International Financial Reporting Standards as adopted by the EU.
Laws and regulations applicable in Austria require us to perform audit procedures whether the consolidated management report is consistent with the consolidated fi nancial statements and whether the other disclosures made in the consolidated management report do not give rise to misconception of the position of the group.
In our opinion, the consolidated management report for the group is consistent with the consolidated fi nancial statements.
Vienna, 16 May 2008
PwC INTER-TREUHAND GmbH Wirtschaftsprüfungs- und Steuerberatungsgesellschaft
signed:
Dr. Aslan Milla Certifi ed Public Accountant
Kapsch Traffi cCom is an international supplier of innovative road traffi c telematics solutions. Its principle business is the development and supply of electronic toll collection (ETC) systems, in particular for the multi-lane free-fl ow (MLFF) of the traffi c, and the technical and commercial operation of such systems. Kapsch Traffi cCom also supplies traffi c management systems, with a focus on road safety and traffi c control, and electronic access systems and parking management. With more than 140 installed tolling systems in 30 countries in Europe, Australia, Latin America, in the Middle-East, in the Asian/Pacifi c region and in South Africa, and with almost 12 million on-board units (OBUs) and nearly 11,000 equipped lanes, Kapsch Traffi cCom has positioned itself among the leading suppliers of ETC systems worldwide. Kapsch TrafficCom is headquartered in Vienna, Austria, and has subsidiaries and representative offi ces in 20 countries.
Kapsch Traffi cCom AG I Wagenseilgasse 1 I A-1120 Vienna, Austria I www.kapschtraffi c.com Investor Relations I Marcus Handl I Phone: +43 (0)50811 1122 I Fax: +43 (0)50811 99 1120 I E-Mail: ir.kapschtraffi [email protected] Public Relations I Brigitte Herdlicka I Phone: +43 (0)50811 2705 I Fax: +43 (0)50811 99 2705 I E-Mail: [email protected]
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