Annual / Quarterly Financial Statement • Jun 27, 2011
Annual / Quarterly Financial Statement
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Kapsch TrafficCom
always one step ahead
| Management Report 3 n |
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| Statement of all Members of the Managing Board 20 n |
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| Additional Information pursuant to Section 82 Para. 4 No. 3 BörseG 21 n |
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| Consolidated Financial Statements as of 31 March 2011 22 n |
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| Notes to the consolidated financial statements 26 n |
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| Notes on individual items in the income statement and balance sheet 39 n |
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| Auditor's Report 64 n |
| n | Management Report as of 31 March 2011 67 | |
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| n | Statement of all Members of the Managing Board 84 | |
| n | Additional Information pursuant to Section 82 Para. 4 No. 3 BörseG 85 | |
| n | Balance Sheet as of 31 March 2011 86 | |
| n | Income Statement for the fiscal year 2010/11 87 | |
| n | Notes to the financial statements for the fiscal year 2010/11 88 | |
| n | Auditor's Report 100 |
Following the financial and economic crisis, world trade has increased again since the start of 2009 and has largely been able to regain pre-crisis levels. Real global trade is expected to increase by 10% per year in 2011 and 2012 as well. The global economy also improved as a result of very expansive monetary and fiscal policy. The global gross domestic product rose by 4.5% year-on-year, but slowed over the course of 2010. The International Monetary Fund (IMF) has forecasted growth of 4.4% for 2011, and expects the global economy to continue growing by 4.5% in 2012.
From a regional perspective, the economic upturn has been very uneven. In the emerging markets, such as in Asia, recovery was observed earlier than in the industrial countries, such as the euro zone in particular. However, the expansion in Asia is now showing a slight decline, which can be attributed to the end of the significant inventory build-up following the crisis as well as attempts by China and other emerging countries to slow growth in order to prevent their economies from overheating and to counteract rising inflationary pressure. Asian and Latin American economies will continue to grow in 2011 and 2012, lending a noticeable impetus to the global economy.
In the euro region, very large differences exist between the individual countries. High-export and internationally competitive nations such as Germany and the Scandinavian countries exhibited positive growth figures for 2010, while the situation in Southern European countries and in Ireland appeared somewhat worse. The problematic national budgets of these euro countries are leading to an abrupt increase in lending rates and continue to put the European Currency Union to a hard test. In the interests of solidarity, the EU has resolved to provide EUR 110 billion of support to Greece and EUR 85 billion to Ireland. It is also assumed that Portugal will need between EUR 80 billion and EUR 90 billion.
The oil price has risen again significantly in recent months due to the flare up of unrest in North Africa and the Near East and stood at roughly USD 110 per barrel Brent as of mid May. Raw materials prices are likewise increasing due to high demand. The price of gold is also rising, ending the reporting period at approx. USD 1.525 per Troy ounce.
2010 was a turbulent year for the financial markets. The European sovereign debt crisis and the relaxation of monetary policy by the US Federal Reserve dominated the international markets. The euro lost ground against the US dollar in the first half of 2010, but the euro exchange rate recovered again in the second half of the year. Demand for low-risk investments in German and American bonds increased.
The final weeks of the fiscal year 2010/11 were dominated by the terrible catastrophe in Japan. Following the massive destruction caused by the earthquake and tsunami, the threat of a nuclear disaster has largely been the focus of attention.
The consequences for the global economy are still difficult to estimate. Japan is faced with its largest reconstruction effort since World War II. The required investments and restoration of the destroyed infrastructure could mean a short-term boost to the Japanese economy. However, Japan is one of the few major economic powers with a strong focus on exports, and this leads to fears of massive economic losses due to production downtimes as well as the radioactive contamination of agricultural products and ocean water. According to economists, the direct consequences on the global economy should remain within limits.
The overall outlook for the global economy justifies the expectation that investors could remain in a risk-averse posture. The high national debts of the developed countries and rising raw materials prices will have a significant impact on growth.
The economy in the United States. developed positively during 2010. The gross domestic product of the U.S.A. increased by 2.7% in 2010, and indicators point toward a continuation of this positive trend. GDP growth of 2.2% is forecasted for the year 2011 and a further increase in growth to 2.9% for 2012.
Measures to stabilize the economy as well as extensive intervention by the US Federal Reserve (Fed) during the year 2010 are allowing banks to repair their balance sheets. Expansive monetary policy and the buyback of government bonds by the Fed have kept the USD exchange rate low. At the end of 2010, the euro was at 1.34 US dollars, while on 31 March 2011 it was 1.42 US dollars. Since the end of 2010, the Fed has held to a historically low interest rate between 0.0% and 0.25%. Experts expect the prime rate will be kept low over the short-term and the relaxed monetary policy will be maintained.
The labor market has recovered slightly in recent months, but is still characterized by delayed development. The unemployment rate remains high and was at 9.0% in January 2011. In 2011, unemployment is expected to average between 8.8% and 9.0%. Developments in the areas of industrial production and exports are positive. Private consumer spending remained expansive despite belt-tightening, which can be attributed in part to the increased prices of food and fuel. Forecasts indicate that the consumption and real estate boom seen prior to the crisis will not return quickly. In particular, the recovery in the real estate market has remained very weak to date. No noticeable improvement is in sight for the construction industry as well.
The rapid implementation of government economic stimulus programs has boosted the emerging markets in the last two years. Emerging countries such as China and India have even seen a surplus of capital.
China exhibited GDP growth of 10.5% in 2010. Although the government took measures to counteract the risk of currency appreciation and rising inflationary pressure, growth amounting to 9% per year is expected for the years 2011 and 2012.
Japan made the turnaround in 2010 and was able to achieve an increase of 3.6% in its gross domestic product. As a result of the recent natural catastrophes, serious estimates regarding future developments are almost impossible, and the opinions of experts also diverge extensively in this area.
Following the global crisis, recovery was also observed in the euro countries during 2010. The gross domestic product in the euro zone rose by 1.7%, and stable growth of 1.5% is expected for the years 2011 and 2012. Industry in the euro region was able to exceed production forecasts, and the volume of new orders also developed positively. At the start of the 4th quarter of 2010, the industrial capacity utilization of 77.6% was far above the low of the previous year (69.6%) but still fell short of the long-term average of 81.2%.
In general, an analysis of the current economic situations in the euro countries shows significant differences.
The competitive export countries of the euro region, such as Germany and the neighbors with which it has strong economic relationships, such as Austria and Slovakia, are profiting from the massive growth in the emerging markets (in particular, from China). Germany, for instance, proved to be the economic motor for Europe in 2010 with growth of 3.6%, and there are good prospects for continued stable growth in 2011 as well. Alongside the positive effects from the rise in global trade, German economic growth also benefits from the low interest rates in the euro zone. As a result, the country has been spared tax hikes and cost-cutting measures, benefiting companies and further promoting consumption.
Other euro countries have encountered great difficulties in controling their national debts and lag behind in terms of growth. High public spending and austerity packages can be seen in Greece, Ireland, Portugal and Spain, and the economies of these countries are stagnating. Portugal is even in a recession at this time.
In recent months, all the nations of Europe have banded together to overcome this crisis through joint action. To this end, a comprehensive plan was passed for opposing the debt crisis in the euro region, stabilizing the economic and monetary union and improving competitiveness. The new crisis fund for high-debt euro countries was recently raised to EUR 700 billion. As of 2013, this money should be made available as credit financing under favorable conditions to euro countries that are unable to get their national budgets under control on their own despite austerity programs. Almost all EU states are helping to finance this rescue fund through cash contributions and guarantees. Strict criteria, including massive cost-cutting measures, must be met in order to take advantage of this aid.
Although the EU began to assist Greece at the start of 2010 – in total, roughly EUR 110 billion should have been approved – the budget deficit for 2010 was again higher than expected at 10.5%. Ireland requested assistance at the end of 2010 and received a loan of roughly EUR 85 billion.
The situation in Portugal also intensified in the spring of 2011. The goals for the budget deficit in 2010 were clearly missed at 9.1%, and political turbulence has ensued since that time. The unemployment rate (11.2% in January 2011) and inflation (roughly 3.5% in February 2011) also rose considerably. At the start of April 2011, after receipt of a significantly worse rating and a correspondingly massive interest rate increase for Portuguese government bonds, the country requested assistance from the EU rescue fund. Estimates of the required aid run to EUR 80-90 billion.
In addition to the crisis fund, adherence to the stability package has once again received greater attention throughout the entire euro region. The new debt of a country may not exceed 3% and the total debt level must be lower than 60% of the GDP. If these criteria are not met, a deficit process must be followed by which 0.2% of the GDP must be set aside as a pledge for improving the debt. If the debt situation does not improve, this pledge is treated as a penalty. The euro countries are also called upon to more closely coordinate their tax, pension and social policies in order to avoid differences in competitiveness.
Overall, the economic recovery in the euro region has been astonishingly robust despite the rising price of oil and continued debt problems.
The new EU countries were able to achieve GDP growth of 1.9% in 2010 (2009: -3.3%). Indicators point to continued GDP growth of 2.6% in 2011 while growth as high as 3.6% is expected for 2012. Poland, the Czech Republic, Slovakia and Hungary have enjoyed good economic growth.
Inflation in the EU (EU-27) increased in 2010 primarily due to rising energy prices and was at 2.8% in February 2011. To counteract this, the European Central Bank raised the prime rate from 1% to 1.25% at the start of April 2011, and another increase is expected over the course of 2011. The 3-month Euribor rate was 1.23% on 31 March 2011.
The unemployment rate in the EU (EU-27) remained at a high level of 9.5% in February 2011, only 0.1% lower than the previous year. This figure also varies widely between the individual countries. The Netherlands, Luxembourg and Austria have the lowest rates, while the highest unemployment rates are reported by Spain, Lithuania and Latvia. Latvia, however, was also able to demonstrate the greatest reduction in unemployment, followed by Estonia and Sweden. The largest increase was reported by Greece and Ireland.
The Austrian GDP increased by 2.0% in 2010, which can be primarily attributed to the strong growth in exports (2010: +12.3%) and rising investments. The GDP growth forecast for 2011 was recently revised upward to 2.5 %, and growth of 2.0% is expected for 2012 as well.
Positive export developments can be attributed to the strong economic growth in Germany, which was in turn positively influenced by growing demand from Asia. Austria's exporters also profited from increasing exports to Switzerland, Russia and the U.S.A.. According to forecasts, Austrian goods exports are expected to grow by 7% in 2011 and 6.4% in 2012.
Consumption by private households remained a stable pillar of the economy in 2010 due to high real growth (tax reform, expansion of social transfers and low inflation). Consumer spending by private households increased by 1.1% in 2010. Trade also profited from the positive development in consumer spending, making possible an increase of 2.8% in value creation.
In 2011, it is expected that net real per capita income will decline somewhat due to lower salary conditions in the public sector and a slight increase in the inflation rate. Net real wages should recover somewhat in 2012.
In February 2011, the inflation rate reached its highest level since September of the previous year. The Europe-wide harmonized consumer price index jumped to 3.1% and exerted a damping effect on economic growth. This increase can be attributed above all to increased prices for fuels, heating oil and food. Approximately 0.4% of this increase originates from the raising of indirect taxes for budget consolidation. On the other hand, core inflation, which excludes energy and unprocessed foods, remained low.
Overall, the Austrian economy is recovering very well compared with the rest of the world. Following on the economic stimulus programs, the austerity package and tax reforms were implemented relatively quickly and have already begun to show the desired effects, demonstrating that they were correctly dimensioned. It has been possible to keep many employees in their jobs by reducing working hours. In addition, innovative ideas helped Austrian companies successfully ride out the crisis.
However, the continued growth of the Austrian economy is subject to a number of uncertainties and risks. The EU countries are faced with the great challenge of overcoming the debt crisis and ensuring the stability of the monetary union in Europe. The unrest in the Near East and North Africa has led to increased oil prices and negatively impacted inflation. It remains to be seen how the situation in North Africa will develop. Due to the low trade volume with Japan, experts believe the catastrophe there will have only a negligible impact on the Austrian economy, with the exception of delivery bottlenecks. The potential influence of this situation on the global economy and thereby directly on Austria remains difficult to assess from today's perspective.
The development of the unemployment rate remains positive. Unemployment has continued to fall, reaching 6.9% in March 2011 according to the national calculation and 4.3% according to the Eurostat definition. This places Austria alongside the Netherlands in the top ranks of the EU-27 countries (average of 9.6%). According to the most recent forecasts, the unemployment rate should stabilize further, and an annual average of 4.1% is expected for 2011 and 4.0% for 2012.
To allow for easier comparisons, the Kapsch TrafficCom Group makes use of the internationally prevailing terms for the intelligent transportation systems market. The study "Intelligent Transportation Systems – A global strategic business report" from Global Industry Analysts, September 2010, describes the ITS market as a diversifying market with the following, widely differing application and product segments.
Electronic toll collection (ETC) systems with technologies that enable drivers to pay toll fees without stopping at tollgates.
Traffic management systems (TMS) that monitor traffic, optimize signal timing, and regulate the flow of traffic.
Commercial vehicle operations (CVO) systems which are technologies to enhance motor carrier productivity and safety during interstate transportation.
Public vehicle transportation management systems (PVTMS) which streamline transit, allow transit companies to locate vehicles and provide safety to commuters.
Vehicle information systems (VIS) which include a host of applications that enable commuters to have a safe journey.
According to Global Industry Analysts, the size of the ITS market amounted to USD 11.8 billion in 2010 and is increasing steadily. The largest market segment is traffic management systems, accounting for almost 38%. The fastest-growing ITS segment is electronic toll collection systems with a compounded average growth rate of 17.1% between 2000 and 2010; at a worldwide volume of about USD 2.8 billion, it had a share on the ITS market of roughly 24% in 2010.
Funding of infrastructure projects. Independent of the economic recession, the worldwide increase in road traffic is the most important growth factor for the ITS market. According to analyses by the EU (European Union 2010, "Energy and Transport in Figures"), commercial traffic increased by 2.3% per year and in total by 33.7% between 1995 and 2008. Commercial road traffic increased by 2.9% per year and by 45.7% in total. While the recent economic crisis triggered a fall in the volume of goods transport, this has already been largely compensated for by the subsequent upswing. Despite political pressure, goods transport could not be shifted significantly from road to rail or ship transport. This growth increases the financing burden for road infrastructure enormously, which in turn fosters greater demand and a high growth potential for ITS applications and the market segment electronic toll collection systems, in particular.
In 2005, the trans-European road network (TEN-V) with a total length of 84,700 km comprised one-fourth of the primary street network but carried 40% of the total commercial traffic. It is predicted that TEN-V will be expanded by 4,800 km per year up to 2020, of which 3,500 km will consist of existing roads. Major investments will be required in the new member states and along the corridor routes to these countries. The European Union estimates investments of EUR 600 billion will be required by 2020. The long-term forecasts for traffic growth continue to remain high.
In addition to dedicated short-range communication (DSRC) systems (microwave technology) according to the Comité Européen de Normalisation (CEN) 5.8 GHz standard, the use of satellite-based systems (satellite technology) has been expanding, depending on the application requirements. Significant growth potential also exists in the area of video-based systems for automatic number plate recognition (ANPR) for tolling and enforcement in urban environments
The high financing requirements for the preservation of road infrastructure are leading to new business models and private concessionaire models in the U.S.A.. Standard & Poor's research estimates an annual demand of USD 92 billion for the preservation of highways and bridges and a further USD 125.6 billion for their improvement. While the standardized tolling technology based on 5.8 GHz DSRC microwave is used in Europe, electronic toll collection systems in North America are based on proprietary protocols in the 915 MHz band. It is expected that a new communication protocol standard based on 5.9 GHz will gradually replace the existing technology in the U.S.A. over the coming years. In addition to the toll application, the communication standard 5.9 GHz WAVE (Wireless Access in the Vehicular Environment) is intended for car-to-car communication and for applications that increase traffic safety as well as additional ITS solutions for traffic information, traffic management and entertainment. These developments will also make it possible for European manufacturers to gain a foothold in the North America, which is also an important growth market for Kapsch TrafficCom.
Reduction of congestion and environmental pollution through road traffic. To reduce traffic congestion and environmental pollution, city charging systems and environmental zones (low emission zones) are deployed in several major cities. Environmental pollution can be viewed as another key driver for the ITS market and also for electronic toll collection systems. In large conurbations and capital cities, in particular, there is a growing need for electronic systems to control and reduce traffic. This topic is politically very sensitive, and the development of this segment within electronic toll collection systems is therefore not as fast as originally expected. Traffic safety devices to monitor compliance with traffic regulations are another field of application in cities. Examples include systems to monitor traffic violations at junctions (e.g. jumping red lights) as well as systems to detect speeding. These applications, which fall under the traffic management system segment, enjoy fast-growing potential on the market both in and between cities, and for municipal authorities they often pave the way for larger and more extensive ITS solutions such as city charging.
The increasing traffic volume can be considered a global trend. Especially in Asia, an increased demand for electronic toll lanes is expected for the replacement and expansion of toll systems previously based on more traditional methods. India has one of the largest road networks in the world, amounting to 3.4 million km in 2004. Only 2% is made up of highways, but these carry 40% of the commercial traffic. Between 1992 and 2002, 52,000 km of highways were built in China and an additional 200,000 km are planned for the coming years.
Reduction of road accidents. Traffic management systems are particularly expected to increase the probability of surviving accidents and reduce accident rates.
The fiscal year 2010/11 was the most successful year in the history of the Kapsch TrafficCom Group. Historic highs were achieved both for revenue and EBIT. The expansion strategy was consequently continued in order to further extend the market positions in selected countries. The presence of the Kapsch TrafficCom Group in South Africa and North America was strengthened through company acquisitions. In Poland, organic growth was generated by an order for implementing and operating the nationwide truck toll system.
On 1 April 2010, Kapsch Telematic Services GmbH, Vienna, acquired the majority of shares in Payvend F&P A/S, Copenhagen, Denmark. The company was then renamed Kapsch Telematic Services Solutions A/S, Copenhagen, Denmark.
On 8 April 2010, the Kapsch TrafficCom Group purchased the majority of shares in TMT Services and Supplies (Pty) Ltd., Cape Town, South Africa. The Group thereby also obtained a local partner that is a leader in the ITS segment traffic management systems and can contribute its expertise and services to the South African Gauteng project. TMT Services and Supplies (Pty) Ltd. engages in projects for traffic and parking monitoring in several South African cities, including speed monitoring in Johannesburg and in the Mpumalanga province. Over the course of fiscal year 2010/11, the new subsidiary also received a contract to deliver and operate an automatic fare collection system for the bus fleet of the city of Johannesburg that corresponds to roughly EUR 18 million.
The U.S., Canadian and Mexican business of MARK IV IVHS was taken over on 30 November 2010. This brings the largest provider of components for electronic toll systems based on the existing 915 MHz technology in North America into the Kapsch TrafficCom Group. The newly acquired subsidiaries are exclusive suppliers of the E-ZPass®Group, a consortium of 24 toll authorities in 14 US states. Projects are also running with customers in Canada and Mexico. In addition to current customer relationships, this takeover offers the ideal basis for participating in the expected technology migration from 915 MHz to 5.9 GHz WAVE. Initial demo and pilot projects based on the 5.9 GHz technology have already been implemented in the U.S.A. by the Kapsch TrafficCom Group.
Transport Telematic Systems LLC, Abu Dhabi, United Arab Emirates, was founded on 30 March 2011 together with a local partner.
In a move that further highlights the planned growth course, a 4.25% corporate bond with a volume of EUR 75 million and a tenor of seven years was successfully issued on 3 November 2010.
The ongoing implementation of the project in South Africa and the project acquired in October 2010 for building a nationwide truck tolling system in Poland dominated the past fiscal year.
The contract awarded by the South African National Roads Agency Ltd (SANRAL) in September 2009 for the implementation and operation of an electronic toll collection system for the multi-lane free-flow of traffic in the Gauteng province was in the implementation phase during the reporting period. After transfering the toll collection system as agreed in fiscal year 2011/12, the technical and commercial operation will be handled by the South African subsidiary. In a separate tender process for the delivery of over 1.8 million on-board units, the Kapsch TrafficCom Group was also able to win a large share of the contract amounting to over 1.5 million units.
With the signing of a contract on 2 November 2010 for the implementation and operation of a nationwide electronic truck tolling system in Poland, the Kapsch TrafficCom Group was able to further expand its leading position in the European market. The first construction phase encompasses the existing road network of roughly 1,750 km and the technical as well as commercial operation up to 2018 with an order value of approximately EUR 560 million. The commissioning will take place in fiscal year 2011/12. The Polish contract partner GDDKiA (General Directorate for National Roads and Highways) expects an expansion of the road network to 7,600 km by 2018.
In the Czech Republic, tolls are collected on 1,350 km of highways and expressways. 249 tolls stations and over 541,000 on-board units are currently in operation. The average toll transaction rate was increased from 99.0% in calendar year 2009 to 99.3% in calendar year 2010.
In Austria, roughly 2,200 km of highways and expressways are tolled with a fully electronic toll collection system for trucks heavier than 3.5 tons permissible total weight. Since 2004, Kapsch TrafficCom has delivered the entire central and roadside infrastructure for 490 toll stations as well as approximately 1 million on-board units (GO Boxes). The average toll transaction rate in Austria remained at the previous year's high level of 99.88%.
Thanks to the outstanding system performance, contractually established bonus payments were earned in both the Czech Republic and Austria.
The highest revenue since the founding of the Kapsch TrafficCom Group was generated in fiscal year 2010/11. Revenue of EUR 216.0 million in fiscal year 2009/10 was improved by 172.6 million, representing an increase of 79.9%, to EUR 388.6 million in fiscal year 2010/11. EBIT in the reporting period was EUR 48.9 million, an increase of EUR 24.3 million that almost doubled the EUR 24.5 million recorded in the previous fiscal year (+99.2%). This led to an improvement in the EBIT margin from 11.4% in the previous year to 12.6% in the reporting year.
Revenue in the segment Road Solution Projects (RSP) reached EUR 158.9 million, or 246.7% above the previous year's value of EUR 45.8 million. The most important factors for this development were the ongoing implementation of the South African Gauteng project, the start of the project obtained in October 2010 for construction of a nationwide electronic truck toll system in Poland and the completion of the traffic management system in the Czech Republic. The segment RSP now represents 40.9% of total sales (2009/10: 21.2%).
For the first time after two fiscal years, the segment RSP once again made a positive contribution of EUR 0.1 million to profit (2009/10: EUR -20.9 million). This can be primarily attributed to the projects in South Africa and Poland. Operating results continue to be impaired by the periodic costs allocated to this segment, the continued expenditures for entry into new markets (in particular costs connected with the acquisition of MARK IV IVHS, including the ancillary acquisition costs that are no longer capitalizable), the costs connected with the tender process for construction of a nationwide electronic truck toll system in France and upfront costs for pending tender processes.
The segment Services, System Extensions, Components Sales (SEC) saw an improvement in sales amounting by EUR 61.4 million, increasing from EUR 161.9 million to EUR 223.3 million. This corresponds to a gain of 37.9%. The primary factors driving this increase were the revenue of TMT Services and Supplies (Pty) Ltd., Cape Town, South Africa, taken over in April, which was reported for the first time in fiscal year 2010/11, the revenue from the U.S., Canadian and Mexican business of MARK IV IVHS, taken over in December, the contribution from the South African Gauteng project and expansions to the nationwide truck toll system in the Czech Republic. Sales of on-board units reached a record volume of 5.2 million delivered units, representing an increase of 46.9% over the previous year. Sales in the U.S.A., South Africa, Turkey, France and Portugal proved particularly positive. The fiscal year 2010/11 once again saw an improvement of revenue in the segment SEC, which amounted to 57.5% of total revenue in fiscal year 2010/11 (2009/10: 75.0%).
The EBIT in the segment SEC was EUR 48.3 million (2009/10: EUR 45.3 million), resulting in an EBIT margin of 21.6% (2009/10: 28.0%). The comparably high profit contribution in the previous fiscal year was attributable to the retroactive clarification of the assumption of costs for the transaction billing for the nationwide electronic truck toll system in the Czech Republic which became effective in the fiscal year 2009/10.
Revenue in the segment Others (OTH) fell from EUR 8.3 million in fiscal year 2009/10 to EUR 6.4 million in the past fiscal year. This decline can be attributed largely to the difficult economic environment in this special manufacturing area.
Despite the lower revenue, EBIT reached EUR 0.4 million (2009/10: EUR 0.2 million). The EBIT margin thus increased from 2.3% to 6.7% in fiscal year 2010/11.
| Revenue by segment | 2010/11 | 2009/10 | +/-% | 2008/09 | ||||
|---|---|---|---|---|---|---|---|---|
| Road Solution Projects (RSP) | ||||||||
| Revenue (% of total revenue) | in million EUR | 158.9 | (41%) | 45.8 | (21%) | >100% | 56.8 | (28%) |
| EBIT | in million EUR | 0.1 | -20.9 | <-100% | -1.7 | |||
| Services, System Extensions, Components Sales (SEC) | ||||||||
| Revenue (% of total revenue) | in million EUR | 223.3 | (57%) | 161.9 | (75%) | 38% | 135.6 | (68%) |
| EBIT | in million EUR | 48.3 | 45.3 | 7% | 31.7 | |||
| Others (OTH) | ||||||||
| Revenue (% of total revenue) | in million EUR | 6.4 | (2%) | 8.3 | (4%) | -23% | 8.0 | (4%) |
| EBIT | in million EUR | 0.4 | 0.2 | >100% | -1.0 |
At 47%, the largest share of total revenue was generated in the region of Europe. This increase of EUR 64.9 million can be attributed largely to the projects in Poland and the Czech Republic as well as the growth in component sales in France, Portugal and Turkey. Revenue in the rest of the world increased by EUR 97.0 million (>100%). The projects in South Africa represented key factors here. Revenue in Austria fell by EUR 4.9 million since no significant expansions to the existing nationwide truck toll system took place during the past fiscal year. The region of America saw a revenue increase of EUR 15.5 million (>100%). An increase was achieved in the U.S.A. and Canada due to the acquisition of the MARK IV IVHS companies, while lower sales in Chile negatively impacted the growth in this area.
| Revenue by region | 2010/11 | 2009/10 | +/- % | 2008/09 | ||||
|---|---|---|---|---|---|---|---|---|
| Austria (% of total revenue) | in million EUR | 37.5 | (10%) | 42.4 | (20%) | -12% | 37.8 | (19%) |
| Europe (excl. Austria) (% of total revenue) | in million EUR | 182.0 | (47%) | 117.1 | (54%) | 55% | 122.8 | (61%) |
| Americas (% of total revenue) | in million EUR | 27.6 | (7%) | 12.1 | (5%) | >100% | 14.0 | (7%) |
| Rest of the World (% of total revenue) | in million EUR | 141.5 | (36%) | 44.5 | (21%) | >100% | 25.6 | (13%) |
The cost of materials and other production services rose from EUR 98.0 million to EUR 191.3 million in fiscal year 2010/11, which reflects an increase of EUR 93.2 million. Compared with the previous year, the share of costs for materials and other production services in relation to revenue changed from 45.4% to 49.2%. This can be attributed primarily to the higher share of external deliveries for the projects in South Africa (Gauteng and Johannesburg), the construction of the nationwide truck toll system in Poland and the expansion projects in the Czech Republic.
Compared with the previous year, staff costs increased by EUR 26.8 million, rising from EUR 59.7 million to EUR 86.5 million in fiscal year 2010/11. At the same time, the average number of employees grew by 648 persons, changing from 973 to 1,621 in the past fiscal year. The integration of the newly acquired companies and the staff requirements connected with the technical and commercial operation projects obtained in South Africa and Poland represent the most important factors here. The staff cost ratio (staff costs in relation to total revenue) was reduced from 27.6% in the previous year to 22.3%.
Depreciation and amortization expenses increased by EUR 6.1 million compared with the previous year (2009/10: EUR 7.5 million; 2010/11: EUR 13.6 million), resulting primarily from the company mergers. Other operating expenses rose from EUR 42.3 million to EUR 63.4 million in fiscal year 2010/11, for an increase of EUR 21.1 million. Increased expenses arose primarily in the form of legal and consulting costs, travel costs, office expenditures, maintenance costs and licensing and patent costs. These increases resulted, on one hand, from the integration of the newly acquired companies and, on the other, from the project-related expenses.
In fiscal year 2010/11, financial result amounted to EUR -7.6 million (2009/10: EUR 4.1 million). The lower finance income can be attributed largely to reduced interest effects in long-term receivables and the decline in exchange rate gains. Finance costs rose considerably as a result of the exchange rate losses, which mainly related to not-realized exchange rate losses. Furthermore the interest expenses relating to the corporate bond burdened the financial result.
The profit before income taxes was EUR 41.3 million, which is EUR 2.6 million lower than the previous year's value. In the previous year, this item was largely influenced by a required reclassification of the shares held in Q-Free ASA, Norway, from associated companies to other investments. This balance sheet change led to an accounting gain of EUR 14.0 million that was recognized in profit and loss, thereby massively increasing the profit before taxes in fiscal year 2009/10.
Despite the negative factors affecting the financial and tax results, profit for the period amounted to EUR 28.4 million (2009/10: EUR 36.5 million).
The balance sheet total of the Kapsch TrafficCom Group was EUR 450.1 million on 31 March 2011 (31 March 2010: EUR 295.1 million). Equity was EUR 191.5 million, resulting in an equity ratio of 42.5% (31 March 2010: 57.0%).
Non-current assets rose from EUR 101.4 million to EUR 159.7 million as at 31 March 2011. The largest changes were observed in the areas of intangible assets and property, plant and equipment, and resulted almost exclusively from the acquisition of companies. The other financial assets and investments declined due to the negative exchange rate development of the shares in the Norwegian Q-Free ASA.
Current assets increased from EUR 193.7 million to EUR 290.4 million as at 31 March 2011. The increases in trade receivables as well as in inventories resulted predominantly from the large projects in South Africa and Poland as well as the newly acquired companies.
Non-current liabilities increased to EUR 117.4 million (31 March 2010: EUR 37.6 million). The largest change took place in non-current financial liabilities due to the successful issuing of the company bond with a volume of EUR 75.0 million, a tenor of seven years and an interest rate of 4.25%.
Current liabilities amounted to EUR 141.2 million on the balance sheet date (31 March 2010: EUR 89.2 million). Trade payables and other current liabilities and deferred income exhibited an increase that originated primarily from the large projects in South Africa and Poland as well as the newly acquired companies. Current financial liabilities increased by EUR 13.8 million compared with the end of the previous fiscal year.
Net cash flow from operating activities declined to EUR -11.7 million in fiscal year 2010/11 (2009/10: EUR 46.5 million). The changes in net current assets resulting from the increase in trade receivables and inventories as well as the payment of income taxes could not be compensated by the increased operating result.
Net cash flow from investing activities amounted to EUR -60.9 million in the past fiscal year (2009/10: EUR -15.3 million) and was influenced by the payments for purchasing Kapsch Telematic Services Solutions A/S, Copenhagen, Denmark, TMT Services and Supplies (Pty) Ltd., Cape Town, South Africa, and MARK IV IVHS.
Net cash flow from financing activities was EUR 65.5 million (2009/10: EUR -48.4 million) and was positively affected primarily by the issuing of the corporate bond.
As a result of outflows from operating and investing activities, cash and cash equivalents decreased to EUR 42.0 million on the balance sheet date (31 March 2010: EUR 47.7 million).
Reliability and accuracy of installed ETC systems. The toll transaction rate is a figure for assessing 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. A high toll transaction rate translates to maximum toll revenue.
In 2010, the average toll transaction rate of the existing truck tolling system in Austria amounted to approximately 99.9%, placing it at an ever higher level as in 2009. During the same period, the average performance rate of the nationwide electronic tolling system in the Czech Republic was approximately 99.31%, up 0.3% from 99.0% in 2009. The calculation of the average performance rate is based on methods agreed upon with the respective customer, meaning that comparisons between the average performance rates achieved in different projects are only possible on a limited basis.
Staff. The average number of employees in the Kapsch TrafficCom Group in the fiscal year 2010/11 was 1,621, a 67% increase against an average of 973 in the fiscal year 2009/10. As of 31 March 2011, the Group had a workforce of 2,167 (2,054 salaried and 113 non-salaried employees).
The Group places great importance on the continued training and education of its employees. This involves not only promoting professional education and training, but also providing seminars and training sessions for developing one's own personality and teamwork skills. The group companies make contributions to an external pension fund on behalf of their employees which are based on the length of employment and company profits. In addition, the Group maintains a profit participation program that offers the staff an opportunity to share in the profits of the Kapsch TrafficCom Group.
Kapsch TrafficCom AG is certified pursuant to OHSAS 18001 for occupational health and safety and has implemented the necessary measures in its internal processes.
Environment. Valid certifications are held for quality management pursuant to ISO 9001 and environmental management pursuant to ISO 14001. In the future the Group will strive to fulfill its responsibilities toward environmental protection even more extensively, particularly with regard to the efficient and responsible use of natural resources.
Kapsch TrafficCom has taken up the call for long-term and responsible business activities and is dedicated to sustainability on an economic, ecologic and social level. Sustainability reports will be published regularly in the future to show the progress on a group level and the continuing establishment of predefined objectives.
Living up to its socio-political responsibility, the entire Kapsch Group – organized by Kapsch AG – supports a number of contemporary art and cultural institutions and projects, and also initiates its own projects in this field. Selected training initiatives and extensive social measures complement this approach, which the company considers to be an obligation both in and outside the Group. The employees of the Kapsch TrafficCom Group hold this long-term commitment to social responsibility in high regard.
Music. A key element of this commitment covers sponsoring activities related to the Vienna Concert Hall (Wiener Konzerthaus). This cultural institution has an excellent reputation far beyond Austria's borders. The Kapsch Group has been the main sponsor of the Vienna Concert Hall since 1992. The Modern Vienna festival – one of the world's best known festivals of contemporary music – has been supported by Kapsch since its launch in 1989.
Visual arts. Promoting less known artists is of particular concern to the Kapsch Group. In particular, young domestic and international artists are assisted by sponsorship campaigns. One example is the photo calendar that Kapsch Group has supported since 1994. The calendar is presented annually in late fall in a private exhibition.
Educational institutions. As a company that is driven by technology and innovation, Kapsch TrafficCom is constantly interested in establishing contacts as early as possible with the best engineering talents. Since 2005, the Kapsch Group has supported Universitäre Gründerservice Wien GmbH which aims to support and accompany young entrepreneurs in the implementation of ideas relating to key business concepts.
Social activities. Kapsch TrafficCom takes pride in supporting selected social projects at home and abroad. One example of the numerous projects is ICEP – the Institute for Cooperation in Development Projects, whose activities help to improve the circumstances of people in developing countries. With the specific advancement of migration and integration, Kapsch TrafficCom contributes to social justice, the positive development of society and safety over the long-term.
As a technology company, Kapsch TrafficCom Group operates in an ever-changing environment. Risks are therefore part of its day-to-day business. For the company, risk means the possibility of deviating from company objectives, meaning that the definition of risk encompasses both positive (opportunities) as well as negative (risks) deviations from planned objectives.
Risk management has been positioned as a separate function within the finance department of Kapsch TrafficCom AG. Under the responsibility of a central risk manager, the risk management system comprises institutionalized processes for collecting and analyzing all relevant opportunities and risks pertaining to the Group's projects and provides the basis for the timely planning and implementation of control measures. In the 2010/11 fiscal year risk management was developed into a company-wide opportunity and risk management system. In addition to project risks, Enterprise Risk Management also analyses strategic, technological, organizational, financial, legal and IT risks, reporting to management on a regular basis. 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 over time in order to make a valuable contribution to the management of the company.
The material risks faced by the Group and the respective risk management measures are briefly explained below:
Volatility of new orders. A major portion of the revenues of the Kapsch TrafficCom Group are generated in the segment Road Solution Projects (RSP). In this segment, the Group regularly participates in tenders for the implementation and operation of large electronic toll collection systems. On the one hand, there is a risk that tenders in which the Group participates or plans to participate could be delayed or withdrawn, for instance as a result of political changes, appeals or legal actions by unsuccessful bidders. On the other hand, a risk exists that Kapsch TrafficCom Group may not win its bids for new projects due to technological, financial, formal or other reasons. Continuing revenues from maintenance agreements and from technical operations also depend on the successful participation in tenders for systems.
In the past, the revenues of the Kapsch TrafficCom Group have been heavily influenced by the realization of implementation projects in the given fiscal year. Significantly higher revenues were recorded, in particular, in 2003 (implementation of a nationwide electronic truck tolling system in Austria) and 2006/07 (implementation of a nationwide electronic truck tolling system in the Czech Republic). In the 2010/11 fiscal year sizeable revenue was generated from implementing an electronic toll system in South Africa as part of the Gauteng Project, and from starting to implement a nationwide electronic truck tolling system in Poland.
The strategy of the Kapsch TrafficCom Group is aimed at reducing the volatility of revenues from single large projects through increased geographic diversification and increased diversification of the product portfolio as well as sustained growth in the share of maintenance and operations of systems.
Risks of project execution. In connection with the installation of systems, Kapsch TrafficCom Group is usually contractually obligated to provide performance guarantees. Since electronic toll collection systems and other ITS solutions are frequently sophisticated and technologically complex systems that must be implemented within a short period, system and product defects or missed deadlines may occur due to the limited time available. The failure to meet guaranteed performance levels or deadlines usually results in penalties and/or compensation, sometimes also compensation for lost toll revenues. Significant deadline overruns also frequently trigger contractual clauses, which enable clients to terminate contracts prematurely. A significant delay in a project, failure to achieve guaranteed performance levels or failure to implement a project would also reduce the chances of success in future tenders for systems. There is also the risk that Kapsch TrafficCom Group cannot execute projects in line within the set cost budgets.
Kapsch TrafficCom Group employs risk management methods and risk management procedures in order to guard against risks associated with projects.
Long-term contracts with public authorities. In many cases, the system contracts are awarded by public agencies. Framework agreements and service contracts in connection with tolling projects may include terms and conditions that are not negotiable in a tender process and that may be disadvantageous to the Kapsch TrafficCom 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 concluded by the Group may include liabilities regarding customers' loss of profit, product liabilities and other liabilities. While the Kapsch TrafficCom Group aims to include appropriate limitations to its liability in contracts, it is still impossible to guarantee that all contracts contain sufficient limitations to the Group's liability or that these limitations can be enforced under applicable law.
Innovation leadership. The leading market position of the Kapsch TrafficCom Group is, to a large extent, based on its ability to develop state-of-the-art, efficient and reliable systems, components and products. In order to maintain its technological leadership, the Kapsch TrafficCom 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 its competitive position. Since its innovation leadership is based largely on technology, 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 failures in protecting these technologies may have a negative impact on the Group's competitive position. Moreover, it is possible that systems, components, products or services could infringe on the intellectual property rights of third parties.
The Kapsch TrafficCom Group places great importance on the protection of technologies and the company's internal know-how, e.g. through patents and non-disclosure agreements with other parties. In order to avoid legal action and court proceedings, the Kapsch TrafficCom Group constantly monitors potential intellectual property rights infringements.
Acquisition and integration of companies as a part of the Group's growth. One of the strategic objectives of the Kapsch TrafficCom Group is to grow internationally both by organic means and through selected acquisitions and joint ventures. In the implementation of this strategy, the Group has acquired and integrated companies around the world. However, a number of challenges remain in connection with this growth strategy in order to realize the desired synergies and objectives.
Country risk. The strong expansion of business activities in Eastern Europe and non-European countries has exposed the Kapsch TrafficCom Group to a heightened political risk. Significant and unforeseeable political changes can exert a major influence on the ability to implement or operate ITS projects in these countries and also affect the availability and accessibility of funds. There may also be interference with the property rights of the Kapsch TrafficCom Group or problems with business practices and activities.
Foreign exchange risk. The Group maintains branches, offices and subsidiaries in several countries outside the euro zone. A considerable portion of revenues and costs are denominated in the currencies of the respective foreign companies rather than in euros. Although the Group aims to hedge the net currency position of the individual contracts as necessary, currency fluctuations may result in exchange rate losses that may influence the consolidated financial statements (transaction risk). In addition, risks arise from the conversion of the separate financial statements of international companies into the Group currency, the euro (translation risk). Fluctuations in exchange rates may also result in a change in the competitive position of the Kapsch TrafficCom Group.
Interest rate risk. Within the framework of project financing, the Group regularly agrees to variable interest rates that are tied to market interest rates (Euribor, Pribor etc.). This exposes the Kapsch TrafficCom Group to interest rate risks. The Kapsch TrafficCom Group utilizes appropriate financial instruments to hedge against interest rate risks when these risks are significant.
Liquidity risk. Sufficient financial resources must be available to ensure that the Kapsch TrafficCom Group can meet its payment liabilities at any time. The availability of medium and long-term financing is required to carry out large-scale projects (such as implementing a nationwide toll collection system under delayed payment terms from the client) and for acquiring other businesses. Additionally, implementing large-scale projects often requires the provision of significant bank guarantees to secure bid obligations (bid bonds) or to secure possible warranty claims (performance bonds).
In financing agreements the Kapsch TrafficCom Group is subject to the customary restrictions in terms of its business policy, e.g. when drawing additional loans, using assets as collateral or providing guarantees for third parties. The availability of financing and bank guarantees depends on market conditions as well as the net assets and financial position of the Kapsch TrafficCom Group and the results of operations. A lack of liquid assets (even if the Group is otherwise solvent), of financing or of bank guarantees can have an extremely adverse impact on the net assets and financial position of the Kapsch TrafficCom Group and the results of operations. The issuing of a seven-year, EUR 75 million corporate bond in November 2010 helped the Kapsch TrafficCom Group to again improve its liquidity.
Credit risk. The Kapsch TrafficCom Group is exposed to the risk of non-payment by customers. The credit ratings of new and existing customers are checked on a regular basis. Many of the key customers of the Kapsch TrafficCom Group are public authorities, especially in connection with implementing and/or operating nationwide or regional toll collection systems. There is also a risk that the counterparties (including financial institutions assumed to have good credit ratings) of both original and derivative financial instruments cannot meet their payment obligations when due. A payment default or the recognition of impairment charges to receivables can be extremely detrimental for the net assets and financial position of the Kapsch TrafficCom Group and the results of operations.
The success of the Kapsch TrafficCom Group depends heavily on key personnel with many years of experience in the industry. Moreover, the Group's ability to recruit qualified staff, integrate them into the company and retain them over the long-term is crucial in its current growth phase. The loss of key personnel and difficulties in the recruitment of personnel may adversely affect the success of the Group.
Kapsch TrafficCom Group has implemented a number of measures to counteract personnel risks, such as incentive schemes, training opportunities, etc.
A variety of regulations and legal requirements must be observed in connection with participating in public tenders, establishing infrastructure for ITS solutions (such as tolling stations) and operating toll collection systems. Working out applicable legal regulations and adhering to applicable legal regulations and requirements can result in considerable administrative and technical expense. The failure to meet regulations or official requirements can lead to severe penalties and also reduce the possibility of (successfully) taking part in tenders or continuing with the given business activity.
In connection with the acquisition of shares in Q-Free ASA, Norway, in January 2009, Norwegian authorities have initiated investigation proceedings against Kapsch TrafficCom AG and Kapsch Aktiengesellschaft. Kapsch TrafficCom AG disagrees with the basis for these allegations and believes that any adverse impact on the financial position of Kapsch TrafficCom AG will not be material. Kapsch TrafficCom AG intends to vigorously defend against the allegations.
As a technology group, the Kapsch TrafficCom Group is exposed to typical IT risks relating to security, confidentiality and the availability of data. For this reason, Kapsch TrafficCom AG has implemented an IT risk management system designed according to the corporate risk and IT security application method (CRISAM) and has been certified pursuant to ISO 27001 (information security management). The Kapsch TrafficCom Group is also certified according to ISO 20000 "IT service management" (similar to ITIL) for the operation of toll systems.
From a current perspective, no risks have been identified that could endanger the continued operations of the Kapsch TrafficCom Group. Increasing geographic expansion, the diversification of the product portfolio and an increased share of recurring revenues (further growth in the segment Services, System Extensions, Components Sales) are planned to further reduce the concentration of risks in the future.
The Corporate Law Amendment Act (URÄG 2008) adopted the 8th EU Directive into Austrian law. Under this legislation, companies with a capital market orientation are henceforth obliged to include in their group management reports not only an outline of their risk management systems but also of the main features of their ICS with regard to the financial reporting process.
Kapsch TrafficCom AG started to analyze and document its existing internal processes for financial reporting on an ongoing basis in the fiscal year 2009/10. The results obtained so far were presented at the quarterly meetings of the audit committee for assessment and discussion.
The International Financial Reporting Standards (IFRS) Group Accounting Manual represents the cornerstone for financial accounting and reporting throughout the whole Kapsch Group. The manual is published and regularly updated by the Kapsch Group and contains the essential financial and reporting procedures based on IFRS. Group-wide guidelines and work instructions represent another important pillar of the internal control system.
The central elements of the ICS process include regular compliance checks according to the principle of dual control, the segregation of duties and defined actions for monitoring the effectiveness and efficiency of operating activities, the reliability of financial reporting and the compliance with relevant legal regulations. The ICS guidelines of Kapsch TrafficCom AG follow the basic structure of the internationally recognized standards for internal control systems (COSO – Internal Control and Enterprise Risk Managing Frameworks of the Committee of Sponsoring Organizations of the Treadway Commission).
The accounting for all group transactions is handled by a variety of software solutions. In a number of countries, the accounting has been outsourced to locally-based tax accountants due to the size of the subsidiaries. Companies submit reporting packages to the
head office on a quarterly basis which contain all accounting data pertaining to the statement of comprehensive income, balance sheet and cash flow statement. The data is then transferred into the central consolidation system (Hyperion financial management). This financial information is verified on group-wide basis by the central Kapsch TrafficCom controlling department and subsequently forms the basis for the quarterly reports issued by the Kapsch TrafficCom Group in accordance with IFRS.
The supervisory board is kept informed of business developments by the managing board during regular meetings by way of consolidated presentations consisting of segment reporting, earnings development analyses containing comparisons of current figures with figures from the budget and the previous period as well as select financial figures, forecasts, group financial statements and developments in the number of employees and order inflow.
In keeping with the decentralized structure of the Kapsch TrafficCom Group, local management is responsible for the implementation and monitoring of the internal control system. The managing directors of the individual subsidiaries are responsible for establishing and designing internal control and risk management that meets the needs of the given company in view of accounting procedures, as well as for ensuring compliance with the group-wide rules and guidelines in this respect. The head of finance for the Kapsch TrafficCom Group, the central controlling department and the internal audit department subsequently verify compliance with these audit procedures by local management, and the results are regularly reported to the audit committee.
The Kapsch TrafficCom Group has a network of research and development centers in Vienna and Klagenfurt (Austria), Jönköping (Sweden), Bologna (Italy), Buenos Aires (Argentina), Toronto (Canada), Carlsbad (California, U.S.A.) and Capetown (South Africa). As of 31 March 2011, the Kapsch TrafficCom Group employed approximately 350 (31 March 2010: approximately 230) research and development engineers in its research and development activities, including internal R&D project management, quality assurance/ testing, production engineering, documentation, international device certifications, standardization activities as well as support for all IPR/patent issues.
Research and development activities are a high priority for the Kapsch TrafficCom Group in pursuing its strategic goals. The knowledge of entirely new technologies and their possible applications based on national and international standards forms the foundation for successful business developments and enables the entry into new markets. The current focus is on countries such as the U.S.A., South Africa, South America and meanwhile also Russia.
Major development efforts of the last fiscal year consisted of specifying and developing a new, generic and scalable roadside platform that integrates all major sensor systems into a single, common software platform. The main goals of this work include eliminating overlapping development work by different R&D centers and offering the international sales force the basis for a more flexible, adaptable and customer-specific approach in system sales. This new sensor platform is currently in its end-testing phase and will be put into operation for the first time as part of the project in South Africa. The main initiatives in the component business area lay in developing new and lower-cost on-board unit generations for CEN/DSRC microwave and GPS/GNSS satellite tolling as well as new WLAN-based 5.9 GHz technologies to support the business development approach in the U.S.A., which is still ongoing. These technologies are currently in the standardization process and will be used in road safety systems as well as tolling systems in the U.S.A. and in Europe.
Successful research and development is the foundation for the sustained improvement of existing products and systems as well as the continuous reduction of production, installation, operating and maintenance costs, all of which are essential for maintaining a technological and competitive advantage.
Research costs are recognized as expenses. The same applies to development costs, unless the IFRS criteria for classification as intangible assets are met. Since the income statement is structured by expense type, the research and development costs are reported under various income statement items, in particular under the cost of materials and other production services, staff costs and other operating expenses. In the fiscal year 2010/11, the Kapsch TrafficCom Group invested approximately EUR 37.3 million (2009/10: EUR 24.9 million) in research and development, representing approximately 10% of revenue.
With a view to the fiscal year 2011/12, the company´s outlook on market developments over the long-term is optimistic even in a changed economic environment. Essential events will be the implementation and the start of operations of the systems in South Africa and Poland. In the U.S., the company expects the decision of the pending tender for the award of the E-Z Pass®Group contracts. In addition, the coming fiscal year will be driven by the preparation for the tenders expected in Hungary, Slovenia and Denmark as well as the by integration of MARK IV IVHS.
In April 2011, a revolving line of credit expiring on 31 December 2011 was contracted by the Group with a maximum amount of EUR 40 million (thereof EUR 20 million drawn at the date of this report) in connection with the tolling project in Poland.
On 1 April 2011, Kapsch Telematic Services FLLC, Minsk, Belarus was founded.
Vienna, 13 May 2011
Mag. Georg Kapsch Ing. Erwin Toplak André Laux
Chief Executive Officer Chief Operating Officer Executive Board member
We declare to the best of our knowledge that the consolidated financial statements give a true and fair view of the assets, liabilities, financial position and profit 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.
Vienna, 13 May 2011
Mag. Georg Kapsch Ing. Erwin Toplak André Laux
Chief Executive Officer Chief Operating Officer Executive Board member
(Austrian Stock Exchange Act)
| Board Member | Area of responsibility |
|---|---|
| Georg Kapsch (CEO) | Finance and Administration, Mergers & Acquisitions, Investor Relations, Legal, International Subsidiaries, Human Resources, Marketing & Communications, International Relations & Affairs, Innovation Management, Production, Telematic Services and North American Market |
| Erwin Toplak (COO) | Sales region 1, Business Development, System Engineering, Research & Development and Technical Operations |
| André F. Laux (Member of the Board) | Sales region 2, Business Development, Product and Project Management |
Consolidated statement of comprehensive income.
| All amounts in EUR | Note | 2010/11 | 2009/10 |
|---|---|---|---|
| Revenue | (1) | 388,577,354 | 216,012,391 |
| Other operating income | (2) | 7,564,449 | 10,938,947 |
| Changes in finished and unfinished goods and work in progress | (3) | 7,461,759 | 5,135,163 |
| Other own work capitalized | 0 | 15,707 | |
| Cost of materials and other production services | (4) | -191,255,566 | -98,041,051 |
| Staff costs | (5) | -86,462,023 | -59,701,767 |
| Amortization of intangible assets and depreciation of property, plant and equipment | (6) | -13,614,643 | -7,485,401 |
| Other operating expenses | (7) | -63,391,169 | -42,333,317 |
| Operating result | 48,880,161 | 24,540,673 | |
| Finance income | (8) | 4,497,773 | 9,260,153 |
| Finance costs | (8) | -12,117,209 | -5,134,662 |
| Financial result | (8) | -7,619,436 | 4,125,491 |
| Result from associates | (14) | 0 | 15,243,465 |
| Profit before income taxes | 41,260,725 | 43,909,629 | |
| Income taxes | (9) | -12,825,554 | -7,398,920 |
| Profit for the period | 28,435,171 | 36,510,709 | |
| Other comprehensive income for the period | |||
| Gains/losses recognized directly in equity: | |||
| Available-for-sale financial assets | -2,276,947 | 2,776,231 | |
| Effects from disproportionate capital increase at associates | 0 | 69,121 | |
| Currency translation differences | 4,294,277 | 3,798,590 | |
| Income tax relating to components of other comprehensive income | -258,963 | -757,790 | |
| Other comprehensive income for the period net of tax | (10) | 1,758,367 | 5,886,150 |
| Total comprehensive income for the period | 30,193,538 | 42,396,859 | |
| Profit attributable to: | |||
| Equity holders of the Company | 22,062,116 | 32,215,536 | |
| Minority interests | 6,373,055 | 4,295,173 | |
| 28,435,171 | 36,510,709 | ||
| Total comprehensive income attributable to: | |||
| Equity holders of the Company | 23,608,360 | 37,676,550 | |
| Minority interests | 6,585,178 | 4,720,309 | |
| 30,193,538 | 42,396,859 | ||
| Earnings per share from the profit for the period attributable to the equity holders of the Company (in EUR) |
(30) | 1.81 | 2.64 |
| Earnings per share from the profit for the period attributable to the equity holders of the Company (in EUR), adjusted*) |
(30) | 1.81 | 1.49 |
*) Adjusted for the fair value adjustment of the share in Q-Free ASA, Norway (see note 30).
| All amounts in EUR | Note | 31 March 2011 | 31 March 2010 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Property, plant and equipment | (12) | 19,404,442 | 15,823,618 |
| Intangible assets | (13) | 88,687,320 | 28,528,781 |
| Shares in associates | (14) | 0 | 0 |
| Other non-current financial assets and investments | (15) | 34,489,914 | 38,937,076 |
| Other non-current assets | (16) | 9,017,638 | 8,480,571 |
| Deferred tax assets – due from tax group leader | (22) | 1,879,894 | 1,302,201 |
| Deferred tax assets – non-tax group | (22) | 6,229,622 | 8,347,863 |
| 159,708,830 | 101,420,110 | ||
| Current assets | |||
| Inventories | (17) | 49,484,611 | 37,582,150 |
| Trade receivables and other current assets | (18) | 190,885,049 | 101,448,315 |
| Other current financial assets | (15) | 8,036,841 | 6,897,848 |
| Cash and cash equivalents | (19) | 42,000,584 | 47,743,108 |
| 290,407,085 | 193,671,421 | ||
| Total assets | 450,115,915 | 295,091,531 | |
| EQUITY | |||
| Capital and reserves attributable to equity holders of the Company | |||
| Share capital | (20) | 12,200,000 | 12,200,000 |
| Capital reserve | 70,077,111 | 70,077,111 | |
| Retained earnings and other reserves | 94,065,714 | 80,936,724 | |
| 176,342,825 | 163,213,835 | ||
| Minority interests | 15,170,566 | 5,034,869 | |
| Total equity | 191,513,391 | 168,248,704 | |
| LIABILITIES | |||
| Non-current liabilities | |||
| Non-current financial liabilities | (21) | 74,112,367 | 10,060,250 |
| Liabilities from post-employment benefits to employees | (23) | 16,314,606 | 14,316,080 |
| Non-current provisions | (26) | 686,388 | 582,733 |
| Other non-current liabilities | (24) | 10,422,739 | 9,353,264 |
| Deferred income tax liabilities – due to tax group leader | (22) | 1,794,041 | 1,812,366 |
| Deferred income tax liabilities – non-tax group | (22) | 14,081,707 | 1,471,490 |
| 117,411,848 | 37,596,183 | ||
| Current liabilities | |||
| Trade payables | 72,531,371 | 41,332,197 | |
| Other liabilities and deferred income | (25) | 36,881,453 | 25,932,719 |
| Current tax payables | 3,973,331 | 5,900,286 | |
| Current financial liabilities | (21) | 23,082,571 | 9,236,566 |
| Current provisions | (26) | 4,721,950 | 6,844,878 |
| 141,190,676 | 89,246,646 | ||
| Total liabilities | 258,602,524 | 126,842,829 | |
| Total equity and liabilities | 450,115,915 | 295,091,531 |
| All amounts in EUR | |||||
|---|---|---|---|---|---|
| Attributable to equity holders of the Company | Minority interests | Total equity | |||
| Share capital | Capital reserve | Consolidated retained earnings and other reserves |
|||
| Carrying amount as of 31 March 2009 | 12,200,000 | 70,077,111 | 47,769,158 | 4,193,524 | 134,239,793 |
| Dividend for 2008/09 | -6,100,000 | -2,287,948 | -8,387,948 | ||
| Effects from the acquisition of minority interests |
1,591,016 | -1,591,016 | 0 | ||
| Total comprehensive income | 37,676,550 | 4,720,309 | 42,396,859 | ||
| Carrying amount as of 31 March 2010 | 12,200,000 | 70,077,111 | 80,936,724 | 5,034,869 | 168,248,704 |
| Dividend for 2009/10 | -9,150,000 | -3,245,699 | -12,395,699 | ||
| Effects from business combinations and the acquisition of minority interests |
-1,329,370 | 6,796,218 | 5,466,848 | ||
| Total comprehensive income | 23,608,360 | 6,585,178 | 30,193,538 | ||
| Carrying amount as of 31 March 2011 | 12,200,000 | 70,077,111 | 94,065,714 | 15,170,566 | 191,513,391 |
| All amounts in EUR | Note | 2010/11 | 2009/10 |
|---|---|---|---|
| Cash flow from operating activities | |||
| Operating result | 48,880,161 | 24,540,673 | |
| Adjustments for non-cash items and other reconciliations: | |||
| Depreciation and amortization | (6) | 13,614,643 | 7,485,401 |
| Increase/decrease in obligations for post-employment benefits | (23) | 114,354 | 102,064 |
| Increase/decrease in other non-current liabilities and provisions | (24, 26) | 103,655 | 58,691 |
| Increase/decrease in other non-current receivables and assets | 757,768 | 0 | |
| Increase/decrease in trade receivables (non-current) | (16) | -537,067 | 9,911,672 |
| Increase/decrease in trade payables (non-current) | (24) | 971,092 | -5,494,549 |
| Other (net) | -1,825,561 | 3,243,138 | |
| 62,079,045 | 39,847,090 | ||
| Changes in net current assets: | |||
| Increase/decrease in trade receivables and other assets | (18) | -72,588,781 | 38,826,166 |
| Increase/decrease in inventories | (17) | -8,098,837 | -3,362,366 |
| Increase/decrease in trade payables and other current payables | 28,696,976 | -14,304,162 | |
| Increase/decrease in current provisions | (26) | -2,218,992 | -3,777,964 |
| -54,209,634 | 17,381,674 | ||
| Cash flow from operations | 7,869,411 | 57,228,764 | |
| Interest received | (8) | 1,173,389 | 676,682 |
| Interest payments | (8) | -3,476,705 | -2,642,103 |
| Net payments of income taxes | -17,229,370 | -8,808,142 | |
| Net cash flow from operating activities | -11,663,275 | 46,455,200 |
| All amounts in EUR | Note | 2010/11 | 2009/10 |
|---|---|---|---|
| Cash flow from investing activities | |||
| Purchase of property, plant and equipment | (12) | -6,362,478 | -3,878,745 |
| Purchase of intangible assets | (13) | -1,888,740 | -957,846 |
| Purchase of securities, investments and other non-current financial assets | (15) | -69,125 | -6,279,899 |
| Payments for acquisition of companies (net of cash acquired) | -52,180,953 | 0 | |
| Payments for acquisition of minority interests | -1,000,000 | -4,226,308 | |
| Payments for the acquisition of shares in companies consolidated at equity | (14) | 0 | -103,918 |
| Proceeds from the disposal of shares in subsidiaries | 35,999 | 0 | |
| Proceeds from the disposal of property, plant and equipment and intangible assets | 553,619 | 144,624 | |
| Net cash flow from investing activities | -60,911,678 | -15,302,092 | |
| Cash flow from financing activities | |||
| Dividends paid to company shareholders | -9,150,000 | -6,100,000 | |
| Dividends paid to minority shareholders of group companies | -3,245,699 | -2,287,948 | |
| Increase in other non-current financial liabilities | (21) | 64,052,117 | 0 |
| Increase in current financial liabilities | (21) | 13,938,131 | 1,937,233 |
| Decrease in current financial liabilities | (21) | -92,126 | -41,910,208 |
| Net cash flow from financing activities | 65,502,423 | -48,360,924 | |
| Net increase/decrease in cash and cash equivalents | -7,072,530 | -17,207,816 | |
| Change in cash and cash equivalents | |||
| Cash and cash equivalents at beginning of year | (19) | 47,743,108 | 60,229,653 |
| Net increase/decrease in cash and cash equivalents | -7,072,530 | -17,207,816 | |
| Currency translation differences on cash and cash equivalents | 1,330,006 | 4,721,271 | |
| Cash and cash equivalents at end of year | (19) | 42,000,584 | 47,743,108 |
Kapsch TrafficCom Group is an international supplier of superior intelligent transportation systems (ITS).
The business activities of the Kapsch TrafficCom Group are subdivided into the following three segments:
The segment Road Solution Projects relates to the installation of ITS solutions.
The segment Services, System Extensions, Components Sales relates to the sale of services (maintenance and operation) and components in the area of ITS solutions.
The segment Others relates to non-core business activities conducted by Kapsch Components GmbH & CoKG. In this segment, Kapsch TrafficCom Group offers engineering solutions, electronic manufacturing and logistics services to affiliated entities and third parties.
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 TrafficCom AG. Under an initial public offering in June 2007 and as a result of further changes in share ownership in the fiscal year ending 31 March 2009, KAPSCH-Group Beteiligungs GmbH reduced its share to 68.42%.
The parent company, Kapsch TrafficCom AG, is a joint stock corporation incorporated and domiciled in Vienna, Austria. The address of its registered office is 1120 Vienna, Am Europlatz 2. 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:
n Kapsch Telematik Technologies Bulgaria EAD, Sofia, Bulgaria
n Kapsch TrafficCom Argentina S.A., Buenos Aires, Argentina
n SafeTCam (Pty) Ltd., Cape Town, South Africa **)
*) Companies newly established in the fiscal year 2010/11
**) Acquisition in the fiscal year 2010/11
The consolidated financial statements of Kapsch TrafficCom AG as of 31 March 2011 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.
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below:
Pursuant to § 245a UGB, the consolidated financial statements as of 31 March 2011 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 financial statements as of 31 March 2011 are prepared under the historical cost convention, with the exception of available-for-sale securities and derivative financial instruments, which are measured at fair value at the balance sheet date. The preparation of the consolidated financial statements in conformity with IFRS requires the use of estimates and assumptions which influence 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 its knowledge and are based on current transactions, actual figures may differ from these estimates. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are material to the consolidated financial statements are disclosed in Note 21.
IFRS 3 (revised) "Business combinations" and consequential amendments to IAS 27 "Consolidated and separate financial statements" are effective prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 July 2009. The revised standard was applied to business combinations occurring on or after 1 April 2010. The major change concerns the accounting for acquisitions of less than 100 percent of the shares in a company. The option to recognize the goodwill from an acquisition under the full goodwill method, i. e. including the amount of the share attributable to the non-controlling shareholders, was introduced. In addition, acquisitions and/or partial sales of shares without loss of control are to be reported directly in equity as transactions between shareholders. The full incidental acquisition costs are to be reported as expenses. Except for the incidental acquisition costs in the fiscal year ending 31 March 2011 for the acquisition of Mark IV IVHS (see Note 28), amounting to EUR 2.8 million and from now on reported as expenses, the first time adoption of the revised standards did not have any material impact on the Group's assets, financial position and earnings.
All other new regulations (standards, amendments to standards, interpretations) mandatory for the first time in the fiscal year had no material impact on the consolidated financial statements.
IFRS 9 "Financial instruments" was issued in November 2009. This standard is the first step in the process to replace IAS 39, "Financial instruments: recognition and measurement". IFRS 9 introduces new requirements for classification and measuring financial assets and is likely to affect the Group's accounting for its financial assets. The standard is not applicable until 1 January 2013 but is available for early adoption. However, the standard has not yet been endorsed by the EU. At present, the date of endorsement is uncertain. The Group is yet to assess IFRS 9's full impact. However, initial indications are that it may affect the Group's accounting for its available-for-sale debt investments, as IFRS 9 only permits the recognition of fair value gains and losses in other comprehensive income if they relate to equity investments that are not held for trading. Fair value gains and losses on available-for-sale debt investments, for example, will therefore have to be recognized directly in profit or loss.
A number of amendments to standards and interpretations, as well as a new interpretation have already been published, but have either not yet been adopted by the European Union or have been adopted by the European Union, but are not yet mandatory. The impact of these regulations on the consolidated financial statements of the Company is not material or cannot be adequately assessed and, therefore, is not presented in detail.
The consolidated financial statements were prepared by the management board on the undersigned date and released for publication. The entity financial statements of the parent company, which have been included in the consolidated financial statements after adoption of the applicable accounting standards, have not yet been approved by the supervisory board. The supervisory board and, in the event of presentation to the general meeting of shareholders, the general meeting of shareholders could amend the entity financial statements in a way that might affect the presentation of the consolidated financial statements.
Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.
The Group uses the acquisition method of accounting to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.
On an acquisition-by-acquisition basis, the Group recognizes any non-controlling interest in the acquiree either at fair value or at the non-controlling interest's proportionate share of the acquiree's net assets.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognized directly in the profit for the period.
Goodwill is tested annually for impairment, as well as when there are indications of impairment. If an impairment requirement is identified, 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 benefit from the business combination in which the goodwill arose.
Inter-company transactions, balances and unrealized gains on transactions between Group companies are eliminated. Unrealized losses are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
The Group treats transactions with non-controlling interests as transactions with equity owners of the Group. For purchases from non-controlling interests, the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.
When the Group ceases to have control or significant influence, any retained interest in the entity is remeasured to its fair value, with the change in carrying amount recognized in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognized in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognized in other comprehensive income are reclassified to profit or loss.
If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognized in other comprehensive income are reclassified to profit or loss where appropriate.
Associates are accounted for by the equity method. Associates are companies in which the Group has significant influence, but not control, generally accompanied by a shareholding of between 20% and 50% of the voting rights. The Group's share of its associates' post-acquisition profits 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.
Significant 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.
In accordance with IAS 21, financial statements of foreign subsidiaries which are included in the consolidated financial 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 financial instruments presented in the balance sheet include "cash and cash equivalents", "securities", "financial 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 financial risks, particularly foreign exchange risk, interest rate risk and credit risk. The Group's risk management focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group's financial performance. The Group does not employ hedge accounting as envisaged by IAS 39.
Foreign exchange risk is the risk arising from fluctuations in the value of financial instruments, other balance sheet items (e. g. receivables and payables) and/or cash flows due to exchange rate fluctuations.
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 significant 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 2011 (31 March 2010) had changed by the percentage rate ("volatility") stated below, the profits 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 | |||
|---|---|---|---|---|---|
| 2010/11 | 2009/10 | ||||
| AUD | 10% | 152 | – | ||
| CAD | 10% | 468 | – | ||
| CZK | 10% | 1,850 | 2,991 | ||
| PLN | 10% | 581 | – | ||
| SEK | 10% | 441 | 672*) | ||
| USD | 10% | 435 | 149 | ||
| ZAR | 10% | 846 | 160 |
*) prior year figure adjusted
Interest rate risk is the risk arising from fluctuations in the value of financial instruments, other balance sheet items (e. g. receivables and payables) and/or cash flows due to fluctuations in the market interest rates.
For fixed-interest balance sheet items, the risk comprises the present value risk. In case the market rate for the financial instrument fluctuates, either a profit or a loss may result if the financial instrument is sold prior to maturity.
For variable-interest balance sheet items, the risk relates to the cash flow. With variable-interest financial instruments, adjustments in the interest rates may result from changes in the market rates. Such changes would entail changes in interest payments. As a result of the corporate bond with a fixed interest rate issued in November 2010, variable-interest (both short-term and long-term) financial liabilities account only for a minor part of financial interest balance sheet items. If the market interest rate had been 100 basis points higher (lower) as of 31 March 2011, 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 financial derivatives were used to hedge the interest rate risk.
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 financial institution, depending on the rating of the institution. With the exception of the tolling projects in the Czech Republic, South Africa and Poland (see Note 18), there is no concentration of credit risk relating to trade receivables, since the Group generally has a large number of customers worldwide. Based on the Group's experiences, the default risk for trade receivables can be considered low.
Prudent liquidity risk management shall involve securing the availability of sufficient 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 the Austrian commercial code. 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 assets) to equity. Net debt (net assets) includes non-current and current financial liabilities less cash and cash equivalents, bank balances and current securities.
| in TEUR | 2010/11 | 2009/10 |
|---|---|---|
| Non-current financial liabilities | 74,112 | 10,060 |
| Current financial liabilities | 23,083 | 9,237 |
| Total financial liabilities | 97,195 | 19,297 |
| Cash on hand and at banks | 42,001 | 47,743 |
| Current securities | 8,037 | 6,898 |
| Net assets (+)/debt (-) | -47,157 | 35,344 |
| Equity | 191,513 | 168,249 |
| Net gearing | 25% | n.a. |
The change over the prior year is primarily due to the corporate bond issued in November 2010 (see Note 21).
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 fulfilled:
Other development expenditures that do not meet these criteria are recognized as an expense. 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 on a straight-line basis over their useful lives ranging from 4 to 30 years. Acquired customer contracts (tolling contracts) are amortized from 2 to 10 years. The carrying amount of each intangible asset is tested for impairment when a triggering event occurs.
Financial assets recognized under non-current assets and other short-term financial assets include only available-for-sale securities. 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 financial assets between the proceeds and the carrying amounts is taken through profit or loss. Additionally, the amount recognized in equity is taken through profit 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 significant individual financial asset or group of financial 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 profit 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 flows.
If in subsequent periods the fair value of the impaired financial instruments increases and that increase can be directly related to an event occurring after the impairment was recognized in profit or loss, the Group reverses the impairment loss. In case of debt instruments the reversal is recognized in profit 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 financial asset or a group of financial assets is impaired.
Derivative financial instruments are accounted for as stand-alone derivatives and are measured at fair value through profit or loss. Changes in the fair value of these derivative financial instruments are recognized immediately in the income statement under "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 office 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 flows are identifiable.
The difference between the proceeds from the sale of property, plant and equipment and their carrying amount is taken through profit 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 finance 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 significant portion of the risks and rewards of ownership are retained by the lessor are classified 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 non-current assets (technical equipment) and are deferred and taken through profit 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 profit 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 finished goods and work in progress comprises design costs, raw materials, direct labor, 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 profitable, 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 profit 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 allowance for bad debt. An allowance for bad debt 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 allowance is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the allowance is recognized in the income statement.
For the presentation of the cash flow 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 financial 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 outflow 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 flaws, 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 labor and material costs incurred, overheads, replacement deliveries or rebates. A provision is recognized for the best estimate of the costs of defects to be rectified under the warranty for products sold before the balance sheet date.
The Group provides various post-employment benefits to employees and other long-term benefits either based on individual agreements or in accordance with local labor law provisions.
For the calculation of liabilities arising from pension obligations and termination benefits in accordance with IAS 19, the projected unit credit method is used. According to this method, post-employment costs for employee benefits 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 qualified actuary, who completely remeasures the schemes annually. The obligation for pension payments and termination benefits is calculated as the present value of future benefits 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 benefit 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 defined 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 in the same way as to the calculation for liabilities arising from termination benefits, 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 financial 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 profit 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 profit will be available against which the temporary differences can be utilized.
Temporary differences mainly arise in connection with depreciation (amortization) periods of non-current assets, provisions for pension benefits, other post-employment benefits, differences regarding the measurement of receivables and payables and tax loss carry-forwards.
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. fiscal year 2004/05). 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 TrafficCom Group, merely reflect 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 confirmed 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 sufficient reliability or an outflow of resources to settle the obligations is not deemed probable).
The Group discloses contingent liabilities unless the possibility of an outflow of resources embodying economic benefits is remote and a liability does not have to be recognized pursuant to IFRS.
In accordance with IAS 18, revenue is recognized in the income statement upon delivery when the significant 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 specific 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 definition, rarely equal the related actual results.
In particular estimates and assumptions regarding revenue recognition have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next fiscal 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 profit 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 final results should deviate by 10% from estimates. The analysis of assumptions made in the past as well as of actual profit mark-ups showed that the estimates had been reliable up to now.
Further areas where assumptions and estimates are significant to the consolidated financial statements include 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 final outcomes were to differ by 10% from the estimates made. Sensitivities for the acquired goodwill (break-even interest rate) are detailed in Note 13.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decisionmaker. The chief operating decision-maker is responsible for allocating resources to the operating segments and assessing their performance. The management board has been identified as the chief operating decision-maker.
Figures in the disclosure notes are presented in Euro thousands (TEUR) unless otherwise stated.
The Group reports three main operating segments (see section "General Information"):
The segment results for the fiscal year ended 31 March 2011 are as follows (in EUR million):
| Road Solution Projects |
Services, System Extensions, Components Sales |
Others | Consolidated Group |
|
|---|---|---|---|---|
| Revenue | 158.9 | 223.3 | 6.4 | 388.6 |
| Operating result | 0.1 | 48.3 | 0.4 | 48.9 |
The segment results for the fiscal year ended 31 March 2010 are as follows (in EUR million):
| Road Solution Projects |
Services, System Extensions, Components Sales |
Others | Consolidated Group |
|
|---|---|---|---|---|
| Revenue | 45.8 | 161.9 | 8.3 | 216.0 |
| Operating result | -20.9 | 45.3 | 0.2 | 24.5 |
The segment assets and liabilities as of 31 March 2011 and capital expenditure, depreciation and amortization and other non-cash-effective expenses for the period then ended are as follows (in EUR million):
| Road Solution Projects |
Services, System Extensions, Components Sales |
Others | Consolidated Group |
|
|---|---|---|---|---|
| Assets | 138.6 | 215.4 | 3.4 | 357.5 |
| Investments in associates | 0.0 | 0.0 | 0.0 | 0.0 |
| Unallocated assets | 92.6 | |||
| Total assets | 138.6 | 215.4 | 3.4 | 450.1 |
| Liabilities | 56.2 | 87.9 | 1.5 | 145.5 |
| Unallocated liabilities | 113.1 | |||
| Total liabilities | 56.2 | 87.9 | 1.5 | 258.6 |
| Capital expenditure | 0.0 | 7.0 | 0.0 | 7.0 |
| Depreciation and amortization | 1.6 | 11.8 | 0.2 | 13.6 |
| Other non-cash-effective expenses | 0.0 | 0.9 | 0.0 | 0.9 |
The segment assets and liabilities as of 31 March 2010 and capital expenditure, depreciation and amortization and other non-cash-effective expenses for the period then ended are as follows (in EUR million):
| Road Solution Projects |
Services, System Extensions, Components Sales |
Others | Consolidated Group |
|
|---|---|---|---|---|
| Assets | 66.2 | 121.1 | 4.6 | 191.9 |
| Investments in associates | 0.0 | 0.0 | 0.0 | 0.0 |
| Unallocated assets | 103.2 | |||
| Total assets | 66.2 | 121.1 | 4.6 | 295.1 |
| Liabilities | 33.2 | 69.8 | 1.3 | 104.3 |
| Unallocated liabilities | 22.6 | |||
| Total liabilities | 33.2 | 69.8 | 1.3 | 126.8 |
| Capital expenditure | 0.8 | 4.0 | 0.0 | 4.8 |
| Depreciation and amortization | 1.8 | 5.3 | 0.4 | 7.5 |
| Other non-cash-effective expenses | 0.0 | 0.4 | 0.0 | 0.4 |
The breakdown of revenue by customer who contributed more than 10% to the revenue for the year is as follows. In addition, the respective segments are shown (in EUR million):
| 2010/11 | 2009/10 | |||||
|---|---|---|---|---|---|---|
| Revenue | Road Solution Projects |
Services, System Extensions, Components Sales |
Revenue | Road Solution Projects |
Services, System Extensions, Components Sales |
|
| Customer 1 | 99.7 | X | X | 78.6 | X | X |
| Customer 2 | 98.7 | X | X | 9.0 | X | X |
| Customer 3 | 39.7 | X | 0.0 |
Revenue is segmented by the location of the customer and balance sheet figures by the location of the Company.
The figures for the fiscal year ended 31 March 2011 are as follows (in EUR million):
| Austria | Europe (excl. Austria) |
Americas | Rest of World | Consolidated Group |
|
|---|---|---|---|---|---|
| Revenue | 37.5 | 182.0 | 27.6 | 141.5 | 388.6 |
| Non-current non-financial assets | 13.2 | 46.9 | 41.4 | 6.6 | 108.1 |
The figures for the fiscal year ended 31 March 2010 are as follows (in EUR million):
| Austria | Europe (excl. Austria) |
Americas | Rest of World | Consolidated Group |
|
|---|---|---|---|---|---|
| Revenue | 42.4 | 117.1 | 12.1 | 44.5 | 216.0 |
| Non-current non-financial assets | 15.8 | 13.9 | 14.5 | 0.1 | 44.4 |
| 2010/11 | 2009/10 | |
|---|---|---|
| Income from the sale of non-current assets | 72 | 2 |
| Income from costs recharged | 62 | 43 |
| Sundry operating income | 7,431 | 10,895 |
| 7,564 | 10,939 |
Sundry operating income mainly relates to research funding awards received and to the assumption of costs of transactions billed for the nationwide electronic truck tolling system in the Czech Republic.
| 2010/11 | 2009/10 | |
|---|---|---|
| Change in unfinished goods and work in progress | -235 | 3,217 |
| Change in finished goods | 7,697 | 1,918 |
| 7,462 | 5,135 |
| 2010/11 | 2009/10 | |
|---|---|---|
| Cost of materials | 82,315 | 32,066 |
| Cost of purchased services | 108,940 | 65,975 |
| 191,256 | 98,041 |
| 2010/11 | 2009/10 | |
|---|---|---|
| Wages | 2,345 | 2,197 |
| Salaries and other remunerations | 67,026 | 43,317 |
| Expenses for social security and payroll-related taxes and contributions | 15,181 | 12,484 |
| Expenses for termination benefits (see Note 23) | 573 | 569 |
| Expenses for pensions (see Note 23) | 556 | 502 |
| Contributions to pension funds and other external funds (see Note 23) | 264 | 164 |
| Fringe benefits | 517 | 468 |
| 86,462 | 59,702 |
As of 31 March 2011, the number of staff amounted to 2,167 persons (31 March 2010: 1,023 persons) and averaged 1,621 persons in the fiscal year 2010/11 (2009/10: 973).
| 2010/11 | 2009/10 | |
|---|---|---|
| Depreciation of property, plant and equipment | 6,595 | 5,145 |
| Amortization of intangible assets | 7,020 | 2,340 |
| 13,615 | 7,485 |
Low-value assets are capitalized as property, plant and equipment or intangible assets and written off in the year of acquisition.
| 2010/11 | 2009/10 | |
|---|---|---|
| Rental expenses | 8,470 | 7,094 |
| Legal and consulting fees | 13,096 | 7,252 |
| Allowance and write-off of receivables | 584 | 371 |
| Marketing and advertising expenses | 6,086 | 8,671 |
| Travel expenses | 7,243 | 4,353 |
| Maintenance | 3,752 | 1,538 |
| Communication and IT expenses | 5,641 | 3,407 |
| Training costs | 1,652 | 855 |
| Losses on disposal of non-current assets | 282 | 35 |
| Insurance costs | 2,181 | 720 |
| License and patent expenses | 3,155 | 1,167 |
| Office expenses | 3,563 | 886 |
| Taxes and charges | 280 | 245 |
| Adjustment provision for warranties | -489 | 504 |
| Commissions and other fees | 2,488 | 994 |
| Transport costs | 954 | 842 |
| Automobile expenses | 2,586 | 1,583 |
| Other | 1,869 | 1,815 |
| 63,391 | 42,333 |
The item "Other" includes membership dues and bank charges as well as other administrative and selling expenses.
| 2010/11 | 2009/10 | |
|---|---|---|
| Interest and similar income: | ||
| Interest income | 1,034 | 454 |
| Income from securities | 139 | 223 |
| Income from interest accretion of long-term receivables | 437 | 1,825 |
| Gains from the disposal of financial assets | 18 | 7 |
| Currency translation differences | 2,869 | 6,752 |
| 4,498 | 9,260 | |
| Interest and similar expenses: | ||
| Interest expense | -3,417 | -2,642 |
| Expense from interest accretion of long-term payables | -362 | -701 |
| Losses on disposals and write-down of financial assets, investments and securities | 0 | -79 |
| Expenses from other investments | -469 | -22 |
| Expenses from currency hedging | -1,340 | -1,219 |
| Currency translation differences | -6,530 | -471 |
| -12,117 | -5,135 | |
| -7,619 | 4,125 |
| 2010/11 | 2009/10 | |
|---|---|---|
| Current taxes | -10,329 | -7,915 |
| Deferred taxes (see Note 22) | -2,496 | 516 |
| Total | -12,826 | -7,399 |
| Thereof income/expense from group taxation | -102 | 112 |
The reasons for the difference between the arithmetic tax income/expense based on the Austrian corporate income tax rate of 25% and the recognized tax income/expense are as follows:
| 2010/11 | 2009/10 | |
|---|---|---|
| Profit before income taxes | 41,261 | 43,910 |
| Arithmetic tax expense based on a tax rate of 25% (2009/10: 25%) | -10,315 | -10,977 |
| Unrecognized deferred tax assets on current losses | -1,421 | -183 |
| Derecognition of deferred tax assets recognized on prior year losses | -1,179 | 0 |
| Different foreign tax rates | 383 | 109 |
| Tax allowances claimed and other permanent tax differences | -929 | 162 |
| Income and expenses not subject to tax and other differences | 636 | 3,490 |
| Recognized tax expense | -12,826 | -7,399 |
For further information on deferred tax assets and liabilities see Note 22.
| 2010/11 | Before taxes | Tax expense/ income |
After taxes |
|---|---|---|---|
| Fair value gains/losses on available-for-sale financial assets: | |||
| Unrealized gains/losses in the current period | -2,277 | -259 | -2,536 |
| Currency translation differences | 4,294 | 0 | 4,294 |
| Fair value changes recognized in equity | 2,017 | -259 | 1,758 |
| 2009/10 | Before taxes | Tax expense/ income |
After taxes |
|---|---|---|---|
| Fair value gains/losses on available-for-sale financial assets: | |||
| Unrealized gains/losses in the current period | 2,776 | -758 | 2,018 |
| Gains/losses recognized in the income statement | 69 | 0 | 69 |
| Currency translation differences | 3,799 | 0 | 3,799 |
| Fair value changes recognized in equity | 6,644 | -758 | 5,886 |
| 2010/11 | 2009/10 | |
|---|---|---|
| Available-for-sale financial assets: | ||
| Other non-current financial assets and investments | 34,490 | 38,937 |
| Other current financial assets | 8,037 | 6,898 |
| 42,527 | 45,835 | |
| Loans and receivables: | ||
| Other non-current assets | 9,018 | 8,481 |
| Trade receivables | 79,329 | 83,999 |
| Cash and cash equivalents | 42,001 | 47,743 |
| 130,348 | 140,223 | |
| Financial liabilities at (amortized) cost: | ||
| Non-current financial liabilities | 74,112 | 10,060 |
| Other non-current liabilities | 10,423 | 9,353 |
| Trade payables | 72,531 | 41,332 |
| Current financial liabilities | 23,083 | 9,237 |
| 180,149 | 69,982 | |
Financial instruments are recognized in the income statement with the following net results:
| 2010/11 | 2009/10 | |
|---|---|---|
| Available-for-sale financial assets | -312 | 128 |
| Loans and receivables | -2,189 | 8,559 |
| Financial liabilities at (amortized) cost | -5,118 | -4,562 |
| -7,619 | 4,125 |
| Land and buildings |
Technical equipment and machinery |
Construction in progress |
Other equipment, factory and office equipment |
Total | |
|---|---|---|---|---|---|
| Carrying amount as of 31 March 2009 | 4,416 | 6,745 | 25 | 5,701 | 16,887 |
| Currency translation differences | 12 | 133 | 6 | 219 | 371 |
| Change in consolidated entities | 0 | 0 | 0 | -7 | -7 |
| Additions | 201 | 2,017 | 191 | 1,470 | 3,879 |
| Disposals | -36 | -43 | -27 | -52 | -160 |
| Scheduled depreciation | -662 | -3,100 | 0 | -1,383 | -5,145 |
| Carrying amount as of 31 March 2010 | 3,930 | 5,751 | 194 | 5,948 | 15,824 |
| Acquisition/production cost | 4,805 | 26,687 | 194 | 13,108 | 44,794 |
| Accumulated depreciation | -875 | -20,936 | 0 | -7,160 | -28,971 |
| Carrying amount as of 31 March 2010 | 3,930 | 5,751 | 194 | 5,948 | 15,824 |
| Currency translation differences | -5 | 39 | -19 | 98 | 112 |
| Reclassification | 3 | 0 | -3 | 0 | 0 |
| Addition resulting from company acquisition | 425 | 2,137 | 516 | 2,207 | 5,284 |
| Additions | 716 | 2,866 | 463 | 1,434 | 5,477 |
| Disposals | -93 | -37 | -355 | -213 | -698 |
| Scheduled depreciation | -720 | -3,417 | 0 | -2,458 | -6,595 |
| Carrying amount as of 31 March 2011 | 4,256 | 7,337 | 796 | 7,015 | 19,404 |
| Acquisition/production cost | 6,767 | 38,337 | 796 | 18,095 | 63,995 |
| Accumulated depreciation | -2,511 | -31,000 | 0 | -11,081 | -44,591 |
| Carrying amount as of 31 March 2011 | 4,256 | 7,337 | 796 | 7,015 | 19,404 |
| Capitalized development costs |
Concessions and rights |
Goodwill | Total | |
|---|---|---|---|---|
| Carrying amount as of 31 March 2009 | 296 | 5,059 | 20,734 | 26,089 |
| Currency translation differences | 9 | -93 | -148 | -232 |
| Additions | 0 | 5,021 | 0 | 5,021 |
| Disposals | 0 | -10 | 0 | -10 |
| Scheduled amortization | -124 | -2,216 | 0 | -2,340 |
| Carrying amount as of 31 March 2010 | 181 | 7,761 | 20,586 | 28,529 |
| Acquisition/production cost | 8,013 | 16,070 | 20,586 | 44,669 |
| Accumulated amortization | -7,832 | -8,309 | 0 | -16,141 |
| Carrying amount as of 31 March 2010 | 181 | 7,761 | 20,586 | 28,529 |
| Currency translation differences | 1 | 7 | -589 | -581 |
| Reclassification | 0 | -2,168 | 2,168 | 0 |
| Addition resulting from company acquisition | 0 | 40,995 | 24,942 | 65,937 |
| Additions | 0 | 655 | 1,233 | 1,888 |
| Disposals | 0 | -65 | 0 | -65 |
| Scheduled amortization | -60 | -6,960 | 0 | -7,020 |
| Carrying amount as of 31 March 2011 | 122 | 40,224 | 48,341 | 88,687 |
| Acquisition/production cost | 8,675 | 55,157 | 48,341 | 112,173 |
| Accumulated amortization | -8,553 | -14,933 | 0 | -23,485 |
| Carrying amount as of 31 March 2011 | 122 | 40,224 | 48,341 | 88,687 |
The addition in goodwill results from the acquisitions of TMT Services and Supplies (Pty) Ltd., Cape Town, South Africa, the U.S.-American, Canadian and Mexican operations of Mark IV IVHS (see Note 28) and from subsequent earn-out payments for the acquisition of Kapsch TrafficCom Argentina S.A., Buenos Aires, Argentina. The remaining goodwill results from the acquisition of Kapsch TrafficCom AB, Jönköping, Sweden, the "Mobility Solutions" business of TechnoCom Corporation, Encino, U.S.A., the acquisition of Kapsch-Busi, S.p.A, Bologna, Italy, and the acquisition of Kapsch TrafficCom, Argentina S.A., Buenos Aires, Argentina.
For the purpose of impairment testing, goodwill was allocated to two cash-generating units (CGU) ("Road Solution Projects" and "Services, System Extensions, Components Sales"). The following assumptions were made:
| Road Solution Projects | Services, System Extensions, Components Sales |
|
|---|---|---|
| The carrying amount of goodwill allocated to the CGU | TEUR 38,084 | TEUR 10,256 |
| The carrying amount of intangible assets with indefinite useful lives allocated to the CGU |
TEUR 0 | TEUR 0 |
| Determination of recoverable amount of CGU | Value in use | Value in use |
Key assumptions for determining expected cash flows of the CGU:
Effects of changes in key assumptions on the recoverable amount:
n 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. The break-even interest rate is 20.1%.
Key assumptions for determining expected cash flows of the CGU:
Effects of changes in key assumptions on the recoverable amount:
n The 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. The break-even interest rate is 45.6%.
Development costs relate to expenses 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 fiscal year 2010/11 amounted to EUR 37,3 million (2009/10: EUR 24.9 million). In the fiscal year 2010/11, EUR 14,9 million thereof (2009/10: EUR 7.4 million thereof) was project-specific development costs and charged to the customer. The remaining amount of EUR 22,4 million (2009/10: EUR 17.5 million) was recognized as an expense.
Shares in associates developed as follows:
| 2010/11 | 2009/10 | |
|---|---|---|
| Carrying amount as of 31 March of prior year | 0 | 12,302 |
| Share in result | 0 | 1,205 |
| Addition | 0 | 104 |
| Currency translation differences | 0 | 760 |
| Effects from disproportional capital increases | 0 | 69 |
| Fair value adjustment on the date of losing significant influence according to IAS 28.18 | 0 | 14,038 |
| Reclassification to "other non-current financial assets and investments" | 0 | -28,479 |
| Carrying amount as of 31 March of fiscal year | 0 | 0 |
In January 2009, the Group acquired an investment in the amount of 20.47% in Q-Free ASA, Norway. In the third quarter of the fiscal year ending 31 March 2010, the share of Kapsch TrafficCom AG was diluted to below 20 % as a result of a capital increase at Q-Free ASA. This made a reclassification to the item "other non-current financial assets and investments" necessary (see Note 15). The accounting profit arising at the time of the dilution was recognized in income in accordance with IAS 28.18.
| 2010/11 | 2009/10 | |
|---|---|---|
| Other non-current financial assets and investments | 34,490 | 38,937 |
| Other current financial assets | 8,037 | 6,898 |
| 42,527 | 45,835 |
| Other non-current financial assets and investments | Available-for-sale securities |
Available-for-sale investments |
Other | Total |
|---|---|---|---|---|
| Carrying amount as of 31 March 2009 | 3,437 | 347 | 0 | 3,784 |
| Currency translation differences | 0 | 0 | 417 | 417 |
| Addition from reclassification | 0 | 28,479 | 0 | 28,479 |
| Additions | 0 | 0 | 6,432 | 6,432 |
| Change in fair value | 79 | -255 | 0 | -176 |
| Carrying amount as of 31 March 2010 | 3,517 | 28,571 | 6,849 | 38,937 |
| Currency translation differences | 0 | 0 | 520 | 520 |
| Additions | 69 | 0 | 505 | 574 |
| Change in fair value | -103 | -3,313 | 0 | -3,416 |
| Write-down | 0 | -343 | -157 | -500 |
| Disposals | 0 | 0 | -1,625 | -1,625 |
| Carrying amount as of 31 March 2011 | 3,483 | 24,916 | 6,092 | 34,490 |
| Other current financial assets | Available-for-sale securities |
Other | Total |
|---|---|---|---|
| Carrying amount as of 31 March 2009 | 3,946 | 0 | 3,946 |
| Additions | 0 | 0 | 0 |
| Disposals | 0 | 0 | 0 |
| Change in fair value | 2,952 | 0 | 2,952 |
| Carrying amount as of 31 March 2010 | 6,898 | 0 | 6,898 |
| Additions | 0 | 0 | 0 |
| Disposals | 0 | 0 | 0 |
| Change in fair value | 1,139 | 0 | 1,139 |
| Carrying amount as of 31 March 2011 | 8,037 | 0 | 8,037 |
As of 31 March 2011, available-for-sale securities relate to government and bank bonds as well as shares in investment funds. As of 31 March 2011, the other investments classified as available-for-sale mainly relate to a 18.40% investment in Q-Free ASA, Norway (see Note 14). These financial assets are measured at fair value based on quoted market prices (level 1 pursuant to IFRS 7). Unrealized gains and losses are recognized in other comprehensive income of the period (see Note 10).
In the fiscal year 2010/11, other non-current financial assets mainly relate to a fixed-term investment in the amount of TEUR 5,597 (2009/10: TEUR 6,697). The fixed-term investment is pledged as a collateral for guarantees issued by the Group.
| 2010/11 | 2009/10 | |
|---|---|---|
| Truck tolling system Czech Republic | 9,017 | 8,480 |
| Other | 1 | 1 |
| 9,018 | 8,481 |
Other non-current assets relate to trade receivables (long-term) that are due from the Czech Ministry of Transport for the installation 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 flows using an interest rate of 4.14% to 5.00% (for the 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 flows of the Group). Thus, the fair values approximate the carrying amounts.
Gross cash flows of other non-current assets are as follows:
| 2010/11 | 2009/10 | |
|---|---|---|
| Up to 2 years | 7,705 | 7,338 |
| Between 2 and 3 years | 1,753 | 1,554 |
| More than 3 years | 1 | 0 |
| 9,459 | 8,892 |
Long-term receivables in the amount of TEUR 0 (2009/10: TEUR 8,480) were pledged as collateral to banks (see Note 21).
| 2010/11 | 2009/10 | |
|---|---|---|
| Purchased parts and merchandise, at acquisition cost | 13,520 | 9,079 |
| Unfinished goods and work in progress, at production cost | 9,062 | 9,297 |
| Finished goods, at production cost | 26,903 | 19,206 |
| 49,485 | 37,582 |
Individual inventory items were written down, where necessary, to their net realizable values. The write-downs of inventories amount to TEUR 9,793 (2009/10: TEUR 7,029).
| 2010/11 | 2009/10 | |
|---|---|---|
| Trade receivables, less allowance for bad debt | 79,329 | 83,999 |
| Gross amount due from customers for contract work | 84,225 | 7,301 |
| Receivables from tax authorities (other than income tax) | 10,030 | 2,779 |
| Other receivables and prepaid expenses | 17,301 | 7,370 |
| 190,885 | 101,448 |
Allowances for bad debt developed as follows:
| 2010/11 | 2009/10 | |
|---|---|---|
| Balance as of 31 March of prior year | 587 | 278 |
| Addition resulting from company acquisition | 207 | 0 |
| Addition | 421 | 425 |
| Utilization | -27 | 0 |
| Disposal | -108 | -115 |
| Balance as of 31 March of fiscal year | 1,079 | 587 |
Maturity structure of trade receivables and other current assets:
| 2010/11 | 2009/10 | |
|---|---|---|
| Not yet due | 176,618 | 81,753 |
| Overdue, but not impaired: | ||
| Less than 60 days | 12,059 | 16,061 |
| More than 60 days | 3,288 | 4,221 |
| 191,965 | 102,035 |
The fair values in the next fiscal year approximate the carrying amounts. Except for the tolling project in the Czech Republic, 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 (current) relating to the installation of the Czech truck tolling system in the amount of TEUR 4,361 (2009/10: TEUR 17,712) and to the operation and maintenance of the system in the amount of TEUR 27,907 (2009/10: TEUR 23,117) are due from Ředitelstvím silnic a dálnic ČR (RSD), a company of the Czech Republic.
Trade receivables in an amount of TEUR 7,353 (2009/10: TEUR 17,712) were pledged as collateral to banks (see Note 21).
Amounts due from customers for contract work are as follows:
| 2010/11 | 2009/10 | |
|---|---|---|
| Construction costs incurred plus recognized gains | 136,707 | 7,301 |
| Less amounts billed and prepayments received | -52,481 | 0 |
| 84,225 | 7,301 |
As of 31 March 2011, amounts due from customers for contract work relate to the tolling project in South Africa in the amount of TEUR 43,273 and to the tolling project in Poland in the amount of TEUR 39,692.
| 2010/11 | 2009/10 | |
|---|---|---|
| Cash on hand | 65 | 20 |
| Deposits held with banks | 41,935 | 47,723 |
| 42,001 | 47,743 |
The carrying amounts of this item also represent cash and cash equivalents at the end of the reporting period as presented in the cash flow statement.
| 2010/11 | 2009/10 | |
|---|---|---|
| Carrying amount as of 31 March of fiscal year | 12,200 | 12,200 |
The registered share capital of the Company amounts to EUR 12,200,000. The share capital is fully paid in. The total number of shares issued is 12,200,000. The shares are ordinary bearer shares and have no par value.
| 2010/11 | 2009/10 | |
|---|---|---|
| Current | ||
| Loans for acquisitions | 10,000 | 0 |
| Other current loans | 13,083 | 9,237 |
| 23,083 | 9,237 | |
| Non-current | ||
| Loans for acquisitions | 0 | 10,000 |
| Corporate bond | 73,796 | 0 |
| Other | 316 | 60 |
| 74,112 | 10,060 | |
| Total | 97,195 | 19,297 |
In November 2010, Kapsch TrafficCom AG issued a corporate bond with a volume of EUR 75 million, a maturity of 7 years and an interest rate of 4.25%. Considering offsetting capital expenses according to IFRS, the addition of non-current financial liabilities was TEUR 73,732 and led to an effective interest rate of 4.54%.
The other non-current financial liabilities mature in 1 to 5 years.
The fair values and the gross cash flows of non-current financial liabilities are as follows:
| 2010/11 | 2009/10 | |
|---|---|---|
| Carrying amount | 97,195 | 19,297 |
| Fair value | 92,227 | 18,736 |
| Gross cash flows: | ||
| Up to 1 year | 23,083 | 9,237 |
| Between 1 and 3 years | 9,754 | 10,543 |
| Between 3 and 5 years | 6,273 | 0 |
| More than 5 years | 78,442 | 0 |
| 117,551 | 19,779 |
Interest rates on current and non-current financial liabilities are as follows:
| 2010/11 | 2009/10 | |
|---|---|---|
| Total financial liabilities: | ||
| Carrying fixed interest rates | 79,579 | 1,937 |
| Carrying variable interest rates | 17,616 | 17,360 |
| 97,195 | 19,297 | |
| Average interest rates: | ||
| Short-term loans | 1.65 – 2.25% | 1.67 – 3.25% |
| Loans for acquisitions | 3.53% | 3.19% |
| Corporate bond | 4.54% | – |
| Other | 2.50% | 2.50% |
Other non-current assets amounting to TEUR 0 (2009/10: TEUR 8,480), trade receivables (current) amounting to TEUR 7,353 (2009/10: TEUR 17,712) as well as 9.9 million shares in Q-Free ASA were pledged as collateral for guarantees issued by banks and for loans granted. A bill of exchange amounting to TEUR 1,425 (2009/10: TEUR 1,425) was issued for an export promotion credit.
| 2010/11 | 2009/10 | |
|---|---|---|
| Deferred tax assets – due from tax group leader | 1,880 | 1,302 |
| Deferred tax assets – non-tax group | 6,230 | 8,348 |
| 8,110 | 9,650 | |
| Deferred tax liabilities – due to tax group leader | 1,794 | 1,812 |
| Deferred tax liabilities – non-tax group | 14,082 | 1,471 |
| 15,876 | 3,284 | |
| Balance | -7,766 | 6,366 |
Deferred taxes due to tax loss carry-forwards and other temporary differences deductible in the future are recognized only to the extent of their potential realization. In these consolidated financial statements, tax loss carry-forwards in the amount of TEUR 14,087 (2009/10: TEUR 2,080) have not been recognized, because it was uncertain whether there would be sufficient taxable profits 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 are normally realized after more than 12 months.
Deferred tax assets/liabilities are attributable to the following positions:
| 31 March 2009 | Addition resulting from company acquisition |
Taken through profit or loss |
Taken through equity |
Currency translation differences |
31 March 2010 | |
|---|---|---|---|---|---|---|
| Deferred tax assets | ||||||
| Tax loss carry-forwards | 2,804 | 0 | 584 | 0 | 25 | 3,413 |
| Provisions disallowed for tax purposes | 1,140 | 0 | 695 | 0 | 33 | 1,868 |
| Depreciation disallowed for tax purposes | 40 | 0 | -42 | 0 | 2 | 0 |
| Other | 4,258 | 0 | -19 | -20 | 150 | 4,369 |
| 8,242 | 0 | 1,218 | -20 | 210 | 9,650 | |
| Deferred tax liabilities | ||||||
| Special depreciation/amortization of non-current assets |
0 | 0 | 0 | 0 | 0 | 0 |
| Other | 1,871 | 0 | 702 | 738 | -27 | 3,283 |
| 1,871 | 0 | 702 | 738 | -27 | 3,283 | |
| Total change | 6,371 | 0 | 516 | -758 | 237 | 6,366 |
| 31 March 2010 | Addition resulting from company acquisition |
Taken through profit or loss |
Taken through equity |
Currency translation differences |
31 March 2011 | |
|---|---|---|---|---|---|---|
| Deferred tax assets | ||||||
| Tax loss carry-forwards | 3,413 | 0 | -195 | 0 | 1 | 3,219 |
| Provisions disallowed for tax purposes | 1,868 | 0 | -817 | 0 | 26 | 1,077 |
| Depreciation disallowed for tax purposes | 0 | 0 | 894 | 0 | 0 | 894 |
| Other | 4,369 | 1,391 | -2,871 | 26 | 6 | 2,921 |
| 9,650 | 1,391 | -2,990 | 26 | 33 | 8,110 | |
| Deferred tax liabilities | ||||||
| Special depreciation/amortization of non-current assets |
0 | 0 | 2 | 0 | 0 | 2 |
| Other | 3,283 | 12,798 | -496 | 285 | 3 | 15,874 |
| 3,283 | 12,798 | -494 | 285 | 3 | 15,876 | |
| Total change | 6,366 | -11,407 | -2,496 | -259 | 30 | -7,766 |
Amounts recognized in the balance sheet:
| 2010/11 | 2009/10 | |
|---|---|---|
| Termination benefits | 5,912 | 5,561 |
| Pension benefits | 10,403 | 8,755 |
| 16,315 | 14,316 |
The obligation to set up a provision for termination benefits is based on the respective labor law.
Liabilities for retirement benefits recognized at the balance sheet date relate to retirees only. All pension agreements are based on past service cost and are, except for the pension plans acquired in the course of the business combination Mark IV IVHS, 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 termination benefits and pension benefit obligations including plan assets an interest rate of 5% (2009/10: 5%) was used, and for compensation increases a rate of 3% (2009/10: 3%). In addition, the calculation was based on the earliest possible statutory retirement age, including transition provisions and using the mortality tables AVÖ 2008-P (2009/10: AVÖ 2008-P) by Pagler & Pagler. Pension increases were estimated at 2-3% (2009/10: 2-3%).
The following amounts are recognized in the income statement as expenses for termination benefits:
| 2010/11 | 2009/10 | |
|---|---|---|
| Current service cost | 182 | 183 |
| Interest expense | 322 | 305 |
| Actuarial losses | 70 | 81 |
| Total, included in staff costs (Note 5) | 573 | 569 |
| Change in liabilities recognized in the balance sheet: | ||
| Carrying amount as of 31 March of prior year | 5,561 | 5,294 |
| Total expense according to the table above | 573 | 569 |
| Payments | -223 | -302 |
| Carrying amount as of 31 March of fiscal year | 5,912 | 5,561 |
| Actuarial present value of obligations (defined benefit obligation) | 7,094 | 6,516 |
| Unrecognized actuarial gains/losses | -1,183 | -954 |
| Amount recognized in the balance sheet | 5,912 | 5,561 |
The following amounts are recognized in the income statement as expenses for retirement benefits:
| 2010/11 | 2009/10 | |
|---|---|---|
| Current service cost | 4 | 0 |
| Interest expense | 533 | 502 |
| Actuarial adjustment | 17 | 0 |
| Gains from external plan assets | 1 | 0 |
| Total, included in staff costs (Note 5) | 556 | 502 |
| Change in liabilities recognized in the balance sheet: | ||
| Carrying amount as of 31 March of prior year | 8,755 | 8,920 |
| Addition resulting from business combinations | 2,024 | 0 |
| Total expense according to the table above | 556 | 502 |
| Payments | -720 | -667 |
| Total | 10,616 | 8,755 |
| Fair value of plan assets | -213 | 0 |
| Carrying amount as of 31 March of fiscal year | 10,403 | 8,755 |
| Actuarial present value of obligations (defined benefit obligation) | 11,877 | 9,998 |
| Unrecognized actuarial gains/losses | -1,261 | -1,243 |
| Fair value of plan assets | -213 | 0 |
| Amount recognized in the balance sheet | 10,403 | 8,755 |
| 2010/11 | 2009/10 | |
|---|---|---|
| Truck tolling system Czech Republic | 6,185 | 5,021 |
| Other | 4,238 | 4,332 |
| 10,423 | 9,353 |
Other non-current liabilities relate to trade payables (non-current) in the amount of TEUR 6,185 (2009/10: TEUR 5,021) 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 flows using discount rates that correspond to those rates applied in discounting non-current receivables from the Czech truck tolling system (see Note 16). Thus, the fair values approximate the carrying amounts.
Other non-current liabilities mainly relate to a liability in the amount of TEUR 3,500 (2009/10: TEUR 3,500) from a put option for shares in Kapsch-Busi S.p.A, Bologna, Italy, and to the non-current portion of a contingent payment obligation in the amount of TEUR 574 (2009/10: TEUR 755) from the acquisition of the "Mobility Solutions" business of TechnoCom Corporation, Encino, U.S.A., in the fiscal year ending 31 March 2009.
The gross cash flows of other non-current liabilities are as follows:
| 2010/11 | 2009/10 | |
|---|---|---|
| Less than 2 year | 9,151 | 4,394 |
| Between 2 and 3 years | 1,450 | 4,910 |
| More than 3 years | 405 | 305 |
| 11,006 | 9,610 |
| 2010/11 | 2009/10 | |
|---|---|---|
| Amounts due to customers for contract work | 300 | 1,679 |
| Prepayments received | 205 | 1,746 |
| Non-current employee liabilities | 13,381 | 9,790 |
| Liabilities to tax authorities (other than income tax) | 1,556 | 3,400 |
| Other liabilities and deferred income | 21,439 | 9,318 |
| 36,881 | 25,933 |
Amounts due to customers for contract work are as follows:
| 2010/11 | 2009/10 | |
|---|---|---|
| Construction costs incurred plus recognized gains | -202 | -13,872 |
| Less amounts billed and prepayments received | 503 | 15,551 |
| 300 | 1,679 |
| 2010/11 | 2009/10 | |
|---|---|---|
| Non-current | 686 | 583 |
| Current | 4,722 | 6,845 |
| 5,408 | 7,428 |
The provisions changed as follows:
| 31 March 2009 | Addition resulting from company acquisition |
Addition | Utilization/ disposal |
Currency translation differences |
31 March 2010 | |
|---|---|---|---|---|---|---|
| Obligations from anniversary bonuses | 524 | 1 | 78 | -20 | 0 | 583 |
| Other | 0 | 0 | 0 | 0 | 0 | 0 |
| Non-current provisions, total | 524 | 1 | 78 | -20 | 0 | 583 |
| Warranties | 1,820 | 0 | 1,029 | -653 | 165 | 2,361 |
| Losses from pending transactions and rework |
934 | 0 | 0 | -224 | 0 | 710 |
| Legal fees, costs of litigation and contract risks |
3,228 | 0 | 36 | -2,473 | 99 | 891 |
| Other | 4,640 | 0 | 9,382 | -11,260 | 120 | 2,883 |
| Current provisions, total | 10,623 | 0 | 10,447 | -14,609 | 384 | 6,845 |
| Total | 11,147 | 1 | 10,525 | -14,629 | 384 | 7,428 |
| 31 March 2010 | Addition resulting from company acquisition |
Addition | Utilization/ disposal |
Currency translation differences |
31 March 2011 | |
|---|---|---|---|---|---|---|
| Obligations from anniversary bonuses | 583 | 0 | 52 | -29 | 0 | 605 |
| Other | 0 | 98 | 0 | -14 | -3 | 81 |
| Non-current provisions, total | 583 | 98 | 52 | -44 | -3 | 686 |
| Warranties | 2,361 | 45 | 100 | -1,163 | 136 | 1,480 |
| Losses from pending transactions and rework |
710 | 0 | 0 | -710 | 0 | 0 |
| Legal fees, costs of litigation and contract risks |
891 | 0 | 55 | 461 | 35 | 1,442 |
| Other | 2,883 | 51 | 1,761 | -2,910 | 15 | 1,800 |
| Current provisions, total | 6,845 | 96 | 1,916 | -4,322 | 186 | 4,722 |
| Total | 7,428 | 194 | 1,969 | -4,366 | 183 | 5,408 |
The provision for anniversary bonuses relates to non-current entitlements by employees based on collective labor agreement provisions. The valuation was based on an interest rate of 5% (2009/10: 5%), the earliest possible statutory retirement age including transition provisions and using the mortality tables AVÖ 2008-P (2009/10: AVÖ 2008-P) by Pagler & Pagler, increases in salary were considered at 3% (2009/10: 3%).
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 financial 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.
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 large-scale projects. Other commitments mainly relate to contract and warranty bonds, bank guarantees, performance and bid bonds and sureties.
Details of contingent liabilities and other commitments are as follows:
| 2010/11 | 2009/10 | |
|---|---|---|
| Contract, warranty, performance and bid bonds | ||
| City Highway Santiago | 0 | 263 |
| City Highway Sydney and Melbourne | 2,306 | 2,881 |
| Truck Tolling System Austria | 12,500 | 12,500 |
| Truck Trolling System Czech Republic | 9,414 | 10,046 |
| Tolling project Poland | 24,656 | 0 |
| Tolling projects South Africa: Gauteng, Marian Hill, Huguenot | 120,208 | 117,084 |
| Other | 967 | 1,069 |
| 170,051 | 143,844 | |
| Bank guarantees | 1,975 | 2,419 |
| Sureties | 544 | 30 |
| 172,570 | 146,293 |
For details of securities for above mentioned contingent liabilities and other commitments see Note 15 and Note 21. In addition, various assets of Kapsch TrafficCom AB, Jönköping, Sweden, amounting to TEUR 10,075 are pledged in favour of a Swedish bank in order to secure contingent liabilities.
The future payments from non-cancellable obligations from rental and operating lease contracts are presented below:
| 2010/11 | 2009/10 | |
|---|---|---|
| Up to 1 year | 8,969 | 6,304 |
| Between 1 and 5 years | 25,198 | 16,550 |
| Over 5 years | 12,860 | 11,146 |
| 47,027 | 34,000 |
On 1 April 2010, Kapsch Telematic Services GmbH, Vienna, acquired 60% of the shares in Payvend F&P A/S, Copenhagen, Denmark at a purchase consideration of TEUR 750. Subsequently, the company was renamed to Kapsch Telematic Services Solutions A/S, Copenhagen, Denmark.
| Purchase consideration | 750 |
|---|---|
| Less share of fair value of net assets acquired | 750 |
| Goodwill | 0 |
Assets and liabilities resulting from the acquisition are shown as follows (provisionally determined):
| Fair value | Carrying amount of the seller |
|
|---|---|---|
| Intangible assets | 1,667 | 1,667 |
| Liabilities, other liabilities and deferred income | -417 | -417 |
| Net assets acquired | 1,250 | 1,250 |
| Thereof controlling interest (60%) | 750 | |
| Thereof non-controlling interest (40%) | 500 |
The acquired company contributed revenue of TEUR 9 and a net income of TEUR -234 to the Group's result of the period from 1 April 2010 to 31 March 2011.
Kapsch TrafficCom AG, Vienna, through a subsidiary, acquired 51.43% of the increased share capital of TMT Services and Supplies (Pty) Ltd., Cape Town, South Africa, as part of a capital increase on 8 April 2010. The consideration paid in connection with the capital increase amounted to a total of ZAR 75 million. This investment was increased to 56.81% by an additional purchase of shares on 30 August 2010. The business combination involves the entities TMT Services and Supplies (Pty) Ltd., Cape Town, South Africa, SafeTCam (Pty) Ltd., Cape Town, South Africa, Traffic Software Solutions (Pty) Ltd., Cape Town, South Africa, TMT Services and Supplies (Gauteng) (Pty) Ltd., Cape Town, South Africa, Electronic Tolling Operations (Pty) Ltd., Cape Town, South Africa, Crestwave 61 (Pty) Ltd., Cape Town, South Africa, Crestwave 63 (Pty) Ltd., Cape Town, South Africa, TMT Services and Supplies (North) (Pty) Ltd., Cape Town, South Africa and Berrydust 51 (Pty) Ltd., Cape Town, South Africa.
For the remaining share of 43.19%, a put-option has been granted to the minority shareholders by the Group.
| Purchase consideration (including contingent elements) | 7,885 |
|---|---|
| Less share of fair value of net assets acquired | 6,420 |
| Goodwill | 1,465 |
Assets and liabilities resulting from the acquisition are shown as follows (provisionally determined):
| Fair value | Carrying amount of the seller |
|
|---|---|---|
| Intangible assets | 6,683 | 403 |
| Property, plant and equipment | 1,267 | 1,267 |
| Receivables and other assets | 4,577 | 4,577 |
| Cash and cash equivalents | 7,170 | 7,170 |
| Liabilities, other liabilities and deferred income | -7,215 | -5,456 |
| Net assets acquired | 12,483 | 7,961 |
| Thereof controlling interest (51.43%) | 6,420 | |
| Thereof non-controlling interest (48.57%) | 6,063 |
The acquired company contributed revenue of TEUR 34,204 and a net income of TEUR 5,125 to the Group's result for the period from 8 April 2010 to 31 March 2011. If the acquisition had occurred on 1 April 2010, there would not have been a significant change in revenue or profit of the Group.
Kapsch TrafficCom AG agreed on 5 November 2010 (signing) to acquire the business of MARK IV IVHS, part of MARK IV, LLC (U.S.), in the U.S., in Canada and in Mexico. Closing date for this acquisition was 30 November 2010. This business combination involves the entities Kapsch TrafficCom IVHS Technologies Holding Corp., Sterling, U.S.A., Kapsch TrafficCom IVHS Holding Corp., Sterling, U.S.A., Kapsch TrafficCom IVHS Inc., Sterling, U.S.A., Mark IV Holdings B.V., Amsterdam, Netherlands, Kapsch TrafficCom IVHS Corp., Mississauga, Canada, and Kapsch TrafficCom IVHS, S.A. de C.V., Mexico City, Mexico.
| Purchase consideration (including contingent elements) | 55,071 |
|---|---|
| Less share of fair value of net assets acquired | 31,595 |
| Goodwill | 23,476 |
Assets and liabilities resulting from the acquisition are shown as follows (provisionally determined):
| Fair value | Carrying amount of the seller |
|
|---|---|---|
| Intangible assets | 32,647 | 0 |
| Property, plant and equipment | 4,011 | 2,561 |
| Receivables and other assets | 15,716 | 15,716 |
| Cash and cash equivalents | 4,255 | 4,255 |
| Liabilities, other liabilities and deferred income | -25,034 | -14,411 |
| Net assets acquired | 31,595 | 8,121 |
The business acquired contributed TEUR 19,327 to the revenue of the Group. If the acquisition had occurred on 1 April 2010, there would have been an increase in the revenue of the Group of TEUR 38,650. It is not possible to indicate the effects on the group result of the period, as the seller was under creditor protection pursuant to "Chapter 11" in the prior period and the necessary results attributable to the assets and liabilities transferred in the course of the business combination were not available.
The following transactions were performed with related parties:
From January 2005, the company has provided services to the Group in the area of group consolidation and legal advice. Expenses incurred by the Group in the fiscal year 2010/11 amounted to TEUR 490 (2009/10: TEUR 494). The company invoiced to the Group expenses in connection with the implementation of the corporate performance management-tool ("CPM-Tool"- particularly with regard to synergies with the consolidation tool HFM) in the amount of TEUR 158 (2009/10: TEUR 0). Furthermore, the company invoices insurance costs (directors & officers liability insurance) to the Group in the amount of TEUR 22 (2009/10: TEUR 0).
In December 2005, the company issued a parental guarantee to FöreningsSparbanken AB, Stockholm, Sweden, in favor of the group company Kapsch TrafficCom AB, Jönköping, Sweden, in the amount of EUR 20.2 million. For the project in South Africa (Gauteng), the company also issued parental guarantees in favor of Kapsch TrafficCom AG to Unicredit Bank Austria AG, Vienna, and to Raiffeisen Bank International AG, Vienna, in September 2009. As of the balance sheet date 31 March 2011, the assumed guarantees amount to EUR 29.7 million. The annual fee for the assumption of the liabilities is 0.5% of the guaranteed amounts. Expenses incurred by the Group in the fiscal year 2010/11 amounted to TEUR 241 (2009/10: TEUR 202).
In January 2007, KAPSCH-Group Beteiligungs GmbH issued an unconditional and irrevocable first demand payment guarantee up to EUR 40 million with respect to the payment obligations of Kapsch TrafficCom Construction & Realization spol. s r.o., Prague, Czech Republic, resulting from the credit and guarantee facilities agreement granted by Ceskoslovenska Obchodni Banka A.S., Prague, Czech Republic, UniCredit Bank Austria AG, Vienna, and Raiffeisen Bank International 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 guaranteed amount. Expenses incurred by the Group in the fiscal year 2010/11 amounted to TEUR 110 (2009/10: TEUR 199). This guarantee was released on 20 October 2010, expenses incurred by the Group in the fiscal year 2010/11 amounted to TEUR 110 (2009/10: TEUR 199).
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).
In connection with the use of the KAPSCH trademark and logo, the company invoices license fees to the Group. The license 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 fiscal year 2010/11 amounted to TEUR 1,924 (2009/10: TEUR 1,104).
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 fiscal year 2009/10 amounted to TEUR 1,591 (2009/10: TEUR 1,024).
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 fiscal year 2010/11 amounted to TEUR 1,400 (2009/10: TEUR 1,184).
Kapsch Aktiengesellschaft has entered into various insurance contracts covering all group companies. The cost allocated to the Group in the fiscal year 2010/11 amounted to TEUR 355 (2009/10: TEUR 309). Furthermore, Kapsch Aktiengesellschaft serviced a software tool and invoiced to the Group TEUR 55 (2009/10: 24).
The company provides human resources services (payroll services, administration, recruiting, advice on labor law and human resources development) to the Group and provides apprentices and trainees. Expenses incurred by the Group in the fiscal year 2010/11 amounted to TEUR 1,092 (2009/10: TEUR 920).
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 fiscal year 2010/11 amounted to TEUR 869 (2009/10: TEUR 2,246).
The company delivers hardware (IT equipment) on behalf of Kapsch TrafficCom AG, Vienna, and provides maintenance and other services for various customer projects, the three largest of which by far are the "Truck Tolling System Austria", the "Truck Tolling System Czech Republic" and the "Truck Tolling System Poland". The deliveries and services performed amounted to TEUR 6,141 in the fiscal year 2010/11 (2009/10: TEUR 2,868).
The company provides IT, EDP and telephone services to the Group in the amount of TEUR 2,725 (2009/10: TEUR 376), as well as other services in the amount of TEUR 456 (2009/10: TEUR 928).
The Group invoices consulting services in the area of public relations to the company. Income of the Group resulting from these services in the fiscal year 2010/11 totaled TEUR 44 (2009/10: TEUR 44).
Kapsch Components GmbH & CoKG provides logistics services to the company in the amount of TEUR 71 (2009/10: TEUR 97), and other services in the amount of TEUR 100 (2009/10: TEUR 128).
Kapsch TrafficCom AG provides services in the area of public relations to the company. Income of the Group resulting from this service in the fiscal year 2010/11 amounted to TEUR 44 (2009/10: TEUR 44).
Kapsch Components GmbH & CoKG provides logistics services to the company in the amount of TEUR 663 (2009/10: TEUR 617) and provides the company with other deliveries and services in the amount of TEUR 45 (2009/10: TEUR 19).
The company provides technical maintenance services for the Czech truck tolling system and is responsible for the current IT support for the Czech subsidiaries. Expenses incurred for this in the fiscal year 2010/11 totaled TEUR 2,736 (2009/10: TEUR 1,910). Furthermore, the company provided public relations services amounting to TEUR 91 in the fiscal year 2010/11 (2009/10: TEUR 95) and other services amounting to TEUR 133 (2009/10: TEUR 0).
The company provides hardware (IT equipment) and renders maintenance and other services for the tolling project in Poland to the Group. This services amounted to TEUR 2,857 in the fiscal year 2010/11 (2009/10: TEUR 0).
On 15 July 2008, a new lease agreement was concluded for the location Am Europlatz 2 and a waiver of termination was agreed for 10 years. It is possible to partly terminate the agreement after 5 or 7 years, respectively. Investments in the amount of TEUR 53 (2009/10: TEUR 0) were made for the adaptation in the field of garage and parking deck. Lease expenses incurred by the Group amounted to TEUR 3,193 in the fiscal year 2010/11 (2009/10: TEUR 3,245).
Lease income of the Group resulting from the sub-lease to related parties in the fiscal year 2010/11 totaled TEUR 386 (2009/10: TEUR 267).
Services are usually negotiated with related parties on a cost-plus basis. Goods are bought and sold at arm's length.
Liabilities for pension benefits include pension obligations (pensions in payment) to the widow of Dr. Karl Kapsch, a former board member of Kapsch Aktiengesellschaft.
The following tables provide an overview of revenue and expenses at the respective balance sheet date as well as receivables from and payables due to related parties at the respective balance sheet dates:
| 2010/11 | 2009/10 | |
|---|---|---|
| Parent company | ||
| Revenue | 0 | 0 |
| Expenses | 884 | 907 |
| Affiliated companies | ||
| Revenue | 1,583 | 1,401 |
| Expenses | 21,667 | 10,807 |
| Other related parties | ||
| Revenue | 0 | 1 |
| Expenses | 4,193 | 5,790 |
| 31 March 2011 | 31 March 2010 | |
|---|---|---|
| Parent company | ||
| Trade receivables and other assets | 1,696 | 1,798 |
| Trade payables and other payables | 96 | 459 |
| Affiliated companies | ||
| Trade receivables and other assets | 262 | 307 |
| Trade payables and other payables | 4,405 | 1,971 |
| Other related parties | ||
| Trade receivables and other assets | 0 | 0 |
| Trade payables and other payables | 412 | 198 |
Earnings per share (basic earnings) is calculated by dividing the profit for the period 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. As of 31 March 2011, as in the prior year, no treasury shares were held by the Company.
| 2010/11 | 2009/10 | |
|---|---|---|
| Profit for the period attributable to equity holders of the Company (in EUR) | 22,062,116 | 32,215,536 |
| Weighted average number of ordinary shares | 12,200,000 | 12,200,000 |
| Earnings per share (in EUR) | 1.81 | 2.64 |
| Profit for the period attributable to equity holders of the Company, adjusted | ||
| for the fair value adjustment of the share in Q-Free ASA, Norway (see note 14) | 22,062,116 | 18,177,176 |
| Number of shares | 12,200,000 | 12,200,000 |
| Earnings per share, adjusted (in EUR) | 1.81 | 1.49 |
In April 2011, a revolving line of credit expiring on 31 December 2011 was contracted by the Group with a maximum amount of EUR 40 million (thereof EUR 20 million drawn at the date of this report) in connection with the tolling project in Poland.
On 1 April 2011, Kapsch Telematic Services FLLC, Minsk, Belarus was founded.
The consolidated group companies are listed in the notes to the consolidated financial statements under the item "consolidated group". The parent company Kapsch TrafficCom AG, Vienna, with the exception of Kapsch Telematic Services sp. z o.o., Poland, Electronic Toll Collection (PTY) Ltd., South Africa, Kapsch Telematic Services Danmark A/S, Denmark, Kapsch Telematic Services Solutions A/S, Denmark, Kapsch Telematic Services GmbH, Vienna, Kapsch Telematic Services GmbH Deutschland, Germany, Kapsch Telematic Services Kft., Hungary, Kapsch Telematic Services spol. s r.o., Czech Republic, Kapsch TrafficCom Construction & Realization spol. s r.o., Czech Republic, TMT Services and Supplies (Pty) Ltd., South Africa, SafeTCam (Pty) Ltd., South Africa, Traffic Software Solutions (Pty) Ltd., South Africa, TMT Services and Supplies (Gauteng) (Pty) Ltd., South Africa, Electronic Tolling Operations (Pty) Ltd., South Africa, Crestwave 63 (Pty) Ltd., South Africa, Crestwave 61 (Pty) Ltd., South Africa, TMT Services and Supplies (North) (Pty) Ltd., South Africa and Berrydust 51 (Pty) Ltd., South Africa, directly or indirectly holds 100% of the shares in the fully consolidated subsidiaries. With regard to additional disclosures in accordance with §265 (2) UGB for the companies mentioned above, the protection-of-interest clause pursuant to §265 (3) UGB was applied.
The average number of staff in the fiscal year 2010/11 was 1,551 salaried employees and 70 waged workers (2009/10: 921 salaried employees and 52 waged workers).
The expenses for the auditor amount to TEUR 184 (2009/10: TEUR 109) and are broken down as follows:
| 2010/11 | 2009/10 | |
|---|---|---|
| Audit of the consolidated financial statements | 61 | 40 |
| Other assurance services | 111 | 43 |
| Tax consulting services | 0 | 0 |
| Other services | 12 | 26 |
| 184 | 109 |
The compensation paid to members of the management board is shown below:
| Managing board remuneration 2010/11 in TEUR | Fixed | Variable | Total |
|---|---|---|---|
| Georg Kapsch | 416 | 405 | 821 |
| Erwin Toplak | 360 | 57 | 417 |
| André Laux | 278 | 56 | 334 |
| Total | 1,054 | 518 | 1,573 |
Expenses for termination benefits for members of the management board amount to TEUR 43.
Individual pension agreements are granted to Erwin Toplak and André Laux. Annually, approximately TEUR 19 is paid by Kapsch TrafficCom AG to an external pension fund.
Remunerations paid to supervisory board members amount to TEUR 21 (2009/10: TEUR 19).
As in the previous years, no advances or loans were granted to members of the management and supervisory board, nor any guarantees issued in their favor.
In the fiscal year 2010/11, the following persons served on the managing board: Mag. Georg Kapsch (Chief Executive Officer) Ing. Erwin Toplak André Laux
In the fiscal year 2010/11, the following persons served on the supervisory board: Dr. Franz Semmernegg (Chairman) Dr. Kari Kapsch (Deputy Chairman) William Morton Llewellyn
Delegated by the works council: Ing. Christian Windisch Dipl.-Ing. Werner Dreschl (until 19 November 2010) Claudia Rudolf-Misch (from 20 November 2010)
Authorized for issue:
Vienna, 13 May 2011
Mag. Georg Kapsch Ing. Erwin Toplak André Laux
Chief Executive Officer Chief Operating Officer Executive Board member
We have audited the accompanying consolidated financial statements of Kapsch TrafficCom AG, Vienna, for the fiscal year from 1 April 2010 to 31 March 2011. These consolidated financial statements comprise the consolidated balance sheet as of 31 March 2011, the consolidated statement of comprehensive income, the consolidated cash flow statement and the consolidated statement of changes in equity for the year ending 31 March 2011, and the notes to the consolidated financial statements.
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, and with the legal provisions applicable in Austria. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial 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 under the circumstances.
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with laws and regulations applicable in Austria and Austrian Standards on Auditing, as well as in accordance with International Standards on Auditing (ISA) 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 financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial 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 financial statements in order to design audit procedures that are appropriate under 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 financial statements.
We believe that the audit evidence we have obtained is sufficient 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 financial statements comply with legal requirements and give a true and fair view of the financial position of the Group as of 31 March 2011 and of its financial performance and its cash flows for the financial year from 1 April 2010 to 31 March 2011 in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU.
Pursuant to statutory provisions, the management report for the Group is to be audited as to whether it is consistent with the consolidated financial statements and whether the other disclosures in the management report for the Group do not give rise to a misstatement of the Group's financial position. The auditor's report also has to contain a statement as to whether the management report for the Group is consistent with the consolidated financial statements and whether the disclosures pursuant to Section 243a UGB are appropriate.
In our opinion, the management report for the Group is consistent with the consolidated financial statements. The disclosures pursuant to Section 243a UGB are appropriate.
Vienna, 13 May 2011
PwC INTER-TREUHAND GmbH Wirtschaftsprüfungs- und Steuerberatungsgesellschaft
signed: Felix Wirth Austrian Certified Public Accountant
| Management Report as of 31 March 2011 67 | |
|---|---|
| Statement of all Members of the Managing Board 84 | |
| Additional Information pursuant to Section 82 Para. 4 No. 3 BörseG 85 | |
| Balance Sheet as of 31 March 2011 86 | |
| Income Statement for the fiscal year 2010/11 87 | |
| Notes to the financial statements for the fiscal year 2010/11 88 | |
| Auditor's Report 100 |
Following the financial and economic crisis, world trade has increased again since the start of 2009 and has largely been able to regain pre-crisis levels. Real global trade is expected to increase by 10% per year in 2011 and 2012 as well. The global economy also improved as a result of very expansive monetary and fiscal policy. The global gross domestic product rose by 4.5% year-on-year, but slowed over the course of 2010. The International Monetary Fund (IMF) has forecasted growth of 4.4% for 2011, and expects the global economy to continue growing by 4.5% in 2012.
From a regional perspective, the economic upturn has been very uneven. In the emerging markets, such as in Asia, recovery was observed earlier than in the industrial countries, such as the euro-zone in particular. However, the expansion in Asia is now showing a slight decline, which can be attributed to the end of the significant inventory build-up following the crisis as well as attempts by China and other emerging countries to slow growth in order to prevent their economies from overheating and to counteract rising inflationary pressure. Asian and Latin American economies will continue to grow in 2011 and 2012, lending a noticeable impetus to the global economy.
In the euro region, very large differences exist between the individual countries. High-export and internationally competitive nations such as Germany and the Scandinavian countries exhibited positive growth figures for 2010, while the situation in Southern European countries and in Ireland appeared somewhat worse. The problematic national budgets of these euro countries are leading to an abrupt increase in lending rates and continue to put the European Currency Union to a hard test. In the interests of solidarity, the EU has resolved to provide EUR 110 billion of support to Greece and EUR 85 billion to Ireland. It is also assumed that Portugal will need between EUR 80 and EUR 90 billion.
The oil price has risen again significantly in recent months due to the flare up of unrest in North Africa and the Near East and stood at roughly USD 110 per barrel Brent as of mid May. Raw materials prices are likewise increasing due to high demand. The price of gold is also rising, ending the reporting period at approx. USD 1.525 per Troy ounce.
2010 was a turbulent year for the financial markets. The European sovereign debt crisis and the relaxation of monetary policy by the US Federal Reserve dominated the international markets. The euro lost ground against the US dollar in the first half of 2010, but the euro exchange rate recovered again in the second half of the year. Demand for low-risk investments in German and American bonds increased.
The final weeks of the fiscal year 2010/11 were dominated by the terrible catastrophe in Japan. Following the massive destruction caused by the earthquake and tsunami, the threat of a nuclear disaster has largely been the focus of attention.
The consequences for the global economy are still difficult to estimate. Japan is faced with its largest reconstruction effort since World War II. The required investments and restoration of the destroyed infrastructure could mean a short-term boost to the Japanese economy. However, Japan is one of the few major economic powers with a strong focus on exports, and this leads to fears of massive economic losses due to production downtimes as well as the radioactive contamination of agricultural products and ocean water. According to economists, the direct consequences on the global economy should remain within limits.
The overall outlook for the global economy justifies the expectation that investors could remain in a risk-averse posture. The high national debts of the developed countries and rising raw materials prices will have a significant impact on growth.
The economy in the U.S.A. developed positively during 2010. The gross domestic product of the U.S.A. increased by 2.7% in 2010, and indicators point toward a continuation of this positive trend. GDP growth of 2.2% is forecasted for the year 2011 and a further increase in growth to 2.9% for 2012.
Measures to stabilize the economy as well as extensive intervention by the US Federal Reserve (Fed) during the year 2010 are allowing banks to repair their balance sheets. Expansive monetary policy and the buyback of government bonds by the Fed have kept the USD exchange rate low. At the end of 2010, the euro was at 1.34 US dollars, while on 31 March 2011 it was 1.42 US dollars. Since the end of 2010, the Fed has held to a historically low interest rate between 0.0% and 0.25%. Experts expect the prime rate will be kept low over the short-term and the relaxed monetary policy will be maintained.
The labor market has recovered slightly in recent months, but is still characterized by delayed development. The unemployment rate remains high and was at 9.0% in January 2011. In 2011, unemployment is expected to average between 8.8% and 9.0%. Developments in the areas of industrial production and exports are positive. Private consumer spending remained expansive despite belt-tightening, which can be attributed in part to the increased prices of food and fuel. Forecasts indicate that the consumption and real estate boom seen prior to the crisis will not return quickly. In particular, the recovery in the real estate market has remained very weak to date. No noticeable improvement is in sight for the construction industry as well.
The rapid implementation of government economic stimulus programs has boosted the emerging markets in the last two years. Emerging countries such as China and India have even seen a surplus of capital.
China exhibited GDP growth of 10.5% in 2010. Although the government took measures to counteract the risk of currency appreciation and rising inflationary pressure, growth amounting to 9% per year is expected for the years 2011 and 2012.
Japan made the turnaround in 2010 and was able to achieve an increase of 3.6% in its gross domestic product. As a result of the recent natural catastrophes, serious estimates regarding future developments are almost impossible, and the opinions of experts also diverge extensively in this area.
Following the global crisis, recovery was also observed in the euro countries during 2010. The gross domestic product in the euro zone rose by 1.7%, and stable growth of 1.5% is expected for the years 2011 and 2012. Industry in the euro region was able to exceed production forecasts, and the volume of new orders also developed positively. At the start of the 4th quarter of 2010, the industrial capacity utilization of 77.6% was far above the low of the previous year (69.6%) but still fell short of the long-term average of 81.2%.
In general, an analysis of the current economic situations in the euro countries shows significant differences.
The competitive export countries of the euro region, such as Germany and the neighbors with which it has strong economic relationships, such as Austria and Slovakia, are profiting from the massive growth in the emerging markets (in particular, from China). Germany, for instance, proved to be the economic motor for Europe in 2010 with growth of 3.6%, and there are good prospects for continued stable growth in 2011 as well. Alongside the positive effects from the rise in global trade, German economic growth also benefits from the low interest rates in the euro zone. As a result, the country has been spared tax hikes and costcutting measures, benefiting companies and further promoting consumption.
Other euro countries have encountered great difficulties in controling their national debts and lag behind in terms of growth. High public spending and austerity packages can be seen in Greece, Ireland, Portugal and Spain, and the economies of these countries are stagnating. Portugal is even in a recession at this time.
In recent months, all the nations of Europe have banded together to overcome this crisis through joint action. To this end, a comprehensive plan was passed for opposing the debt crisis in the euro region, stabilizing the economic and monetary union and improving competitiveness. The new crisis fund for high-debt euro countries was recently raised to 700 billion EUR. As of 2013, this money should be made available as credit financing under favorable conditions to euro countries that are unable to get their national budgets under control on their own despite austerity programs. Almost all EU states are helping to finance this rescue fund through cash contributions and guarantees. Strict criteria, including massive costcutting measures, must be met in order to take advantage of this aid.
Although the EU began to assist Greece at the start of $2010 -$ in total, roughly 110 billion EUR should have been approved – the budget deficit for 2010 was again higher than expected at 10.5%. Ireland requested assistance at the end of 2010 and received a loan of roughly EUR 85 billion.
The situation in Portugal also intensified in the spring of 2011. The goals for the budget deficit in 2010 were clearly missed at 9.1%, and political turbulence has ensued since that time. The unemployment rate (11.2% in January 2011) and inflation (roughly 3.5% in February 2011) also rose considerably. At the start of April 2011, after receipt of a significantly worse rating and a correspondingly massive interest rate increase for Portuguese government bonds, the country requested assistance from the EU rescue fund. Estimates of the required aid run to EUR 80-90 billion.
In addition to the crisis fund, adherence to the stability package has once again received greater attention throughout the entire euro region. The new debt of a country may not exceed 3% and the total debt level must be lower than 60% of the GDP. If these criteria are not met, a deficit process must be followed by which 0.2% of the GDP must be set aside as a pledge for improving the debt. If the debt situation does not improve, this pledge is treated as a penalty. The euro countries are also called upon to more closely coordinate their tax. pension and social policies in order to avoid differences in competitiveness.
Overall, the economic recovery in the euro region has been astonishingly robust despite the rising price of oil and continued debt problems.
The new EU countries were able to achieve GDP growth of 1.9% in 2010 (2009: -3.3%). Indicators point to continued GDP growth of 2.6% in 2011 while growth as high as 3.6% is expected for 2012. Poland, the Czech Republic, Slovakia and Hungary have enjoyed good economic growth.
Inflation in the EU (EU-27) increased in 2010 primarily due to rising energy prices and was at 2.8% in February 2011. To counteract this, the European Central Bank raised the prime rate from 1% to 1.25% at the start of April 2011, and another increase is expected over the course of 2011. The 3-month Euribor rate was 1.23% on 31 March 2011.
The unemployment rate in the EU (EU-27) remained at a high level of 9.5% in February 2011, only 0.1% lower than the previous year. This figure also varies widely between the individual countries. The Netherlands, Luxembourg and Austria have the lowest rates, while the highest unemployment rates are reported by Spain, Lithuania and Latvia. Latvia, however, was also able to demonstrate the greatest reduction in unemployment, followed by Estonia and Sweden. The largest increase was reported by Greece and Ireland.
The Austrian GDP increased by 2.0% in 2010, which can be primarily attributed to the strong growth in exports (2010: +12.3%) and rising investments. The GDP growth forecast for 2011 was recently revised upward to 2.5%, and growth of 2.0% is expected for 2012 as well.
Positive export developments can be attributed to the strong economic growth in Germany. which was in turn positively influenced by growing demand from Asia. Austria's exporters also profited from increasing exports to Switzerland, Russia and the U.S.A. According to forecasts, Austrian goods exports are expected to grow by 7% in 2011 and 6.4% in 2012.
Consumption by private households remained a stable pillar of the economy in 2010 due to high real growth (tax reform, expansion of social transfers and low inflation). Consumer spending by private households increased by 1.1% in 2010. Trade also profited from the positive development in consumer spending, making possible an increase of 2.8% in value creation.
In 2011, it is expected that net real per capita income will decline somewhat due to lower salary conditions in the public sector and a slight increase in the inflation rate. Net real wages should recover somewhat in 2012.
In February 2011, the inflation rate reached its highest level since September of the previous year. The Europe-wide harmonized consumer price index jumped to 3.1% and exerted a damping effect on economic growth. This increase can be attributed above all to increased prices for fuels, heating oil and food. Approximately 0.4% of this increase originates from the raising of indirect taxes for budget consolidation. On the other hand, core inflation, which excludes energy and unprocessed foods, remained low.
Overall, the Austrian economy is recovering very well compared with the rest of the world. Following on the economic stimulus programs, the austerity package and tax reforms were implemented relatively quickly and have already begun to show the desired effects, demonstrating that they were correctly dimensioned. It has been possible to keep many employees in their jobs by reducing working hours. In addition, innovative ideas helped Austrian companies successfully ride out the crisis.
However, the continued growth of the Austrian economy is subject to a number of uncertainties and risks. The EU countries are faced with the great challenge of overcoming the debt crisis and ensuring the stability of the monetary union in Europe. The unrest in the Near East and North Africa has led to increased oil prices and negatively impacted inflation. It remains to be seen how the situation in North Africa will develop. Due to the low trade volume with Japan, experts believe the catastrophe there will have only a negligible impact on the Austrian economy, with the exception of delivery bottlenecks. The potential influence of this situation on the global economy and thereby directly on Austria remains difficult to assess from today's perspective.
The development of the unemployment rate remains positive. Unemployment has continued to fall, reaching 6.9% in March 2011 according to the national calculation and 4.3% according to the Eurostat definition. This places Austria alongside the Netherlands in the top ranks of the 27 EU countries (average of 9.6%). According to the most recent forecasts, the unemployment rate should stabilize further, and an annual average of 4.1% is expected for 2011 and 4.0% for 2012.
To allow for easier comparisons, the Kapsch TrafficCom Group makes use of the internationally prevailing terms for the intelligent transportation systems market. The study "Intelligent Transportation Systems - A global strategic business report" from Global Industry Analysts, September 2010, describes the ITS market as a diversifying market with the following, widely differing application and product segments.
2010.
Funding of infrastructure projects. Independent of the economic recession, the worldwide increase in road traffic is the most important growth factor for the ITS market. According to analyses by the EU (European Union 2010, "Energy and Transport in Figures"), commercial traffic increased by 2.3% per year and in total by 33.7% between 1995 and 2008. Commercial road traffic increased by 2.9% per year and by 45.7% in total. While the recent economic crisis triggered a fall in the volume of goods transport, this has already been largely compensated for by the subsequent upswing. Despite political pressure, goods transport could not be shifted significantly from road to rail or ship transport. This growth increases the financing burden for road infrastructure enormously, which in turn fosters greater demand and a high growth potential for ITS applications and the market segment electronic toll collection systems, in particular.
In 2005, the trans-European road network (TEN-V) with a total length of 84,700 km comprised one-fourth of the primary street network but carried 40% of the total commercial traffic. It is predicted that TEN-V will be expanded by 4,800 km per year up to 2020, of which 3,500 km will consist of existing roads. Major investments will be required in the new member states and along the corridor routes to these countries. The European Union estimates investments of EUR 600 billion will be required by 2020. The long-term forecasts for traffic growth continue to remain high.
In addition to dedicated short-range communication systems (DSRC) according to the Comité Européen de Normalisation (CEN) standard, the use of satellite-based systems has been expanding, depending on the application requirements. Significant growth potential also exists in the area of video-based systems for automatic number plate recognition for tolling and enforcement in urban environments.
The high financing requirements for the preservation of road infrastructure are leading to new business models and private concessionaire models in the U.S.A. Standard & Poor's research estimates an annual demand of USD 92 billion for the preservation of highways and bridges and a further USD 125.6 billion for their improvement. While the standardized tolling technology based on 5.8 GHz DSRC microwave is used in Europe, electronic toll collection systems in North America are based on proprietary protocols in the 915 MHz band. It is expected that a new communication protocol standard based on 5.9 GHz will gradually replace the existing technology in the U.S.A. over the coming years. In addition to the toll application, the communication standard 5.9 GHz WAVE (Wireless Access in the Vehicular Environment) is intended for car-to-car communication and for applications that increase traffic safety as well as additional ITS solutions for traffic information, traffic management and entertainment. These developments will also make it possible for European manufacturers to gain a foothold in the North America, which is also an important growth market for Kapsch TrafficCom.
Reduction of congestion and environmental pollution through road traffic. To reduce traffic congestion and environmental pollution, city charging systems and environmental zones (low emission zones) are deployed in several major cities. Environmental pollution can be viewed as another key driver for the ITS market and also for electronic toll collection systems. In large conurbations and capital cities, in particular, there is a growing need for electronic systems to control and reduce traffic. This topic is politically very sensitive, and the development of this segment within electronic toll collection systems is therefore not as fast as originally expected. Traffic safety devices to monitor compliance with traffic regulations are another field of application in cities. Examples include systems to monitor traffic violations at junctions (e.g. jumping red lights) as well as systems to detect speeding. These applications, which fall under the traffic management system segment, enjoy fast-growing potential on the market both in and between cities, and for municipal authorities they often pave the way for larger and more extensive ITS solutions such as city charging.
The increasing traffic volume can be considered a global trend. Especially in Asia, an increased demand for electronic toll lanes is expected for the replacement and expansion of toll systems previously based on more traditional methods. India has one of the largest road networks in the world, amounting to 3.4 million km in 2004. Only 2% is made up of highways, but these carry 40% of the commercial traffic. Between 1992 and 2002, 52,000 km of highways were built in China and an additional 200,000 km are planned for the coming years.
Reduction of road accidents. Traffic management systems are particularly expected to increase the probability of surviving accidents and reduce accident rates.
In the past fiscal year Kapsch TrafficCom AG managed to further consolidate its position as internationally leading provider of innovative traffic telematics systems, products and services. The company supplies products and systems for toll collection and traffic management and, in addition, offers the technical and also commercial operation, as is the case e.g. in the nationwide electronic truck tolling system in the Czech Republic.
The fiscal year 2010/11 was marked by the project in South Africa as well as by the award of the contract for the implementation and operation of a nationwide electronic truck tolling system in Poland.
The contract awarded by the South African National Roads Agency Ltd (SANRAL) in September 2009 for the implementation and operation of an electronic toll collection system for the multi-lane free-flow of traffic in the Gauteng province was in the implementation phase during the reporting period. After transfering the toll collection system as agreed in fiscal year 2011/12, the technical and commercial operation will be handled by the South African subsidiary.
With the signing of a contract on 2 November 2010 for the implementation and operation of a nationwide electronic truck tolling system in Poland, the Kapsch TrafficCom Group was able to further expand its leading position in the European market. The first construction phase encompasses the existing road network of roughly 1,750 km and the technical as well as commercial operation up to 2018 with an order value of approximately EUR 560 million. The commissioning will take place in fiscal year 2011/12. The Polish contract partner GDDKiA (General Directorate for National Roads and Highways) expects an expansion of the road network to 7,600 km by 2018.
In Austria, roughly 2,200 km of highways and expressways are tolled with fully electronic multi-lane free-flow systems for trucks heavier than 3.5 tons permissible total weight. Since 2004, Kapsch TrafficCom AG has delivered the entire central and roadside infrastructure for 490 toll stations as well as approximately 1 million on-board units (GO Boxes). The average toll transaction rate in Austria remained at the previous year's high level of 99.88%.
In a move that further highlights the planned growth course, a 4.25% corporate bond with a volume of EUR 75 million and a tenor of seven years was successfully issued on 3 November 2010.
The US, Canadian and Mexican business of MARK IV IVHS was taken over on 30 November 2010. This brings the largest provider of components for electronic toll systems based on the existing 915 MHz technology in North America into the Kapsch TrafficCom Group. The newly acquired subsidiaries are exclusive suppliers of the E-ZPass® Group, a consortium of 24 toll authorities in 14 US states. Projects are also running with customers in Canada and Mexico. In addition to current customer relationships, this takeover offers the ideal basis for participating in the expected technology migration from 915 MHz to 5.9 GHz WAVE. Initial demo and pilot projects based on the 5.9 GHz technology have already been implemented in the U.S.A. by the Kapsch TrafficCom Group.
Transport Telematic Systems LLC, Abu Dhabi, United Arab Emirates, was founded on 30 March 2011 together with a local partner.
Compared to the prior year, net sales in the amount of EUR 79.5 million were up 13 %, and the operating performance was EUR 87.9 million. This means an increase in the operating performance of 23 % over the prior year (EUR 71.5 million). Sales in the segment Road Solution Projects (RSP) increased from EUR 5.6 million in prior year to EUR 24.9 million in the fiscal year. Sales in the segment Services, System Extensions, Component Sales (SEC) however declined from EUR 64.8 million in the prior year to EUR 54.7 million.
The increase in sundry other operating income by EUR 2.6 million is primarily due to intercompany recharges and higher research funding awards.
In connection with the increase in sales primarily from the tolling projects in Poland and South Africa, cost of materials and other purchased services also increased from EUR 32.9 million to EUR 45.1 million, and other operating expenses from EUR 27.1 million to EUR 31.2 million.
Personnel expenses rose from EUR 26.2 million to EUR 29.9 million, which is due to the increase in the number of staff to prepare and execute the current and planned projects and to the expansion for investments in technology.
Due to these cost increases, EBIT declined by EUR 1 million from EUR -0.5 million to EUR -1.5 million year-on-year.
In contrast, the financial result developed positively and increased on the prior year from EUR 15.1 million to EUR 19.8 million which is mainly due to dividends from subsidiaries.
The balance sheet total of Kapsch TrafficCom AG increased by 57 % from EUR 166.2 million to EUR 261.0 million.
On the one hand, with regard to financial assets, shares in affiliated companies rose by EUR 20.0 million as a result of the acquisition of the North American business of Mark IV IVHS, on the other hand, receivables from affiliated companies increased by EUR 53.5 million.
Furthermore, on the assets side, long-term receivables increase by EUR 11.7 million to EUR 48.9 million resulting from the financing of the acquisition of the Mark IV IVHS entities and the development costs for the North American market.
On the liabilities side, the increase of the balance sheet total is mainly reflected in liabilities. Due to the issuing of the company bond (EUR 75 million), an increase in loans and overdrafts by EUR 2.5 million, an increase in trade payables by EUR 6.8 million and an increase in payables to affiliated companies by EUR 6.2 million total liabilities increased by EUR 90.7 million.
This development resulted in a decrease of the equity ratio from 77.7 % to 53.0 %.
Due to the increase in inventory, the net cash flow from operating activities amounted to EUR 11.2 million.
The net cash flow from investing activities of EUR -75.7 million results from investments made in financial assets and financing of subsidiaries.
The net cash flow from investing activities was EUR 68.3 million and results from the issuing of the bond in an amount of EUR 75 million as well as the payment of the dividend for the fiscal year 200910 in the amount of EUR 9.1 million.
Overall, cash and bank balances increased from EUR 2.5 million to EUR 6.3 million over the prior year.
The toll transaction rate is a figure for assessing 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. A high toll transaction rate translates to maximum toll revenue.
In 2010, the average toll transaction rate of the existing truck tolling system in Austria amounted to approximately 99.88%, placing it at the same high level as in 2009.
The average number of employees in Kapsch TrafficCom AG in the fiscal year 2010/11 was 395 (prior year: 354) employees. As of 31 March 2011, the company had a workforce of 433 (prior year: 363).
The Company is certified pursuant to OHSAS 18001 since 2005. The related measures for occupational safety and health regarding risk evaluation, planning and supervision have been implemented in the internal processes.
The Company is certified pursuant to ISO 14001 since 2005. Environmental awareness could be raised throughout the Company. It is planned also for the future to meet the Company's social responsibility: in particular, to use natural resources even more economically and responsibly.
Kapsch specifically supports women through trainee and advanced training programs in the Company and also participates in events of the Technical University. Together with the Public Employment Service Austria (AMS), the "women in engineering" project is implemented.
Kapsch – in recognition of the socio-cultural significance of art and culture and aware of the socio-political responsibility of the Company - supports a variety of training initiatives, contemporary art and selected social projects. These activities are carried out through Kapsch Aktiengesellschaft for the entire Group.
The following examples – representative of numerous other projects – provide an overview of the Company's activities in the area of corporate social responsibility:
Music. A key element of this commitment covers sponsoring activities related to the Vienna Concert Hall (Wiener Konzerthaus). This cultural institution has an excellent reputation far beyond Austria's borders. The Kapsch Group has been the main sponsor of the Vienna Concert Hall since 1992. The Modern Vienna festival - one of the world's best known festivals of contemporary music - has been supported by Kapsch since its launch in 1989.
Visual arts. Promoting less known artists is of particular concern to the Kapsch Group. In particular, young domestic and international artists are assisted by sponsorship campaigns. One example is the photo calendar that Kapsch Group has supported since 1994. The calendar is presented annually in late fall in a private exhibition.
Educational institutions. As a company that is driven by technology and innovation, we are constantly interested in establishing contacts as early as possible with the best engineering talents. Since 2005, the Kapsch Group has supported Universitäre Gründerservice Wien GmbH which aims to support and accompany young entrepreneurs in the implementation of ideas relating to key business concepts.
Social activities. Kapsch TrafficCom takes pride in supporting selected social projects at home and abroad. One example of the numerous projects is ICEP - the Institute for Cooperation in Development Projects, whose activities help to improve the circumstances of people in developing countries. With the specific advancement of migration and integration. Kapsch TrafficCom contributes to social justice, the positive development of society and safety over the long-term.
As a technology company, Kapsch TrafficCom Group operates in an ever-changing environment. Risks are therefore part of its day-to-day business. For the company, risk means the possibility of deviating from company objectives, meaning that the definition of risk encompasses both positive (opportunities) as well as negative (risks) deviations from planned objectives.
Risk management has been positioned as a separate function within the finance department of Kapsch TrafficCom AG. Under the responsibility of a central risk manager, the risk management system comprises institutionalized processes for collecting and analyzing all relevant opportunities and risks pertaining to Kapsch TrafficCom Group's projects and provides the basis for the timely planning and implementation of control measures. In the 2010/11 fiscal year risk management was developed into a company-wide opportunity and risk management system. In addition to project risks, Enterprise Risk Management also analyses strategic, technological, organizational, financial, legal and IT risks, reporting to management on a regular basis. 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 over time in order to make a valuable contribution to the management of the company.
The material risks faced by the Group and the respective risk management measures are briefly explained below:
Volatility of new orders. A major portion of the revenues of the Kapsch TrafficCom AG are generated in the segment Road Solution Projects (RSP). 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 a risk that tenders in which the Group participates or plans to participate could be delayed or withdrawn, for instance as a result of political changes, appeals or legal actions by unsuccessful bidders. On the other hand, a risk exists that Kapsch TrafficCom AG may not win its bids for new projects due to technological, financial, formal or other reasons. Continuing revenues from maintenance agreements and from technical operations also depend on the successful participation in tenders for systems.
In the past, the sales revenues of Kapsch TrafficCom AG have been heavily influenced by the realization of RSP implementation projects in the given fiscal year. Significantly higher revenues were recorded, in particular, in 2003 (implementation of a national electronic truck tolling system in Austria) and 2006/07 (implementation of a national electronic truck tolling system in the Czech Republic). In the 2010/11 fiscal year sizeable revenue was generated from implementing an electronic toll system in South Africa as part of the Gauteng Project, and from starting to implement a national electronic truck tolling system in Poland.
The strategy of Kapsch TrafficCom AG is aimed at reducing the volatility of revenues from single large projects through increased geographic diversification and increased diversification of the product portfolio as well as sustained growth in the share of maintenance and operations of systems.
Risks of project execution. In connection with the installation of systems, Kapsch TrafficCom AG is usually contractually obligated to provide performance quarantees. Since ETC systems and other ITS solutions are frequently sophisticated and technologically complex systems that must be implemented within a short period, system and product defects can occur due to the limited time available for testing. The failure to meet guaranteed performance levels or missed deadlines usually results in penalties and/or compensation, sometimes also compensation for lost toll revenues. Significant deadline overruns also frequently trigger contractual clauses, which enable clients to terminate contracts prematurely. A significant delay in a project, failure to achieve guaranteed performance levels or failure to implement a project would also reduce the chances of success in future tenders for systems. There is also the risk that Kapsch TrafficCom AG cannot execute projects in line within the set cost budgets.
Kapsch TrafficCom AG employs risk management methods and risk management procedures in order to quard against risks associated with projects.
Long-term contracts with public authorities. In many cases, the system contracts are awarded by public agencies. Framework agreements and service contracts in connection with tolling projects may include terms and conditions that are not negotiable in a tender process and that may be disadvantageous to Kapsch TrafficCom AG. 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 concluded by the Group may include liabilities regarding customers' loss of profit, product liabilities and other liabilities. While Kapsch TrafficCom AG aims to include appropriate limitations to its liability in contracts, it is still impossible to guarantee that all contracts contain sufficient limitations to the company's liability or that these limitations can be enforced under applicable law.
Innovation leadership. The leading market position of Kapsch TrafficCom AG is, to a large extent, based on its ability to develop state-of-the-art, efficient and reliable systems, components and products. In order to maintain its technological leadership, Kapsch TrafficCom AG 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 its competitive position. Since its innovation leadership is based largely on technology, internal know-how and intellectual property, the global increase in product piracy and reverse engineering may have negative effects on the Kapsch TrafficCom Group. In addition, any failures in protecting these technologies may have a negative impact on Kapsch TrafficCom Group's competitive position. Moreover, it is possible that systems, components, products or services could infringe on the intellectual property rights of third parties.
Kapsch TrafficCom AG places great importance on the protection of technologies and the company's internal know-how, e.g. through patents and non-disclosure agreements with other parties. In order to avoid legal action and court proceedings, Kapsch TrafficCom AG constantly monitors potential intellectual property rights infringements.
Acquisition and integration of companies as a part of the Group's growth. One of the strategic objectives of Kapsch TrafficCom AG is to grow internationally both by organic means and through selected acquisitions and joint ventures. In the implementation of this strategy, Kapsch TrafficCom Group has acquired and integrated companies around the world. However, a number of challenges remain in connection with this growth strategy in order to realize the desired synergies and objectives.
Country risk. The strong expansion of business activities in Eastern Europe and non-European countries has exposed Kapsch TrafficCom AG to a heightened political risk. Significant and unforeseeable political changes can exert a major influence on the ability to implement or operate ITS projects in these countries and also affect the availability and accessibility of funds. There may also be interference with the property rights of Kapsch TrafficCom AG or problems with business practices and activities.
Foreign exchange risk. The Group maintains branches, offices and subsidiaries in several countries outside the euro zone. A considerable portion of revenues and costs are denominated in the currencies of the respective foreign companies rather than in EUR. Although the company aims to hedge the net currency position of the individual contracts as necessary, currency fluctuations may result in exchange rate losses that may influence the financial statements
Interest rate risk. Within the framework of project financing, the Group regularly agrees to variable interest rates that are tied to market interest rates (Euribor, Pribor etc.). This exposes Kapsch TrafficCom AG to interest rate risks. Kapsch TrafficCom AG utilizes appropriate financial instruments to hedge against interest rate risks when these risks are significant.
Liquidity risk. Sufficient financial resources must be available to ensure that Kapsch TrafficCom AG can meet its payment liabilities at any time. The availability of medium and long-term financing is required to carry out large-scale projects (such as implementing a national toll system under delayed payment terms from the client) and for acquiring other businesses. Additionally, implementing large-scale projects with ITS solutions often requires the provision of significant bank guarantees to secure bid obligations (bid bonds) or to secure possible warranty claims (performance bonds).
In financing agreements Kapsch TrafficCom AG is subject to the customary restrictions in terms of its business policy, e.g. when drawing additional loans, using assets as collateral or providing guarantees for third parties. The availability of financing and bank guarantees depends on market conditions as well as the net assets and financial position of Kapsch TrafficCom AG and the results of operations. A lack of liquid assets (even if the company is otherwise solvent), of financing or of bank guarantees can have an extremely adverse impact on the net assets and financial position of Kapsch TrafficCom AG and the results of operations. The issuing of a seven-year, EUR 75 million bond in November 2010 helped Kapsch TrafficCom AG to again improve its liquidity.
Credit risk. Kapsch TrafficCom AG is exposed to the risk of non-payment by customers. The credit ratings of new and existing customers are checked on a regular basis. Many of the key customers of Kapsch TrafficCom AG are public authorities, especially in connection with implementing and/or operating national or regional toll systems. There is also a risk that the counterparties (including financial institutions assumed to have good credit ratings) of both original and derivative financial instruments cannot meet their payment obligations when due. A payment default or the recognition of impairment charges to receivables can be extremely detrimental for the net assets and financial position of Kapsch TrafficCom AG and the results of operations.
The success of Kapsch TrafficCom AG depends heavily on key personnel with many years of experience in the industry. Moreover, the ability to recruit qualified staff, integrate them into the company and retain them over the long-term is crucial in the current growth phase. The loss of key personnel and difficulties in the recruitment of personnel may adversely affect the success of the company.
Kapsch TrafficCom AG has implemented a number of measures to counteract personnel risks, such as incentive schemes, training opportunities, etc.
A variety of regulations and legal requirements must be observed in connection with participating in public tenders, establishing infrastructure for ITS solutions (such as tolling stations) and operating toll systems. Working out applicable legal regulations and adhering to applicable legal regulations and requirements can result in considerable administrative and technical expense. The failure to meet regulations or official requirements can lead to severe penalties and also reduce the possibility of (successfully) taking part in tenders or continuing with the given business activity. In connection with the acquisition of shares in Q-Free ASA, Norway, in January 2009, Norwegian authorities have initiated investigation proceedings against Kapsch TrafficCom AG and Kapsch Aktiengesellschaft. Kapsch TrafficCom AG disagrees with the basis for these allegations and believes that any adverse impact on the financial position of Kapsch TrafficCom AG will not be material. Kapsch TrafficCom AG intends to vigorously defend against the allegations.
As a technology group, Kapsch TrafficCom AG is exposed to typical IT risks relating to security, confidentiality and the availability of data. For this reason, Kapsch TrafficCom AG has implemented an IT risk management system designed according to the corporate risk and IT security application method (CRISAM) and has been certified pursuant to ISO 27001 (information security management). Kapsch TrafficCom AG is also certified according to ISO 20000 "IT service management" (similar to ITIL) for the operation of toll systems.
From a current perspective, no risks have been identified that could endanger the continued operations of Kapsch TrafficCom AG. Increasing geographic diversification, the diversification of the product portfolio and an increased share of recurring revenues (further growth in the Services, System Extensions, Components Sales segment) are planned to further reduce the concentration of risks in the future.
The Corporate Law Amendment Act (URÄG 2008) adopted the 8th EU Directive into Austrian law. Under this legislation, companies with a capital market orientation are henceforth obliged to include in their group management reports not only an outline of their risk management systems but also of the main features of their ICS with regard to the financial reporting process.
The International Financial Reporting Standards (IFRS) Group Accounting Manual represents the cornerstone for financial accounting and reporting throughout the whole Kapsch Group. The manual is published and regularly updated by the Kapsch Group and contains the essential financial and reporting procedures based on IFRS. Group-wide guidelines and work instructions represent another important pillar of the internal control system.
The central elements of the ICS process include regular compliance checks according to the principle of dual control, the segregation of duties and defined actions for monitoring the effectiveness and efficiency of operating activities, the reliability of financial reporting and the compliance with relevant legal regulations. The ICS guidelines of Kapsch TrafficCom AG follow the basic structure of the internationally recognized standards for internal control systems (COSO - Internal Control and Enterprise Risk Managing Frameworks of the Committee of Sponsoring Organizations of the Treadway Commission).
The supervisory board is kept informed of business developments by the managing board during regular meetings by way of consolidated presentations consisting of segment reporting, earnings development analyses containing comparisons of current figures with figures from the budget and the previous period as well as select financial figures, forecasts, group financial statements and developments in the number of employees and order inflow.
The head of finance, the central controlling department and the internal audit department subsequently verify compliance with these audit procedures by local management, and the results are regularly reported to the audit committee.
Kapsch TrafficCom AG has a network of research and development centers in Vienna and Klagenfurt (Austria), Jönköping (Sweden), Bologna (Italy), Buenos Aires (Argentina), Toronto (Canada), Carlsbad (California, U.S.A.) and Capetown (South Africa). The research and development centers are organized as competence centers. Research and development activities are being coordinated from the headquarters in Vienna.
Research and development activities and in particular the knowledge on as well as the application of newest technologies based on national and international standards, are a high priority for Kapsch TrafficCom AG in light of its business development and support to enter new markets. The current focus is on countries, such as the U.S.A., South Africa and India, South Africa and also Russia.
Successful research and development is the foundation for the sustained improvement of existing products and systems and the continuous reduction of production, installation, operations and maintenance costs, all of which are essential for maintaining our technological and competitive advantage.
Major development efforts of the last fiscal year consisted of specifying and developing a new, generic and scalable roadside platform that integrates all major sensor systems into a single, common software platform. The main goals of this work include eliminating overlapping development work by different R&D centers and offering our international sales force the basis for a more flexible, adaptable and customer-specific approach in system sales. This new sensor platform is currently in its end-testing phase and will be put into operation for the first time as part of the toll project in South Africa. The main initiatives in the component business area lay in developing new and lower-cost on-board unit generations for CEN/DSRC microwave and GPS/GNSS satellite tolling as well as new WLAN-based 5.9GHz technologies to support the business development approach in the U.S.A., which is still ongoing, These technologies are currently in the standardiza-
Research costs are recognized as expenses. Since the income statement is structured by expense type, the research and development costs are reported within various items of the income statement, in particular under the cost of material and other production services, staff costs and other operating expenses.
tion process and will be used in road safety systems as well as tolling systems in the
In the past fiscal year expenses for research and development amounted to EUR 23.4 million (prior year: EUR 15.7 million).
U.S.A. and in Europe.
With a view to the fiscal year 2011/12, the company on market developments over the long-term is optimistic even in a changed economic environment. The implementation and launch of the tolling systems in Poland and South Africa will be significant. In the U.S.A. we are awaiting the decision on the tender for the renewal of the E-ZPass® Group contracts. Furthermore, the coming fiscal year will be shaped by the preparation for the tenders expected in Hungary, Slovenia and Denmark as well as by the integration of MARK IV IVHS.
In April 2011, a revolving line of credit expiring on 31 December 2011 was contracted by Kapsch TrafficCom AG with a maximum amount of EUR 40 million (thereof EUR 20 million drawn at date of this report) in connection with the tolling project in Poland.
On April 1, 2011, Kapsch Telematic Services FLLC, Minsk, Belarus was founded.
Vienna, May 13, 2011
signed:
Mag. Georg Kapsch (Chief Executive Officer) The Executive Board:
signed:
Ing. Erwin Toplak (Executive Board member)
andré J
signed:
André Laux (Executive Board member)
We declare to the best of our knowledge that the consolidated financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the parent company as required by the applicable accounting standards and that the management report gives a true and fair view of the development and performance of the business and the position of the company, together with a description of the principal risks and uncertainties the company faces.
Vienna, 13 May 2011
Mag.
Georg
Kapsch
Ing.
Erwin
Toplak André
Laux
Chief
Executive
Officer Chief Operating Officer Board member
(Austrian Stock Exchange Act)
| Board Member | Area of responsibility |
|---|---|
| Georg Kapsch (CEO) | Finance and Administration, Mergers & Acquisitions, Investor Relations, Legal, International Subsidiaries, Human Resources, Marketing & Communications, International Relations & Affairs, Innovation Management, Production, Telematic Services and North American Market |
| Erwin Toplak (COO) | Sales region 1, Business Development, System Engineering, Research & Development and Technical Operations |
| André F. Laux (Member of the Board) | Sales region 2, Business Development, Product and Project Management |
Kapsch TrafficCom AG, Vienna
Assets
Shareholders' Equity and Liabilities
$\overline{\phantom{a}}$
| March 31, 2011 | March 31, 2010 | March 31, 2011 | March 31, 2010 | ||
|---|---|---|---|---|---|
| EUR | kEUR | EUR | KEUR | ||
| A. Fixed assets | Shareholders' equity $\ddot{\mathbf{A}}$ |
||||
| Intangible assets | Share capital | 12,200,000.00 | 12,200 | ||
| Industrial property and similar rights and assets, | Capital reserves | ||||
| and licenses in such rights and assets | 1,835,094.41 | 2,581 | Appropriated | 69,200,000.00 | 69,200 |
| Unappropriated retained earnings, thereof prior period $\equiv$ |
56,868,992.26 | 47,784 | |||
| Tangible assets $\equiv$ |
unappropriated retained earnings brought forward | ||||
| 1. Investments in leasehold buildings | 2,692,925.66 | 3,044 | EUR 38,634,417.01 (prior year: kEUR 33,140) | ||
| 2. Technical equipment and machinery | 507,722.05 | 518 | 138,268,992.26 | 129,184 | |
| 3. Other equipment, factory and office equipment | 2,301,403.89 | 2,292 | |||
| 5,502,051.60 | 5,854 | ||||
| III. Financial assets | Investment grants ø |
594.957.99 | 672 | ||
| 1. Shares in affiliated companies | 57,698,370.23 | 37,662 | |||
| 2. Participating interests | 12,406,390.85 | 12,749 | |||
| 3. Securities | 8,041,215.79 | 6,902 | Accruals Ö |
||
| 78,145,976.87 | 57,313 | Accruals for severance payments | 2,718,181.00 | 2,500 | |
| 85,483,122.88 | 65,748 | Other accruals $\tilde{\mathcal{N}}$ |
6,597,677.99 | 9,957 | |
| B. Current assets | 9,315,858.99 | 12,457 | |||
| Inventories | |||||
| 1. Merchandise | 17,182,57581 | 4,996 | Accounts payable ₫ |
||
| 2. Services not yet invoiced | 13,350,620.17 | 4,958 | Corporate Bonds | 75,000,000.00 | $\circ$ |
| 3. Prepayments | 4,928,876.13 | 4,494 | Bank loans and overdrafts $\sim$ |
13,925,462.56 | 11,426 |
| 35,462,072.11 | 14,448 | Customer advances | 530,748.62 | $\overline{8}$ | |
| Receivables and other assets $\equiv$ |
Trade payables 4 |
8,895,826.49 | 2,060 | ||
| . Trade receivables | 7,998,447.38 | 14,090 | Payables to affiliated companies ທ່ |
11,238,295.36 | 5,012 |
| 2. Receivables from affiliated companies | 119,665,713.81 | 66,137 | Other liabilities, ۱o |
3,254,008.83 | 3,538 |
| 3. Receivables from companies in which | of which taxes EUR 52,369.46 (prior year: kEUR 1,812), | ||||
| the Company has a participating interest | 0.00 | 152 | of which social security payables EUR 599,295.08 | ||
| Other assets $\frac{1}{4}$ |
4,266,154.92 | 1,724 | (prior year: kEUR 504) | ||
| 131,930,316.11 | 82,103 | 112,844,341.86 | 22,117 | ||
| III. Cash, bank balances | 6,273,415.90 | 2,449 | |||
| 173,665,804.12 | 99,000 | Deferred income . أطا |
0.00 | 1,817 | |
| C. Prepaid expenses and deferred charges | 1,875,224.10 | 1.499 | |||
| 261,024,151.10 | 166,247 | 261,024,151.10 | 166,247 | ||
Contingent liabilities
| 2010/11 | 2009/10 | |
|---|---|---|
| EUR | kEUR | |
| 1. Net sales | 79,538,776.09 | 70,450 |
| 2. Change in services not yet invoiced | 8,392,610.78 | 1,047 |
| 3. Other operating income | ||
| a) Income from the retirement of fixed assets | ||
| excluding financial assets | 0.00 | 3 |
| b) Income from the reversal of accruals | 2,436,759.95 | 1,451 |
| c) Other | 16,507,253.19 | 14,864 |
| 18,944,013.14 | 16,318 | |
| 4. Cost of materials and purchased services | ||
| a) Cost of materials | $-6,166,367.13$ | $-7,254$ |
| b) Cost of purchased services | -38,888,591.96 | $-25,606$ |
| -45,054,959.09 | $-32,860$ | |
| 5. Personnel expenses | ||
| a) Wages | $-125,042.48$ | $-109$ |
| b) Salaries | $-23,290,624.23$ | $-20,234$ |
| c) Expenses for severance payments and contributions to | ||
| severance provision funds | $-502,907.22$ | $-464$ |
| d) Expenses for pensions | $-19,238.00$ | $-89$ |
| e) Expenses for statutory social security, payroll-related | ||
| taxes and mandatory contributions | $-5,800,662.92$ | $-5,184$ |
| f) Other social benefits | $-155,312.64$ | $-136$ |
| -29,893,787.49 | $-26,216$ | |
| 6. Depreciation and amortization of fixed intangible and | ||
| tangible assets | $-2,161,022.57$ | $-2,096$ |
| 7. Other operating expenses | ||
| a) Taxes not included in line 17 | $-100,712.71$ | $-76$ |
| b) Other | -31,132,599.30 | $-27,050$ |
| $-31,233,312.01$ | $-27,126$ | |
| 8. Subtotal of lines 1 to 7 (Operating result) | $-1,467,681.15$ | $-483$ |
| 9. Income from participating interests, of which from affiliated | ||
| companies EUR 20,477,705.40 (prior year: kEUR 12,098) | 20,477,705.40 | 12,098 |
| 10. Income from other long-term securities | 20,372.22 | 85 |
| 11. Other interest and similar income, of which from affiliated | ||
| companies EUR 1,820,184.71 (prior year: kEUR 1,163) | 1,925,618.19 | 1,276 |
| 12. Income from the write-up of fixed financial assets | 1,138,992.30 | 2,952 |
| 13. Expenses on fixed financial assets, of which | ||
| a) Amounts written off EUR 2,019,288.08 (prior year: kEUR 725) | $-2,019,288.08$ | $-725$ |
| b) Relating to affiliated companies EUR 1,676,708.63 | ||
| (prior year: kEUR 0) | ||
| 14. Interest and similar expenses, of which relating to affiliated | ||
| companies EUR 75,741.79 (prior year: kEUR 89) | $-1,743,484.75$ | $-559$ |
| 15. Subtotal of lines 9 to 14 (Financial result) | 19,799,915.28 | 15,127 |
| 16. Net operating income | 18,332,234.13 | 14,644 |
| 17. Taxes on income, thereof recharged from group parent | ||
| EUR 97,578.77 (prior year: kEUR 0) | $-97,658.88$ | $\theta$ |
| 18. Net income for the year | 18,234,575.25 | 14,644 |
| 19. Prior period unappropriated retained earnings brought forward | 38,634,417.01 | 33,140 |
| 20. Unappropriated retained earnings | 56,868,992.26 | |
| 47,784 |
The financial statements as of March 31, 2011 have been prepared in accordance with the financial reporting requirements of the Austrian Commercial Code (UGB) as amended.
The financial statements, prepared under Austrian generally accepted accounting principles, present a true and fair view of the assets and liabilities, the financial situation of the Company, as well as its results of operations.
Accounting and valuation methods are based on generally accepted accounting principles. Section 201 (2) UGB was adhered to, as were the provisions on classification and valuation of balance sheet and income statement items under Sections 195 to 211 and 222 to 235 UGB. The income statement was prepared in accordance with the total expenditure format.
Purchased intangible assets and tangible assets are valued at acquisition or production cost less scheduled straight-line amortization/depreciation charged according to the estimated useful life of the assets.
Low-value assets with acquisition costs of less than EUR 400 were written off in the year of acquisition or production in an insignificant amount.
Acquired IT software is amortized based on a useful life of between four to eight years.
Tangible assets were depreciated on a straight-line basis over the following useful lives:
| t cato | |
|---|---|
| Investments in leasehold buildings | $2 - 10$ |
| Technical equipment and machinery | $2 - 20$ |
| Factory and office equipment | $3 - 20$ |
No unscheduled depreciation was charged in the fiscal year.
Additions to fixed assets are depreciated according to the date of their initial use.
Financial assets are stated at acquisition costs or the lower market values at the balance sheet date. Write-downs are made only in case a diminution in value is expected to be permanent.
Foreign currency receivables are stated using the exchange rate at the date of the transaction or the lower bank buying rate at the balance sheet date.
Foreign currency payables are stated using the exchange rate at the date of the transaction or the higher bank selling rate at the balance sheet date.
Inventories and receivables were stated in accordance with the strict lower of cost or market principle.
The stocks of purchased goods, recorded by means of electronic data processing, were stated using the moving average price method. Inventories denominated in foreign currencies were stated using the exchange rate at the date of acquisition. Where required, write-downs were made to lower replacement costs.
A proportional deduction from acquisition or production cost was made for goods with diminished usability or marketability, which was derived from the respective inventory turnover ratio. In case of long-term contracts, no administrative and selling overheads were capitalized (option provided by Section 206 (3) UGB).
$V2000$
Receivables were stated at nominal values. Identifiable risks were considered in the valuation of the individual receivables by write-offs. No-interest or low-interest receivables were discounted.
The accruals were set up in accordance with the principle of prudence at the estimated amounts.
The accruals for severance payments and anniversary bonuses were calculated in accordance with IAS 19 using the projected unit credit method (for severance payments the corridor method of IAS 19 is applied). A discount rate of 5.0 % (prior year: $5.0$ %) was used for the calculation of entitlements and a percentage of 3.0 % (prior year: $3.0$ %) was assumed for salary increases. Furthermore, the calculation was based on the earliest possible retirement age in accordance with the transitional statutory provisions and the mortality tables Pagler & Pagler AVÖ 2008-P (prior year: AVÖ 2008-P).
In accordance with the principle of prudence, accounts payable were valued at the amount repayable.
| Acquisition/Production cost | Accumulated | Net book value | Amortization/ | Write-ups | |||||
|---|---|---|---|---|---|---|---|---|---|
| Balance | Additions | Disposals | Balance | amortization | Balance | Balance | depreciation | of current | |
| April 1, 2010 | March 31, 2011 | depreciation | March 31, 2011 | March 31, 2010 | current year | fiscal year | |||
| EUR | EUR | EUR | EUR | EUR | EUR | EUR | EUR | EUR | |
| Industrial property and similar rights and assets, Intangible assets |
|||||||||
| and licenses in such rights and assets *) | 7,368,384.44 | 267,509.16 | 281,066.52 | 7.354.827.08 | 5.519.732.67 | 1,835,094.41 | 2,580,737.88 | 939,893.89 | $\overline{0.00}$ |
| Tangible assets $\equiv$ |
|||||||||
| . Investments in leasehold buildings | 3,600,874.21 | 151,832.63 | 0.00 | 3,752,706.84 | 1,059,781.18 | 2,692,925.66 | 3,043,993.40 | 502,900.37 | 0.00 |
| 2. Technical equipment and machinery | 1,157,385.29 | 226,614.31 | 3,636.04 | 1,380,363.56 | 872,641.51 | 507,722.05 | 517,935.15 | 236,719.70 | 0.00 |
| 3. Other equipment, factory and office | |||||||||
| equipment **) | 4,518,611.92 | 524.182.13 | 193.753.80 | 4.849.040.25 | 2,547,636.36 | 2,301,403.89 | 2,292,188.67 | 481,508.61 | 0.00 |
| 9,276,871.42 | 902,629.07 | 197,389.84 | 9,982,110.65 | 4,480,059.05 | 5,502,051.60 | 5,854,117.22 | 1,221,128.68 | $\frac{8}{10}$ | |
| III. Financial assets | |||||||||
| . Shares in affiliated companies | 40,290,453.74 | 713,234.17 $\frac{1}{2}$ |
0.00 | 62,003,687.91 | 4,305,317.68 | 57,698,370.23 | 37,661,844.69 | 1,676,708.63 | 0.00 |
| 2. Participating interests | 12,748,970.30 | 0.00 | 0.00 | 12,748,970.30 | 342,579.45 | 12,406,390.85 | 12,748,970.30 | 342,579.45 | 0.00 |
| 3. Securities | 10,004,356.99 | 0.00 | 0.00 | 10.004.356.99 | 1.963.141.20 | 8,041,215.79 | 6,902,223.49 | 0.00 | 1,138,992.30 |
| 63,043,781.03 | 21,713,234,17 | $_{0.00}$ | 84.757.015.20 | 6.611.038.33 | 78.145.976.87 | 57,313,038.48 | 2,019,288.08 | 138.992.30 | |
| 79,689,036.89 | 883,372.40 Z, |
478,456.36 | 102,093,952.93 | 16,610,830.05 | 85,483,122.88 | 65,747,893.58 | 4,180,310.65 | 1,138,992.30 | |
| in accordance with Section 13 EStG *) thereof low-value assets |
14,928.84 | 14,928.84 | 14,928.84 |
31,180.86
31,180.86
31,180.86
**) thereof low-value assets
in accordance with Section 13 EStG
B. Comments on balance sheet items
Assets
Fixed assets
Movements in fixed assets:
$\hat{\boldsymbol{\beta}}$
Financial obligations of the Company from the use of tangible assets not recognized in the balance sheet amount to:
| In the following | In the next | |||
|---|---|---|---|---|
| fiscal year | 5 fiscal years | |||
| Prior year | Prior year | |||
| EUR | kEUR | EUR | kEUR | |
| Obligations from rental and leasing | ||||
| agreements | 5, 143, 571. 49 | 4,474 15,905,751.19 | 11,001 |
| Share | Sharehold- | Result of | FN | |
|---|---|---|---|---|
| ers' equity | fiscal year | |||
| $\frac{0}{0}$ | kEUR | kEUR | ||
| a) Shares in affiliated companies | ||||
| Kapsch TrafficCom AB, Jönköping, Sweden | 100 | 24,900 | 7,965 | 1) |
| Kapsch TrafficCom Argentina S.A., Buenos Aires, Argentina | 95 | 1,770 | 607 | 1) |
| Kapsch Components GmbH & Co KG, Vienna | 100 | $-679$ | 3,019 | 1) |
| Kapsch Components GmbH, Vienna | 100 | 76 | 1) | |
| Kapsch TrafficCom B.V., Amsterdam, Netherlands | 100 | 24,858 | $-78$ | 1) |
| Kapsch Telematic Services GmbH, Vienna | 2) | |||
| Kapsch TrafficCom Construction & Realization spol. s r.o., | ||||
| Prague, Czech Republic | 99 | 12,872 | 2,150 | 1) |
| Kapsch TrafficCom S.r.l., Milan, Italy | 100 | 37 | $-23$ | 1) |
| Kapsch-Busi S.p.A., Bologna, Italy | 67 | $-152$ | $-298$ | 1) |
| Kapsch Telematic Technologies Bulgaria EAD, Sofia, Bulgaria | 100 | 34 | $-4$ | 3) |
| Kapsch TrafficCom Ltd., Manchester, England | 100 | 299 | $-124$ | 1) |
| ArtiBrain Software Entwicklungsgesellschaft mbH, Vienna | 100 | 57 | $-4$ | 1) |
| Kapsch TrafficCom Russia OOO, Moscow, Russia | 100 | $-434$ | 53 | 3) |
| Kapsch TrafficCom d.o.o., Ljubljana, Slovenia | 100 | 22 | 1) | |
| Kapsch TrafficCom France SAS, Paris, France | 30.19 | 230 | 72 | 1) |
| Electronic Toll Collection (PTY) Ltd., Centurion, South Africa | 25 | 3,110 | 2,009 | 1) |
| Kapsch TrafficCom South Africa Holding (Pty) Ltd., Cape | ||||
| Town, South Africa | 100 | 8,696 | -16 | 1) |
| Kapsch TrafficCom Kazakhstan LLC, Astana, Kazakhstan | 100 | 17 | 11 | 3) |
| Jibeseov GmbH, Vienna | 100 | 231 | 187 | 3) |
| PREMID a.s., Bratislava, Slovak Republic | 100 | $-40$ | $-10$ | 1) |
| Transport Telematic Systems LLC, Abu Dhabi, United Arab | ||||
| Emirates | 2) | |||
| b) Shares in associates | ||||
| Autostrada Wschodina Sp. z o.o., Warsaw, Poland | 25 | 60 | $-72$ | 3) |
| Q-Free ASA, Trondheim, Norway | 18.40 | 55,341 | $-4,816$ | 3) |
1) Figures as of March 31, 2011
2) The protection-of-interest clause pursuant to Section 241 (2) UGB is used.
3) Figures as of December 31, 2010
$\hat{\mathcal{L}}$
Prepayments in the amount of EUR 4,325,000 (prior year: kEUR 3,900) relate to prepayments made to affiliated companies.
| 3/31/2011 of which with a remaining Total maturity $> 1$ year |
3/31/2010 | |||
|---|---|---|---|---|
| Total | of which with a remaining maturity $>1$ year |
|||
| EUR | EUR | EUR | EUR | |
| Trade receivables Receivables from affiliated companies Receivables from companies in which |
7,998,447.38 119,665,713.81 |
8,429.23 48,847,153.27 |
14,089,697.66 66, 137, 145.01 |
8,429.33 11,661,334.33 |
| the Company has a participating interest | 0.00 | 0.00 | 152,106.59 | 0.00 |
| Other assets | 4,266,154.92 | 0.00 | 1,724,098.95 | 0.00 |
| 131,930,316.11 | 48,855,582.50 | 82,103,048.21 | 11,669,763.66 |
Receivables from affiliated companies include trade receivables in the amount of EUR 31,017,656.22 (prior year: kEUR 39,011), other receivables in the amount of EUR 69,511,943.94 (prior year: kEUR 14,201), dividend receivables in the amount of EUR 17,860,000.00 (prior year: kEUR 5,700) and intra-group recharges in the amount of EUR 1,276,113.65 (prior year: kEUR 7,225).
Other assets mainly include research bonuses, receivables from fiscal authorities, accrued receivables and other receivables.
Other receivables include income in the amount of EUR 2,693,659.00 (prior year: kEUR 1,420) that will affect cash flow only after the balance sheet date.
Kapsch TrafficCom AG, Vienna, received an investment grant amounting to EUR 750,000.00 from the lessor for the adaptation of the new location at Euro Plaza. The grant is related to the following items of fixed assets:
| 4/1/2010 | Usage | 3/31/2011 | |
|---|---|---|---|
| EUR | EUR. | EUR | |
| Leasehold improvements | 671,638.66 | $-76,680.67$ | 594,957.99 |
The amount recognized in the balance sheet does not include actuarial losses amounting to EUR 475,652.00 (prior year: kEUR 239).
| Other accruals include the following items: | 3/31/2011 EUR |
3/31/2010 kEUR |
|---|---|---|
| Losses from pending transactions | 0.00 | 710 |
| Personnel accruals (including vacation accruals of | ||
| EUR 2,341,838.96, prior year: kEUR 2,014) | 3,704,615.89 | 3,227 |
| Warranties and liabilities for construction flaws, | ||
| as well as production and system defects | 183,651.57 | 393 |
| Invoices not yet received and outstanding project costs | 2,196,271.81 | 5,095 |
| Sundry accruals | 513,138.72 | 532 |
| 6,597,677.99 | 9,957 |
| 3/31/2011 | 3/31/2010 | |||||
|---|---|---|---|---|---|---|
| remaining | remaing | remaining | ||||
| total | maturity | maturity | total | maturity | ||
| $\leq$ 1 year | $>$ 5 years | $\leq$ 1 year | ||||
| EUR | EUR | EUR | EUR | EUR | ||
| 1. | Corporate bond | 75,000,000.00 | 75,000,000.00 | 75,000,000.00 | 0.00 | 0.00 |
| $\vert 2. \vert$ | Bank loans and overdrafts | 13,925,462.56 | 0.00 | 0.00 | 11,425,462.56 | 10,000,000.00 |
| 3. Customer advances | 530,748.62 | 0.00 | 0.00 1 | 81,270.00 | 0.00 | |
| 4. | Trade payables | 8,895,826.49 | 0.00 | 0.00 1 | 2,060,248.07 | 0.00 |
| 5. Payables to affiliated companies | 11,238,295.36 | 0.00 | 0.00 1 | 5,011,727.21 | 0.00 | |
| 6. Other payables | 3,254,008.83 | 60,250.00 | 0.00 | 3,538,404.73 | 60,250.00 | |
| 112.844.341.86 | 75,060,250.00 | 75.000.000.00 | 22.117.112.57 | 10,060,250.00 |
In November 2010, Kapsch TrafficCom AG issued a corporate bond with a volume of EUR 75 million, a maturity of 7 years and a fixed interest rate of 4.25 %.
All other long-term liabilities have a maturity below five years.
Payables to affiliated companies include only trade payables (same as prior year).
Other liabilities include expenses in the amount of EUR 2,946,929.27 (prior year: kEUR 3,313) that will affect cash flow only after the balance sheet date.
9.9 million bearer shares in Q-Free ASA were pledged as collateral for a loan from Erste Group Bank AG.
The export promotion credit recognized in the amount of EUR 1,425,462.56 is secured by bill of exchange.
In connection with the financing of the "Truck Tolling Czech Republic" project, current as well as future receivables, rights or other claims from the subcontractor agreement for the "Truck Tolling Czech Republic" project against Kapsch Components GmbH & Co KG, Vienna, and Kapsch TrafficCom Argentinia S.A., Buenos Aires, Argentina, as well as from a receivable subordinated in relation to Kapsch TrafficCom Construction & Realization spol. s r.o., Prague, Czech Republic, were pledged as collateral to Ceskoslovenska Obchodni Banka A.S., Prague, Czech Republic, in accordance with the collateral agreement and collateral assignment agreement dated January 23, 2007.
Contingent liabilities in the amount of EUR 113,438,855.40 (prior year: kEUR 79,791) result from the assumption of liability on behalf of subsidiaries in the amount of EUR 10,624,565.09 (prior year: kEUR 10,234), bank guarantees for the performance of contracts relating to major projects in the amount of EUR 68,380,768.34 (prior year: kEUR 42,957), payment guarantees in the amount of EUR 17,670,205.44 (prior year: kEUR 10,050), guarantees for project financings in the amount of EUR 16,286,437.40 (prior year: kEUR 15,668) as well as other guarantees (security deposits, bid bonds and sureties) in the amount of EUR 476,879.13 (prior year: kEUR 882).
In addition, Kapsch TrafficCom AG, Vienna, issued performance bonds for export transactions or projects of Kapsch TrafficCom AB, Jönköping, Sweden, in a contract value of EUR 44.8 million (prior year: EUR 41.3 million).
At the balance sheet date, the Company had no obligations from derivative financial instruments.
| By activity: | 2010/11 EUR |
2009/10 kEUR |
|---|---|---|
| Road Solution Projects | 24,880,188.26 | 5,639 |
| Services, System Extensions, Components Sales | 54,658,587.83 79,538,776.09 |
64,811 70,450 |
| By region: | 2010/11 EUR |
2009/10 kEUR |
| Domestic | 17,669,042.63 | 35,252 |
| European Union | 48, 322, 871.01 | 24,577 |
| Foreign | 13,546,862.45 | 10,621 |
| 79,538,776.09 | 70,450 |
| 2010/11 | 2009/10 | |
|---|---|---|
| EI IR | kEUR | |
| Expenses for severance payments | 261,443.17 | 263 |
| Payments to severance provision funds | 241,464.05 | 201 |
| 502,907.22 | 464 |
Expenses for the auditor amount to EUR 184,830.00 (prior year: kEUR 109) and are broken down as follows:
| 2009/10 EUR |
2008/09 kEUR |
|
|---|---|---|
| Audit of the financial statements | 50,190.00 | 43 |
| Other assurance services | 122,280.00 | 40 |
| Other services | 12,360.00 | 26 |
| 184,830.00 | 109 |
The registered share capital of the Company amounts to EUR 12,200,000. The share capital is fully paid in. The total number of shares issued is 12,200,000. The shares are no-par value bearer shares.
Under the initial public offering in June 2007 the Company issued 2,200,000 new shares at an issue price of EUR 32 per share.
Authorized capital amounts to EUR 800,000 as of March 31, 2011 (prior year: kEUR 800).
The Company is a 68.42% subsidiary of KAPSCH-Group Beteiligungs GmbH, Vienna, and thus is related to its shareholder and its affiliated companies as a group company.
DATAX HandelsgmbH, Vienna, prepares the consolidated financial statements for the largest group of companies. These consolidated financial statements are deposited at the Commercial Court Vienna.
The Company prepares the consolidated financial statements for the smallest group of companies.
Regarding the disclosure on the legal and economic relations with affiliated companies, the protection clause pursuant to Section 241 (3) UGB was used.
The average number of staff during the fiscal year 2010/11 was 395, including 375 salaried employees and 20 waged workers (prior year: 340 salaried employees, 14 waged workers).
In the fiscal year, total remunerations of the management board amounted to EUR 1,572,805.00, expenses for severance payments and pensions for managing directors amounted to EUR 62,083.93. In the prior year, the protection-of-interest clause pursuant to Section 241 (4) UGB was applied.
Remunerations paid to the supervisory board amounted to EUR 21,365.13.
The following persons served on the management and supervisory board:
Mag. Georg Kapsch (Chief Executive Officer) Ing. Erwin Toplak André Laux (since April 1, 2010)
Dr. Franz Semmernegg (Chairman) Dr. Kari Kapsch (Deputy Chairman) William Morton Llewellyn
delegated by the Works Council:
Ing. Christian Windisch Dipl.-Ing. Werner Dreschl (until November 19, 2010) Claudia Rudolf-Misch (since November 20, 2010)
Vienna, May 13, 2011
The Management Board:
signed:
Mag. Georg Kapsch
lasla
signed:
Ing. Erwin Toplak
signed:
André Laux
We draw attention to the fact that the English translation of this auditor's report is presented for the convenience of the reader only and that the German wording is the only legally binding version.
We have audited the accompanying financial statements including the accounting system of Kapsch TrafficCom AG. Vienna, for the fiscal year from April 1, 2010 to March 31, 2011. These financial statements comprise the balance sheet as of March 31, 2011, the income statement for the fiscal year ended March 31, 2011, and the notes.
The Company's management is responsible for the accounting system and for the preparation and fair presentation of these financial statements in accordance with Austrian Generally Accepted Accounting Principles. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial 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 financial statements based on our audit. We conducted our audit in accordance with laws and regulations applicable in Austria and Austrian Standards on Auditing. Those standards require that we comply with professional quidelines and that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company's preparation and fair presentation of the financial 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 Company'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 financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Our audit did not give rise to any objections. In our opinion, which is based on the results of our audit, the financial statements comply with legal requirements and give a true and fair view of the financial position of the Company as of March 31, 2011 and of its financial performance for the fiscal year from April 1, 2010 to March 31, 2011 in accordance with Austrian Generally Accepted Accounting Principles.
Pursuant to statutory provisions, the management report is to be audited as to whether it is consistent with the financial statements and as to whether the other disclosures are not misleading with respect to the Company's position. The auditor's report also has to contain a statement as to whether the management report is consistent with the financial statements and whether the disclosures pursuant to Section 243a UGB are appropriate.
In our opinion, the management report is consistent with the financial statements. The disclosures pursuant to Section 243a UGB are appropriate.
Vienna, May 13, 2011
signed:
Felix Wirth Austrian Certified Public Accountant
Disclosure, publication and duplication of the financial statements together with the auditor's report according to Section 281 (2) UGB in a form not in accordance with statutory requirements and differing from the version audited by us is not permitted. Reference to our audit may not be made without prior written permission from us.
Kapsch TrafficCom is an international supplier of superior Intelligent Transportation Systems (ITS). Its principle business is the development and supply of electronic toll collection systems, in particular for the multi-lane free-flow of the traffic, and the technical and commercial operation of such systems. Kapsch TrafficCom also supplies traffic management systems, urban traffic solutions and selected ITS and telematic applications. With 260 references in 41 countries on all 5 continents, and with almost 44 million on-board units delivered and more than 18,000 lanes equipped, Kapsch TrafficCom has positioned itself among the internationally recognized suppliers of electronic toll collection systems worldwide. Kapsch TrafficCom is headquartered in Vienna, Austria, and has subsidiaries and representative offices in 25 countries.
Kapsch TrafficCom AG | Am Europlatz 2 | 1120 Vienna | Austria | www.kapschtraffic.com Investor Relations | Marcus Handl | Phone +43 50 811 1120 | Fax +43 50 811 99 1120 | E-mail [email protected] Corporate Communications | Alf Netek | Phone +43 50 811 1710 | Fax +43 50 811 99 1710 | E-mail [email protected]
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