TomTom Reports Second Quarter 2013 Results

Cash flow

We recorded cash flow from operating activities of €45 million for the quarter (Q2 2012: €10 million). The increase in cash flow for the quarter was mainly driven by the reduced working capital utilisation and the remaining €10 million receipt of the €80 million total settlement we agreed upon with the tax authorities in relation to prior year tax issues.

The cash flow used in investing activities during the quarter increased by €14 million year on year to €24 million (Q2 2012: €10 million). The year on year increase is mainly due to higher investments in R&D projects, together with acquired technology assets in the fitness space and the mapIT acquisition which we closed during the quarter.

TOMTOM NV
INTERIM FINANCIAL REPORT
(unaudited)
30 JUNE 2013

Contents:
Semi-annual financial report
Consolidated condensed statement of income
Consolidated condensed statement of comprehensive income
Consolidated condensed balance sheet
Consolidated condensed statements of cash flows
Consolidated condensed statement of changes in stockholders’ equity
Notes to the consolidated interim financial statements

Semi-annual financial report

Introduction

TomTom NV (the Company) and its subsidiaries (together referred to as ‘the group’) is the world’s leading provider of location and navigation solutions. TomTom has 3,500 employees working in its offices across all continents. The commercial activities of the group are carried out through four customer facing business units – Consumer, Automotive, Business Solutions and Licensing. The first three of these business units provide targeted solutions for their customers: consumers, car manufacturers and their suppliers, and fleet owners. Licensing sells its content and services to multiple customer groups, including PND companies, smartphone companies, governments and enterprises.

It is our mission to provide all drivers with the world's best navigation experience. We tailor our activities towards multiple audiences and aim to play a leading role on all platforms where our products and services can be of use.

Market and TomTom outlook 2013

We expect the macro-economic situation to remain challenging for the remainder of the year. In this environment Consumer will focus on the introduction of its new generation PNDs powered by our new navigation engine (‘NavKit’) and our new GPS sport watches. Automotive revenue development will largely depend on the new car sales and take rates of our current partners. Licensing will focus on working with its large customers to develop and deepen TomTom’s product offering and we expect revenue to be broadly stable. Business Solutions is expected to continue to grow organically and if opportunities arise pursue some smaller acquisitions.

For the group we expect full year revenue of between €900 million and €950 million. We expect to deliver adjusted earnings per share1 of around €0.20.

Financial review for the six month period ended 30 June 2013

Revenues

Total revenue for H1 2013 was €452 million, down by €43 million compared to €495 million in H1 2012 primarily due to decrease in Consumer revenue. Year on year, Consumer revenue decreased by 11% to €250 million in H1 2013 from €280 million in H1 2012. Automotive revenue decreased by €15 million from €118 million in H1 2012 to €103 million in H1 2013. Licensing revenue decreased by €2.7 million to €60 million (H1 2012: €62 million) and Business Solutions revenue increased by 17% to €39 million in H1 2013 (H1 2012: €34 million).

Gross profit

Gross profit decreased to €240 million in H1 2013 from €250 million in H1 2012. The gross margin increased to 53% compared with 51% in H1 2012. The gross result in the previous year was impacted by a one-off provision for a malfunctioning GPS chip.

Operating expenses

Operating expenses in H1 2013 were €233 million, a decrease of €3.7 million compared to the same period last year (H1 2012: €236 million). This decrease is mainly driven by lower Marketing expenditures partially offset by higher SG&A expenses.

Operating result

The operating result for H1 2013 was €7.7 million compared to €14 million in H1 2012.

Financial result

The group recorded €1.4 million of interest expenses in H1 2013, a decrease of €5.1 million compared to the previous year (H1 2012: €6.5 million). The year on year decrease was the result of the reduction in borrowings following the repayments in H2 2012 and March 2013 as well as lower interest rates. The other finance result in H1 2013 was a loss of €2.3 million versus a gain of €2.1 million in H1 2012 mainly as a result of foreign exchange effects which resulted from the revaluation of monetary items in our balance sheet partly offset by a gain of €0.6 million due to refund of previously written-off derivatives.

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