TomTom reports fourth quarter and full year results

  TomTom reports fourth quarter and full year results

Business Wire

AMSTERDAM -- February 12, 2013

Financial headlines Q4 2012

  *Revenue down 19% year on year to €289 million
  *Gross margin up 7 percentage points year on year to 53%
  *One-off tax gain of €80 million; proceeds to be received in H1 2013
  *EPS of €0.45 and adjusted EPS^1 of €0.13 (Q4 2011: €0.05 and €0.16
    respectively)
  *Net cash flow from operating activities of €91 million

Financial headlines FY 2012

  *Revenue down 17% year on year to €1,057 million
  *Gross margin up 2 percentage points year on year to 52%
  *OPEX down 12% year on year to €484 million^2
  *EPS of €0.58 and adjusted EPS of €0.40 (2011: €-1.97 and €0.55
    respectively)
  *Net debt of €86 million compared to €194 million at the end of 2011

Operational headlines Q4 2012

  *HD Traffic 6.0 launched in US powered by 75 million probes
  *New LBS portal launched for developers
  *PND market share in Europe increased to 50%
  *Partnership with LoJack Corporation to drive WEBFLEET sales in North
    American market

Outlook full year 2013

  *Revenue in the range of €900 million to €950 million
  *Adjusted EPS of around €0.20; €0.25 adjusted for the introduction of
    lifetime maps

Key figures

                                                        
(in €       FY '12  FY ‘11  y.o.y.   Q4     Q4    y.o.y.  Q3    q.o.q.
millions)                      change    '12     ‘11    change   ‘12    change
                                                        
Revenue     1,057   1,273   -17%     289    357   -19%    274   6%
                                                        
Gross       555     640     -13%     154    166   -7%     150   3%
result
Gross       52%     50%             53%    46%          55%   
margin
                                                        
EBITDA       181      206      -12%      53      47     12%      58     -9%
EBITDA      17%     16%             18%    13%          21%   
margin
                                                        
EBIT         70       -425               25      10     137%     32     -23%
EBIT        7%      -33%            9%     3%           12%   
margin
                                                        
Net result
attr. to    129     -438            99     12           22    
the group
                                                        
EPS, €       0.58     -1.97              0.45    0.05            0.10
diluted
Adjusted
EPS, €      0.40    0.55    -28%     0.13   0.16  -22%    0.14  -10%
diluted

Change percentages are based on non-rounded figures

^1 Earnings per share adjusted for impairment, acquisition-related
amortisation and restructuring charges on a post-tax basis in 2011 and
acquisition-related amortisation on a post-tax basis and the €80 million tax
benefit in 2012.

^2 Excluding €512 million impairment charge booked in Q2 2011.

TomTom’s Chief Executive Officer, Harold Goddijn

“We delivered financial results in the quarter modestly ahead of expectations
with a high gross margin and strong cash flow.

“Early in 2012 we implemented a new product unit structure to increase
development efficiency and reduce time to market by componentising our core
map, navigation and traffic content and technologies. The year ahead will be a
pivotal year as new products start to reach our customers. R&D investments
will continue to shift to new technologies, away from legacy technologies, to
increase returns.”

Outlook 2013

We expect the macro-economic situation to remain challenging. In this
environment Consumer will focus on broadening its revenue base consistent with
its brand while limiting the revenue decline from PNDs. We expect our core PND
markets to decline by 15–20% in volume year over year. Automotive revenue
development will largely depend on the new car sales and take rates of our
current partners. For Licensing we expect revenue to be broadly stable.
Business Solutions is expected to continue to grow strongly.

For the group we expect full year revenue of between €900 million and €950
million. We expect to deliver adjusted earnings per share of around €0.20.
Adjusted for the negative impact of deferred revenue related to PND
introductions with lifetime maps in the European market, this would be €0.25.

Business review Q4 2012

Consumer released an update to the Android app, making it available to a
broader range of smartphones.

We launched our new cloud-based Location Based Services (LBS) Platform and
Developer Portal. The platform provides developers with the content and tools
to create location-enabled applications. These applications include map
display, routing, traffic and geocoding.

We launched the latest version of our real-time traffic information service in
the US. With over 75 million probes in the US alone, HD Traffic 6.0 is able to
report the location and length of traffic jams on highways more accurately
than the previous version. During the quarter we signed a partnership with
Telenav to deliver TomTom HD Traffic to Telenav's mobile navigation customers.

Automotive is affected by tough conditions for its customers in the European
car market. It is progressing well with the execution of its modular strategy.
We aim to sell OEMs and their tier one suppliers, easy-to-integrate maps,
traffic and navigation components that provide low development cost, fast
time-to-market and the best end-user experience for their customers.

Business Solutions grew its WEBFLEET subscriber base in the quarter by 33%
year on year to 239,000 (Q4 2011: 180,000). The customer base passed the
19,000 mark, the largest in the fleet management services industry. Our
partnership with Tracker is developing well and sales in South Africa grew
markedly. Just after quarter end, we entered into an alliance with LoJack
Corporation. The US based stolen vehicle recovery specialist will add WEBFLEET
to its product offering and sell it through its extensive dealership network.

Financial review

Revenue split

                                                     
(€ millions)        Q4'12  Q4 '11  y.o.y. change  Q3 '12  q.o.q. change
                                                     
Group               289    357     -19%           274     6%
                                                     
Consumer            187    242     -23%           172     9%
Automotive           44      56       -21%            49       -10%
Licensing            37      40       -7%             33       12%
Business Solutions  20     19      8%             19      6%
                                                     
Hardware             191     250      -24%            169      13%
Content & Services  98     107     -8%            105     -6%

Change percentages are based on non-rounded figures

Revenue

Revenue for the quarter was €289 million which is 19% lower compared to the
same quarter last year (Q4 2011: €357 million) and 6% higher compared to the
previous quarter (Q3 2012: €274 million). The year on year decrease is mainly
driven by lower Consumer and Automotive sales.

Consumer revenue for Q4 decreased year on year by 23% from €242 million in Q4
2011 to €187 million in Q4 2012. The year-on-year decrease is mainly the
result of PND demand continuing to be less skewed towards the fourth quarter.
PND sales in EMEA were relatively strong and we saw revenue from the
SportWatch nearly double year on year albeit from a small base. Sequentially,
Consumer revenue increased by €15 million or 9%, mainly due to our higher
market share in Europe and seasonality in PND demand in the US.

The PND market size in Europe was 2.5 million units compared to 3.2 million
units in the same quarter of last year. TomTom’s European market share
increased from 47% in Q4 2011 to 50% in Q4 2012. The North American market
size was 2.5 million units compared to 3.7 million units last year. Our market
share in North America was 19% compared to 27% in the prior year.

Automotive revenue for Q4 2012 was €44 million, which is a decrease of 21%
compared to €56 million in Q4 2011 and 10% sequentially (Q3 2012: €49
million). The year on year decline reflects the tough conditions in the
European automotive industry which continue to constrain new car sales.

Licensing generated revenue of €37 million in this quarter, a decline of 7%
compared to the €40 million in Q4 2011, mainly due to lower revenue coming
from third party PND vendors. Sequentially, revenue increased by €4.0 million
or 12% (Q3 2012: €33 million) as a result of higher revenue from smartphone
and internet customers.

Revenue for Business Solutions in the quarter was €20 million, representing an
8% increase year on year (Q4 2011: €19 million) and a 6% increase sequentially
(Q3 2012: €19 million). The year on year increase is the result of the growth
in WEBFLEET subscription revenue. The partner model for geo-expansion is
increasing the relative contribution of WEBFLEET revenue in the mix.

Hardware revenue development reflected the decline in Consumer PND and
Automotive hardware sales. Hardware revenue in the quarter decreased by 24%
year on year to €191 million (Q4 2011: €250 million). Sequentially, Hardware
revenue increased by 13% (Q3 2012: €169 million).

Revenue from Content & Services for the quarter was €98 million, an 8%
decrease year on year (Q4 2011: €107 million) and a 6% decrease sequentially
(Q3 2012: €105 million). Content & Services revenue accounted for 34% of
revenue for the quarter (Q4 2011: 30%; Q3 2012: 38%).

Gross margin

The gross margin for the quarter was 53% compared with 46% in Q4 2011 and 55%
in Q3 2012. The year on year increase is mainly due to the accelerated
write-off of pre-paid third party service costs in Q4 2011 and one-off
provision releases in the current quarter. Excluding the releases the gross
margin for the current quarter was 51%. Foreign exchange currency movements
did not have a meaningful impact on the gross margin compared to last year and
prior quarter. The normalised gross margin in Q4 2011 was 48%.

Operating expenses

The restructuring program initiated in Q4 2011 has made a visible impact on
the lowering of our cost base in 2012. Total operating expenses for the
quarter were €130 million compared to €156 million in Q4 2011, representing a
17% decrease year on year. €14 million out of the €26 million decrease is
explained by the restructuring costs recognised in Q4 2011. Sequentially,
operating expenses increased by €11 million or 9.5%.

The year on year reduction in operating expenses in the quarter was mainly
visible in the areas of Marketing (-31%) and SG&A (-23%). In R&D we continue
to invest in our innovation projects which resulted in a modest decrease of
3.2% for the quarter compared to Q4 2011. The amortisation of technology and
databases decreased by 19% year on year as the result of the accelerated
amortisation of certain technologies in Q4 2011.

The sequential increase in operating expenses is mainly due to the timing of
R&D projects, which led to higher R&D expenses, and an increase in the SG&A
expenses mainly as a result of higher property and personnel expenses.

Financial results

The net interest charge for the quarter was €2.4 million compared with €3.8
million in Q4 2011 and €3.2 million in Q3 2012. Interest paid for the quarter
was €3.5 million. The amortisation of transaction costs related to the term
loan and revolving credit facility amounted to €0.8 million.

The other financial result for the quarter was a loss of €0.3 million compared
with a gain of €0.7 million in Q4 2011.The loss was mainly driven by our hedge
results.

Tax

In the quarter we had a normalised income tax charge of €2.6 million,
representing an effective tax rate of 11.7%. Due to an €80 million one-off tax
gain as a result of a settlement of prior year tax issues with the Dutch tax
authority, the total tax result was a gain of €77 million (Q4 2011: gain of
€4.6 million). The normalised tax rate in Q4 2011, excluding a €5.9 million
one-off tax gain as well as the tax effect of the restructuring charges was
20.7%.

Cash flows

The cash inflow from operations for the quarter was €98 million compared with
€138 million in the same quarter last year. The year on year reduction is
mainly because the cash inflow from reduced working capital was lower in the
quarter than in the corresponding quarter of last year.

The cash flow used in investing activities during the quarter was €15 million,
an increase of €3.3 million compared to €11 million in Q4 2011.

Cash flows used in financing activities amounted to €48 million mainly
reflecting the net effect of repayments made during the quarter net of the
proceeds from our new term loan.

Debt financing

On 31 December 2012 we made the final repayment on the outstanding amount of
the loan we entered into in 2008 and we drew down on the new €250 million term
loan.

This new term loan is part of the forward-start facility arrangement we signed
in April 2011. It additionally includes a €150 million revolving credit
facility, which remained unutilised on 31 December 2012. Netted with the
transaction costs, the carrying amount of this €250 million loan at year end
was €247 million.

Our net debt position on 31 December 2012 was €86 million, down from €194
million at the end of 2011. Our leverage ratio was reduced from 0.9 at the end
of 2011 to 0.5 at the end of 2012.

Balance sheet

As at 31 December 2012, accounts receivable plus other receivables were €268
million compared with €236 million at 31 December 2011. The increase is mainly
attributed to the income tax receivable balance partly offset by a decrease in
the trade receivables balance. The inventory level was reduced to €44 million
from €66 million at the end of last year and €59 million at the end of
previous quarter. Cash and cash equivalents at the end of the quarter were
€164 million compared to €194 million at the end of the prior year.

Current liabilities were €475 million compared to €845 million in the same
quarter last year. The year on year decrease is mainly due to the full
repayment of our previous borrowings partly offset by the current portion of
our new term loan.

At the end of the quarter we had shareholders’ equity of €838 million up from
€742 million at the beginning of the quarter.

                                   - END -

Consolidated income statements

                                                             
(in € thousands)                    Q4 ‘12   Q4 ‘11   FY ‘12     FY ‘11
                                                             
Revenue                             289,010  357,401  1,057,134  1,273,217
Cost of sales                       134,678  191,426  502,398    633,545
Gross result                        154,332  165,975  554,736    639,672
                                                             
Research and development expenses    45,257    46,745    166,315     172,822
Amortisation of technology &         21,777    27,007    84,011      84,619
databases
Impairment charge                    0         0         0           511,936
Marketing expenses                   14,238    20,507    57,305      78,062
Selling, general and                 46,698    60,511    169,716     208,917
administrative expenses
Stock compensation expense          1,723    789      7,140      7,985
Total operating expenses            129,693  155,559  484,487    1,064,341
                                                             
Operating result                    24,639   10,416   70,249     -424,669
                                                             
Interest result                      -2,374    -3,826    -12,084     -21,862
Other finance result                 -290      714       1,642       6,093
Result associates                   137      -94      726        -432
Result before tax                   22,112   7,210    60,533     -440,870
                                                             
Income tax                          77,403   4,583    68,660     1,919
Net result                          99,515   11,793   129,193    -438,951
                                                             
Non-controlling interests           403      -94      469        -1,107
Net result attributed to the group  99,112   11,887   128,724    -437,844
                                                             
Basic number of shares (in           221,895   221,895   221,895     221,874
thousands)
Diluted number of shares (in        222,316  221,939  222,024    221,874¹
thousands)
                                                             
EPS, € basic                         0.45      0.05      0.58        -1.97
EPS, € diluted                      0.45     0.05     0.58       -1.97

¹ In 2011, 29,686 potential diluted shares were not taken into account as the
effect would be anti-dilutive.

Consolidated balance sheet

                                                          
(in € thousands)                          31 December 2012  31 December 2011
                                                          
Goodwill                                  381,569           381,569
Other intangible assets                    821,233            871,528
Property, plant and equipment              26,770             32,555
Deferred tax assets                        13,610             10,493
Investments in associates                 3,880             4,450
Total non-current assets                  1,247,062         1,300,595
                                                          
Inventories                                44,383             65,502
Trade receivables                          149,834            184,939
Other receivables and prepayments          118,262            51,242
Other financial assets                     444                2,784
Cash and cash equivalents                 164,459           193,579
Total current assets                      477,382           498,046
                                                          
Total assets                              1,724,444         1,798,641
                                                          
Share capital                              44,379             44,379
Share Premium                              975,260            975,260
Other reserves                             159,011            131,213
Accumulated deficit                       -342,875          -444,852
Equity attributable to equity of the      835,775           706,000
parent
Non-controlling interests                 2,642             2,451
Total equity                              838,417           708,451
                                                          
Borrowings                                 173,437            0
Provisions                                 48,268             50,114
Deferred tax liability                     170,909            182,273
Other long term liabilities               18,130            12,720
Total non-current liabilities             410,744           245,107
                                                          
Trade payables                             84,162             116,616
Borrowings¹                                73,703             383,810
Tax and social security                    33,263             20,942
Provisions                                 33,192             51,213
Other liabilities and accruals            250,963           272,502
Total current liabilities                 475,283           845,083
                                                          
Total equity and liabilities              1,724,444         1,798,641

¹ The 2011 borrowings were fully due in 2012 and hence the full amount has
been presented under current liabilities.

Consolidated statements of cash flows

                                                              
(in € thousands)                    Q4 ‘12    Q4 ‘11    FY ‘12    FY ‘11
                                                              
Operating result                    24,639    10,416    70,249    -424,669
Financial (losses)/gains             -4,226     7,786      -784       4,554
Depreciation and amortisation        28,528     36,999     110,670    119,097
Impairment charge                    0          0          0          511,936
Change in provisions                 -928       -6,645     -9,428     -10,224
Equity-settled stock compensation    1,210      1,067      5,700      7,996
expenses
Changes in working capital:
Change in inventories                12,861     9,683      13,819     27,915
Change in receivables and            33,058     31,185     47,660     113,384
prepayments
Change in current liabilities       3,249     47,253    -51,210   -154,770
(excl. provisions)^1
Cash flow from operations           98,391    137,744   186,676   195,219
                                                              
Interest received                    214        1,535      1,197      2,871
Interest paid                        -3,466     -3,997     -9,908     -18,459
Corporate income taxes paid         -4,244    -1,119    -11,025   -5,456
Net cash flow from operating        90,895    134,163   166,940   174,175
activities
                                                              
Investments in intangible assets     -11,075    -9,512     -42,990    -57,918
Investments in property, plant and   -3,519     -3,370     -9,311     -16,502
equipment
Dividend received                   40        1,628     1,487     1,628
Total cash flow used in investing   -14,554   -11,254   -50,814   -72,792
activities
                                                              
Repayments of borrowings             -290,000   -110,000   -388,000   -210,000
Proceeds of new term loan            247,140    0          247,140    0
Redemption of vested equity          -4,605     0          -4,605     0
instruments
Dividends paid                       -317       0          -317       0
Acquisition of non-controlling       0          -4,004     0          -4,243
interests
Proceeds on issue of ordinary       0         0         0         724
shares
Total cash flow from financing      -47,782   -114,004  -145,782  -213,519
activities
                                                              
Net increase in cash and cash        28,559     8,905      -29,656    -112,136
equivalents
Cash and cash equivalents at         136,528    182,313    193,579    305,600
beginning of period
Exchange rate effect on cash
balances held in foreign            -628      2,361     536       115
currencies
Cash and cash equivalents at end    164,459   193,579   164,459   193,579
of period

¹ Includes movements in non-current portion of deferred revenue presented
under other long term liabilities.

Accounting policies

Basis of accounting

The condensed consolidated financial information for the three-month and
twelve-month periods ended 31 December 2012 with related comparative
information have been prepared using accounting policies which are based on
International Financial Reporting Standards (IFRS). Accounting policies and
methods of computation followed in the condensed consolidated financial
information, for the period ended 31 December 2012, are the same as those
followed in the Financial Statements for the year ended 31 December 2012.
Further disclosures as required under IFRS for a complete set of consolidated
financial statements are not included in the condensed consolidated financial
information. The consolidated and company financial statements of TomTom NV
for the year ended 31 December 2012 have been prepared and audited but are not
yet published. The quarterly condensed consolidated information in this press
release is unaudited.

Audio webcast fourth quarter and full year 2012 results
The information for our fourth quarter results audio webcast is as follows:
12 February at 14.00 CET
http://corporate.tomtom.com/presentations.cfm

TomTom is listed at NYSE Euronext Amsterdam in the Netherlands
ISIN: NL0000387058 / Symbol: TOM2

About TomTom

Founded in 1991, TomTom is a leading provider of navigation and location-based
products and services.

TomTom maps, traffic information and navigation technology power automotive
in-dash systems, mobile devices, web based applications and government and
business solutions.

TomTom also designs and manufactures its own location-based products including
portable navigation devices and fleet management solutions, as well as
GPS-enabled sports watches.

Headquartered in Amsterdam, TomTom has 3,500 employees worldwide and sells its
products in over 40 countries.

For further information, please visit www.tomtom.com

This document contains certain forward-looking statements relating to the
business, financial performance and results of the Company and the industry in
which it operates. These statements are based on the Company’s current plans,
estimates and projections, as well as its expectations of external conditions
and events. In particular the words “expect”, “anticipate”, “estimate”, “may”,
“should”, “believe” and similar expressions are intended to identify
forward-looking statements. Forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially from those
suggested in the forward-looking statements. These include, but are not
limited to: the level of consumer acceptance of existing and new and upgraded
products and services; the growth of overall market demand for the Company’s
products or for personal navigation products generally; the Company’s ability
to sustain and effectively manage its recent rapid growth and its relations
with third party suppliers, and its ability to accurately forecast the volume
and timing of sales. Additional presently unknown factors could also cause
future results to differ materially from those in the forward-looking
statements.

Contact:

For more information
TomTom Investor Relations
+31 20 757 5194
ir@tomtom.com
 
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