Freedom to Move… Review
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TomTom NV Oosterdoksstraat 114 ANNUAL REPORT AND ACCOUNTS 1011 DK Amsterdam The Netherlands Tel: +31 (0)20 757 5000 TomTom Annual Report and Accounts Annual Report and Accounts TomTom www.tomtom.com 2010 Freedom to move… review 01 Introduction 02 CEO Letter 04 Profile 05 Mission, Vision and Strategy 07 Three Stories 08 Broadening our customer base 10 Navigation in a changing world 12 Traffic 15 Four Business Units 16 Management Board Report 26 Corporate Social Responsibility 28 Internal Control Report 29 Business Risks 35 Corporate Governance 44 Profiles of the Management Board 45 Profiles of the Supervisory Board 46 Supervisory Board Report consolidated Financial statements 54 Consolidated Statement of Income 55 Consolidated Statement of Comprehensive Income 56 Consolidated Balance Sheet 57 Consolidated Statement of Cash Flows 58 Consolidated Statement of Changes in Equity 59 Notes to the Consolidated Financial Statements company Financial statements 87 Company Statement of Income of TomTom NV 88 Company Balance Sheet of TomTom NV 89 Notes to the Company Financial Statements 91 Other Information 93 shareholder inFormation 95 key Figures overview FORWARD-LOOKING STATEMENTS/IMPORTANT NOTICE This document contains certain forward-looking statements with respect to the financial condition, results of operations and business of TomTom and certain of the plans and objectives of TomTom with respect to these items. In particular the words “expect”, “anticipate”, “estimate”, “may”, “should”, “believe” and similar expressions are intended to identify forward-looking statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. Actual results may differ materially from those expressed in these forward-looking statements, and you should not place undue reliance on them. We have based these forward-looking statements on our current expectations and projections about future events, including numerous assumptions regarding our present and future business strategies, operations and the environment in which we will operate in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. These factors include, but are not limited to, levels of customer spending in major economies, changes in consumer tastes and preferences, changes in law, the performance of the financial markets, the levels of marketing and promotional expenditures by TomTom and its competitors, raw materials and employee costs, changes in exchange and interest rates (in particular changes in the US dollar and GB pound versus the euro can materially affect results), changes in tax rates, future business combinations, acquisitions or disposals, the rate of technological changes, political and military developments in countries where TomTom operates and the risk of a downturn in the market. Statements regarding market share, including TomTom’s competitive position, contained in this document are based on outside sources such as specialised research institutes, industry and dealer panels in combination with management estimates. Where full-year information regarding 2010 is not yet available to TomTom, those statements may also be based on estimates and projections prepared by outside sources or management. Market shares are based on sales in units unless otherwise stated. The forward-looking statements contained refer only to the date on which they are made, and we do not undertake any obligation to update any forward- looking statement to reflect events or circumstances after the date of this Annual Report. p 01 / TomTom Annual Report and Accounts 2010 INTRODUCTION tomtom is the world’s leading provider of location and navigation products and services. Our products include portable navigation devices, in-dash infotainment systems, fleet track and trace solutions, maps and real-time traffic services, including the award winning HD Traffic®. FINANCIAL HIGHLIGHTS 2010 > €1.5 billion revenue – up 3% > €357 million Content & Services revenue – up 17% > €0.49 earnings per share – up 3% > 49% gross margin > 12% operating margin > Net cash flow from operating activities €210 million OPERATIONAL HIGHLIGHTS 2010 > New and extended automotive contracts with Mazda, Renault, Fiat and Toyota > Introduction of PND ranges with instant routing and improved user interfaces > New licensing contracts with HTC and MiTAC > HD Traffic rolled out across Europe > Implementation of an integrated group wide technology platform p 02 / TomTom Annual Report and Accounts 2010 CEO LETTER p 03 / TomTom Annual Report and Accounts 2010 In 2010 we made good progress with broadening the base of our company; we increased revenue by growing our newer income streams, generated a significant amount of cash and grew earnings per share whilst continuing to invest in our products and people. HD Traffic, our real-time traffic solution, plays an important part in our strategy to expand the services we can offer our customers. We can help them reach their destinations safely, efficiently and with relevant information literally at their fingertips. Independent tests have identified HD Traffic as the most accurate traffic solution currently on the market. As our customer base grows, so will the data streams it generates, this in turn will ensure that the quality of the services will continue to improve. We launched HD Traffic widely across Europe and in 2011 we will make it available in the US. Our automotive business is developing well. Our customers are offering our navigation systems on more of their models, in more countries, and take-up rates are increasing. We will continue our dialogue with other car manufacturers to extend our client base. We offer increasingly enhanced content and services that are particularly valuable to car manufacturers and we have the technology and assets to enable us to attain a leading position in the rise of the connected car. The GPS sports watch, developed in conjunction with Nike and to be introduced to the market in 2011, is a good example of a product that leverages our platform assets and extends our reach into new markets. This very exciting product marks our first steps in the fast growing GPS sports segment. technology development / We made major investments in our content and technology platforms in 2010. This year we will continue to invest; we focus on delivering the highest quality automotive grade maps and on keeping them up to date. We are building an efficient and scalable online delivery platform for our content and services, as well as a more configurable client software platform that can meet the future requirements of our customers. In addition we are developing an unrivalled database of points of interest, speed cameras, traffic information and much more, from which we can develop a range of products and services for different markets and applications. thank you / My gratitude goes out to our employees for their commitment and hard work throughout the year. I would also like to thank our partners who work with us to deliver our solutions in this dynamic world. I thank our shareholders for recognising the value of our assets and the growth opportunity they provide. Finally, I would like to thank our customers who continue to welcome us on their journeys. harold goddijn Chief Executive Officer, TomTom NV p 04 / TomTom Annual Report and Accounts 2010 PROFILE tomtom is the world’s leading provider of location and navigation products and services focused on getting car drivers to their destinations safely, efficiently and well informed along the way. > Hundreds of millions of people use our devices, content and services. We sell our products in over 40 countries and have 3,500 employees. Our company structure consists of four customer facing business units – Consumer, Automotive, Business Solutions and Licensing. The first three business units provide targeted solutions for customers; consumers, car manufacturers and their suppliers, and fleet owners. Licensing sells its content and services to multiple customer groups including portable navigation device (PND) companies, wireless companies, governments and enterprises. TomTom’s business units are supported by an integrated technology platform leveraging our technologies and expertise to enable us to continue to develop innovative products and services to meet and surpass our customers’ growing needs. p 05 / TomTom Annual Report and Accounts 2010 MISSION, VISION AND STRATEGy it is our mission to provide all drivers with the world’s best navigation experience. Our customers use our navigation products on a multitude of devices, such as our PNDs, in-dash systems and on smartphones. Moreover, many drivers benefit from our content on a range of third party applications and devices. > We further improve our products by taking advantage of the possibilities that arise from “connected navigation”. Connected navigation provides customers with relevant and up-to-date information when it is needed. Much of that content can now be provided via real-time services such as traffic information and mobile speed cameras. An increasing proportion of our products come equipped with a cellular wireless data connection. At TomTom we realise that traffic congestion has a significant negative economic impact and a direct effect on people’s lives. We will continue to do all we can to ensure that our technologies help to minimise these impacts.