Adjusted EPS for the quarter was €0.10 versus €0.05 in Q2 '15.
At the end of the quarter, trade receivables plus other receivables totalled €231 million compared with €197 million at the end of Q2 '15. The inventory level was €51 million, an increase of €2.5 million compared with the end of the same quarter last year (end of Q2 '15: €48 million). Cash and cash equivalents at the end of the quarter were €136 million versus €122 million at the end of Q2 '15.
Current liabilities excluding deferred revenue were €278 million compared with €287 million at the end of Q2 '15. The year on year decrease is mainly due to decrease in the balance of trade payables and income tax liabilities.
Deferred revenue was €188 million at the end of Q2 '16, compared with €145 million at the end of the same quarter last year. The year on year increase reflects the increased deferred revenue position related to Automotive contracts with upfront payments or lifetime offerings, as well as an increasing number of products with lifetime service offerings within Consumer.
At 30 June 2016, we reported a net cash position of €58 million (Q2 '15: net cash of €77 million). Net cash is the sum of the cash and cash equivalents at the end of the period (€136 million) minus the borrowings (€78 million).
The cash flow from operating activities for the quarter was €33 million compared with €28 million in the same quarter last year, which is mainly due to the higher operating result.
Excluding acquisition-related cash flows and dividends received, the cash flow used in investing activities during the quarter increased by €3 million year on year to €30 million (Q2 '15: €27 million).
In the second quarter, 1.5 million options (Q2 '15: 3.3 million options), related to our long-term employee incentive programmes, were exercised resulting in an €6.4 million cash inflow (Q2 '15: €16 million).
– END –
INTERIM FINANCIAL REPORT
30 JUNE 2016
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 equity
Notes to the consolidated interim financial statements
Semi-annual financial report
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 more than 4,600 employees (FTE) working in its offices across all continents. The commercial activities of the group are carried out through four customer facing business units – Consumer, Automotive, Licensing and Telematics. Consumer generates revenue mainly from the sale of PNDs, sport watches, maps and related navigation products and services. The Automotive business unit develops and sells navigation software, services and content, such as maps and traffic, to car manufacturers and their suppliers worldwide. Licensing generates revenue by licensing digital maps, traffic and other content to a wide range of customers, and Telematics provides fleet management services and related products to fleet owners.
Market and TomTom outlook 2016
Consumer’s aim is to maximise value from the PND category and establish a sport product business. Automotive revenue development will largely depend on the order intake and new car sales / take rates. Licensing aims to maximise its revenue via existing and new customers and broaden its product portfolio. Telematics aims to grow organically and diversify into the Connected Car services industry using our Telematics capabilities and Automotive relationships.
We are reiterating our guidance for the year. We expect to grow our revenue to around €1,050 million and adjusted EPS to around €0.23. We expect the level of investment (both CAPEX and OPEX) in our core technologies to be higher than in 2015. In particular, we are investing in advanced content and software for the automotive industry and in our new map-making platform.
Financial review for the six-month period ended 30 June 2016
In the first half of 2016, the Group generated revenue of €482 million, which is €12 million higher compared with €470 million in the same period of 2015. The year on year growth in revenue came from strong growth in both Automotive and Telematics, partly offset by lower Consumer revenue. The Group’s gross margin and operating results were positively impacted by a higher portion of content and services revenue in the revenue mix.
Consumer revenue for H1 '16 was €274 million compared with €287 million in H1 '15. PND and related content & services revenue declined year on year, partly offset by a sharp growth in sport revenue.
Automotive generated revenue of €65 million in H1 '16, up by 30% compared with €50 million in the first half year of 2015. This increase is the result of higher volumes on our existing contracts and partially by the go-live of new contracts.
Licensing revenue in H1 '16 was a stable €67 million compared with €68 million in H1 ’15.
Telematics revenue grew by 16% year on year from €66 million in H1 '15 to €77 million in H1 '16. The increase was mainly due to the growth in the subscriber installed base, both organically and through the acquisition of Finder at the end of 2015.
The gross profit for H1 '16 was €269 million, an increase of €24 million compared with the same period last year (H1 '15: €244 million). The gross margin in H1 '16 increased to 56% from 52% in H1 '15 mainly as the result of more high margin content and services revenue.
Operating expenses in H1 '16 were €260 million compared with €249 million in H1 '15. The year on year increase was mainly driven by higher SG&A expenses. Both last year as well as the first half of 2016 contained a one-off gain (2016: customs related, 2015: one-off litigation settlement). The underlying operating expenses are trending slightly up year on year.
The operating result for H1 '16 was a gain of €8.4 million compared with a loss of €4.5 million in H1 '15.
The group recorded €0.7 million interest expenses in H1 '16 compared with €0.4 million in the same period of 2015. The other financial result in H1 '16 was a gain of €0.5 million versus a loss of €2.3 million in H1 '15. The other financial result is driven by foreign exchange results from the revaluation of monetary balance sheet items.
In H1 '16, the group recorded an income tax gain of €8.3 million versus €2.6 million in the same period last year. The gain in the first half year of 2016 mainly came from a remeasurement of certain deferred tax assets and liabilities resulting from the application of the innovation box facility in the Netherlands.
The cash flow from operating activities was €15 million, flat compared with same period last year.
Excluding acquisition-related cash flows and dividends received, the cash flow used in investing activities during H1 '16 was €59 million, an increase of €8 million compared with €51 million in the same period last year.
The cash flow from financing activities includes a cash inflow of €7.7 million from the exercise of 1.8 million options related to our long-term employee incentive programmes during H1 '16.
Related party transactions
For related party transactions please refer to note 8 of our interim financial report.
Principal risks and uncertainties H1 2016
In the 2015 Annual Report, we described the key business risks and uncertainties which we are aware of, and which could have a material adverse effect on our financial position and results.