Bernd Leukert nominated as Supervisory Board Member of TomTom + TomTom reports second quarter 2017 results

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Overig advies 19/07/2017 07:27
Amsterdam, the Netherlands, 19 July 2017 TomTom (TOM2) today announced that Bernd Leukert will be nominated for appointment to the Supervisory Board for a term of four years at an Extraordinary General Meeting to be convened later this year. With this appointment, TomTom further broadens the technology expertise of its Supervisory Board.

Bernd Leukert is a member of the Executive Board of SAP SE with global responsibility for the development and delivery of all products across SAP’s product portfolio. In addition, he heads strategic innovation initiatives. Bernd joined SAP in 1994 and has held various management positions in application development, technology development, software engineering, and process governance.

Bernd is also a member of the Supervisory Boards of the German Research Center for Artificial Intelligence (Deutsches Forschungszentrum für Künstliche Intelligenz, DFKI) and of Bertelsmann SE & Co. KGaA, a member of the Market Strategy Board of the International Electrotechnical Commission and the steering committee chairman of the Plattform Industrie 4.0 for the German government’s Industrie 4.0 initiative.

“We are delighted to welcome Bernd,” said Peter Wakkie, Chairman of the Supervisory Board, TomTom. “He brings a wealth of experience in technology transformation and innovation to our board. I’m convinced his contribution will be immediate and impactful.”

Harold Goddijn, CEO of TomTom, said: “Bernd is widely recognised as a thought leader in the technology industry. His impressive track record in the information technology sector and his knowledge of the business of software development and delivery will be a great asset to TomTom.”

Bernd will fulfil a vacancy in the Supervisory Board which was open since the 2017 Annual General Meeting. Upon the adoption of the proposed appointment at the Extraordinary General Meeting, the Supervisory Board will consist of Peter Wakkie (Chairman), Jacqueline Tammenoms Bakker (Deputy Chairman), Jack de Kreij, Michael Rhodin and Bernd Leukert.

TomTom reports second quarter 2017 results
Amsterdam, the Netherlands, 19 July 2017 7.15 AM

Financial summary Q2 '17

Revenue of €253 million (Q2 '16: €265 million)
Gross margin of 63% (Q2 '16: 55%)
EBITDA of €45 million (Q2 '16: €44 million)
Non-cash impairment charge on the entire goodwill of the Consumer segment of €169 million
Net result of -€160 million (Q2 '16: €12 million)
Adjusted EPS1 of €0.09 (Q2 '16: €0.10)
Net cash position of €82 million (Q2 '16: €58 million)
Operational summary Q2 '17

TomTom High Definition (HD) map coverage expanded to all motorways in Western Europe
TomTom Traffic service expanded to 64 countries from 54 countries
TomTom and Baidu have joined forces to develop global HD maps
Collaboration with Bosch announced to create first radar localisation map layer
Telematics passes milestone of 750,000 subscribed vehicles
New share buy-back program

TomTom intends to repurchase ordinary TomTom shares for an amount up to €50 million, representing 2.5% of total issued share capital.2

Outlook 2017

Full year revenue outlook updated; we now expect to deliver full year revenue around the lower end of our guidance of between €925 million and €950 million.

Outlook for adjusted EPS1 of around €0.25 is unchanged.

Key figures
(€ in millions, unless stated otherwise) Q2 '17 Q2 '16 y.o.y.
change
H1 '17 H1 '16 y.o.y.
change
Automotive & Licensing 87.0 68.1 28% 161.1 131.5 23%
Telematics 40.1 39.9 0% 80.7 77.0 5%
Consumer 126.3 157.2 –20% 224.3 273.9 –18%
REVENUE 253.4 265.2 –4% 466.2 482.4 –3%
GROSS RESULT 160.6 145.3 11% 293.0 268.6 9%
Gross margin 63% 55% 63% 56%
EBITDA 45.2 43.7 4% 73.2 69.3 6%
EBITDA margin 18% 16% 16% 14%
OPERATING RESULT (EBIT) –159.5 12.8 –164.4 8.4
EBIT margin –63% 5% –35% 2%
NET RESULT –160.1 12.2 –164.6 17.0
ADJUSTED NET RESULT 21.0 23.2 –10% 28.0 30.7 –9%
DATA PER SHARE (in €)
EPS - fully diluted –0.68 0.05 –0.70 0.07
Adjusted EPS1 - fully diluted 0.09 0.10 –11% 0.12 0.13 –10%
Change percentages and totals calculated before rounding.
This report includes the following non-GAAP measures: gross margin, EBIT (margin), EBITDA (margin), adjusted net result, adjusted EPS and net cash,
which are further explained on page 21 of this report.


1 Earnings per fully diluted share count adjusted for acquisition-related expenses & gains and material restructuring costs on a post-tax basis.
2 Based on the closing price of TomTom (TOM2) share on Euronext Amsterdam on 18 July 2017 of €8.72.

TOMTOM’S CHIEF EXECUTIVE OFFICER, HAROLD GODDIJN
"Our strategy is to build on our navigation technologies to provide location-based content, software, and services to business customers,
with high margins and recurring income. Combined Automotive, Licensing and Telematics revenue grew by 18% year on year in the
quarter, ahead of expectations."

OUTLOOK 2017 UPDATED
Hardware revenues were lower than planned because of disappointing Sports sales. The wearables market has fallen short of expectations.
Because of this and because we want to focus on our Automotive, Licensing and Telematics businesses, we are reviewing strategic options
for Sports.
As a result, we are updating our revenue outlook. We now expect to deliver full year revenue around the lower end of our guidance of
between €925 million and €950 million. Adjusted EPS3 of around €0.25 remains unchanged.
We expect the combined revenue of the Automotive, Licensing and Telematics businesses to grow around 15% year on year in 2017.
We expect the level of investments (both CAPEX and OPEX) to show a modest increase compared with 20164, excluding acquisitions.

GOODWILL IMPAIRMENT
The difficult market circumstances combined with lower sales than planned for the second quarter has resulted in a downward revision
in the future profitability projections for Consumer Sports. As a result, TomTom recorded a full impairment charge against the goodwill
of the Consumer segment of €169 million in the second quarter 2017. This non-cash impairment charge is included within operating
income (loss). The goodwill that was impaired was originally recorded at the time of the acquisition of Tele Atlas in 2008.
NEW SHARE BUY-BACK PROGRAM
TomTom intends to repurchase ordinary TomTom shares on Euronext Amsterdam for an amount up to €50 million. Based on the closing
price of the TomTom share on Euronext Amsterdam on 18 July 2017, the repurchase represents approximately 2.5% of TomTom’s issued
share capital. TomTom aims to start the repurchase in the second half of 2017.
The repurchase will be executed within the limits of relevant laws and regulations and the existing authority granted by the Annual General
Meeting on 24 April 2017. TomTom will inform the market about the actual start of the repurchase and the progress made in the execution
of this program through a press release and corporate website. The share buy-back will be used to cover TomTom’s commitments arising
from its stock option and share plans.

FINANCIAL AND BUSINESS REVIEW Q2 2017
Revenue for the second quarter amounted to €253 million, 4% lower compared with the same quarter last year (Q2 '16: €265 million).
Automotive, Licensing and Telematics jointly grew by 18% year on year, which was offset by lower Consumer revenue. Our gross margin
for the quarter equalled to 63% (Q2 '16: 55%). The net result for the quarter was a loss of €160 million. Excluding the impairment charge,
our net result for the quarter was €8.6 million. Adjusted EPS4 in Q2 '17 was €0.09, compared with €0.10 in the same quarter last year.
3 Earnings per fully diluted share count adjusted for acquisition-related expenses & gains and material restructuring costs on a post-tax basis.
4 In 2016, CAPEX was €118 million and OPEX was €557 million. Year to date in 2017 we spent €24.5 million on acquisition related CAPEX.

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 more than 4,700 employees (FTE) working in its offices across all continents. The commercial activities
of the group are carried out through four customer facing business units – Automotive, Licensing, Telematics and Consumer. Automotive
and Licensing are engaged in developing and selling similar location-based application components such as maps, online services (e.g.
traffic) and navigation software to customers in different market segments. Automotive serves automotive customers (mainly OEMs and
Tier1 head unit vendors) while Licensing serves a wide range of non-Automotive customers. Telematics provides a wide range of telematics
services and related products to fleet owners including sale and/or rental of hardware products associated with the services. Consumer
generates revenue mainly from the sale of consumer electronics devices, such as PNDs and sports watches.
Market and TomTom outlook 2017
Within the Automotive & Licensing business we aim to grow through technology leadership in mapmaking information systems, traffic
and navigation software. To achieve leadership we will invest in automation, modularity and industry standard interfaces. We are targeting
new growth opportunities in ADAS and Autonomous Driving, investing in our HD map and RoadDNA technologies. Our Telematics business
strategy is to continue to profitably grow our fleet management business and to diversify to other Connected Car services such as vehicle
leasing.
Hardware revenues were lower than planned because of disappointing Sports sales. The wearables market has fallen short of expectations.
Because of this and because we want to focus on our Automotive, Licensing and Telematics businesses, we are reviewing strategic options
for Sports.
As a result, we are updating our revenue outlook. We now expect to deliver full year revenue around the lower end of our guidance of
between €925 million and €950 million. Adjusted EPS5 of around €0.25 remains unchanged.
We expect the combined revenue of the Automotive, Licensing and Telematics businesses to grow around 15% year on year in 2017.
We expect the level of investments (both CAPEX and OPEX) to show a modest increase compared with 20166, excluding acquisitions.
Financial review for the six-month period ended 30 June 2017
In the first half of 2017, the Group generated revenue of €466 million, which is €16 million less compared with €482 million in the same
period of 2016. Our year on year revenue development reflects growth in Automotive, Licensing and Telematics revenue offset by the
revenue decline in Consumer. The Group’s gross margin for H1 '17 was 63% (H1 '16: 56%) and the operating result for H1 '17 was a
loss of €164 million (H1 '16: €8.4 million) as we recorded an impairment charge of €169 million on the goodwill of our Consumer segment.
Revenue
Automotive & Licensing generated revenue of €161 million in H1 '17, an increase of 23% compared with €132 million in H1 '16.
Automotive generated revenue of €90 million in H1 '17, an increase of 39% compared with €65 million in H1 '16. This increase is mainly
the result of the ramp up of revenue from a contract that went live at the end of H1 '16. Licensing revenue in H1 '17 was €72 million
compared with €67 million in H1 '16. This increase is driven by a catch-up of revenue for content delivered in the earlier quarters but the
revenue recognition criteria were not yet fulfilled.
Telematics revenue increased by 5% year on year from €77 million in H1 '16 to €81 million in H1 '17. The increase was mainly driven by
growing recurring service revenue.
Consumer revenue for H1 '17 declined year on year by 18% to €224 million, driven by difficult market circumstances in Sports, a declining
PND market in line with expectations and phasing out of Automotive hardware contracts which are included in the Consumer segment.
5 Earnings per fully diluted share count adjusted for acquisition-related expenses & gains and material restructuring costs on a post-tax basis.
6 In 2016, CAPEX was €118 million and OPEX was €557 million. Year to date in 2017 we spent €24.5 million on acquisition related CAPEX.
Interim financial report 2017
19 JULY 2017 - 07:15 CEST - INTERIM FINANCIAL REPORT / 8
Gross result
The gross profit for H1 '17 was €293 million, an increase of €24 million compared with the same period last year (H1 '16: €269 million).
The gross margin in H1 '17 was 63% compared with 56% in H1 '16, mainly reflecting the shift of our revenue mix towards higher margin
data, software & services revenue.
Goodwill impairment
The difficult market circumstances combined with lower sales than planned for the second quarter has resulted in a downward revision
in the future profitability projections for Consumer Sports. As a result, TomTom recorded a full impairment charge against the goodwill
of the Consumer segment of €169 million in the second quarter 2017. This non-cash impairment charge is included within operating
income (loss). The goodwill that was impaired was originally recorded at the time of the acquisition of Tele Atlas in 2008.
Operating expenses
Excluding the impairment charge, operating expenses in H1 '17 were €289 million compared with €260 million in H1 '16. The operating
expenses in H1 '16 included a one-off gain relating to a pending customs case. Excluding this one-off gain, the underlying operating
expenses increased by €22 million year on year. This increase mainly came from higher expenses on our long-term employee incentive
program and amortisation.
Operating result
The operating result for H1 '17 was a loss of €164 million compared with a gain of €8.4 million in H1 '16.
Financial result
The group recorded €0.5 million interest expenses in H1 '17 compared with €0.7 million in the same period of 2016. The other financial
result in H1 '17 was a gain of €1.9 million versus a gain of €0.5 million in H1 '16, mainly driven by a gain on foreign exchange revaluation
of our monetary balance sheet items.
Income taxes
In H1 '17, the group recorded an income tax expense of €2.0 million versus a gain of €8.3 million in the same period last year. The gain
in 2016 was mainly the result of the remeasurement of our deferred tax positions as the result of application of innovation box facility in
the Netherlands.
Cash flow
The cash flow from operating activities was €27 million, an increase of €12 million compared with €15 million in the same period last
year. The increase is mainly due to lower working capital utilisation in H1 '17.
Excluding acquisition-related cash flows and dividends received, the cash flow used in investing activities during H1 '17 was €62 million,
an increase of €3 million compared with €59 million in the same period last year.
The cash flow from financing activities includes a cash inflow of €11 million from the exercise of 2.2 million options related to our longterm
employee incentive programmes during H1 '17.
Related party transactions
For related party transactions please refer to note 9 of our interim financial report.
Principal risks and uncertainties H1 2017
The risks associated with building a multi-product Consumer business were acknowledged in TomTom’s Group Risk Profile (see 2016
Annual Report). The weaker than expected Sports revenue is a partial realisation of this risk.
Taking the decision to evaluate our strategic options for Consumer Sports gives rise to a change in this risk. The most significant changes
are the possible negative impact on our brand name, the unnecessary loss of talented people employed by our organisation and the
negative market response to the TomTom Sports business itself.
Interim financial report 2017 / Continued
19 JULY 2017 - 07:15 CEST - INTERIM FINANCIAL REPORT / 9
We have anticipated these risks and prepared appropriate risk responses that include investigating the strategic options for Consumer
Sports as well as proactively engaging stakeholders to minimise TomTom organisational and product market disruption.
All other group risks mentioned in the Group Risk Profile section of TomTom’s 2016 Annual Report are still relevant and deemed
incorporated and repeated in this report by reference.
Responsibility statement
With reference to the statement within the meaning of article 5:25d (2c) of the Financial Supervision Act, the Management Board hereby
declares that, to the best of their knowledge:
• the interim financial statements prepared in accordance with IAS 34, “Interim Financial Reporting”, give a true and fair view of the
assets, liabilities, financial position, profit or loss of the company and the undertakings included in the consolidation taken as a whole;
and
• the interim Management Board report gives a fair review of the information required pursuant to section 5:25d(8)/(9) of the Financial
Supervision Act.
Amsterdam, 19 July 2017

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TomTom EUR 9,337 +61,4ct vol. 2,8 miljoen.



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