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TomTom's activities at a glance

2.1Our core technologies

2.1.1

TomTom's core technology assets are maps, traffic and navigation. These assets underlie many of TomTom's products, and are used in PNDs, embedded navigation systems, smartphone applications, and web-based applications. In addition, our Telematics business has its own proprietary technology called WEBFLEET, used by businesses to improve fleet performance, save fuel, support drivers and increase overall fleet efficiency.

Our R&D cash spending in 2015 totalled to €268 million, an increase of 9% compared with 2014. This reflects significant investments in our new mapmaking platform and in advanced content and software for the automotive industry. We have over 3,500 people working in R&D across 40 countries globally.




2.1.1.1


2.1.2

Maps

We provide global map coverage with fully navigable maps for 135 countries, covering over 46 million kilometres and over 4 billion people worldwide.

Mapmaking at TomTom is about efficiently dealing with map changes, and the full implementation of our state-of-the-art mapmaking platform is now enabling us to deliver high quality map content with short delivery cycles. TomTom is the leader in the use of probe traces in quality mapmaking and in handling consumer feedback.

Next to the traditional navigable map, we also produce high-accuracy Advanced Driving Attributes (ADA) to enable Advanced Driver Assistance Systems (ADAS). In addition, we are creating HD map products on a global scale to enable Autonomous Driving. By delivering a highly accurate border-to-border model of the road, our HD Map enables a self-driving vehicle to see beyond its sensors. Together, these advanced map features extend the range of view for the vehicle while supporting smoother, safer and more efficient driving scenarios. In 2015, we launched RoadDNA, our proprietary precise localisation technology. HD Map and RoadDNA together represent the most accurate and robust technology in the market today to provide real-time information about a vehicle’s precise location on a map and on the road whilst coping with changes in the environment.


Traffic

We have a comprehensive product portfolio for traffic and travel information as well as road data analytics. We create real-time traffic and historical traffic information for highways, major roads and secondary roads. This information is available in 50 countries.

Our traffic service provides drivers highly accurate measurements of traffic jams and delays for better route calculation and expected times of arrival (ETAs). We use a wide range of sources to generate real-time traffic information. An important source of traffic data comes from our own community input that delivers over 8 billion speed measurements per day. Our traffic technology intelligently combines the data, including weather, from all available sources into a database with both traffic flow and incident data for the entire road network covered.





Navigation

NavKit, our state-of-the-art navigation engine, is the foundation for many of our products and delivers best-in-class dynamic routing performance. NavKit is available in 135 countries.

Our navigation software is based on the NDS map format fully leveraging its incremental map update capabilities. Our navigation engine provides interfaces (APIs) that enable our customers to develop a fully customised navigation application on any device or platform. NavKit can be provided with an award winning User Interface. NavKit navigation technology is also offered with cloud-based services that enable hybrid navigation and storage facility for personal navigation data to allow for a seamless navigation experience across different devices.


WEBFLEET: Software-as-a-Service fleet management sOLUTION

Our Telematics business offers fleet management solutions for commercial fleets of any size. WEBFLEET is a Software-as-a-Service solution – used by small to large businesses to improve vehicle performance, save fuel, support drivers, increase overall fleet efficiency and contribute to logistics operations.

Our leadership in the telematics industry lies in the strength and scalability of our proprietary technology – WEBFLEET, certified with ISO 27001:2013 for confidentiality, integrity and availability, re-audited in November 2015. WEBFLEET allows for seamless integration with third-party applications. To date, more than 350 software and hardware partners have integrated our WEBFLEET platform into their product applications – this represents the largest partner ecosystem in the fleet management industry today. Available third-party software solutions and apps include those for CRM and ERP, planning and scheduling, route optimisation, temperature control, mobile printing and lone worker safety. This makes our solution adaptable to any business requirement.

Vehicle-related data generated by our telematics technology can be extended into added-value products for aftermarket Connected Car services, including car OEMs, dealerships, importers, servicing, leasing and rental companies and the usage-based insurance (UBI) sector.





2.1.2.1

2.2Our group business structure


Our activities are organised around four customer-facing business units that leverage our brand, capabilities, and common technology assets to provide consumers, businesses, governments and local authorities with industry-leading location-based products.


2.2.1


2.2.2

Consumer

Our Consumer business creates innovative and easy-to-use products that give consumers the knowledge they need to get where they want to go effortlessly and quickly. Consumer activities are focused on the Drive and Sports categories; products include PNDs, smartphone navigation applications, GPS sport watches and action cameras. TomTom consumer products are recognised for their smart and intuitive user interface, strong GPS performance and innovative design and features aimed at satisfying real consumer needs and desires.

Automotive

Our Automotive business provides cutting-edge modular software components - maps, traffic and navigation software - to car manufacturers (OEMs) and Tier 1 head unit vendors. Each component can be integrated as a stand-alone product, or combined into the Connected Navigation System, to deliver seamless compatibility, advanced user experience and cost-effective implementation. Automotive is also involved in a number of ADAS and Autonomous Driving partnerships, where our technology is being used to make Autonomous Driving a reality.

Licensing

Our Licensing business sells maps, traffic and navigation software. It also offers cloud-based products and platforms that allow developers easy access to content to create location-enabled applications for businesses and governments. Licensing focuses on two types of customers: B2B2C, where TomTom's products are incorporated in end user applications such as smartphones, wearables and tablets, and on the internet; and B2B & Government, serving professional users for location-based applications such as geographical information systems (GIS) providers, governmental bodies and traffic management institutions.

Telematics

Our Telematics business offers fleet management, vehicle telematics and connected car services. Our WEBFLEET platform is a Software-as-a-Service solution, used by small to large businesses to improve vehicle performance, save fuel, support drivers and increase overall fleet efficiency. In addition, Telematics provides services for the insurance, rental and leasing industries, car importers and companies that address businesses as well as consumers.

2.3Our people

2.3.1

ENTREPRENEURIALISM IS VALUED IN OUR COMPANY;
We believe that without organisational flexibility for people to make their own choices and thrive, we will stifle innovative thinking

2.3.2

The true value of our business lies in our people. We aim to attract the best talent, invest in their development and give them the opportunity to grow and achieve more every day. TomTom attracts agile and adaptable people, capable of effectively dealing with and responding rapidly to changing circumstances. Having the best and diverse talent enables us to deliver the best and most innovative products to our customers.

In 2015, our global headcount grew by 12% to more than 4,600 people based in 35 countries. Number of new joiners was at an all-time high, with more than 922 people coming on board in 32 countries.

2.3.3


2.4Key financials for 2015




WE DELIVERED TOP-LINE GROWTH THIS YEAR, FOR THE FIRST TIME SINCE 2010; In 2015, we invested more in our technologies and in acquisitions than in recent years and maintained a relatively flat net cash position

2.4.1

In 2015, we delivered revenue of €1 billon, 6% higher compared with €950 million in 2014. Our Licensing, Telematics and Consumer Sports businesses grew strongly to offset the reduction in PND revenue, which remained the biggest revenue contributor for the group. Our Automotive business showed a modest decline year on year. This decline is mainly due to the phasing out of certain legacy contracts. Revenue from Content & Services grew to €449 million in 2015 (2014: €407 million) and accounted for 45% of total revenue. 

The weakening of the euro impacted our performance in 2015 negatively. We reported a gross margin of 52% in 2015. At constant currency rates, our 2015 gross margin equalled to 56%. Our group EBITDA reached €124 million this year, 9% lower compared with 2014 (2014: €136 million). The net result for 2015 was €18 million, which translates to adjusted earnings per share of €0.21.

We  continued to broaden our Consumer product portfolio and invested more in advertising to support this. We made significant investments (both in capital expenditures and operating expenses) in our core technologies compared with previous years. In particular, we are investing in advanced content and software for the automotive industry (e.g. to enable Autonomous Driving) and in our new mapmaking platform. We expect these investments to lead to higher Automotive revenue in the mid-term. We have also invested more in acquisitions than in recent years.


2.4.2