TomTom 2005 Annual Report Download - page 42

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42
Financial฀review฀
2005฀was฀a฀year฀of฀substantial฀progress฀for฀TomTom฀and฀
this฀was฀reflected฀in฀the฀strong฀financial฀performance฀
of฀the฀Company.฀Revenue฀increased฀by฀275%฀to฀

720฀million฀from฀

192฀million฀and฀net฀profit฀by฀411%฀
to฀

143฀million฀from฀

28฀million.฀We฀raised฀

117฀
million฀of฀new฀capital฀from฀our฀Global฀Offering฀and฀we฀
strengthened฀our฀balance฀sheet฀to฀net฀assets฀of฀

306฀
million฀at฀the฀end฀of฀the฀year฀compared฀with฀

38฀million฀
at฀the฀start฀of฀the฀year.฀We฀delivered฀an฀83%฀return฀on฀
equity฀for฀the฀year฀(measured฀as฀net฀profit฀over฀average฀
equity฀for฀the฀year)฀and฀diluted฀earnings฀per฀share฀
increased฀to฀

1.26฀from฀

0.26฀in฀the฀previous฀year.฀
Profit฀and฀Loss฀ 2004฀ 2005฀ Change
(in฀
฀millions)
Revenue฀ 192฀ 720฀ 275%
Gross฀profit฀ 85฀ 311฀ 266%
%฀of฀sales฀ 44%฀ 43%฀
Operating฀profit฀ 43฀ 195฀ 353%
%฀of฀sales฀ 22%฀ 27%฀
Net฀profit฀ 28฀ 143฀ 411%
%฀of฀sales฀ 15%฀ 20%฀
EPS฀(fully฀diluted฀-฀in฀
)฀ 0.26฀ 1.26฀ 385%
Revenue
The฀increase฀in฀revenue฀was฀driven฀by฀sales฀of฀integrated฀
devices,฀namely฀the฀TomTom฀GO฀and฀TomTom฀
ONE
product฀ranges,฀which฀represented฀86%฀of฀our฀total฀
revenue฀for฀the฀year,฀compared฀to฀60%฀in฀2004.
Revenue฀ 2004฀ 2005฀ Change
(in฀
฀millions)
Integrated฀devices฀ 115฀ 622฀ 441%
Non-Integrated฀solutions฀ 69฀ 65฀ -6%
Other฀ 8฀ 33฀ 313%
Total฀ 192฀ 720฀ 275%
Number฀of฀units฀sold฀ 2004฀ 2005฀ Change
(in฀000s)
Integrated฀devices฀ 248฀ 1,688฀ 581%
Non-Integrated฀solutions฀ 438฀ 524฀ 20%
Total฀ 686฀ 2,212฀ 222%
Average฀selling฀price฀ 2004฀ 2005฀ Change
(in฀
)
Integrated฀devices฀ 464฀ 368฀ -21%
Non-Integrated฀solutions฀ 158฀ 124฀ -21%
Weighted฀average฀selling฀price฀ 268฀ 311฀ 16%
The฀volume฀of฀integrated฀units฀we฀shipped฀in฀2005฀grew฀
by฀581%฀to฀close฀to฀1.7฀million,฀up฀from฀248,000฀in฀2004.฀
We฀opened฀up฀the฀market฀to฀a฀larger฀consumer฀base฀as฀
we฀offered฀products฀at฀a฀wider฀range฀of฀price฀points฀and฀
as฀a฀result฀the฀average฀selling฀price฀of฀an฀integrated฀unit฀
decreased฀to฀

368฀from฀

466฀over฀the฀course฀of฀the฀
year.฀The฀lower฀price฀points฀and฀the฀broader฀consumer฀
acceptance฀of฀the฀personal฀navigation฀category฀meant฀
that฀volumes฀and฀revenues฀increased฀substantially.฀The฀
majority฀of฀our฀sales฀were฀made฀through฀retail฀channels.
In฀2005,฀93%฀of฀revenues฀were฀generated฀in฀Europe.฀
We฀made฀good฀progress฀in฀North฀America฀where฀revenue฀
increased฀to฀

42.3฀million฀in฀2005฀from฀

5.6฀million฀in฀
2004.฀We฀also฀entered฀the฀Australian฀market฀and฀in฀our฀
first฀year฀of฀operations฀realised฀revenue฀of฀

7.3฀million.
Gross฀profit
Gross฀profit฀increased฀almost฀fourfold,฀to฀

311฀million฀in฀
2005฀from฀

85฀million฀in฀2004.฀Owing฀to฀reductions฀in฀
product฀costs,฀the฀gross฀profit฀margin฀only฀decreased฀by฀
one฀percentage฀point฀to฀43%฀despite฀the฀21%฀reduction฀
in฀the฀average฀selling฀price฀for฀integrated฀units.฀The฀gross฀
profit฀margin฀percentage฀is฀a฀key฀measure฀of฀
performance฀for฀the฀business฀and฀this฀was฀a฀strong฀
contributor฀to฀our฀profitability฀in฀2005.