TomTom 2014 Annual Report Download - page 60

compensation expenses charged to the stock compensation reserve for this plan amounted to €228 thousand (2013: €245 thousand). As this
plan is not material, no further disclosures are provided.
Accounting policy
Equity-settled share-based payments are measured at fair value at the date of grant. The fair value determined at the grant date of the equity-
settled share-based payments is expensed on a straight-line basis over the vesting period. The costs are determined based on the fair value
of the granted instruments and the number expected to vest. At each balance sheet date, the group revises its estimates of the number of
instruments expected to vest.
Cash-settled share-based payments are initially recognised at the fair value of the liability and are expensed over the vesting period. The liability
is remeasured at each balance sheet date to its fair value, with all changes recognised immediately as either a profit or a loss.
8. Depreciation and amortisation
Total depreciation and amortisation for the year was €115 million (2013: €117 million) of which €6.1 million (2013: € 4.9 million) is included
in cost of sales.
(€ in thousands) 2014 2013
Amortisation 102,089 100,404
Depreciation 12,622 17,015
TOTAL 114,711 117,419
Amortisation charge totalling €102.1 million (2013: €100.4 million) are included in the following line items in the Income Statement:
• Cost of sales: €5.7 million (2013: €4.9 million);
• Amortisation of technology and databases: €88.1 million (2013: €81.4 million);
• R&D expenses: €2.2 million (2013: €8.0 million); and
• Selling, general and administration expenses: €6.1 million (2013: €6.1 million).
9. Government grants
In 2014, the group received government grants amounting to €4.7 million, in relation to the research and development activities performed
by the group (2013: €6.4 million).
Accounting policy
Government grants are recognised at their fair value when there is a reasonable assurance that the group will comply with the conditions
attached to them, and that the grants will be received. Government grants that are receivable as compensation for expenses or losses already
incurred, or for the purpose of giving immediate financial support to the group with no future related costs, are recognised as a deduction
of the related expense in the period in which they become receivable.
10. Income tax
Income tax expense represents the sum of the tax currently payable and deferred tax. The activities of the group are subject to corporate
income tax in several countries, depending on presence and activity. The applicable statutory tax rates vary between 12.5% and 41.0%. The
different tax jurisdictions in which the group operates can cause the Effective Tax Rate (ETR) to differ from the Dutch corporate tax rate.
(€ in thousands) 2014 2013
Current tax 4,054 2,398
Deferred tax –12,086 1,612
INCOME TAX (GAIN) / EXPENSE –8,032 4,010
In 2914, the ETR was –54.9% compared to 16.7% last year. The reconciliation between the tax charge on the basis of the Dutch tax rate and
the Effective Tax Rate is as follows:
2014 2013
Dutch tax rate 25.0% 25.0%
Higher weighted average statutory rate of group activities 9.8% 6.9%
Income exempted from tax –26.2% –20.8%
Non tax deductible costs 17.7% 15.7%
Utilisation of losses not previously capitalised –19.6% –17.3%
Effect of prior years' settlements and/or adjustments –40.6% –26.5%
Remeasurement of deferred tax –25.6% 33.2%
Other 4.7% 0.5%
EFFECTIVE TAX RATE –54.9% 16.7%
The income tax credited directly in equity in 2014 amounted to €6.9 million (2013: credit of €0.3 million).
CONTENTS OVERVIEW MANAGEMENT
BOARD REPORT CORPORATE GOVERNANCE SUPERVISORY BOARD REPORT FINANCIAL
STATEMENTS SUPPLEMENTARY
INFORMATION
ANNUAL REPORT AND ACCOUNTS 2014 / 60