TomTom 2005 Annual Report Download - page 44
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TreasuryPolicy
TomTom’streasuryfunctionstrivestoachievea
reasonablereturnonexcesscashresources.Themain
goalistogetareasonablereturnonthecashbalances
relativetomarketratereturns.
TomTomwillapplytheseguidelines,amongothers,to
selectinvestmentopportunitiesforitsexcesscash
balances.AllinvestmentshaveatleastanAA
-
creditrisk
ratingbyanacknowledgedinstitute.Amaximumtermof
threeyearsisused,andwithapotentiallyloweroverall
return,earlyunwindingisallowedforeachinvestment.
ThetreasuryfunctionalsocontrolsrisksforTomTom
relatingtochangesinforeigncurrencyexchangerates
(relativetotheeuro)byeffectiveandefficient
managementofforeignexchangeexposuresrelatedto
revenue,procurementandcashbalances.Themaingoal
istomakethecostofworkingwithforeigncurrencies
morepredictableandtoreducethecostofthetoolsthat
areused.Thegoalisnottoreducethecostofforeign
currenciesbyachievinglowerexchangeratesthan
marketaveragesormarketexpectations.
TomTommanagesitstransactionrisksrelatingtofuture
forecastcashflowsbyenteringintofinancialinstruments
whichmakethefuturecashflowsmorepredictable.
TomTomseekstoprotectitscostofsaleslinefrom
suddenmovementsintheUSdollarrelativetotheeuro
anditalsodoesthesameforpoundsterling-
denominatedrevenuesarisingintheUK.TomTomdoes
nothedgetranslationriski.e.:theriskwhichariseson
thetranslationofnon-eurodenominatedincome
statementsandbalancesheetsofsubsidiaries.TomTom
willonlyusesimplehedginginstruments,mainlyforward
contractsandtoafarlesserextentplainoptions.TomTom
doesnotcurrentlyapplyhedgeaccounting.
Liquidityandcapitalresources
TomTom’scashbalancesincreasedto
178millionat
theendoftheyearfrom
40millionatthestartofthe
year.Despitethesubstantialgrowthofthecompanyin
theyearwecontinuedtobecashgenerativein2005with
43millionofnetcashgeneratedfromoperating
activities.Duringtheyearweraised
117millionofnew
fundsfromthecompany’sIPOandwecompletedtwo
acquisitionswhichmadeup
15millionofthecashflow
usedininvestingactivities.
CashFlow 2004 2005
(in
millions)
Netcashflowfromoperatingactivities 36.2 43.1
Cashflowusedininvestingactivities -2.9 -21.4
Cashflowfromfinancingactivities 0 116.5
Netincreaseincashandcashequivalents 33.3 138.2
Cashandcashequivalentsatendofperiod40.2 178.4
BalanceSheet 2004 2005
(in
millions)
Non-currentassets 3.0 21.0
Currentassets 87.9 442.6
Totalassets 90.9 463.6
Capitalandreserves 37.8 306.4
Provisions 0.4 21.0
Longtermliabilities 1.3 1.0
Currentliabilities 51.4 135.2
Totalequityandliabilities 90.9 463.6
Thebalancesheetstrengthenedconsiderablyintheyear.
Netassetsatthestartoftheyearwere
38million;by
theendoftheyeartheyhadincreasedto
306million,
mainlyasaresultofthenetprofitof
143millionforthe
yearandtheIPOcapitalraisingof
117million.