TomTom 2014 Annual Report Download - page 78

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Other provisions
Other provisions include an amount of €8.4 million (2013: €6.8 million) related to the defined benefit pension plan in Germany as disclosed
in note 6. Personnel expenses, and the remainder relates mainly to provisions for expected earn-out payments. The amount of 'Other
provisions' estimated to be settled/utilised within the coming twelve months amounted to €4.2 million.
32. Commitments, contingent assets and liabilities
The group has a number of long-term financial commitments, which are not shown in the group's balance sheet as at 31 December 2014.
Operating leases
These are operating leases for buildings, cars and office equipment, which consist of:
(€ in thousands) 2014 2013
Commitments less than 1 year 15,298 13,835
Commitments between 1 - 5 years 34,380 40,442
Commitments longer than 5 years 974 2,198
TOTAL 50,652 56,475
No discount factor is used in determining the operating lease commitments.
Purchase commitments
As at 31 December 2014, the group had open purchase commitments with contract manufacturers for certain products and components.
Contract manufacturers order the requisite component parts from their suppliers on the basis of forecasts of the number of units required.
Manufacturers have commitments on these components. In certain circumstances, the group has a contractual obligation to purchase these
components from the manufacturers.
Other commitments
The group has contracts with third-party suppliers or other business partners that include minimum royalty or revenue share payments over
the duration of the contracts that range from 1 to 5 years. The total commitments under these contracts are presented below.
(€ in thousands) 2014 2013
Commitments less than 1 year 9,541 7,517
Commitments between 1 - 5 years 9,430 11,333
TOTAL 18,971 18,850
The group has given a guarantee as described in section 479C of the UK Companies Act to TomTom Software Ltd. Accordingly, TomTom
Software Ltd. is exempted from the requirements of the Companies Act 2006 relating to audit by virtue of section 479A.
In addition, a German subsidiary, TomTom Germany GmbH & Co. KG., which is included in these consolidated financial statements, applies
the exemption as described in section 264b of the German Commercial Code (HGB) with regard to the publication of the annual financial
statements and the drawing up of a management report and the notes to the financial statements.
Contingencies
Please refer to note 31. Provisions for disclosures on tax and legal contingencies.
In 2014, we won an arbitration award in which the Tribunal ruled that one of our suppliers must repay royalties paid by TomTom in prior
periods. TomTom has recently filed a motion in local Court to recognise this award and render it internationally enforceable. Our supplier may
choose to oppose our motion and file a separate Court action to overturn the arbitration award. While we believe it is more likely than not
that the Court will uphold and recognise the arbitration award, we cannot be certain of such an outcome, and a final judgement in this matter,
including the quantum and timing of any final judicial award, remains uncertain. Consequently, we have not recognised the asset, and given
that further disclosure could seriously prejudice our position, no further disclosure is provided. If TomTom is ultimately successful and the
arbitration award is enforced, the amount awarded will not have a significant impact on TomTom's financial position.
Based on legal advice, there were no other contingencies that management expects to have a material adverse effect on the group's financial
position as at 31 December 2014.
33. Remunerations of members of the Management Board and the Supervisory Board
The Remuneration Policy
The Remuneration Policy for members of the Management Board is drawn up by the Supervisory Board and approved by the General Meeting.
The on-target bonus percentage is set at 80% of the base salary for the CEO and at 64% of the base salary for the other members of the
Management Board. The maximum annual incentive achievable is 120% of the annual base salary for the CEO and 96% of the annual base
salary for the other members of the Management Board. The actual bonus pay-out depends on certain challenging financial targets (gross
profit, EBIT and cash flow). The total remuneration paid/payable to or on behalf of the members of the Management Board for the year ended
31 December 2014, amounted to approximately €2.3 million (2013: €2.5 million), of which 38% represented bonus payments (2013: 46%).
In 2014, the bonus achievement was 101% of the on-target bonus percentage (2013: 131%).
CONTENTS OVERVIEW MANAGEMENT
BOARD REPORT CORPORATE
GOVERNANCE SUPERVISORY
BOARD REPORT FINANCIAL
STATEMENTS SUPPLEMENTARY
INFORMATION
ANNUAL REPORT AND ACCOUNTS 2014 / 78