- Management Board Report
- Group financial review
Group financial review
Key figures overview
Table_5 Key Figures Group
|(€ in millions, unless stated otherwise)||2016||2015||y.o.y. change1|
|Automotive & Licensing||269.0||248.0||8%|
|Gross margin (%)||57%||52%|
|Operating result (EBIT)2, 3||8.9||0.6|
|EBIT margin (%)||1%||0%|
|Adjusted net result4||54.1||49.6|
|EPS - fully diluted (€)||0.05||0.08|
|Adjusted EPS - fully diluted (€)4||0.23||0.21|
|Depreciation & amortisation2||132.0||123.1||7%|
|of which acquisition-related||55.3||52.1||6%|
|EBITDA margin %||14%||12%|
|Cash flows from operating activities||144.3||118.8||22%|
|Cash flows from investing activities||-119.7||-154.2||22%|
|1. Change percentages and totals calculated before rounding.|
|2. 2015 includes a €11 million impairment charge on customer specific technology.|
|3. The EBIT and EBITDA measure and reconciliation to our income statement is further explained in note 4 of the consolidated financial statements.|
|4. A reconciliation of adjusted net result and adjusted EPS to our income statement is provided in note 25 of the consolidated financial statements.|
In 2016, we generated revenue of €987 million, a 2% decline compared with €1,007 million in 2015. From a regional perspective, 78% of our 2016 revenue was generated in Europe (2015: 77%), 17% in North America (2015: 18%) and the remaining 5% in the rest of the world (2015: 5%).
Our gross result for 2016 was €566 million, 9% higher compared with last year (2015: €519 million). The year on year increase was mainly due to a change in our product mix, with relatively higher portion of recurring high gross margin data, software & services revenue. We reported a gross margin of 57% compared with 52% in 2015. At constant currency rates for US dollar (USD) and British Pound (GBP), our gross margin would have been one percentage point higher.
Operating expenses for the year were €557 million compared with €518 million in 2015. This increase is mainly caused by higher depreciation and amortisation costs as well as an increase in Selling, general and administrative (SG&A). Both 2016 and 2015 operating expenses included a one-off gain of around €9 million, which resulted from respectively a resolved customs case (2016) and a settlement of a legal case (2015).
Research & Development (R&D) expenses amounted to €190 million in 2016 compared with €185 million last year. The year on year increase is mainly the result of increased usage of server and storage related to our content production platform. Total R&D cash spending during the year, including capital expenditures, amounted to €283 million compared with €268 million last year. The increase is mainly explained by higher investments in our mapmaking platform.
Our marketing expenses were relatively flat year on year, although the focus of our marketing campaigns has shifted more towards Sports products to support our growth in this category.
SG&A expenses increased from €172 million in 2015 to €195 million in 2016. The increase is mainly in our Telematics unit, reflecting an increase in our sales force and higher acquisition-related amortisation and integration expenses.
Total amortisation and depreciation expenses were €132 million compared with €123 million in 2015. Amortisation of technology and database increased by €15 million year on year due to the amortisation of certain technology platforms that went operational in 2016.
Operating result (EBIT) for the year amounted €8.9 million (2015: €0.6 million) reflecting the higher gross result partially offset by the above-mentioned increase in operating expenses.
Financial results and Taxation
Total financial expenses for the year were €2.4 million versus €8.3 million in 2015. The year on year decrease was mainly the result of a lower foreign currency loss compared with 2015.
The income tax for the year was a gain of €4.7 million, mainly reflecting a change in estimated prior years' taxable income following the finalisation of the tax returns and the remeasurement of deferred tax assets and liabilities to a lower tax rate due to the application of the innovation box facility in the Netherlands.
The net result for the year was €12 million (2015: €18 million). The net result adjusted for acquisition-related expenses and gains on a post-tax basis was €54 million compared with €50 million in 2015. The adjusted EPS for the year was €0.23 (2015: €0.21).
Total cash used in investing activities in 2016 was €120 million, a decrease of €34 million compared with €154 million in 2015. In 2015, we made two acquisitions for an aggregate consideration of €42 million. Excluding 2015 acquisitions, our cash used in investing activities increased by €8 million year on year due to higher investments in our map database.
Cash, Liquidity and debt financing
The net cash from operating activities increased from €119 million to €144 million this year reflecting higher EBITDA. Net cash used in financing activities for the year was a net cash outflow of €29 million as we were able to reduce the utilisation of our credit facility and have fully repaid the external borrowings from an acquired subsidiary early 2016. Net cash used in financing activity includes a cash inflow of €10 million from the exercise of 2.3 million options related to our long-term employee incentive programmes.
At the end of 2016, our net cash position was €133 million (2015: €98 million) which includes an outstanding borrowing of €10 million (2015: €45 million) that we utilised from our €250 million revolving credit facility.
[PLAATJE=10] Business outlook
In 2017, we expect full year revenue of between €925 million and €950 million. Adjusted EPS is expected of around €0.25.
We expect the combined revenue of the Automotive, Licensing and Telematics businesses to grow above 10% year on year in 2017, in line with our previous expectations of their combined revenue CAGR of 15% between 2016 and 2020.
In Consumer, we expect the PND revenue to continue to decline; this will be only partially offset by a growing Sports business. We expect the level of investments (both CAPEX and OPEX) to show a modest increase compared with 2016, excluding acquisitions. In particular, we are investing in advanced content and software for the automotive industry and in our mapmaking activities.
The number of employees in 2017 is expected to modestly increase compared with 2016.