Name | % issued capital or % voting rights |
Harold Goddijn \u2013 Founder | 11.7% |
Corinne Vigreux \u2013 Founder | 11.3% |
Peter Frans Pauwels \u2013 Founder | 11.1% |
Pieter Geelen \u2013 Founder | 10.7% |
J.H.H. de Mol | between 5% and 10% |
Teslin Participaties Co\u00f6peratief U.A. | between 5% and 10% |
DNB Asset Management AS | between 3% and 5% |
TomTom N.V. | 3.6% |
(\u20ac) | Salary and bonus1 | Other short- term benefits2 | Post- employment benefits | Long-term incentives | Total remuneration3 | |||||
2023 | ||||||||||
Management Board and Senior Leadership Team | 5,966,177 | 166,475 | 246,491 | 3,391,562 | 9,770,705 | |||||
Supervisory Board | 280,000 | 0 | 0 | 0 | 280,000 | |||||
Total remuneration | 6,246,177 | 166,475 | 246,491 | 3,391,562 | 10,050,705 | |||||
2022 | ||||||||||
Management Board and Senior Leadership Team | 6,196,965 | 108,825 | 241,598 | 3,601,158 | 10,148,546 | |||||
Supervisory Board | 236,790 | 0 | 0 | 0 | 236,790 | |||||
Total remuneration | 6,433,755 | 108,825 | 241,598 | 3,601,158 | 10,385,336 |
Name | % issued capital or % voting rights |
Harold Goddijn \u2013 Founder | 11.7% |
Corinne Vigreux \u2013 Founder | 11.3% |
Peter Frans Pauwels \u2013 Founder | 11.1% |
Pieter Geelen \u2013 Founder | 10.7% |
J.H.H. de Mol | between 5% and 10% |
Teslin Participaties Co\u00f6peratief U.A. | between 5% and 10% |
DNB Asset Management AS | between 3% and 5% |
TomTom N.V. | 3.6% |
2023 | 2022 | |||||
Number | (\u20ac in thousands) | Number | (\u20ac in thousands) | |||
Authorized: | ||||||
Ordinary shares | 300,000,000 | 60,000 | 300,000,000 | 60,000 | ||
Preferred shares | 150,000,000 | 30,000 | 150,000,000 | 30,000 | ||
Total | 450,000,000 | 90,000 | 450,000,000 | 90,000 | ||
Issued and fully paid: | ||||||
Ordinary shares | 132,366,672 | 26,473 | 132,366,672 | 26,473 | ||
Of which held in treasury | 4,717,362 | 3,974,381 |
ACCOUNTING POLICY | ||
Share capital | ||
Ordinary shares are classified as share capital. Equity instruments are recorded at the proceeds received, net of direct issue costs. | ||
Share premium | ||
The share premium represents the amount by which the fair value of the consideration received exceeds the nominal value of shares issued. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. | ||
Treasury shares | ||
Own equity instruments that are reacquired (treasury shares) are recognized at cost and deducted from equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the group\u2019s own equity instruments. Upon reissue, any difference between the carrying amount (determined on a first-in, first-out basis) and the consideration is recognized in the retained earnings. | ||
(\u20ac in thousands) | Legal reserve participation | Cumulative translation reserve | Total legal reserve | Stock compensation reserve | Total other reserves | |||||
Balance as at 1 January 2022 | 65,757 | 14,475 | 80,232 | 18,940 | 99,172 | |||||
Currency translation differences | 0 | 2,406 | 2,406 | 0 | 2,406 | |||||
Fair value remeasurement of financial instruments | -3,090 | 0 | -3,090 | 0 | -3,090 | |||||
Stock compensation expenses | 0 | 0 | 0 | 10,532 | 10,532 | |||||
Transfers between reserves | -26,622 | 0 | -26,622 | -9,581 | -36,203 | |||||
Balance as at 31 December 2022 | 36,045 | 16,881 | 52,926 | 19,891 | 72,817 | |||||
Currency translation differences | 0 | -570 | -570 | 0 | -570 | |||||
Fair value remeasurement of financial instruments | 995 | 0 | 995 | 0 | 995 | |||||
Stock compensation expenses | 0 | 0 | 0 | 12,801 | 12,801 | |||||
Reclassification from liability | 0 | 0 | 0 | 2,296 | 2,296 | |||||
Transfers between reserves | -21,586 | 0 | -21,586 | -10,008 | -31,594 | |||||
Balance as at 31 December 2023 | 15,454 | 16,311 | 31,765 | 24,980 | 56,745 |
Name | % issued capital or % voting rights |
Harold Goddijn \u2013 Founder | 11.7% |
Corinne Vigreux \u2013 Founder | 11.3% |
Peter Frans Pauwels \u2013 Founder | 11.1% |
Pieter Geelen \u2013 Founder | 10.7% |
J.H.H. de Mol | between 5% and 10% |
Teslin Participaties Co\u00f6peratief U.A. | between 5% and 10% |
DNB Asset Management AS | between 3% and 5% |
TomTom N.V. | 3.6% |
2023 | 2022 | |||||
Number | (\u20ac in thousands) | Number | (\u20ac in thousands) | |||
Authorized: | ||||||
Ordinary shares | 300,000,000 | 60,000 | 300,000,000 | 60,000 | ||
Preferred shares | 150,000,000 | 30,000 | 150,000,000 | 30,000 | ||
Total | 450,000,000 | 90,000 | 450,000,000 | 90,000 | ||
Issued and fully paid: | ||||||
Ordinary shares | 132,366,672 | 26,473 | 132,366,672 | 26,473 | ||
Of which held in treasury | 4,717,362 | 3,974,381 |
Name | % issued capital or % voting rights |
Harold Goddijn \u2013 Founder | 11.7% |
Corinne Vigreux \u2013 Founder | 11.3% |
Peter Frans Pauwels \u2013 Founder | 11.1% |
Pieter Geelen \u2013 Founder | 10.7% |
J.H.H. de Mol | between 5% and 10% |
Teslin Participaties Co\u00f6peratief U.A. | between 5% and 10% |
DNB Asset Management AS | between 3% and 5% |
TomTom N.V. | 3.6% |
(\u20ac) | Salary and bonus1 | Other short- term benefits2 | Post- employment benefits | Long-term incentives | Total remuneration3 | |||||
2023 | ||||||||||
Management Board and Senior Leadership Team | 5,966,177 | 166,475 | 246,491 | 3,391,562 | 9,770,705 | |||||
Supervisory Board | 280,000 | 0 | 0 | 0 | 280,000 | |||||
Total remuneration | 6,246,177 | 166,475 | 246,491 | 3,391,562 | 10,050,705 | |||||
2022 | ||||||||||
Management Board and Senior Leadership Team | 6,196,965 | 108,825 | 241,598 | 3,601,158 | 10,148,546 | |||||
Supervisory Board | 236,790 | 0 | 0 | 0 | 236,790 | |||||
Total remuneration | 6,433,755 | 108,825 | 241,598 | 3,601,158 | 10,385,336 |
ACCOUNTING POLICY | ||
The revenue recognition policy for each type of revenue or combination is presented below. | ||
License revenue | ||
License revenue is generated through licensing of digital map content and/or navigation software to B2B Location Technology customers and through the sale of map update services directly to the end-customers. | ||
In the B2B license arrangements, the license of our navigation software is typically granted as \u2018right to use\u2019 license while the license of digital map content can either be granted as \u2018right to access\u2019 and/or \u2018right to use\u2019. Right to access licenses provide the customer the right to access TomTom\u2019s map data which is continuously developed and enhanced during the contract period. Right to use licenses are those that only provide the customer the right to use certain map data or software as it exists at the moment the control passes to the customer. This does not give the customer the right to receive future updates or upgrades other than those that can be considered as minor enhancements or bug fixes. | ||
Revenue from \u2018right to access\u2019 licenses is recognized over the (estimated) period during which TomTom is obliged to provide access to the customers. For royalty-based arrangements, the revenue is either recognized based on (estimated) reported royalties, as typically the royalties reflect the usage and benefits to the customers or based on time as progress measure but restricted to the amount of the (estimated) reported royalties. When restrictions in license terms result in multiple individual licenses in royalty-based arrangements for maps, each reported unit of usage is treated as a separate license or subscription. The initial map and map updates for each newly activated subscription are treated as two separate performance obligations. The transaction price allocated to the initial map is recognized immediately when the customer installs our map while the portion allocated to the map update service is recognized on a straight-line basis over the applicable service period. | ||
License revenue for \u2018right to use\u2019 licenses is recognized at the moment the control passes to the customer, except for the usage-based royalties, which are recognized when the usage has taken place based on royalties TomTom is entitled to for the period. | ||
When license arrangements include a minimum guarantee, the excess of the reported royalties above the guaranteed amount is only recognized when cumulative reported royalties have exceeded the minimum guarantee, unless the expected total royalties is estimated to be above the minimum. In this case, the revenue is recognized based on the royalties TomTom is entitled to. When contracts include an annual minimum instead of a contract minimum, the excess of royalties above the annual minimum is recognized in the respective period when the royalties exceed the annual minimum. | ||
To the extent possible, the group makes use of the practical expedient to use right to invoice as a measure of progress as long as the invoice reflects the benefits to the customer. | ||
Service revenue | ||
Service revenue includes revenue generated from the sale of traffic and travel information services to both B2B and/or end-customers, sale of online map and location-based services through hosted API solutions (Maps APIs) and providing connected navigation services. | ||
The (estimated) revenue relating to the service element is recognized over the agreed or estimated service period on a straight-line basis or based on the invoiced amount if such invoice reflects the benefit of the services to the customer over the service period. The service period for life-time traffic and map update service offering within Consumer is estimated at three years. | ||
Sale of goods | ||
Revenue from the sale of goods is generated primarily through the sale of Consumer navigation, Automotive hardware products and related accessories. Revenue from sale of goods is generally recognized at the moment the control passes to the customers. | ||
Bundled goods and services | ||
When products and services are offered as a bundle under one agreement or under a series of agreements that are commercially linked, the (estimated) total transaction price of the agreement is allocated to each of the identified \u2018distinct\u2019 performance obligation based on the relative stand-alone selling price of each element. Depending on their nature, the revenue from each of the \u2018distinct\u2019 performance obligations is recognized based on the applicable revenue recognition policy as described above. | ||
Non-cash consideration | ||
When an arrangement involves non-cash consideration, the value of the goods or services received is only included in the (estimated) total transaction price of the agreement if the goods and services received are distinct and their fair value can be reliably determined. When the fair value cannot be reliably determined, the value of the non-cash consideration is measured at the stand-alone selling price of the goods and services provided by the group. | ||
Contract balances | ||
The group uses the terms \u2018unbilled receivables\u2019 and \u2018deferred revenue\u2019 to describe contract assets and contract liabilities. The term \u2018Contract-related assets\u2019 is used to denote the aggregate balance of unbilled receivables and capitalized contract costs while \u2018Contract-related liabilities\u2019 refers to the collective balance of deferred revenue and other contract related liabilities. | ||
Contract costs | ||
Contract costs are capitalized only to the extent they are recoverable. Internal development costs relating to customer-specific customization of software and/or other technology platforms are capitalized as contract costs if they have no alternative use. The group does not capitalize costs to obtain multi-year contracts as they are not deemed to be material. | ||
Where the amortization period of an asset recognized for the costs to obtain a contract is one year or less, the costs are expensed. | ||
ACCOUNTING POLICY | ||
For defined contribution plans, the group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The group has no further payment obligations once the contributions have been paid. The contributions are recognized as employee benefit expenses when services have been rendered to the group. Prepaid contributions are recognized as an asset to the extent that a cash refund or reduction of future payments is available. | ||
In relation to the defined benefit plan, the group recognizes a liability based on the present value of the defined benefit obligation at the end of the reporting period. The defined benefit obligation is calculated at least annually using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and for which the terms to maturity approximate the terms of the related pension obligation. The service cost and the interest cost are recognized as pension costs, while the actuarial gains/losses are credited/charged to \u2018Other comprehensive income\u2019. | ||
ACCOUNTING POLICY | ||
The fair value of equity-settled stock compensation grants as measured at the date of grant is expensed on a straight-line basis over the vesting period. For options, the fair value at grant date is measured using the binomial tree model. For RSUs, the fair value at grant date is equal to the share price at the date of grant. The purchase of the RSUs under our employee share purchase plan is recognized through reclassification of the previously accrued employee bonus to the stock compensation reserve. The difference between the grant price and the share price at conversion date is recognized immediately in the income statement while the expenses for the additional RSUs are recognized over the vesting period taking into account the expected numbers that will vest and the (non-market-based) performance conditions. | ||
Cash-settled stock compensation plans are initially measured at the fair value of the liability which is expensed on a straight-line basis over the vesting period. The liability is remeasured at each balance sheet date to its fair value, reflected by the share price at balance sheet date, with any changes recognized immediately through profit and loss. | ||
All stock compensation expenses are based on the number of units that are expected to vest, the estimates of which are revised at each balance sheet date. | ||
ACCOUNTING POLICY | ||
Current and deferred taxes are recognized as an expense or income in the profit and loss account, except when they relate to items that arise from the initial accounting for a business combination or items credited or debited directly to equity. For the latter, the tax is also recognized either in Other comprehensive income or directly in equity. The group\u2019s income tax expense is calculated using tax rates that have been enacted or substantively enacted at the balance sheet date. Uncertain tax positions are included in current tax. The group recognizes uncertain tax provision when it is not probable that a particular tax treatment will be accepted by the tax authorities. | ||
ACCOUNTING POLICY | ||
Deferred taxes are calculated using the liability method. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes (accounting base) and the amounts used for income tax purposes (tax base). | ||
Deferred tax assets and liabilities are measured using the tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled, using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date. | ||
The measurement of deferred tax liabilities and deferred tax assets reflects the tax consequences that would follow from the manner in which the group expects, at the balance sheet date, to recover or settle the carrying amount of its assets and liabilities. | ||
Deferred tax assets are recognized when it is probable that sufficient taxable income will be available against which the deferred tax assets can be utilized. The carrying amounts of deferred tax assets are reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. | ||
Deferred income tax assets and liabilities are offset on the balance sheet when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes relate to income taxes levied by the same fiscal authority. | ||
ACCOUNTING POLICY | ||
Goodwill represents the excess of the costs of an acquisition over the fair value of the group\u2019s share of identifiable assets of the acquiree at the date of acquisition and is carried at cost less accumulated impairment losses. Goodwill is allocated to operating segments that are expected to benefit from the business combination in which the goodwill arose. | ||
Impairment testing | ||
Goodwill and intangible assets that have an indefinite useful life are tested for impairment at least annually, or whenever management identifies conditions that may indicate a risk of impairment. | ||
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). An impairment loss is recognized for the amount by which the asset\u2019s carrying amount exceeds its recoverable amount and is recognized immediately in the income statement. The recoverable amount is the higher of an asset\u2019s fair value less costs of disposal and its value in use. In estimating the recoverable amount, management is required to make an estimate of the expected future cash flows from the cash-generating unit in the forecasted period and also to determine a suitable discount rate in order to calculate the present value of those cash flows. Such estimates are subject to a certain degree of judgment and uncertainty. | ||
Impairments to goodwill are not subsequently reversed. | ||
ACCOUNTING POLICY | |||
Other intangible assets | |||
Other intangible assets includes assets that have been acquired, either through individual asset acquisitions or through business combinations, and assets that have been generated internally, such as the group\u2019s core technology and geographical content database. | |||
Internally generated intangible assets | |||
Internal development costs for core technology are recognized as an intangible asset if, and only if, all of the following have been demonstrated: | |||
\u2022 The technical feasibility to complete the project. \u2022 The intention to complete the intangible asset, and use or sell it. \u2022 The ability to use or sell the intangible asset. \u2022 How the intangible asset will generate probable future economic benefits. \u2022 The availability of adequate resources to complete the project. \u2022 The cost of developing the asset can be measured reliably. | |||
Internally generated databases are capitalized until a certain level of map quality is reached and ongoing activities focus on maintenance. Internal software costs relating to development of non-core software with an estimated average useful life of less than one year and engineering costs relating to the detailed manufacturing design of new products are expensed in the period in which they are incurred. The amount initially recognized for internally generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. All expenditures on research activities are expensed in the income statement as incurred. | |||
Acquired intangible assets | |||
Intangible assets acquired separately are initially recognized at cost, including directly attributable costs to bring the asset to its intended use. Intangible assets acquired in a business combination are identified and recognized separately from goodwill when they satisfy the definition of an intangible asset and their fair values can be measured reliably. The cost of such intangible assets is their fair value at the acquisition date. All intangible assets are subsequently carried at cost less accumulated amortization and accumulated impairment losses. | |||
The amortization of other intangible assets is recorded on a straight-line basis over the following estimated useful lives as follows: | |||
\u2022 Map content and mapmaking platform: 5-12 years. \u2022 Internally generated core technology: 3-6 years. \u2022 Acquired technology: 3-5 years. \u2022 Customer relationships: 5-13 years. \u2022 Computer software: 2-5 years. | |||
Impairment | |||
Intangible assets which have an indefinite useful life and intangible assets not yet ready for use are tested for impairment at least annually, or whenever management identifies conditions that may indicate a risk of impairment. Assets that are subject to amortization are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. In making this assessment we include climate-related consideration insofar they are visible and quantifiable. | |||
Testing is conducted as per the policy outlined in note 13. | |||
Non-financial assets, other than goodwill, which have been subject to an impairment, are reviewed for possible reversal of the impairment at each reporting date. | |||
ACCOUNTING POLICY | |||
Property, plant and equipment are stated at historical cost less accumulated depreciation and impairment charges. Depreciation is recorded on a straight-line basis over the estimated useful lives of the assets as follows: | |||
\u2022 Furniture and fixtures: 4-10 years. \u2022 Computer equipment and hardware: 2-7 years. \u2022 Leasehold improvements: 7-10 years. \u2022 Vehicles: 4 years. | |||
The estimated useful lives, residual values, and depreciation methods are reviewed at each year-end, with the effect that any changes in estimate are accounted for on a prospective basis. | |||
Impairment | |||
For the accounting policy relating to impairment refer to note 14 Other intangible assets. | |||
ACCOUNTING POLICY | ||
Leases as a lessee | ||
A contract is classified as a lease at the inception of the contract, if the contract conveys the right to control the use of an identified asset for a period in exchange for consideration. | ||
The group recognizes a right-of-use asset (lease asset) and a lease liability at the lease commencement date. The asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to restore the underlying asset, less any lease incentives received. | ||
The lease asset is subsequently depreciated using the straight-line method from the commencement date to the end of the useful life of the right-of-use asset, considered to be indicated by the lease term. The lease asset is periodically adjusted for certain remeasurements of the lease liability and impairment losses (if any). | ||
The lease liability is initially measured at the present value of outstanding lease payments, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the group\u2019s incremental borrowing rate. Generally, the group uses its incremental borrowing rate as the discount rate. The group separates payments for lease cars into lease components and non-lease components. | ||
The lease liability is measured at amortized cost using the effective interest method and is remeasured when there is a change in future lease payments arising from a change in an index or rate or if the group changes its assessment of whether it will exercise a purchase, extension or termination option. A corresponding adjustment is made to the carrying amount of the right- of-use asset with any excess over the carrying amount of the asset being recognized in profit or loss. | ||
Short-term leases and leases of low-value assets | ||
The group has elected not to recognize lease assets and lease liabilities for short-term (term of 12 months or less) leases and leases of low-value assets, including IT equipment. The group recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term. | ||
Extension options | ||
Extension options are mainly applicable to leased buildings. | ||
The group assesses whether it is reasonably certain to exercise the options at lease commencement and subsequently, if there is a change in circumstances within its control. Such assessment involves management judgment and estimate based on information at the time the assessments are made. | ||
Extension options are included in the lease term when the group has an economic incentive to exercise the option. The group considers available evidence at the time of the assessment, including potential favorable terms upon extension, potential termination penalties, the relative costs associated with potential relocation or termination of the lease, and the extent of leasehold improvements undertaken. | ||
The size and the relative importance of the lease premises as well as the availability of easily substitutable assets is taken into consideration when assessing whether the group has an economic incentive to extend a lease for which it holds an option to do so. | ||
ACCOUNTING POLICY | ||
Inventories are stated at the lower of cost and net realizable value. The cost of inventories comprises costs of purchase, assembly and conversion to finished products. The cost of inventories is determined using the first-in, first-out (FIFO) method, net of reserves for obsolescence and any excess stock. Net realizable value represents the estimated selling price less an estimate of the costs of completion and direct selling costs. | ||
ACCOUNTING POLICY | ||
Trade receivables that do not contain a significant financing component or for which the group has applied the practical expedient, are measured at the transaction price as disclosed in Revenue from contracts with customers (note 6), less expected credit loss allowances. For details of expected credit losses refer to note 27. | ||
ACCOUNTING POLICY | ||
Cash and cash equivalents | ||
Cash and cash equivalents are stated at face value and comprise cash on hand, deposits held on call with banks, and other short-term highly liquid investments which have a maturity of three months or less from the date of acquisition. They are readily convertible to a known amount of cash and subject to an insignificant risk of changes in value. | ||
Fixed-term deposits | ||
Fixed-term deposits have insignificant interest rate risk and maturity dates longer than three months but less than 12 months at the date of acquisition. | ||
ACCOUNTING POLICY | ||
Share capital | ||
Ordinary shares are classified as share capital. Equity instruments are recorded at the proceeds received, net of direct issue costs. | ||
Share premium | ||
The share premium represents the amount by which the fair value of the consideration received exceeds the nominal value of shares issued. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. | ||
Treasury shares | ||
Own equity instruments that are reacquired (treasury shares) are recognized at cost and deducted from equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the group\u2019s own equity instruments. Upon reissue, any difference between the carrying amount (determined on a first-in, first-out basis) and the consideration is recognized in the retained earnings. | ||
ACCOUNTING POLICY | ||
Basic earnings per share | ||
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the company by the weighted average number of ordinary shares outstanding during the year. Treasury shares are deducted from the number of ordinary shares outstanding on a weighted average basis. | ||
Diluted earnings per share | ||
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares arising from stock options and other equity-settled stock compensation plans. When the effect of the equity- settled stock compensation plans is anti-dilutive, the number is excluded from the calculation of diluted earnings. | ||
ACCOUNTING POLICY | ||
In determining the expected credit loss, the group applies the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance for all trade and unbilled receivables. As unbilled receivables share the same risk characteristics as trade receivables for similar types of contracts, the expected loss rates for trade receivables are considered a reasonable approximation of the loss rates for unbilled receivables. The expected credit loss rates are measured by grouping trade and unbilled receivables based on shared credit risk characteristics and days passed due. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. The expected loss allowances and any subsequent recoveries of amounts previously written off, are recognized in operating expenses within \u2018General and administrative\u2019 expenses. | ||
ACCOUNTING POLICY | |||
Financial assets | |||
The group classifies its financial assets, at initial recognition, as subsequently measured at amortized cost or at fair value through profit or loss or other comprehensive income. The classification depends on the purpose for which the financial assets were acquired. | |||
Financial assets at amortized cost | |||
Financial assets measured at amortized cost are financial assets which are held for the objective of collecting contractual cash flows which are fixed and determinable and consist solely of payments of principal and interest. They are initially recognized at fair value and subsequently measured at amortized cost (if the effect of time value is material) using the effective interest method, less any expected credit losses. Financial assets are included in current assets, except for those with maturities greater than 12 months after the balance sheet date, which are classified as non-current assets. For further details regarding expected credit losses, refer to note 27 Financial risk management. | |||
Financial assets at fair value through other comprehensive income | |||
Financial assets at fair value through other comprehensive income (OCI) represents investment in equity instruments carried at fair value. The group elected to recognize the changes in fair value through OCI. Dividend income is recognized in the profit or loss when the group's right to receive payment is established. The fair value of such instrument is determined using level 1 input. | |||
Financial assets and liabilities at fair value through profit or loss | |||
Derivatives are categorized at fair value through profit or loss unless they are designated as hedges. Derivatives are recorded as financial assets when the value of the derivative is positive in favor of the company; otherwise the derivative is classified as a financial liability. All derivative financial instruments are classified as current or non-current assets or liabilities based on their maturity dates and are accounted for at trade date. Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the group has substantially transferred all risks and rewards of ownership. | |||
The fair value of financial assets/liabilities carried at fair value through profit or loss is determined using valuation techniques that maximize the use of observable market data where it is available and which rely as little as possible on entity-specific estimates. In accordance with the fair value hierarchy established by IFRS 13, these types of inputs classify as level 2 inputs. | |||
Financial liabilities at amortized cost | |||
Financial liabilities issued by the group are classified according to the substance of the contractual arrangements entered into, and the definitions of a financial liability. Financial liabilities are initially recognized and measured at fair value and subsequently at amortized cost. | |||
Fair value estimation | |||
The group classifies fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. | |||
The fair value hierarchy divides the inputs into the following levels: | |||
\u2022 Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities. \u2022 Level 2: inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly (for example, derived from prices). \u2022 Level 3: inputs for the asset or liability that are not based on observable market data. | |||
ACCOUNTING POLICY | ||
Interest income and expense are recognized using the effective interest method. Interest expense includes all finance costs such as lease interest expense. | ||
ACCOUNTING POLICY | |||
Provisions are recognized when: | |||
\u2022 The group has a present obligation as a result of a past event. | |||
\u2022 It is probable that the group will be required to settle that obligation. | |||
\u2022 The amount can be reliably estimated. | |||
Provisions are measured at management\u2019s best estimate of the expenditure required to settle the obligation at the balance sheet date, and are discounted to present value where the effect is material. | |||
Warranty provision | |||
The group offers warranties mainly for its hardware products in Consumer (including Automotive hardware). Provisions for warranty costs are recognized at the date of sale of the relevant products, at management\u2019s best estimate of the expenditure required to settle the group\u2019s obligation. Warranty costs are recorded within cost of sales. | |||
Claims and litigation provision | |||
The group made a provision for potential legal, tax penalties and other risks in various jurisdictions. The legal matters consist mainly of intellectual property infringement issues. In the normal course of business, the group receives claims relating to allegations that it has infringed intellectual property assets. | |||
In such cases, the companies making the claims seek payments that may take the form of licenses and/or damages. While these claims will be resisted, some are likely to be settled by negotiation and others are expected to result in litigation. | |||
The cases and claims against the group often raise difficult and complex factual and legal issues which are subject to many uncertainties and complexities, including but not limited to the facts and circumstances of each particular case and claim, the jurisdiction in which each suit is brought, and the differences in applicable law. In the normal course of business, management consults with legal counsel and certain other experts on matters related to such claims and litigation. The group accrues a liability when it is determined that an adverse outcome is more likely than not, and the amount of the loss can be reasonably estimated. | |||
If the likelihood of an adverse outcome is reasonably possible or an estimate is not determinable, the matter is disclosed, provided it is material. Management is of the opinion that the provision is adequate to resolve these claims. | |||
Employee benefits provision | |||
Employee benefits provision relates mainly to the defined benefit pension plan in Germany and Belgium as disclosed in note 8 and excludes restructuring provision. | |||
Other provision | |||
Other provision includes provisions for restructuring which is recognized only when a detailed formal plan has been finalized and management has raised valid expectation to those affected that the plan will be implemented. | |||
Note | ||||
Revenue-related estimates | 6 | |||
Income tax | 12 | |||
Impairment of non-financial assets | 13 | - | 15 | |
Provisions and contingent assets/liabilities | 30 | - | 31 |
SIGNIFICANT ESTIMATES | ||
Significant revenue estimates include the estimates of various pricing allowances deducted from the revenue, estimates of the stand-alone selling price of various elements in bundled arrangements and the estimation of total transaction price for contracts with customers. | ||
Price allowance deductions | ||
The estimated sales return deduction for Consumer revenue is based upon historical data on the return rates and information on the inventory levels in the distribution channel. For sales incentives, including channel and end-user rebates, the reduction in revenue is based on the group\u2019s historical experience, taking into account future expectations on rebate payments. If there is excess stock at retailers when a price reduction becomes effective, the group will compensate its customers on the price difference for their existing stock, provided certain criteria are met. To reflect the costs related to known price reductions in the income statement, an accrual is created against revenue at the time of sale based on an estimate of the inventory levels in the channel and future price reductions. | ||
Relative stand-alone selling price | ||
The relative stand-alone selling price of each element in a bundled arrangement is based on the available stand-alone selling price or is estimated using methods allowed under IFRS, such as the cost plus reasonable margin method, residual method or a combination thereof. In making such estimates, management makes use of judgment and assumptions to arrive at an outcome that best reflects a transaction\u2019s substance. Total deferred revenue balance relating to the elements deferred under bundled arrangements at 31 December 2023 amounted to \u20ac9 million (31 December 2022: \u20ac18 million). | ||
Contract determination and total transaction price | ||
Arrangements and contracting with Automotive customers are very specific and complex in nature. For each arrangement, management must make an assessment and judgment as to whether the agreement signed with the OEM should be treated as a contract under IFRS 15 or whether it serves as a framework agreement for future installation or activation of services. When the latter is the case, each of the activated individual subscriptions is treated as the contract as meant by IFRS 15 (referred to as 'subscription contracts'). If the overall agreement with the OEM is treated as a single contract, then management treats the future usage as variable consideration of the contract. | ||
The (expected) total transaction price of such contracts needs to be estimated at the inception of the contract and each future reporting date. Such estimates particularly relate to expected usage of our licenses and/or services which may be susceptible to factors outside our influence such as the developments in the market and industry in which our customer operates. In making such estimates management makes use of input from different sources such as historical experience, estimated sales volumes of customers as well as other relevant sources. The estimated variable consideration is only taken into account to the extent that management believes that it is highly probable that it will not be subject to significant reversal in the future. | ||
SIGNIFICANT ESTIMATES | ||
The determination of the group\u2019s provision for income tax as well as deferred tax assets and liabilities involves significant judgments and estimates on certain matters and transactions, for which the ultimate outcome may be uncertain. | ||
The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the countries where the deferred tax assets originated and the periods during which the tax losses or temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. | ||
If the final outcome or a new estimate differs from the group\u2019s estimates, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made. | ||
SIGNIFICANT ESTIMATES | |||
Impairment test of goodwill | |||
The methodologies as well as assumptions applied in performing our year-end goodwill impairment test for Location Technology are set out below. | |||
The fair value less costs of disposal calculation resulted in a higher recoverable amount. The calculations of fair value less costs of disposal for Location Technology uses post-tax cash flow projections based on financial forecasts approved by management covering a five-year period (forecasted period) including terminal value. | |||
Management\u2019s cash flow projections for Location Technology in the forecast period are based on management\u2019s assumptions on the expected revenue developments, gross margin, and operating margin after allocation of operating expenses from shared units, taking into account management\u2019s expectation of market size and market share development as well as new market opportunities. Our estimates include considerations for climate-related risks and opportunities insofar as they are visible and quantifiable. | |||
Location Technology revenue is projected to grow in line with management\u2019s mid- and long- term plan in the forecast period. Given the limited visibility on longer-term growth, growth rates in later years are more subject to uncertainty compared with earlier years. Gross and operating margin projections for each segment are consistent with expected revenue developments. | |||
The growth rates after the forecast period as well as the discount rate used are presented in the table below. The input to the group\u2019s key assumptions include those that are based on non- observable market data (level 3 input in accordance with IFRS 13). | |||
2023 | Location Technology | ||
Revenue \u2013 perpetual growth1 | 2.0% | ||
Discount rate2 | 9.5% | ||
2022 | |||
Revenue \u2013 perpetual growth1 | 2.0% | ||
Discount rate2 | 9.5% | ||
1. Weighted average growth rate used to extrapolate cash flows beyond the forecasted period. 2. Post-tax discount rate applied to the cash flow projections. | |||
Discount rates used are post-tax and reflect specific risks relating to the relevant operating segments and market uncertainties in general. | |||
Management considered the effects of applying a pre-tax approach and concluded that this will not materially change the outcome of the impairment test. | |||
Expectations and input to the impairment calculation, as well as its outcome, were compared with available external information from analysts and, to the extent available, information on recent comparable transactions (merger and acquisition activities of comparable companies). | |||
The sensitivity test for Location Technology showed that a reasonably possible change in any of the above-mentioned key assumptions as well as other assumptions in the forecasted period would not cause the fair value less costs of disposal to fall below the level of the carrying value. | |||
SIGNIFICANT ESTIMATES | ||
Management made use of assumptions and judgment in assessing the expected future economic benefits that can be attributed to the internally generated technology, databases and tools, as well as their expected useful lives. For internally generated databases, assumptions are also made on the level of completion, at which point the capitalization is discontinued and future activities are considered to be maintenance. | ||
Such estimates are made on a regular basis, as they can be significantly affected by changes in technology and other factors. | ||
Impairment of intangible assets | ||
No impairment charge has been recorded for other intangible assets in either period presented. | ||
SIGNIFICANT ESTIMATES | ||
Warranty provision | ||
Management estimates the related provision for future warranty claims based on historical warranty claim information, as well as evaluating recent trends that might suggest that past cost information may differ from future claims. From the total warranty provision of \u20ac3 million (2022: \u20ac3 million), it is estimated that an amount of \u20ac1 million (2022: \u20ac2 million) will be utilized within 12 months while the remaining will be utilized between 1-3 years. | ||
Claims and litigation provision | ||
The methodology used to determine the amount of the liability requires significant judgments and estimates regarding the costs of settling asserted claims. Due to the fact that there is limited historical data available, the estimated liability cannot be based upon recent settlement experience for similar types of claims. | ||
Based on the best estimate, the portion of the claims and litigation provision expected to be settled in the coming 12 months amounts to approximately \u20ac0.7 million (2022: \u20ac0.4 million). | ||
Note | ||||
Revenue-related estimates | 6 | |||
Income tax | 12 | |||
Impairment of non-financial assets | 13 | - | 15 | |
Provisions and contingent assets/liabilities | 30 | - | 31 |
SIGNIFICANT ESTIMATES | ||
Significant revenue estimates include the estimates of various pricing allowances deducted from the revenue, estimates of the stand-alone selling price of various elements in bundled arrangements and the estimation of total transaction price for contracts with customers. | ||
Price allowance deductions | ||
The estimated sales return deduction for Consumer revenue is based upon historical data on the return rates and information on the inventory levels in the distribution channel. For sales incentives, including channel and end-user rebates, the reduction in revenue is based on the group\u2019s historical experience, taking into account future expectations on rebate payments. If there is excess stock at retailers when a price reduction becomes effective, the group will compensate its customers on the price difference for their existing stock, provided certain criteria are met. To reflect the costs related to known price reductions in the income statement, an accrual is created against revenue at the time of sale based on an estimate of the inventory levels in the channel and future price reductions. | ||
Relative stand-alone selling price | ||
The relative stand-alone selling price of each element in a bundled arrangement is based on the available stand-alone selling price or is estimated using methods allowed under IFRS, such as the cost plus reasonable margin method, residual method or a combination thereof. In making such estimates, management makes use of judgment and assumptions to arrive at an outcome that best reflects a transaction\u2019s substance. Total deferred revenue balance relating to the elements deferred under bundled arrangements at 31 December 2023 amounted to \u20ac9 million (31 December 2022: \u20ac18 million). | ||
Contract determination and total transaction price | ||
Arrangements and contracting with Automotive customers are very specific and complex in nature. For each arrangement, management must make an assessment and judgment as to whether the agreement signed with the OEM should be treated as a contract under IFRS 15 or whether it serves as a framework agreement for future installation or activation of services. When the latter is the case, each of the activated individual subscriptions is treated as the contract as meant by IFRS 15 (referred to as 'subscription contracts'). If the overall agreement with the OEM is treated as a single contract, then management treats the future usage as variable consideration of the contract. | ||
The (expected) total transaction price of such contracts needs to be estimated at the inception of the contract and each future reporting date. Such estimates particularly relate to expected usage of our licenses and/or services which may be susceptible to factors outside our influence such as the developments in the market and industry in which our customer operates. In making such estimates management makes use of input from different sources such as historical experience, estimated sales volumes of customers as well as other relevant sources. The estimated variable consideration is only taken into account to the extent that management believes that it is highly probable that it will not be subject to significant reversal in the future. | ||
SIGNIFICANT ESTIMATES | ||
The determination of the group\u2019s provision for income tax as well as deferred tax assets and liabilities involves significant judgments and estimates on certain matters and transactions, for which the ultimate outcome may be uncertain. | ||
The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the countries where the deferred tax assets originated and the periods during which the tax losses or temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. | ||
If the final outcome or a new estimate differs from the group\u2019s estimates, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made. | ||
SIGNIFICANT ESTIMATES | |||
Impairment test of goodwill | |||
The methodologies as well as assumptions applied in performing our year-end goodwill impairment test for Location Technology are set out below. | |||
The fair value less costs of disposal calculation resulted in a higher recoverable amount. The calculations of fair value less costs of disposal for Location Technology uses post-tax cash flow projections based on financial forecasts approved by management covering a five-year period (forecasted period) including terminal value. | |||
Management\u2019s cash flow projections for Location Technology in the forecast period are based on management\u2019s assumptions on the expected revenue developments, gross margin, and operating margin after allocation of operating expenses from shared units, taking into account management\u2019s expectation of market size and market share development as well as new market opportunities. Our estimates include considerations for climate-related risks and opportunities insofar as they are visible and quantifiable. | |||
Location Technology revenue is projected to grow in line with management\u2019s mid- and long- term plan in the forecast period. Given the limited visibility on longer-term growth, growth rates in later years are more subject to uncertainty compared with earlier years. Gross and operating margin projections for each segment are consistent with expected revenue developments. | |||
The growth rates after the forecast period as well as the discount rate used are presented in the table below. The input to the group\u2019s key assumptions include those that are based on non- observable market data (level 3 input in accordance with IFRS 13). | |||
2023 | Location Technology | ||
Revenue \u2013 perpetual growth1 | 2.0% | ||
Discount rate2 | 9.5% | ||
2022 | |||
Revenue \u2013 perpetual growth1 | 2.0% | ||
Discount rate2 | 9.5% | ||
1. Weighted average growth rate used to extrapolate cash flows beyond the forecasted period. 2. Post-tax discount rate applied to the cash flow projections. | |||
Discount rates used are post-tax and reflect specific risks relating to the relevant operating segments and market uncertainties in general. | |||
Management considered the effects of applying a pre-tax approach and concluded that this will not materially change the outcome of the impairment test. | |||
Expectations and input to the impairment calculation, as well as its outcome, were compared with available external information from analysts and, to the extent available, information on recent comparable transactions (merger and acquisition activities of comparable companies). | |||
The sensitivity test for Location Technology showed that a reasonably possible change in any of the above-mentioned key assumptions as well as other assumptions in the forecasted period would not cause the fair value less costs of disposal to fall below the level of the carrying value. | |||
SIGNIFICANT ESTIMATES | ||
Management made use of assumptions and judgment in assessing the expected future economic benefits that can be attributed to the internally generated technology, databases and tools, as well as their expected useful lives. For internally generated databases, assumptions are also made on the level of completion, at which point the capitalization is discontinued and future activities are considered to be maintenance. | ||
Such estimates are made on a regular basis, as they can be significantly affected by changes in technology and other factors. | ||
Impairment of intangible assets | ||
No impairment charge has been recorded for other intangible assets in either period presented. | ||
SIGNIFICANT ESTIMATES | ||
Warranty provision | ||
Management estimates the related provision for future warranty claims based on historical warranty claim information, as well as evaluating recent trends that might suggest that past cost information may differ from future claims. From the total warranty provision of \u20ac3 million (2022: \u20ac3 million), it is estimated that an amount of \u20ac1 million (2022: \u20ac2 million) will be utilized within 12 months while the remaining will be utilized between 1-3 years. | ||
Claims and litigation provision | ||
The methodology used to determine the amount of the liability requires significant judgments and estimates regarding the costs of settling asserted claims. Due to the fact that there is limited historical data available, the estimated liability cannot be based upon recent settlement experience for similar types of claims. | ||
Based on the best estimate, the portion of the claims and litigation provision expected to be settled in the coming 12 months amounts to approximately \u20ac0.7 million (2022: \u20ac0.4 million). | ||
(\u20ac in thousands) | 2023 | 2022 | |||
Location Technology | 499,869 | 446,309 | |||
External customers | 490,664 | 436,402 | |||
Inter-segment | 9,205 | 9,907 | |||
Consumer | 94,096 | 99,941 | |||
Eliminations | -9,205 | -9,907 | |||
Total revenue | 584,760 | 536,343 | |||
The EBIT of each segment is as follows: | |||||
Location Technology | -11,309 | -71,240 | |||
Consumer | 6,932 | 6,466 | |||
Total segment operating result (segment EBIT) | -4,377 | -64,774 | |||
The EBITDA of each segment is as follows: | |||||
Location Technology | 31,122 | -15,581 | |||
Consumer | 7,775 | 7,403 | |||
Total segment EBITDA1 | 38,897 | -8,178 |
(\u20ac in thousands) | 2023 | 2022 | ||
Total segment EBIT | -4,377 | -64,774 | ||
Unallocated expenses1 | -15,631 | -32,839 | ||
Financial result | 6,000 | 2,818 | ||
Result before tax | -14,008 | -94,795 |
(\u20ac in thousands) | 2023 | 2022 | ||
External revenue by products and services | ||||
License revenue | 331,236 | 299,491 | ||
Rendering of services | 188,610 | 166,003 | ||
Sale of goods | 64,914 | 70,849 | ||
Total revenue | 584,760 | 536,343 | ||
Revenue by timing of revenue recognition | ||||
Goods and services transferred at a point in time | 88,965 | 97,567 | ||
Goods and services transferred over time | 495,795 | 438,776 | ||
Total revenue | 584,760 | 536,343 | ||
External revenue by geographical areas | ||||
Europe | 349,600 | 316,169 | ||
North America | 136,702 | 137,125 | ||
Rest of world | 98,458 | 83,049 | ||
Total revenue | 584,760 | 536,343 |
(\u20ac in thousands) | 2023 | 2022 | ||
Capitalized contract costs | 33,795 | 29,591 | ||
Other deferred cost of sales | 1,224 | 1,036 | ||
Other contract-related assets | 35,019 | 30,627 | ||
Other contract-related assets are disclosed as: | ||||
Current | 10,635 | 6,890 | ||
Non-current | 24,384 | 23,737 |
(\u20ac in thousands) | 2023 | 2022 | ||
Deferred revenue | 433,230 | 438,650 | ||
Other contract-related liabilities1 | 17,078 | 18,921 | ||
Total contract-related liabilities | 450,308 | 457,571 | ||
Of which: | ||||
Current | 183,249 | 194,528 | ||
Non-current | 267,059 | 263,043 |
(\u20ac in thousands) | 2023 | 2022 | ||
Location Technology | 413,610 | 417,974 | ||
Consumer | 19,620 | 20,676 | ||
Total deferred revenue | 433,230 | 438,650 |
(\u20ac in millions) | 2023 | 2022 | ||
Less than 1 year | 399 | 357 | ||
Between 1-5 years | 861 | 804 | ||
More than 5 years | 246 | 274 | ||
Total unfulfilled performance obligations | 1,506 | 1,435 |
ACCOUNTING POLICY | ||
The revenue recognition policy for each type of revenue or combination is presented below. | ||
License revenue | ||
License revenue is generated through licensing of digital map content and/or navigation software to B2B Location Technology customers and through the sale of map update services directly to the end-customers. | ||
In the B2B license arrangements, the license of our navigation software is typically granted as \u2018right to use\u2019 license while the license of digital map content can either be granted as \u2018right to access\u2019 and/or \u2018right to use\u2019. Right to access licenses provide the customer the right to access TomTom\u2019s map data which is continuously developed and enhanced during the contract period. Right to use licenses are those that only provide the customer the right to use certain map data or software as it exists at the moment the control passes to the customer. This does not give the customer the right to receive future updates or upgrades other than those that can be considered as minor enhancements or bug fixes. | ||
Revenue from \u2018right to access\u2019 licenses is recognized over the (estimated) period during which TomTom is obliged to provide access to the customers. For royalty-based arrangements, the revenue is either recognized based on (estimated) reported royalties, as typically the royalties reflect the usage and benefits to the customers or based on time as progress measure but restricted to the amount of the (estimated) reported royalties. When restrictions in license terms result in multiple individual licenses in royalty-based arrangements for maps, each reported unit of usage is treated as a separate license or subscription. The initial map and map updates for each newly activated subscription are treated as two separate performance obligations. The transaction price allocated to the initial map is recognized immediately when the customer installs our map while the portion allocated to the map update service is recognized on a straight-line basis over the applicable service period. | ||
License revenue for \u2018right to use\u2019 licenses is recognized at the moment the control passes to the customer, except for the usage-based royalties, which are recognized when the usage has taken place based on royalties TomTom is entitled to for the period. | ||
When license arrangements include a minimum guarantee, the excess of the reported royalties above the guaranteed amount is only recognized when cumulative reported royalties have exceeded the minimum guarantee, unless the expected total royalties is estimated to be above the minimum. In this case, the revenue is recognized based on the royalties TomTom is entitled to. When contracts include an annual minimum instead of a contract minimum, the excess of royalties above the annual minimum is recognized in the respective period when the royalties exceed the annual minimum. | ||
To the extent possible, the group makes use of the practical expedient to use right to invoice as a measure of progress as long as the invoice reflects the benefits to the customer. | ||
Service revenue | ||
Service revenue includes revenue generated from the sale of traffic and travel information services to both B2B and/or end-customers, sale of online map and location-based services through hosted API solutions (Maps APIs) and providing connected navigation services. | ||
The (estimated) revenue relating to the service element is recognized over the agreed or estimated service period on a straight-line basis or based on the invoiced amount if such invoice reflects the benefit of the services to the customer over the service period. The service period for life-time traffic and map update service offering within Consumer is estimated at three years. | ||
Sale of goods | ||
Revenue from the sale of goods is generated primarily through the sale of Consumer navigation, Automotive hardware products and related accessories. Revenue from sale of goods is generally recognized at the moment the control passes to the customers. | ||
Bundled goods and services | ||
When products and services are offered as a bundle under one agreement or under a series of agreements that are commercially linked, the (estimated) total transaction price of the agreement is allocated to each of the identified \u2018distinct\u2019 performance obligation based on the relative stand-alone selling price of each element. Depending on their nature, the revenue from each of the \u2018distinct\u2019 performance obligations is recognized based on the applicable revenue recognition policy as described above. | ||
Non-cash consideration | ||
When an arrangement involves non-cash consideration, the value of the goods or services received is only included in the (estimated) total transaction price of the agreement if the goods and services received are distinct and their fair value can be reliably determined. When the fair value cannot be reliably determined, the value of the non-cash consideration is measured at the stand-alone selling price of the goods and services provided by the group. | ||
Contract balances | ||
The group uses the terms \u2018unbilled receivables\u2019 and \u2018deferred revenue\u2019 to describe contract assets and contract liabilities. The term \u2018Contract-related assets\u2019 is used to denote the aggregate balance of unbilled receivables and capitalized contract costs while \u2018Contract-related liabilities\u2019 refers to the collective balance of deferred revenue and other contract related liabilities. | ||
Contract costs | ||
Contract costs are capitalized only to the extent they are recoverable. Internal development costs relating to customer-specific customization of software and/or other technology platforms are capitalized as contract costs if they have no alternative use. The group does not capitalize costs to obtain multi-year contracts as they are not deemed to be material. | ||
Where the amortization period of an asset recognized for the costs to obtain a contract is one year or less, the costs are expensed. | ||
SIGNIFICANT ESTIMATES | ||
Significant revenue estimates include the estimates of various pricing allowances deducted from the revenue, estimates of the stand-alone selling price of various elements in bundled arrangements and the estimation of total transaction price for contracts with customers. | ||
Price allowance deductions | ||
The estimated sales return deduction for Consumer revenue is based upon historical data on the return rates and information on the inventory levels in the distribution channel. For sales incentives, including channel and end-user rebates, the reduction in revenue is based on the group\u2019s historical experience, taking into account future expectations on rebate payments. If there is excess stock at retailers when a price reduction becomes effective, the group will compensate its customers on the price difference for their existing stock, provided certain criteria are met. To reflect the costs related to known price reductions in the income statement, an accrual is created against revenue at the time of sale based on an estimate of the inventory levels in the channel and future price reductions. | ||
Relative stand-alone selling price | ||
The relative stand-alone selling price of each element in a bundled arrangement is based on the available stand-alone selling price or is estimated using methods allowed under IFRS, such as the cost plus reasonable margin method, residual method or a combination thereof. In making such estimates, management makes use of judgment and assumptions to arrive at an outcome that best reflects a transaction\u2019s substance. Total deferred revenue balance relating to the elements deferred under bundled arrangements at 31 December 2023 amounted to \u20ac9 million (31 December 2022: \u20ac18 million). | ||
Contract determination and total transaction price | ||
Arrangements and contracting with Automotive customers are very specific and complex in nature. For each arrangement, management must make an assessment and judgment as to whether the agreement signed with the OEM should be treated as a contract under IFRS 15 or whether it serves as a framework agreement for future installation or activation of services. When the latter is the case, each of the activated individual subscriptions is treated as the contract as meant by IFRS 15 (referred to as 'subscription contracts'). If the overall agreement with the OEM is treated as a single contract, then management treats the future usage as variable consideration of the contract. | ||
The (expected) total transaction price of such contracts needs to be estimated at the inception of the contract and each future reporting date. Such estimates particularly relate to expected usage of our licenses and/or services which may be susceptible to factors outside our influence such as the developments in the market and industry in which our customer operates. In making such estimates management makes use of input from different sources such as historical experience, estimated sales volumes of customers as well as other relevant sources. The estimated variable consideration is only taken into account to the extent that management believes that it is highly probable that it will not be subject to significant reversal in the future. | ||
(\u20ac in thousands) | 2023 | 2022 | ||
External revenue by products and services | ||||
License revenue | 331,236 | 299,491 | ||
Rendering of services | 188,610 | 166,003 | ||
Sale of goods | 64,914 | 70,849 | ||
Total revenue | 584,760 | 536,343 | ||
Revenue by timing of revenue recognition | ||||
Goods and services transferred at a point in time | 88,965 | 97,567 | ||
Goods and services transferred over time | 495,795 | 438,776 | ||
Total revenue | 584,760 | 536,343 | ||
External revenue by geographical areas | ||||
Europe | 349,600 | 316,169 | ||
North America | 136,702 | 137,125 | ||
Rest of world | 98,458 | 83,049 | ||
Total revenue | 584,760 | 536,343 |
(\u20ac in thousands) | 2023 | 2022 | ||
Capitalized contract costs | 33,795 | 29,591 | ||
Other deferred cost of sales | 1,224 | 1,036 | ||
Other contract-related assets | 35,019 | 30,627 | ||
Other contract-related assets are disclosed as: | ||||
Current | 10,635 | 6,890 | ||
Non-current | 24,384 | 23,737 |
(\u20ac in thousands) | 2023 | 2022 | ||
Deferred revenue | 433,230 | 438,650 | ||
Other contract-related liabilities1 | 17,078 | 18,921 | ||
Total contract-related liabilities | 450,308 | 457,571 | ||
Of which: | ||||
Current | 183,249 | 194,528 | ||
Non-current | 267,059 | 263,043 |
(\u20ac in thousands) | 2023 | 2022 | ||
Location Technology | 413,610 | 417,974 | ||
Consumer | 19,620 | 20,676 | ||
Total deferred revenue | 433,230 | 438,650 |
(\u20ac in millions) | 2023 | 2022 | ||
Less than 1 year | 399 | 357 | ||
Between 1-5 years | 861 | 804 | ||
More than 5 years | 246 | 274 | ||
Total unfulfilled performance obligations | 1,506 | 1,435 |
ACCOUNTING POLICY | ||
The revenue recognition policy for each type of revenue or combination is presented below. | ||
License revenue | ||
License revenue is generated through licensing of digital map content and/or navigation software to B2B Location Technology customers and through the sale of map update services directly to the end-customers. | ||
In the B2B license arrangements, the license of our navigation software is typically granted as \u2018right to use\u2019 license while the license of digital map content can either be granted as \u2018right to access\u2019 and/or \u2018right to use\u2019. Right to access licenses provide the customer the right to access TomTom\u2019s map data which is continuously developed and enhanced during the contract period. Right to use licenses are those that only provide the customer the right to use certain map data or software as it exists at the moment the control passes to the customer. This does not give the customer the right to receive future updates or upgrades other than those that can be considered as minor enhancements or bug fixes. | ||
Revenue from \u2018right to access\u2019 licenses is recognized over the (estimated) period during which TomTom is obliged to provide access to the customers. For royalty-based arrangements, the revenue is either recognized based on (estimated) reported royalties, as typically the royalties reflect the usage and benefits to the customers or based on time as progress measure but restricted to the amount of the (estimated) reported royalties. When restrictions in license terms result in multiple individual licenses in royalty-based arrangements for maps, each reported unit of usage is treated as a separate license or subscription. The initial map and map updates for each newly activated subscription are treated as two separate performance obligations. The transaction price allocated to the initial map is recognized immediately when the customer installs our map while the portion allocated to the map update service is recognized on a straight-line basis over the applicable service period. | ||
License revenue for \u2018right to use\u2019 licenses is recognized at the moment the control passes to the customer, except for the usage-based royalties, which are recognized when the usage has taken place based on royalties TomTom is entitled to for the period. | ||
When license arrangements include a minimum guarantee, the excess of the reported royalties above the guaranteed amount is only recognized when cumulative reported royalties have exceeded the minimum guarantee, unless the expected total royalties is estimated to be above the minimum. In this case, the revenue is recognized based on the royalties TomTom is entitled to. When contracts include an annual minimum instead of a contract minimum, the excess of royalties above the annual minimum is recognized in the respective period when the royalties exceed the annual minimum. | ||
To the extent possible, the group makes use of the practical expedient to use right to invoice as a measure of progress as long as the invoice reflects the benefits to the customer. | ||
Service revenue | ||
Service revenue includes revenue generated from the sale of traffic and travel information services to both B2B and/or end-customers, sale of online map and location-based services through hosted API solutions (Maps APIs) and providing connected navigation services. | ||
The (estimated) revenue relating to the service element is recognized over the agreed or estimated service period on a straight-line basis or based on the invoiced amount if such invoice reflects the benefit of the services to the customer over the service period. The service period for life-time traffic and map update service offering within Consumer is estimated at three years. | ||
Sale of goods | ||
Revenue from the sale of goods is generated primarily through the sale of Consumer navigation, Automotive hardware products and related accessories. Revenue from sale of goods is generally recognized at the moment the control passes to the customers. | ||
Bundled goods and services | ||
When products and services are offered as a bundle under one agreement or under a series of agreements that are commercially linked, the (estimated) total transaction price of the agreement is allocated to each of the identified \u2018distinct\u2019 performance obligation based on the relative stand-alone selling price of each element. Depending on their nature, the revenue from each of the \u2018distinct\u2019 performance obligations is recognized based on the applicable revenue recognition policy as described above. | ||
Non-cash consideration | ||
When an arrangement involves non-cash consideration, the value of the goods or services received is only included in the (estimated) total transaction price of the agreement if the goods and services received are distinct and their fair value can be reliably determined. When the fair value cannot be reliably determined, the value of the non-cash consideration is measured at the stand-alone selling price of the goods and services provided by the group. | ||
Contract balances | ||
The group uses the terms \u2018unbilled receivables\u2019 and \u2018deferred revenue\u2019 to describe contract assets and contract liabilities. The term \u2018Contract-related assets\u2019 is used to denote the aggregate balance of unbilled receivables and capitalized contract costs while \u2018Contract-related liabilities\u2019 refers to the collective balance of deferred revenue and other contract related liabilities. | ||
Contract costs | ||
Contract costs are capitalized only to the extent they are recoverable. Internal development costs relating to customer-specific customization of software and/or other technology platforms are capitalized as contract costs if they have no alternative use. The group does not capitalize costs to obtain multi-year contracts as they are not deemed to be material. | ||
Where the amortization period of an asset recognized for the costs to obtain a contract is one year or less, the costs are expensed. | ||
SIGNIFICANT ESTIMATES | ||
Significant revenue estimates include the estimates of various pricing allowances deducted from the revenue, estimates of the stand-alone selling price of various elements in bundled arrangements and the estimation of total transaction price for contracts with customers. | ||
Price allowance deductions | ||
The estimated sales return deduction for Consumer revenue is based upon historical data on the return rates and information on the inventory levels in the distribution channel. For sales incentives, including channel and end-user rebates, the reduction in revenue is based on the group\u2019s historical experience, taking into account future expectations on rebate payments. If there is excess stock at retailers when a price reduction becomes effective, the group will compensate its customers on the price difference for their existing stock, provided certain criteria are met. To reflect the costs related to known price reductions in the income statement, an accrual is created against revenue at the time of sale based on an estimate of the inventory levels in the channel and future price reductions. | ||
Relative stand-alone selling price | ||
The relative stand-alone selling price of each element in a bundled arrangement is based on the available stand-alone selling price or is estimated using methods allowed under IFRS, such as the cost plus reasonable margin method, residual method or a combination thereof. In making such estimates, management makes use of judgment and assumptions to arrive at an outcome that best reflects a transaction\u2019s substance. Total deferred revenue balance relating to the elements deferred under bundled arrangements at 31 December 2023 amounted to \u20ac9 million (31 December 2022: \u20ac18 million). | ||
Contract determination and total transaction price | ||
Arrangements and contracting with Automotive customers are very specific and complex in nature. For each arrangement, management must make an assessment and judgment as to whether the agreement signed with the OEM should be treated as a contract under IFRS 15 or whether it serves as a framework agreement for future installation or activation of services. When the latter is the case, each of the activated individual subscriptions is treated as the contract as meant by IFRS 15 (referred to as 'subscription contracts'). If the overall agreement with the OEM is treated as a single contract, then management treats the future usage as variable consideration of the contract. | ||
The (expected) total transaction price of such contracts needs to be estimated at the inception of the contract and each future reporting date. Such estimates particularly relate to expected usage of our licenses and/or services which may be susceptible to factors outside our influence such as the developments in the market and industry in which our customer operates. In making such estimates management makes use of input from different sources such as historical experience, estimated sales volumes of customers as well as other relevant sources. The estimated variable consideration is only taken into account to the extent that management believes that it is highly probable that it will not be subject to significant reversal in the future. | ||
(\u20ac in thousands) | 2023 | 2022 | ||
Deferred revenue | 433,230 | 438,650 | ||
Other contract-related liabilities1 | 17,078 | 18,921 | ||
Total contract-related liabilities | 450,308 | 457,571 | ||
Of which: | ||||
Current | 183,249 | 194,528 | ||
Non-current | 267,059 | 263,043 |
(\u20ac in thousands) | 2023 | 2022 | ||
Location Technology | 413,610 | 417,974 | ||
Consumer | 19,620 | 20,676 | ||
Total deferred revenue | 433,230 | 438,650 |
ACCOUNTING POLICY | ||
The revenue recognition policy for each type of revenue or combination is presented below. | ||
License revenue | ||
License revenue is generated through licensing of digital map content and/or navigation software to B2B Location Technology customers and through the sale of map update services directly to the end-customers. | ||
In the B2B license arrangements, the license of our navigation software is typically granted as \u2018right to use\u2019 license while the license of digital map content can either be granted as \u2018right to access\u2019 and/or \u2018right to use\u2019. Right to access licenses provide the customer the right to access TomTom\u2019s map data which is continuously developed and enhanced during the contract period. Right to use licenses are those that only provide the customer the right to use certain map data or software as it exists at the moment the control passes to the customer. This does not give the customer the right to receive future updates or upgrades other than those that can be considered as minor enhancements or bug fixes. | ||
Revenue from \u2018right to access\u2019 licenses is recognized over the (estimated) period during which TomTom is obliged to provide access to the customers. For royalty-based arrangements, the revenue is either recognized based on (estimated) reported royalties, as typically the royalties reflect the usage and benefits to the customers or based on time as progress measure but restricted to the amount of the (estimated) reported royalties. When restrictions in license terms result in multiple individual licenses in royalty-based arrangements for maps, each reported unit of usage is treated as a separate license or subscription. The initial map and map updates for each newly activated subscription are treated as two separate performance obligations. The transaction price allocated to the initial map is recognized immediately when the customer installs our map while the portion allocated to the map update service is recognized on a straight-line basis over the applicable service period. | ||
License revenue for \u2018right to use\u2019 licenses is recognized at the moment the control passes to the customer, except for the usage-based royalties, which are recognized when the usage has taken place based on royalties TomTom is entitled to for the period. | ||
When license arrangements include a minimum guarantee, the excess of the reported royalties above the guaranteed amount is only recognized when cumulative reported royalties have exceeded the minimum guarantee, unless the expected total royalties is estimated to be above the minimum. In this case, the revenue is recognized based on the royalties TomTom is entitled to. When contracts include an annual minimum instead of a contract minimum, the excess of royalties above the annual minimum is recognized in the respective period when the royalties exceed the annual minimum. | ||
To the extent possible, the group makes use of the practical expedient to use right to invoice as a measure of progress as long as the invoice reflects the benefits to the customer. | ||
Service revenue | ||
Service revenue includes revenue generated from the sale of traffic and travel information services to both B2B and/or end-customers, sale of online map and location-based services through hosted API solutions (Maps APIs) and providing connected navigation services. | ||
The (estimated) revenue relating to the service element is recognized over the agreed or estimated service period on a straight-line basis or based on the invoiced amount if such invoice reflects the benefit of the services to the customer over the service period. The service period for life-time traffic and map update service offering within Consumer is estimated at three years. | ||
Sale of goods | ||
Revenue from the sale of goods is generated primarily through the sale of Consumer navigation, Automotive hardware products and related accessories. Revenue from sale of goods is generally recognized at the moment the control passes to the customers. | ||
Bundled goods and services | ||
When products and services are offered as a bundle under one agreement or under a series of agreements that are commercially linked, the (estimated) total transaction price of the agreement is allocated to each of the identified \u2018distinct\u2019 performance obligation based on the relative stand-alone selling price of each element. Depending on their nature, the revenue from each of the \u2018distinct\u2019 performance obligations is recognized based on the applicable revenue recognition policy as described above. | ||
Non-cash consideration | ||
When an arrangement involves non-cash consideration, the value of the goods or services received is only included in the (estimated) total transaction price of the agreement if the goods and services received are distinct and their fair value can be reliably determined. When the fair value cannot be reliably determined, the value of the non-cash consideration is measured at the stand-alone selling price of the goods and services provided by the group. | ||
Contract balances | ||
The group uses the terms \u2018unbilled receivables\u2019 and \u2018deferred revenue\u2019 to describe contract assets and contract liabilities. The term \u2018Contract-related assets\u2019 is used to denote the aggregate balance of unbilled receivables and capitalized contract costs while \u2018Contract-related liabilities\u2019 refers to the collective balance of deferred revenue and other contract related liabilities. | ||
Contract costs | ||
Contract costs are capitalized only to the extent they are recoverable. Internal development costs relating to customer-specific customization of software and/or other technology platforms are capitalized as contract costs if they have no alternative use. The group does not capitalize costs to obtain multi-year contracts as they are not deemed to be material. | ||
Where the amortization period of an asset recognized for the costs to obtain a contract is one year or less, the costs are expensed. | ||
(\u20ac in thousands) | 2023 | 2022 | ||
Salaries | 237,997 | 240,862 | ||
Social security costs | 34,151 | 38,595 | ||
Pensions | 9,241 | 10,250 | ||
Stock compensation | 13,138 | 11,300 | ||
Temporary employee expenses | 18,008 | 13,690 | ||
Restructuring | 7,884 | 25,856 | ||
Other1 | 42,455 | 39,641 | ||
Total personnel expenses | 362,874 | 380,194 |
(\u20ac in thousands) | 2023 | 2022 | ||
Amortization | 22,458 | 32,835 | ||
Depreciation | 21,158 | 23,837 | ||
Total depreciation and amortization | 43,616 | 56,672 |
(\u20ac in thousands) | 2023 | 2022 | ||
Research and development expenses - Geographic data | 21,399 | 31,495 | ||
Research and development expenses - Application layer | 1,054 | 1,339 | ||
Sales and marketing expenses | 0 | 0 | ||
General and administrative expenses | 5 | 1 | ||
Total amortization | 22,458 | 32,835 |
(\u20ac in thousands) | 2023 | 2022 | ||
Salaries | 237,997 | 240,862 | ||
Social security costs | 34,151 | 38,595 | ||
Pensions | 9,241 | 10,250 | ||
Stock compensation | 13,138 | 11,300 | ||
Temporary employee expenses | 18,008 | 13,690 | ||
Restructuring | 7,884 | 25,856 | ||
Other1 | 42,455 | 39,641 | ||
Total personnel expenses | 362,874 | 380,194 |
(\u20ac in thousands) | 2023 | 2022 | ||
Research and development - Geographic data | 1,742 | 2,093 | ||
Research and development - Application layer | 1,183 | 1,217 | ||
Sales and marketing | 346 | 336 | ||
General and administrative | 437 | 481 | ||
Total FTE | 3,708 | 4,127 |
2023 | 2022 | |||||||
(\u20ac in thousands) | Plan Assets | Plan Liabilities | Plan Assets | Plan Liabilities | ||||
Present value as at 1 January | 27,524 | -30,230 | 25,348 | -33,130 | ||||
Return on assets | 843 | 209 | ||||||
Current service cost | 0 | -469 | 0 | -1,067 | ||||
Past service cost | 0 | 126 | 0 | 305 | ||||
Interest cost | 0 | -926 | 0 | -277 | ||||
28,367 | -31,499 | 25,557 | -34,169 | |||||
Remeasurements: | ||||||||
Experience gains due to change in demographical assumptions | 0 | -293 | 515 | -1,895 | ||||
Gains/losses from change in financial assumptions | -31 | -67 | 0 | 6,095 | ||||
-31 | -360 | 515 | 4,200 | |||||
Benefits and taxes paid | -902 | 902 | -235 | 235 | ||||
Employer\u2019s contributions | 1,206 | 0 | 1,191 | 0 | ||||
Employee contributions | 495 | -495 | 496 | -496 | ||||
Present value as at 31 December | 29,135 | -31,452 | 27,524 | -30,230 | ||||
Net defined benefit obligation | -2,317 | -2,706 |
(\u20ac in thousands) | 2023 | 2022 | ||
Present value as at 1 January | -7,488 | -10,326 | ||
Current service cost | -27 | -50 | ||
Interest cost | -268 | -102 | ||
-7,783 | -10,478 | |||
Remeasurements: | ||||
Experience (gains)/losses due to change in demographical assumptions | 164 | -351 | ||
(Gains)/losses from change in financial assumptions | -370 | 3,152 | ||
-206 | 2,801 | |||
Benefits paid | 323 | 189 | ||
Present value as at 31 December | -7,666 | -7,488 |
2023 | 2022 | |||||||
Belgium | Germany | Belgium | Germany | |||||
Discount rate | 3.2% | 4.1% | 3.1% | 3.7% | ||||
Average life expectancy1 | 14 | 17 | 14 | 17 |
Impact on defined benefit obligation | ||||
(\u20ac in thousands) | Belgium | Germany | ||
Discount rate increases by 0.5% | -864 | -293 | ||
Discount rate decreases by 0.5% | 1,013 | 350 |
ACCOUNTING POLICY | ||
For defined contribution plans, the group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The group has no further payment obligations once the contributions have been paid. The contributions are recognized as employee benefit expenses when services have been rendered to the group. Prepaid contributions are recognized as an asset to the extent that a cash refund or reduction of future payments is available. | ||
In relation to the defined benefit plan, the group recognizes a liability based on the present value of the defined benefit obligation at the end of the reporting period. The defined benefit obligation is calculated at least annually using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and for which the terms to maturity approximate the terms of the related pension obligation. The service cost and the interest cost are recognized as pension costs, while the actuarial gains/losses are credited/charged to \u2018Other comprehensive income\u2019. | ||
(\u20ac in thousands) | Warranty | Claims and litigation | Employee benefits | Other | Total1 | |||||
Balance as at 1 January 2022 | 5,935 | 9,474 | 21,407 | 3,205 | 40,021 | |||||
Increases in provisions | 1,297 | 455 | -429 | 31,054 | 32,377 | |||||
Utilized | -3,657 | 0 | -8,444 | -12,316 | -24,417 | |||||
Released | -204 | -4,441 | 0 | -4,925 | -9,570 | |||||
Reclassified | 0 | 0 | 0 | -9,154 | -9,154 | |||||
Balance as at 31 December 2022 | 3,371 | 5,488 | 12,534 | 7,864 | 29,257 | |||||
Increases in provisions | 1,742 | 206 | 205 | 12,533 | 14,686 | |||||
Utilized | -1,798 | 0 | -172 | -5,597 | -7,567 | |||||
Released1 | -400 | -3,553 | -572 | -55 | -4,580 | |||||
Reclassified | 0 | 0 | 0 | -6,076 | -6,076 | |||||
Balance as at 31 December 2023 | 2,915 | 2,141 | 11,995 | 8,669 | 25,720 |
(\u20ac in thousands) | 2023 | 2022 | ||
Research and development - Geographic data | 1,742 | 2,093 | ||
Research and development - Application layer | 1,183 | 1,217 | ||
Sales and marketing | 346 | 336 | ||
General and administrative | 437 | 481 | ||
Total FTE | 3,708 | 4,127 |
2023 | 2022 | |||||||
(\u20ac in thousands) | Plan Assets | Plan Liabilities | Plan Assets | Plan Liabilities | ||||
Present value as at 1 January | 27,524 | -30,230 | 25,348 | -33,130 | ||||
Return on assets | 843 | 209 | ||||||
Current service cost | 0 | -469 | 0 | -1,067 | ||||
Past service cost | 0 | 126 | 0 | 305 | ||||
Interest cost | 0 | -926 | 0 | -277 | ||||
28,367 | -31,499 | 25,557 | -34,169 | |||||
Remeasurements: | ||||||||
Experience gains due to change in demographical assumptions | 0 | -293 | 515 | -1,895 | ||||
Gains/losses from change in financial assumptions | -31 | -67 | 0 | 6,095 | ||||
-31 | -360 | 515 | 4,200 | |||||
Benefits and taxes paid | -902 | 902 | -235 | 235 | ||||
Employer\u2019s contributions | 1,206 | 0 | 1,191 | 0 | ||||
Employee contributions | 495 | -495 | 496 | -496 | ||||
Present value as at 31 December | 29,135 | -31,452 | 27,524 | -30,230 | ||||
Net defined benefit obligation | -2,317 | -2,706 |
(\u20ac in thousands) | 2023 | 2022 | ||
Present value as at 1 January | -7,488 | -10,326 | ||
Current service cost | -27 | -50 | ||
Interest cost | -268 | -102 | ||
-7,783 | -10,478 | |||
Remeasurements: | ||||
Experience (gains)/losses due to change in demographical assumptions | 164 | -351 | ||
(Gains)/losses from change in financial assumptions | -370 | 3,152 | ||
-206 | 2,801 | |||
Benefits paid | 323 | 189 | ||
Present value as at 31 December | -7,666 | -7,488 |
2023 | 2022 | |||||||
Belgium | Germany | Belgium | Germany | |||||
Discount rate | 3.2% | 4.1% | 3.1% | 3.7% | ||||
Average life expectancy1 | 14 | 17 | 14 | 17 |
Impact on defined benefit obligation | ||||
(\u20ac in thousands) | Belgium | Germany | ||
Discount rate increases by 0.5% | -864 | -293 | ||
Discount rate decreases by 0.5% | 1,013 | 350 |
ACCOUNTING POLICY | ||
For defined contribution plans, the group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The group has no further payment obligations once the contributions have been paid. The contributions are recognized as employee benefit expenses when services have been rendered to the group. Prepaid contributions are recognized as an asset to the extent that a cash refund or reduction of future payments is available. | ||
In relation to the defined benefit plan, the group recognizes a liability based on the present value of the defined benefit obligation at the end of the reporting period. The defined benefit obligation is calculated at least annually using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and for which the terms to maturity approximate the terms of the related pension obligation. The service cost and the interest cost are recognized as pension costs, while the actuarial gains/losses are credited/charged to \u2018Other comprehensive income\u2019. | ||
(\u20ac in thousands) | 2023 | 2022 | ||
Non-current | 14,841 | 18,237 | ||
Current | 10,879 | 11,020 | ||
Total provisions | 25,720 | 29,257 |
(\u20ac in thousands) | Warranty | Claims and litigation | Employee benefits | Other | Total1 | |||||
Balance as at 1 January 2022 | 5,935 | 9,474 | 21,407 | 3,205 | 40,021 | |||||
Increases in provisions | 1,297 | 455 | -429 | 31,054 | 32,377 | |||||
Utilized | -3,657 | 0 | -8,444 | -12,316 | -24,417 | |||||
Released | -204 | -4,441 | 0 | -4,925 | -9,570 | |||||
Reclassified | 0 | 0 | 0 | -9,154 | -9,154 | |||||
Balance as at 31 December 2022 | 3,371 | 5,488 | 12,534 | 7,864 | 29,257 | |||||
Increases in provisions | 1,742 | 206 | 205 | 12,533 | 14,686 | |||||
Utilized | -1,798 | 0 | -172 | -5,597 | -7,567 | |||||
Released1 | -400 | -3,553 | -572 | -55 | -4,580 | |||||
Reclassified | 0 | 0 | 0 | -6,076 | -6,076 | |||||
Balance as at 31 December 2023 | 2,915 | 2,141 | 11,995 | 8,669 | 25,720 |
ACCOUNTING POLICY | |||
Provisions are recognized when: | |||
\u2022 The group has a present obligation as a result of a past event. | |||
\u2022 It is probable that the group will be required to settle that obligation. | |||
\u2022 The amount can be reliably estimated. | |||
Provisions are measured at management\u2019s best estimate of the expenditure required to settle the obligation at the balance sheet date, and are discounted to present value where the effect is material. | |||
Warranty provision | |||
The group offers warranties mainly for its hardware products in Consumer (including Automotive hardware). Provisions for warranty costs are recognized at the date of sale of the relevant products, at management\u2019s best estimate of the expenditure required to settle the group\u2019s obligation. Warranty costs are recorded within cost of sales. | |||
Claims and litigation provision | |||
The group made a provision for potential legal, tax penalties and other risks in various jurisdictions. The legal matters consist mainly of intellectual property infringement issues. In the normal course of business, the group receives claims relating to allegations that it has infringed intellectual property assets. | |||
In such cases, the companies making the claims seek payments that may take the form of licenses and/or damages. While these claims will be resisted, some are likely to be settled by negotiation and others are expected to result in litigation. | |||
The cases and claims against the group often raise difficult and complex factual and legal issues which are subject to many uncertainties and complexities, including but not limited to the facts and circumstances of each particular case and claim, the jurisdiction in which each suit is brought, and the differences in applicable law. In the normal course of business, management consults with legal counsel and certain other experts on matters related to such claims and litigation. The group accrues a liability when it is determined that an adverse outcome is more likely than not, and the amount of the loss can be reasonably estimated. | |||
If the likelihood of an adverse outcome is reasonably possible or an estimate is not determinable, the matter is disclosed, provided it is material. Management is of the opinion that the provision is adequate to resolve these claims. | |||
Employee benefits provision | |||
Employee benefits provision relates mainly to the defined benefit pension plan in Germany and Belgium as disclosed in note 8 and excludes restructuring provision. | |||
Other provision | |||
Other provision includes provisions for restructuring which is recognized only when a detailed formal plan has been finalized and management has raised valid expectation to those affected that the plan will be implemented. | |||
SIGNIFICANT ESTIMATES | ||
Warranty provision | ||
Management estimates the related provision for future warranty claims based on historical warranty claim information, as well as evaluating recent trends that might suggest that past cost information may differ from future claims. From the total warranty provision of \u20ac3 million (2022: \u20ac3 million), it is estimated that an amount of \u20ac1 million (2022: \u20ac2 million) will be utilized within 12 months while the remaining will be utilized between 1-3 years. | ||
Claims and litigation provision | ||
The methodology used to determine the amount of the liability requires significant judgments and estimates regarding the costs of settling asserted claims. Due to the fact that there is limited historical data available, the estimated liability cannot be based upon recent settlement experience for similar types of claims. | ||
Based on the best estimate, the portion of the claims and litigation provision expected to be settled in the coming 12 months amounts to approximately \u20ac0.7 million (2022: \u20ac0.4 million). | ||
ACCOUNTING POLICY | ||
For defined contribution plans, the group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The group has no further payment obligations once the contributions have been paid. The contributions are recognized as employee benefit expenses when services have been rendered to the group. Prepaid contributions are recognized as an asset to the extent that a cash refund or reduction of future payments is available. | ||
In relation to the defined benefit plan, the group recognizes a liability based on the present value of the defined benefit obligation at the end of the reporting period. The defined benefit obligation is calculated at least annually using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and for which the terms to maturity approximate the terms of the related pension obligation. The service cost and the interest cost are recognized as pension costs, while the actuarial gains/losses are credited/charged to \u2018Other comprehensive income\u2019. | ||
ACCOUNTING POLICY | |||
Provisions are recognized when: | |||
\u2022 The group has a present obligation as a result of a past event. | |||
\u2022 It is probable that the group will be required to settle that obligation. | |||
\u2022 The amount can be reliably estimated. | |||
Provisions are measured at management\u2019s best estimate of the expenditure required to settle the obligation at the balance sheet date, and are discounted to present value where the effect is material. | |||
Warranty provision | |||
The group offers warranties mainly for its hardware products in Consumer (including Automotive hardware). Provisions for warranty costs are recognized at the date of sale of the relevant products, at management\u2019s best estimate of the expenditure required to settle the group\u2019s obligation. Warranty costs are recorded within cost of sales. | |||
Claims and litigation provision | |||
The group made a provision for potential legal, tax penalties and other risks in various jurisdictions. The legal matters consist mainly of intellectual property infringement issues. In the normal course of business, the group receives claims relating to allegations that it has infringed intellectual property assets. | |||
In such cases, the companies making the claims seek payments that may take the form of licenses and/or damages. While these claims will be resisted, some are likely to be settled by negotiation and others are expected to result in litigation. | |||
The cases and claims against the group often raise difficult and complex factual and legal issues which are subject to many uncertainties and complexities, including but not limited to the facts and circumstances of each particular case and claim, the jurisdiction in which each suit is brought, and the differences in applicable law. In the normal course of business, management consults with legal counsel and certain other experts on matters related to such claims and litigation. The group accrues a liability when it is determined that an adverse outcome is more likely than not, and the amount of the loss can be reasonably estimated. | |||
If the likelihood of an adverse outcome is reasonably possible or an estimate is not determinable, the matter is disclosed, provided it is material. Management is of the opinion that the provision is adequate to resolve these claims. | |||
Employee benefits provision | |||
Employee benefits provision relates mainly to the defined benefit pension plan in Germany and Belgium as disclosed in note 8 and excludes restructuring provision. | |||
Other provision | |||
Other provision includes provisions for restructuring which is recognized only when a detailed formal plan has been finalized and management has raised valid expectation to those affected that the plan will be implemented. | |||
ACCOUNTING POLICY | ||
For defined contribution plans, the group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The group has no further payment obligations once the contributions have been paid. The contributions are recognized as employee benefit expenses when services have been rendered to the group. Prepaid contributions are recognized as an asset to the extent that a cash refund or reduction of future payments is available. | ||
In relation to the defined benefit plan, the group recognizes a liability based on the present value of the defined benefit obligation at the end of the reporting period. The defined benefit obligation is calculated at least annually using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and for which the terms to maturity approximate the terms of the related pension obligation. The service cost and the interest cost are recognized as pension costs, while the actuarial gains/losses are credited/charged to \u2018Other comprehensive income\u2019. | ||
ACCOUNTING POLICY | ||
The fair value of equity-settled stock compensation grants as measured at the date of grant is expensed on a straight-line basis over the vesting period. For options, the fair value at grant date is measured using the binomial tree model. For RSUs, the fair value at grant date is equal to the share price at the date of grant. The purchase of the RSUs under our employee share purchase plan is recognized through reclassification of the previously accrued employee bonus to the stock compensation reserve. The difference between the grant price and the share price at conversion date is recognized immediately in the income statement while the expenses for the additional RSUs are recognized over the vesting period taking into account the expected numbers that will vest and the (non-market-based) performance conditions. | ||
Cash-settled stock compensation plans are initially measured at the fair value of the liability which is expensed on a straight-line basis over the vesting period. The liability is remeasured at each balance sheet date to its fair value, reflected by the share price at balance sheet date, with any changes recognized immediately through profit and loss. | ||
All stock compensation expenses are based on the number of units that are expected to vest, the estimates of which are revised at each balance sheet date. | ||
(\u20ac in thousands) | 2023 | 2022 | ||
Balance as at 1 January | 19,891 | 18,940 | ||
Stock compensation expense | 12,801 | 10,532 | ||
Transfer between reserves and/or liabilities | 462 | -847 | ||
Stock options exercised and settlement of restricted shares | -8,174 | -8,734 | ||
Balance as at 31 December | 24,980 | 19,891 |
2023 | 2022 | |||
Outstanding as at 1 January | 4,688,899 | 2,868,273 | ||
Granted | 2,500,468 | 3,095,644 | ||
Purchased | 375,268 | 0 | ||
Vested and settled | -1,084,393 | -924,131 | ||
Forfeited | -1,077,895 | -350,887 | ||
Outstanding as at 31 December | 5,402,347 | 4,688,899 |
Year of grant | Number outstanding at 31/12/2023 | Exercise price per share (\u20ac) | Weighted average remaining life | Number exercisable at 31/12/2023 | Weighted average exercise price (\u20ac) | |||||
2017 | 509,350 | 9.15 - 9.60 | 0.36 | 509,350 | 9.57 | |||||
2018 | 508,250 | 7.52 - 8.30 | 1.35 | 508,250 | 8.12 |
2023 | 2022 | |||||
Number | Weighted average exercise price (\u20ac) | Number | Weighted average exercise price (\u20ac) | |||
Outstanding as at 1 January | 1,633,171 | 8.61 | 2,451,001 | 8.35 | ||
Exercised | -48,500 | 7.78 | -518,610 | 7.81 | ||
Expired | -505,533 | 8.07 | -299,220 | 7.87 | ||
Forfeited | -61,538 | 10.06 | 0 | \u2014 | ||
Outstanding as at 31 December | 1,017,600 | 8.84 | 1,633,171 | 8.61 |
ACCOUNTING POLICY | ||
The fair value of equity-settled stock compensation grants as measured at the date of grant is expensed on a straight-line basis over the vesting period. For options, the fair value at grant date is measured using the binomial tree model. For RSUs, the fair value at grant date is equal to the share price at the date of grant. The purchase of the RSUs under our employee share purchase plan is recognized through reclassification of the previously accrued employee bonus to the stock compensation reserve. The difference between the grant price and the share price at conversion date is recognized immediately in the income statement while the expenses for the additional RSUs are recognized over the vesting period taking into account the expected numbers that will vest and the (non-market-based) performance conditions. | ||
Cash-settled stock compensation plans are initially measured at the fair value of the liability which is expensed on a straight-line basis over the vesting period. The liability is remeasured at each balance sheet date to its fair value, reflected by the share price at balance sheet date, with any changes recognized immediately through profit and loss. | ||
All stock compensation expenses are based on the number of units that are expected to vest, the estimates of which are revised at each balance sheet date. | ||
ACCOUNTING POLICY | ||
The fair value of equity-settled stock compensation grants as measured at the date of grant is expensed on a straight-line basis over the vesting period. For options, the fair value at grant date is measured using the binomial tree model. For RSUs, the fair value at grant date is equal to the share price at the date of grant. The purchase of the RSUs under our employee share purchase plan is recognized through reclassification of the previously accrued employee bonus to the stock compensation reserve. The difference between the grant price and the share price at conversion date is recognized immediately in the income statement while the expenses for the additional RSUs are recognized over the vesting period taking into account the expected numbers that will vest and the (non-market-based) performance conditions. | ||
Cash-settled stock compensation plans are initially measured at the fair value of the liability which is expensed on a straight-line basis over the vesting period. The liability is remeasured at each balance sheet date to its fair value, reflected by the share price at balance sheet date, with any changes recognized immediately through profit and loss. | ||
All stock compensation expenses are based on the number of units that are expected to vest, the estimates of which are revised at each balance sheet date. | ||
(\u20ac in thousands) | 2023 | 2022 | ||
Amortization | 22,458 | 32,835 | ||
Depreciation | 21,158 | 23,837 | ||
Total depreciation and amortization | 43,616 | 56,672 |
(\u20ac in thousands) | 2023 | 2022 | ||
Research and development expenses - Geographic data | 21,399 | 31,495 | ||
Research and development expenses - Application layer | 1,054 | 1,339 | ||
Sales and marketing expenses | 0 | 0 | ||
General and administrative expenses | 5 | 1 | ||
Total amortization | 22,458 | 32,835 |
(\u20ac in thousands) | 2023 | 2022 | ||
Current tax | -8,733 | -7,495 | ||
Deferred tax | 1,733 | -445 | ||
Total income tax | -7,000 | -7,940 |
2023 | 2022 | |||
Dutch tax rate | 25.8% | 25.8% | ||
Higher/(lower) weighted average statutory rate of group activities | 1.7% | 0.2% | ||
Income exempted from tax | 3.6% | 0.0% | ||
Non-deductible expenses | -30.8% | -4.0% | ||
Current year losses not capitalized/non-recognition of previously capitalized losses | -25.4% | -27.5% | ||
Effect of prior years\u2019 settlements and/or adjustments | 11.8% | -0.6% | ||
Other | -36.9% | -2.3% | ||
Effective tax rate | -50.2% | -8.4% |
ACCOUNTING POLICY | ||
Current and deferred taxes are recognized as an expense or income in the profit and loss account, except when they relate to items that arise from the initial accounting for a business combination or items credited or debited directly to equity. For the latter, the tax is also recognized either in Other comprehensive income or directly in equity. The group\u2019s income tax expense is calculated using tax rates that have been enacted or substantively enacted at the balance sheet date. Uncertain tax positions are included in current tax. The group recognizes uncertain tax provision when it is not probable that a particular tax treatment will be accepted by the tax authorities. | ||
(\u20ac in thousands) | Assessed losses & credits | Provisions | Long-term incentives | Intangible assets | Other | Total | ||||||
Balance as at 1 January 2022 | 4,280 | 3,833 | 836 | -5,905 | -2,863 | 181 | ||||||
(Charged)/credited to income statement | -1,569 | -745 | 149 | 1,720 | 0 | -445 | ||||||
Credited/(charged) to equity | 0 | -2,112 | 0 | 0 | 1,074 | -1,038 | ||||||
Currency translation differences | -19 | 36 | 0 | 39 | 0 | 56 | ||||||
Balance as at 31 December 2022 | 2,692 | 1,012 | 985 | -4,146 | -1,789 | -1,246 | ||||||
(Charged)/credited to income statement | -1,624 | 285 | -158 | 1,876 | 1,354 | 1,733 | ||||||
(Charged)/credited to equity | 0 | -86 | 0 | 0 | -300 | -386 | ||||||
Currency translation differences | -4 | -40 | 0 | 109 | 0 | 65 | ||||||
Balance as at 31 December 2023 | 1,064 | 1,170 | 827 | -2,161 | -735 | 166 |
(\u20ac in thousands) | 2023 | 2022 | ||
To be reversed within 12 months | -393 | -1,046 | ||
To be reversed after more than 12 months | 559 | -200 | ||
Total deferred tax | 166 | -1,246 |
(\u20ac in thousands) | 2023 | 2022 | ||
Deferred tax assets | 1,206 | 1,158 | ||
Deferred tax liabilities | -1,040 | -2,404 | ||
Total deferred tax | 166 | -1,246 |
ACCOUNTING POLICY | ||
Deferred taxes are calculated using the liability method. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes (accounting base) and the amounts used for income tax purposes (tax base). | ||
Deferred tax assets and liabilities are measured using the tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled, using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date. | ||
The measurement of deferred tax liabilities and deferred tax assets reflects the tax consequences that would follow from the manner in which the group expects, at the balance sheet date, to recover or settle the carrying amount of its assets and liabilities. | ||
Deferred tax assets are recognized when it is probable that sufficient taxable income will be available against which the deferred tax assets can be utilized. The carrying amounts of deferred tax assets are reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. | ||
Deferred income tax assets and liabilities are offset on the balance sheet when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes relate to income taxes levied by the same fiscal authority. | ||
SIGNIFICANT ESTIMATES | ||
The determination of the group\u2019s provision for income tax as well as deferred tax assets and liabilities involves significant judgments and estimates on certain matters and transactions, for which the ultimate outcome may be uncertain. | ||
The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the countries where the deferred tax assets originated and the periods during which the tax losses or temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. | ||
If the final outcome or a new estimate differs from the group\u2019s estimates, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made. | ||
ACCOUNTING POLICY | ||
Current and deferred taxes are recognized as an expense or income in the profit and loss account, except when they relate to items that arise from the initial accounting for a business combination or items credited or debited directly to equity. For the latter, the tax is also recognized either in Other comprehensive income or directly in equity. The group\u2019s income tax expense is calculated using tax rates that have been enacted or substantively enacted at the balance sheet date. Uncertain tax positions are included in current tax. The group recognizes uncertain tax provision when it is not probable that a particular tax treatment will be accepted by the tax authorities. | ||
(\u20ac in thousands) | Assessed losses & credits | Provisions | Long-term incentives | Intangible assets | Other | Total | ||||||
Balance as at 1 January 2022 | 4,280 | 3,833 | 836 | -5,905 | -2,863 | 181 | ||||||
(Charged)/credited to income statement | -1,569 | -745 | 149 | 1,720 | 0 | -445 | ||||||
Credited/(charged) to equity | 0 | -2,112 | 0 | 0 | 1,074 | -1,038 | ||||||
Currency translation differences | -19 | 36 | 0 | 39 | 0 | 56 | ||||||
Balance as at 31 December 2022 | 2,692 | 1,012 | 985 | -4,146 | -1,789 | -1,246 | ||||||
(Charged)/credited to income statement | -1,624 | 285 | -158 | 1,876 | 1,354 | 1,733 | ||||||
(Charged)/credited to equity | 0 | -86 | 0 | 0 | -300 | -386 | ||||||
Currency translation differences | -4 | -40 | 0 | 109 | 0 | 65 | ||||||
Balance as at 31 December 2023 | 1,064 | 1,170 | 827 | -2,161 | -735 | 166 |
(\u20ac in thousands) | 2023 | 2022 | ||
To be reversed within 12 months | -393 | -1,046 | ||
To be reversed after more than 12 months | 559 | -200 | ||
Total deferred tax | 166 | -1,246 |
(\u20ac in thousands) | 2023 | 2022 | ||
Deferred tax assets | 1,206 | 1,158 | ||
Deferred tax liabilities | -1,040 | -2,404 | ||
Total deferred tax | 166 | -1,246 |
ACCOUNTING POLICY | ||
Deferred taxes are calculated using the liability method. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes (accounting base) and the amounts used for income tax purposes (tax base). | ||
Deferred tax assets and liabilities are measured using the tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled, using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date. | ||
The measurement of deferred tax liabilities and deferred tax assets reflects the tax consequences that would follow from the manner in which the group expects, at the balance sheet date, to recover or settle the carrying amount of its assets and liabilities. | ||
Deferred tax assets are recognized when it is probable that sufficient taxable income will be available against which the deferred tax assets can be utilized. The carrying amounts of deferred tax assets are reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. | ||
Deferred income tax assets and liabilities are offset on the balance sheet when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes relate to income taxes levied by the same fiscal authority. | ||
SIGNIFICANT ESTIMATES | ||
The determination of the group\u2019s provision for income tax as well as deferred tax assets and liabilities involves significant judgments and estimates on certain matters and transactions, for which the ultimate outcome may be uncertain. | ||
The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the countries where the deferred tax assets originated and the periods during which the tax losses or temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. | ||
If the final outcome or a new estimate differs from the group\u2019s estimates, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made. | ||
ACCOUNTING POLICY | ||
Current and deferred taxes are recognized as an expense or income in the profit and loss account, except when they relate to items that arise from the initial accounting for a business combination or items credited or debited directly to equity. For the latter, the tax is also recognized either in Other comprehensive income or directly in equity. The group\u2019s income tax expense is calculated using tax rates that have been enacted or substantively enacted at the balance sheet date. Uncertain tax positions are included in current tax. The group recognizes uncertain tax provision when it is not probable that a particular tax treatment will be accepted by the tax authorities. | ||
ACCOUNTING POLICY | ||
Current and deferred taxes are recognized as an expense or income in the profit and loss account, except when they relate to items that arise from the initial accounting for a business combination or items credited or debited directly to equity. For the latter, the tax is also recognized either in Other comprehensive income or directly in equity. The group\u2019s income tax expense is calculated using tax rates that have been enacted or substantively enacted at the balance sheet date. Uncertain tax positions are included in current tax. The group recognizes uncertain tax provision when it is not probable that a particular tax treatment will be accepted by the tax authorities. | ||
ACCOUNTING POLICY | ||
Deferred taxes are calculated using the liability method. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes (accounting base) and the amounts used for income tax purposes (tax base). | ||
Deferred tax assets and liabilities are measured using the tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled, using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date. | ||
The measurement of deferred tax liabilities and deferred tax assets reflects the tax consequences that would follow from the manner in which the group expects, at the balance sheet date, to recover or settle the carrying amount of its assets and liabilities. | ||
Deferred tax assets are recognized when it is probable that sufficient taxable income will be available against which the deferred tax assets can be utilized. The carrying amounts of deferred tax assets are reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. | ||
Deferred income tax assets and liabilities are offset on the balance sheet when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes relate to income taxes levied by the same fiscal authority. | ||
(\u20ac in thousands) | 2023 | 2022 | ||
Less than 1 year | 59,187 | 55,692 | ||
Between 1-5 years | 30,305 | 40,064 | ||
More than 5 years | 1,553 | 630 | ||
Total commitments | 91,045 | 96,386 |
(\u20ac in thousands) | 2023 | 2022 | ||
Cost | 1,881,901 | 1,881,901 | ||
Accumulated impairment | -1,689,607 | -1,689,607 | ||
Balance as at 31 December | 192,294 | 192,294 |
ACCOUNTING POLICY | ||
Goodwill represents the excess of the costs of an acquisition over the fair value of the group\u2019s share of identifiable assets of the acquiree at the date of acquisition and is carried at cost less accumulated impairment losses. Goodwill is allocated to operating segments that are expected to benefit from the business combination in which the goodwill arose. | ||
Impairment testing | ||
Goodwill and intangible assets that have an indefinite useful life are tested for impairment at least annually, or whenever management identifies conditions that may indicate a risk of impairment. | ||
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). An impairment loss is recognized for the amount by which the asset\u2019s carrying amount exceeds its recoverable amount and is recognized immediately in the income statement. The recoverable amount is the higher of an asset\u2019s fair value less costs of disposal and its value in use. In estimating the recoverable amount, management is required to make an estimate of the expected future cash flows from the cash-generating unit in the forecasted period and also to determine a suitable discount rate in order to calculate the present value of those cash flows. Such estimates are subject to a certain degree of judgment and uncertainty. | ||
Impairments to goodwill are not subsequently reversed. | ||
SIGNIFICANT ESTIMATES | |||
Impairment test of goodwill | |||
The methodologies as well as assumptions applied in performing our year-end goodwill impairment test for Location Technology are set out below. | |||
The fair value less costs of disposal calculation resulted in a higher recoverable amount. The calculations of fair value less costs of disposal for Location Technology uses post-tax cash flow projections based on financial forecasts approved by management covering a five-year period (forecasted period) including terminal value. | |||
Management\u2019s cash flow projections for Location Technology in the forecast period are based on management\u2019s assumptions on the expected revenue developments, gross margin, and operating margin after allocation of operating expenses from shared units, taking into account management\u2019s expectation of market size and market share development as well as new market opportunities. Our estimates include considerations for climate-related risks and opportunities insofar as they are visible and quantifiable. | |||
Location Technology revenue is projected to grow in line with management\u2019s mid- and long- term plan in the forecast period. Given the limited visibility on longer-term growth, growth rates in later years are more subject to uncertainty compared with earlier years. Gross and operating margin projections for each segment are consistent with expected revenue developments. | |||
The growth rates after the forecast period as well as the discount rate used are presented in the table below. The input to the group\u2019s key assumptions include those that are based on non- observable market data (level 3 input in accordance with IFRS 13). | |||
2023 | Location Technology | ||
Revenue \u2013 perpetual growth1 | 2.0% | ||
Discount rate2 | 9.5% | ||
2022 | |||
Revenue \u2013 perpetual growth1 | 2.0% | ||
Discount rate2 | 9.5% | ||
1. Weighted average growth rate used to extrapolate cash flows beyond the forecasted period. 2. Post-tax discount rate applied to the cash flow projections. | |||
Discount rates used are post-tax and reflect specific risks relating to the relevant operating segments and market uncertainties in general. | |||
Management considered the effects of applying a pre-tax approach and concluded that this will not materially change the outcome of the impairment test. | |||
Expectations and input to the impairment calculation, as well as its outcome, were compared with available external information from analysts and, to the extent available, information on recent comparable transactions (merger and acquisition activities of comparable companies). | |||
The sensitivity test for Location Technology showed that a reasonably possible change in any of the above-mentioned key assumptions as well as other assumptions in the forecasted period would not cause the fair value less costs of disposal to fall below the level of the carrying value. | |||
(\u20ac in thousands) | Map content and mapmaking platform1 | Internally generated technology | Other | Total | ||||
Cost | 1,109,923 | 135,472 | 7,729 | 1,253,124 | ||||
Accumulated amortization and impairment | -1,039,755 | -135,233 | -7,658 | -1,182,646 | ||||
Balance as at 1 January 2022 | 70,168 | 239 | 71 | 70,478 | ||||
Of which internally generated2 | 63,285 | 239 | 0 | 63,524 | ||||
Additions | 5,271 | 0 | 0 | 5,271 | ||||
Disposals (net) | 0 | 0 | -71 | -71 | ||||
Amortization charges | -32,526 | -239 | 0 | -32,765 | ||||
Currency translation differences | 4 | 0 | 0 | 4 | ||||
Movements | -27,251 | -239 | -71 | -27,561 | ||||
Cost | 1,114,942 | 135,428 | 5,487 | 1,255,857 | ||||
Accumulated amortization and impairment | -1,072,025 | -135,428 | -5,487 | -1,212,940 | ||||
Balance as at 31 December 2022 | 42,917 | 0 | 0 | 42,917 | ||||
Of which internally generated2 | 35,009 | 0 | 0 | 35,009 | ||||
Additions | 0 | 0 | 0 | 0 | ||||
Disposals (net) | 0 | 0 | 0 | 0 | ||||
Amortization charges | -22,458 | 0 | 0 | -22,458 | ||||
Currency translation differences | -184 | 0 | 0 | -184 | ||||
Movements | -22,642 | 0 | 0 | -22,642 | ||||
Cost | 1,113,343 | 120,343 | 3,207 | 1,236,893 | ||||
Accumulated amortization and impairment | -1,093,068 | -120,343 | -3,207 | -1,216,618 | ||||
Balance as at 31 December 2023 | 20,275 | 0 | 0 | 20,275 | ||||
Of which internally generated2 | 16,744 | 0 | 0 | 16,744 |
ACCOUNTING POLICY | |||
Other intangible assets | |||
Other intangible assets includes assets that have been acquired, either through individual asset acquisitions or through business combinations, and assets that have been generated internally, such as the group\u2019s core technology and geographical content database. | |||
Internally generated intangible assets | |||
Internal development costs for core technology are recognized as an intangible asset if, and only if, all of the following have been demonstrated: | |||
\u2022 The technical feasibility to complete the project. \u2022 The intention to complete the intangible asset, and use or sell it. \u2022 The ability to use or sell the intangible asset. \u2022 How the intangible asset will generate probable future economic benefits. \u2022 The availability of adequate resources to complete the project. \u2022 The cost of developing the asset can be measured reliably. | |||
Internally generated databases are capitalized until a certain level of map quality is reached and ongoing activities focus on maintenance. Internal software costs relating to development of non-core software with an estimated average useful life of less than one year and engineering costs relating to the detailed manufacturing design of new products are expensed in the period in which they are incurred. The amount initially recognized for internally generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. All expenditures on research activities are expensed in the income statement as incurred. | |||
Acquired intangible assets | |||
Intangible assets acquired separately are initially recognized at cost, including directly attributable costs to bring the asset to its intended use. Intangible assets acquired in a business combination are identified and recognized separately from goodwill when they satisfy the definition of an intangible asset and their fair values can be measured reliably. The cost of such intangible assets is their fair value at the acquisition date. All intangible assets are subsequently carried at cost less accumulated amortization and accumulated impairment losses. | |||
The amortization of other intangible assets is recorded on a straight-line basis over the following estimated useful lives as follows: | |||
\u2022 Map content and mapmaking platform: 5-12 years. \u2022 Internally generated core technology: 3-6 years. \u2022 Acquired technology: 3-5 years. \u2022 Customer relationships: 5-13 years. \u2022 Computer software: 2-5 years. | |||
Impairment | |||
Intangible assets which have an indefinite useful life and intangible assets not yet ready for use are tested for impairment at least annually, or whenever management identifies conditions that may indicate a risk of impairment. Assets that are subject to amortization are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. In making this assessment we include climate-related consideration insofar they are visible and quantifiable. | |||
Testing is conducted as per the policy outlined in note 13. | |||
Non-financial assets, other than goodwill, which have been subject to an impairment, are reviewed for possible reversal of the impairment at each reporting date. | |||
SIGNIFICANT ESTIMATES | ||
Management made use of assumptions and judgment in assessing the expected future economic benefits that can be attributed to the internally generated technology, databases and tools, as well as their expected useful lives. For internally generated databases, assumptions are also made on the level of completion, at which point the capitalization is discontinued and future activities are considered to be maintenance. | ||
Such estimates are made on a regular basis, as they can be significantly affected by changes in technology and other factors. | ||
Impairment of intangible assets | ||
No impairment charge has been recorded for other intangible assets in either period presented. | ||
(\u20ac in thousands) | 2023 | 2022 | ||
Cost | 1,881,901 | 1,881,901 | ||
Accumulated impairment | -1,689,607 | -1,689,607 | ||
Balance as at 31 December | 192,294 | 192,294 |
ACCOUNTING POLICY | ||
Goodwill represents the excess of the costs of an acquisition over the fair value of the group\u2019s share of identifiable assets of the acquiree at the date of acquisition and is carried at cost less accumulated impairment losses. Goodwill is allocated to operating segments that are expected to benefit from the business combination in which the goodwill arose. | ||
Impairment testing | ||
Goodwill and intangible assets that have an indefinite useful life are tested for impairment at least annually, or whenever management identifies conditions that may indicate a risk of impairment. | ||
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). An impairment loss is recognized for the amount by which the asset\u2019s carrying amount exceeds its recoverable amount and is recognized immediately in the income statement. The recoverable amount is the higher of an asset\u2019s fair value less costs of disposal and its value in use. In estimating the recoverable amount, management is required to make an estimate of the expected future cash flows from the cash-generating unit in the forecasted period and also to determine a suitable discount rate in order to calculate the present value of those cash flows. Such estimates are subject to a certain degree of judgment and uncertainty. | ||
Impairments to goodwill are not subsequently reversed. | ||
SIGNIFICANT ESTIMATES | |||
Impairment test of goodwill | |||
The methodologies as well as assumptions applied in performing our year-end goodwill impairment test for Location Technology are set out below. | |||
The fair value less costs of disposal calculation resulted in a higher recoverable amount. The calculations of fair value less costs of disposal for Location Technology uses post-tax cash flow projections based on financial forecasts approved by management covering a five-year period (forecasted period) including terminal value. | |||
Management\u2019s cash flow projections for Location Technology in the forecast period are based on management\u2019s assumptions on the expected revenue developments, gross margin, and operating margin after allocation of operating expenses from shared units, taking into account management\u2019s expectation of market size and market share development as well as new market opportunities. Our estimates include considerations for climate-related risks and opportunities insofar as they are visible and quantifiable. | |||
Location Technology revenue is projected to grow in line with management\u2019s mid- and long- term plan in the forecast period. Given the limited visibility on longer-term growth, growth rates in later years are more subject to uncertainty compared with earlier years. Gross and operating margin projections for each segment are consistent with expected revenue developments. | |||
The growth rates after the forecast period as well as the discount rate used are presented in the table below. The input to the group\u2019s key assumptions include those that are based on non- observable market data (level 3 input in accordance with IFRS 13). | |||
2023 | Location Technology | ||
Revenue \u2013 perpetual growth1 | 2.0% | ||
Discount rate2 | 9.5% | ||
2022 | |||
Revenue \u2013 perpetual growth1 | 2.0% | ||
Discount rate2 | 9.5% | ||
1. Weighted average growth rate used to extrapolate cash flows beyond the forecasted period. 2. Post-tax discount rate applied to the cash flow projections. | |||
Discount rates used are post-tax and reflect specific risks relating to the relevant operating segments and market uncertainties in general. | |||
Management considered the effects of applying a pre-tax approach and concluded that this will not materially change the outcome of the impairment test. | |||
Expectations and input to the impairment calculation, as well as its outcome, were compared with available external information from analysts and, to the extent available, information on recent comparable transactions (merger and acquisition activities of comparable companies). | |||
The sensitivity test for Location Technology showed that a reasonably possible change in any of the above-mentioned key assumptions as well as other assumptions in the forecasted period would not cause the fair value less costs of disposal to fall below the level of the carrying value. | |||
(\u20ac in thousands) | 2023 | 2022 | ||
Cost | 1,881,901 | 1,881,901 | ||
Accumulated impairment | -1,689,607 | -1,689,607 | ||
Balance as at 31 December | 192,294 | 192,294 |
SIGNIFICANT ESTIMATES | |||
Impairment test of goodwill | |||
The methodologies as well as assumptions applied in performing our year-end goodwill impairment test for Location Technology are set out below. | |||
The fair value less costs of disposal calculation resulted in a higher recoverable amount. The calculations of fair value less costs of disposal for Location Technology uses post-tax cash flow projections based on financial forecasts approved by management covering a five-year period (forecasted period) including terminal value. | |||
Management\u2019s cash flow projections for Location Technology in the forecast period are based on management\u2019s assumptions on the expected revenue developments, gross margin, and operating margin after allocation of operating expenses from shared units, taking into account management\u2019s expectation of market size and market share development as well as new market opportunities. Our estimates include considerations for climate-related risks and opportunities insofar as they are visible and quantifiable. | |||
Location Technology revenue is projected to grow in line with management\u2019s mid- and long- term plan in the forecast period. Given the limited visibility on longer-term growth, growth rates in later years are more subject to uncertainty compared with earlier years. Gross and operating margin projections for each segment are consistent with expected revenue developments. | |||
The growth rates after the forecast period as well as the discount rate used are presented in the table below. The input to the group\u2019s key assumptions include those that are based on non- observable market data (level 3 input in accordance with IFRS 13). | |||
2023 | Location Technology | ||
Revenue \u2013 perpetual growth1 | 2.0% | ||
Discount rate2 | 9.5% | ||
2022 | |||
Revenue \u2013 perpetual growth1 | 2.0% | ||
Discount rate2 | 9.5% | ||
1. Weighted average growth rate used to extrapolate cash flows beyond the forecasted period. 2. Post-tax discount rate applied to the cash flow projections. | |||
Discount rates used are post-tax and reflect specific risks relating to the relevant operating segments and market uncertainties in general. | |||
Management considered the effects of applying a pre-tax approach and concluded that this will not materially change the outcome of the impairment test. | |||
Expectations and input to the impairment calculation, as well as its outcome, were compared with available external information from analysts and, to the extent available, information on recent comparable transactions (merger and acquisition activities of comparable companies). | |||
The sensitivity test for Location Technology showed that a reasonably possible change in any of the above-mentioned key assumptions as well as other assumptions in the forecasted period would not cause the fair value less costs of disposal to fall below the level of the carrying value. | |||
ACCOUNTING POLICY | ||
Goodwill represents the excess of the costs of an acquisition over the fair value of the group\u2019s share of identifiable assets of the acquiree at the date of acquisition and is carried at cost less accumulated impairment losses. Goodwill is allocated to operating segments that are expected to benefit from the business combination in which the goodwill arose. | ||
Impairment testing | ||
Goodwill and intangible assets that have an indefinite useful life are tested for impairment at least annually, or whenever management identifies conditions that may indicate a risk of impairment. | ||
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). An impairment loss is recognized for the amount by which the asset\u2019s carrying amount exceeds its recoverable amount and is recognized immediately in the income statement. The recoverable amount is the higher of an asset\u2019s fair value less costs of disposal and its value in use. In estimating the recoverable amount, management is required to make an estimate of the expected future cash flows from the cash-generating unit in the forecasted period and also to determine a suitable discount rate in order to calculate the present value of those cash flows. Such estimates are subject to a certain degree of judgment and uncertainty. | ||
Impairments to goodwill are not subsequently reversed. | ||
ACCOUNTING POLICY | ||
Goodwill represents the excess of the costs of an acquisition over the fair value of the group\u2019s share of identifiable assets of the acquiree at the date of acquisition and is carried at cost less accumulated impairment losses. Goodwill is allocated to operating segments that are expected to benefit from the business combination in which the goodwill arose. | ||
Impairment testing | ||
Goodwill and intangible assets that have an indefinite useful life are tested for impairment at least annually, or whenever management identifies conditions that may indicate a risk of impairment. | ||
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). An impairment loss is recognized for the amount by which the asset\u2019s carrying amount exceeds its recoverable amount and is recognized immediately in the income statement. The recoverable amount is the higher of an asset\u2019s fair value less costs of disposal and its value in use. In estimating the recoverable amount, management is required to make an estimate of the expected future cash flows from the cash-generating unit in the forecasted period and also to determine a suitable discount rate in order to calculate the present value of those cash flows. Such estimates are subject to a certain degree of judgment and uncertainty. | ||
Impairments to goodwill are not subsequently reversed. | ||
ACCOUNTING POLICY | |||
Other intangible assets | |||
Other intangible assets includes assets that have been acquired, either through individual asset acquisitions or through business combinations, and assets that have been generated internally, such as the group\u2019s core technology and geographical content database. | |||
Internally generated intangible assets | |||
Internal development costs for core technology are recognized as an intangible asset if, and only if, all of the following have been demonstrated: | |||
\u2022 The technical feasibility to complete the project. \u2022 The intention to complete the intangible asset, and use or sell it. \u2022 The ability to use or sell the intangible asset. \u2022 How the intangible asset will generate probable future economic benefits. \u2022 The availability of adequate resources to complete the project. \u2022 The cost of developing the asset can be measured reliably. | |||
Internally generated databases are capitalized until a certain level of map quality is reached and ongoing activities focus on maintenance. Internal software costs relating to development of non-core software with an estimated average useful life of less than one year and engineering costs relating to the detailed manufacturing design of new products are expensed in the period in which they are incurred. The amount initially recognized for internally generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. All expenditures on research activities are expensed in the income statement as incurred. | |||
Acquired intangible assets | |||
Intangible assets acquired separately are initially recognized at cost, including directly attributable costs to bring the asset to its intended use. Intangible assets acquired in a business combination are identified and recognized separately from goodwill when they satisfy the definition of an intangible asset and their fair values can be measured reliably. The cost of such intangible assets is their fair value at the acquisition date. All intangible assets are subsequently carried at cost less accumulated amortization and accumulated impairment losses. | |||
The amortization of other intangible assets is recorded on a straight-line basis over the following estimated useful lives as follows: | |||
\u2022 Map content and mapmaking platform: 5-12 years. \u2022 Internally generated core technology: 3-6 years. \u2022 Acquired technology: 3-5 years. \u2022 Customer relationships: 5-13 years. \u2022 Computer software: 2-5 years. | |||
Impairment | |||
Intangible assets which have an indefinite useful life and intangible assets not yet ready for use are tested for impairment at least annually, or whenever management identifies conditions that may indicate a risk of impairment. Assets that are subject to amortization are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. In making this assessment we include climate-related consideration insofar they are visible and quantifiable. | |||
Testing is conducted as per the policy outlined in note 13. | |||
Non-financial assets, other than goodwill, which have been subject to an impairment, are reviewed for possible reversal of the impairment at each reporting date. | |||
ACCOUNTING POLICY | ||
Goodwill represents the excess of the costs of an acquisition over the fair value of the group\u2019s share of identifiable assets of the acquiree at the date of acquisition and is carried at cost less accumulated impairment losses. Goodwill is allocated to operating segments that are expected to benefit from the business combination in which the goodwill arose. | ||
Impairment testing | ||
Goodwill and intangible assets that have an indefinite useful life are tested for impairment at least annually, or whenever management identifies conditions that may indicate a risk of impairment. | ||
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). An impairment loss is recognized for the amount by which the asset\u2019s carrying amount exceeds its recoverable amount and is recognized immediately in the income statement. The recoverable amount is the higher of an asset\u2019s fair value less costs of disposal and its value in use. In estimating the recoverable amount, management is required to make an estimate of the expected future cash flows from the cash-generating unit in the forecasted period and also to determine a suitable discount rate in order to calculate the present value of those cash flows. Such estimates are subject to a certain degree of judgment and uncertainty. | ||
Impairments to goodwill are not subsequently reversed. | ||
ACCOUNTING POLICY | |||
Other intangible assets | |||
Other intangible assets includes assets that have been acquired, either through individual asset acquisitions or through business combinations, and assets that have been generated internally, such as the group\u2019s core technology and geographical content database. | |||
Internally generated intangible assets | |||
Internal development costs for core technology are recognized as an intangible asset if, and only if, all of the following have been demonstrated: | |||
\u2022 The technical feasibility to complete the project. \u2022 The intention to complete the intangible asset, and use or sell it. \u2022 The ability to use or sell the intangible asset. \u2022 How the intangible asset will generate probable future economic benefits. \u2022 The availability of adequate resources to complete the project. \u2022 The cost of developing the asset can be measured reliably. | |||
Internally generated databases are capitalized until a certain level of map quality is reached and ongoing activities focus on maintenance. Internal software costs relating to development of non-core software with an estimated average useful life of less than one year and engineering costs relating to the detailed manufacturing design of new products are expensed in the period in which they are incurred. The amount initially recognized for internally generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. All expenditures on research activities are expensed in the income statement as incurred. | |||
Acquired intangible assets | |||
Intangible assets acquired separately are initially recognized at cost, including directly attributable costs to bring the asset to its intended use. Intangible assets acquired in a business combination are identified and recognized separately from goodwill when they satisfy the definition of an intangible asset and their fair values can be measured reliably. The cost of such intangible assets is their fair value at the acquisition date. All intangible assets are subsequently carried at cost less accumulated amortization and accumulated impairment losses. | |||
The amortization of other intangible assets is recorded on a straight-line basis over the following estimated useful lives as follows: | |||
\u2022 Map content and mapmaking platform: 5-12 years. \u2022 Internally generated core technology: 3-6 years. \u2022 Acquired technology: 3-5 years. \u2022 Customer relationships: 5-13 years. \u2022 Computer software: 2-5 years. | |||
Impairment | |||
Intangible assets which have an indefinite useful life and intangible assets not yet ready for use are tested for impairment at least annually, or whenever management identifies conditions that may indicate a risk of impairment. Assets that are subject to amortization are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. In making this assessment we include climate-related consideration insofar they are visible and quantifiable. | |||
Testing is conducted as per the policy outlined in note 13. | |||
Non-financial assets, other than goodwill, which have been subject to an impairment, are reviewed for possible reversal of the impairment at each reporting date. | |||
(\u20ac in thousands) | Map content and mapmaking platform1 | Internally generated technology | Other | Total | ||||
Cost | 1,109,923 | 135,472 | 7,729 | 1,253,124 | ||||
Accumulated amortization and impairment | -1,039,755 | -135,233 | -7,658 | -1,182,646 | ||||
Balance as at 1 January 2022 | 70,168 | 239 | 71 | 70,478 | ||||
Of which internally generated2 | 63,285 | 239 | 0 | 63,524 | ||||
Additions | 5,271 | 0 | 0 | 5,271 | ||||
Disposals (net) | 0 | 0 | -71 | -71 | ||||
Amortization charges | -32,526 | -239 | 0 | -32,765 | ||||
Currency translation differences | 4 | 0 | 0 | 4 | ||||
Movements | -27,251 | -239 | -71 | -27,561 | ||||
Cost | 1,114,942 | 135,428 | 5,487 | 1,255,857 | ||||
Accumulated amortization and impairment | -1,072,025 | -135,428 | -5,487 | -1,212,940 | ||||
Balance as at 31 December 2022 | 42,917 | 0 | 0 | 42,917 | ||||
Of which internally generated2 | 35,009 | 0 | 0 | 35,009 | ||||
Additions | 0 | 0 | 0 | 0 | ||||
Disposals (net) | 0 | 0 | 0 | 0 | ||||
Amortization charges | -22,458 | 0 | 0 | -22,458 | ||||
Currency translation differences | -184 | 0 | 0 | -184 | ||||
Movements | -22,642 | 0 | 0 | -22,642 | ||||
Cost | 1,113,343 | 120,343 | 3,207 | 1,236,893 | ||||
Accumulated amortization and impairment | -1,093,068 | -120,343 | -3,207 | -1,216,618 | ||||
Balance as at 31 December 2023 | 20,275 | 0 | 0 | 20,275 | ||||
Of which internally generated2 | 16,744 | 0 | 0 | 16,744 |
ACCOUNTING POLICY | |||
Other intangible assets | |||
Other intangible assets includes assets that have been acquired, either through individual asset acquisitions or through business combinations, and assets that have been generated internally, such as the group\u2019s core technology and geographical content database. | |||
Internally generated intangible assets | |||
Internal development costs for core technology are recognized as an intangible asset if, and only if, all of the following have been demonstrated: | |||
\u2022 The technical feasibility to complete the project. \u2022 The intention to complete the intangible asset, and use or sell it. \u2022 The ability to use or sell the intangible asset. \u2022 How the intangible asset will generate probable future economic benefits. \u2022 The availability of adequate resources to complete the project. \u2022 The cost of developing the asset can be measured reliably. | |||
Internally generated databases are capitalized until a certain level of map quality is reached and ongoing activities focus on maintenance. Internal software costs relating to development of non-core software with an estimated average useful life of less than one year and engineering costs relating to the detailed manufacturing design of new products are expensed in the period in which they are incurred. The amount initially recognized for internally generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. All expenditures on research activities are expensed in the income statement as incurred. | |||
Acquired intangible assets | |||
Intangible assets acquired separately are initially recognized at cost, including directly attributable costs to bring the asset to its intended use. Intangible assets acquired in a business combination are identified and recognized separately from goodwill when they satisfy the definition of an intangible asset and their fair values can be measured reliably. The cost of such intangible assets is their fair value at the acquisition date. All intangible assets are subsequently carried at cost less accumulated amortization and accumulated impairment losses. | |||
The amortization of other intangible assets is recorded on a straight-line basis over the following estimated useful lives as follows: | |||
\u2022 Map content and mapmaking platform: 5-12 years. \u2022 Internally generated core technology: 3-6 years. \u2022 Acquired technology: 3-5 years. \u2022 Customer relationships: 5-13 years. \u2022 Computer software: 2-5 years. | |||
Impairment | |||
Intangible assets which have an indefinite useful life and intangible assets not yet ready for use are tested for impairment at least annually, or whenever management identifies conditions that may indicate a risk of impairment. Assets that are subject to amortization are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. In making this assessment we include climate-related consideration insofar they are visible and quantifiable. | |||
Testing is conducted as per the policy outlined in note 13. | |||
Non-financial assets, other than goodwill, which have been subject to an impairment, are reviewed for possible reversal of the impairment at each reporting date. | |||
SIGNIFICANT ESTIMATES | ||
Management made use of assumptions and judgment in assessing the expected future economic benefits that can be attributed to the internally generated technology, databases and tools, as well as their expected useful lives. For internally generated databases, assumptions are also made on the level of completion, at which point the capitalization is discontinued and future activities are considered to be maintenance. | ||
Such estimates are made on a regular basis, as they can be significantly affected by changes in technology and other factors. | ||
Impairment of intangible assets | ||
No impairment charge has been recorded for other intangible assets in either period presented. | ||
(\u20ac in thousands) | Furniture and fixtures | Computer equipment | Leasehold improvemen ts | Other1 | Total | |||||
Cost | 7,507 | 34,529 | 16,953 | 2,523 | 61,512 | |||||
Accumulated depreciation | -3,913 | -24,135 | -5,828 | -1,395 | -35,271 | |||||
Balance as at 1 January 2022 | 3,594 | 10,394 | 11,125 | 1,128 | 26,241 | |||||
Additions | 304 | 3,944 | 738 | 69 | 5,055 | |||||
Disposals (net)2 | -71 | -42 | 0 | -8 | -121 | |||||
Reclassification between categories | 487 | 10 | -497 | 0 | ||||||
Depreciation charges | -1,235 | -5,822 | -1,932 | -360 | -9,349 | |||||
Currency translation differences | -84 | 124 | -194 | -27 | -181 | |||||
Movements | -599 | -1,786 | -1,885 | -326 | -4,596 | |||||
Cost | 7,141 | 32,147 | 15,596 | 2,422 | 57,306 | |||||
Accumulated depreciation | -4,146 | -23,539 | -6,356 | -1,620 | -35,661 | |||||
Balance as at 31 December 2022 | 2,995 | 8,608 | 9,240 | 802 | 21,645 | |||||
Additions | 1,766 | 4,882 | 4,916 | 395 | 11,959 | |||||
Disposals (net)2 | -34 | -62 | 0 | -22 | -118 | |||||
Depreciation charges | -1,267 | -5,099 | -2,222 | -287 | -8,875 | |||||
Currency translation differences | 451 | -475 | -52 | -222 | -298 | |||||
Movements | 916 | -754 | 2,642 | -136 | 2,668 | |||||
Cost | 7,151 | 27,745 | 17,866 | 2,133 | 54,895 | |||||
Accumulated depreciation | -3,240 | -19,891 | -5,984 | -1,467 | -30,582 | |||||
Balance as at 31 December 2023 | 3,911 | 7,854 | 11,882 | 666 | 24,313 |
ACCOUNTING POLICY | |||
Property, plant and equipment are stated at historical cost less accumulated depreciation and impairment charges. Depreciation is recorded on a straight-line basis over the estimated useful lives of the assets as follows: | |||
\u2022 Furniture and fixtures: 4-10 years. \u2022 Computer equipment and hardware: 2-7 years. \u2022 Leasehold improvements: 7-10 years. \u2022 Vehicles: 4 years. | |||
The estimated useful lives, residual values, and depreciation methods are reviewed at each year-end, with the effect that any changes in estimate are accounted for on a prospective basis. | |||
Impairment | |||
For the accounting policy relating to impairment refer to note 14 Other intangible assets. | |||
ACCOUNTING POLICY | |||
Property, plant and equipment are stated at historical cost less accumulated depreciation and impairment charges. Depreciation is recorded on a straight-line basis over the estimated useful lives of the assets as follows: | |||
\u2022 Furniture and fixtures: 4-10 years. \u2022 Computer equipment and hardware: 2-7 years. \u2022 Leasehold improvements: 7-10 years. \u2022 Vehicles: 4 years. | |||
The estimated useful lives, residual values, and depreciation methods are reviewed at each year-end, with the effect that any changes in estimate are accounted for on a prospective basis. | |||
Impairment | |||
For the accounting policy relating to impairment refer to note 14 Other intangible assets. | |||
(\u20ac in thousands) | Lease buildings | Lease vehicles | Total | |||
2023 | ||||||
Additions and changes to leased assets | 19,281 | 1,718 | 20,999 | |||
Depreciation charges | 11,093 | 1,190 | 12,283 | |||
Balance as at 31 December | 42,854 | 1,770 | 44,624 | |||
2022 | ||||||
Additions and changes to leased assets | 15,260 | 571 | 15,831 | |||
Depreciation charges | 13,220 | 1,268 | 14,488 | |||
Balance as at 31 December | 34,592 | 1,223 | 35,815 |
(\u20ac in thousands) | 2023 | 2022 | ||
Less than 1 year | 9,986 | 11,954 | ||
Between 1-5 years | 25,386 | 20,483 | ||
More than 5 years | 18,554 | 9,151 | ||
Total undiscounted lease liabilities at 31 December | 53,926 | 41,588 |
ACCOUNTING POLICY | ||
Leases as a lessee | ||
A contract is classified as a lease at the inception of the contract, if the contract conveys the right to control the use of an identified asset for a period in exchange for consideration. | ||
The group recognizes a right-of-use asset (lease asset) and a lease liability at the lease commencement date. The asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to restore the underlying asset, less any lease incentives received. | ||
The lease asset is subsequently depreciated using the straight-line method from the commencement date to the end of the useful life of the right-of-use asset, considered to be indicated by the lease term. The lease asset is periodically adjusted for certain remeasurements of the lease liability and impairment losses (if any). | ||
The lease liability is initially measured at the present value of outstanding lease payments, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the group\u2019s incremental borrowing rate. Generally, the group uses its incremental borrowing rate as the discount rate. The group separates payments for lease cars into lease components and non-lease components. | ||
The lease liability is measured at amortized cost using the effective interest method and is remeasured when there is a change in future lease payments arising from a change in an index or rate or if the group changes its assessment of whether it will exercise a purchase, extension or termination option. A corresponding adjustment is made to the carrying amount of the right- of-use asset with any excess over the carrying amount of the asset being recognized in profit or loss. | ||
Short-term leases and leases of low-value assets | ||
The group has elected not to recognize lease assets and lease liabilities for short-term (term of 12 months or less) leases and leases of low-value assets, including IT equipment. The group recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term. | ||
Extension options | ||
Extension options are mainly applicable to leased buildings. | ||
The group assesses whether it is reasonably certain to exercise the options at lease commencement and subsequently, if there is a change in circumstances within its control. Such assessment involves management judgment and estimate based on information at the time the assessments are made. | ||
Extension options are included in the lease term when the group has an economic incentive to exercise the option. The group considers available evidence at the time of the assessment, including potential favorable terms upon extension, potential termination penalties, the relative costs associated with potential relocation or termination of the lease, and the extent of leasehold improvements undertaken. | ||
The size and the relative importance of the lease premises as well as the availability of easily substitutable assets is taken into consideration when assessing whether the group has an economic incentive to extend a lease for which it holds an option to do so. | ||
(\u20ac in thousands) | 2023 | 2022 | ||
Less than 1 year | 9,986 | 11,954 | ||
Between 1-5 years | 25,386 | 20,483 | ||
More than 5 years | 18,554 | 9,151 | ||
Total undiscounted lease liabilities at 31 December | 53,926 | 41,588 |
(\u20ac in thousands) | 2023 | 2022 | ||
Less than 1 year | 9,986 | 11,954 | ||
Between 1-5 years | 25,386 | 20,483 | ||
More than 5 years | 18,554 | 9,151 | ||
Total undiscounted lease liabilities at 31 December | 53,926 | 41,588 |
(\u20ac in thousands) | 2023 | 2022 | ||
EUR | 59,246 | 40,321 | ||
GBP | 2,234 | 115 | ||
USD | 7,135 | 23,712 | ||
Other | 541 | 1,595 | ||
Total trade receivables (net) | 69,156 | 65,743 |
(\u20ac in thousands) | 2023 | 2022 | ||
Balance as at 1 January | -1,934 | -2,213 | ||
Additions to provision | -442 | -912 | ||
Receivables written off during the year as uncollectible | 170 | 582 | ||
Unused amounts reversed | 925 | 602 | ||
Currency translation differences | 23 | 7 | ||
Balance as at 31 December | -1,258 | -1,934 |
(\u20ac in thousands) | 2023 | 2022 | ||
Gross unbilled receivables | 42,870 | 48,483 | ||
Gross trade receivables | 70,322 | 67,492 | ||
113,192 | 115,975 | |||
Of which: | ||||
Not overdue | 105,463 | 107,303 | ||
Overdue less than 3 months | 6,275 | 5,007 | ||
Between 3-6 months | 735 | 1,533 | ||
More than 6 months | 719 | 2,132 | ||
Gross receivables | 113,192 | 115,975 |
ACCOUNTING POLICY | ||
In determining the expected credit loss, the group applies the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance for all trade and unbilled receivables. As unbilled receivables share the same risk characteristics as trade receivables for similar types of contracts, the expected loss rates for trade receivables are considered a reasonable approximation of the loss rates for unbilled receivables. The expected credit loss rates are measured by grouping trade and unbilled receivables based on shared credit risk characteristics and days passed due. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. The expected loss allowances and any subsequent recoveries of amounts previously written off, are recognized in operating expenses within \u2018General and administrative\u2019 expenses. | ||
(\u20ac in thousands) | 2023 | 2022 | ||||
Strengthen | Weaken | Strengthen | Weaken | |||
USD | -61 | 61 | 218 | -218 | ||
GBP | -142 | 142 | -324 | 324 | ||
PLN | -630 | 485 | -467 | 464 |
ACCOUNTING POLICY | ||
Leases as a lessee | ||
A contract is classified as a lease at the inception of the contract, if the contract conveys the right to control the use of an identified asset for a period in exchange for consideration. | ||
The group recognizes a right-of-use asset (lease asset) and a lease liability at the lease commencement date. The asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to restore the underlying asset, less any lease incentives received. | ||
The lease asset is subsequently depreciated using the straight-line method from the commencement date to the end of the useful life of the right-of-use asset, considered to be indicated by the lease term. The lease asset is periodically adjusted for certain remeasurements of the lease liability and impairment losses (if any). | ||
The lease liability is initially measured at the present value of outstanding lease payments, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the group\u2019s incremental borrowing rate. Generally, the group uses its incremental borrowing rate as the discount rate. The group separates payments for lease cars into lease components and non-lease components. | ||
The lease liability is measured at amortized cost using the effective interest method and is remeasured when there is a change in future lease payments arising from a change in an index or rate or if the group changes its assessment of whether it will exercise a purchase, extension or termination option. A corresponding adjustment is made to the carrying amount of the right- of-use asset with any excess over the carrying amount of the asset being recognized in profit or loss. | ||
Short-term leases and leases of low-value assets | ||
The group has elected not to recognize lease assets and lease liabilities for short-term (term of 12 months or less) leases and leases of low-value assets, including IT equipment. The group recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term. | ||
Extension options | ||
Extension options are mainly applicable to leased buildings. | ||
The group assesses whether it is reasonably certain to exercise the options at lease commencement and subsequently, if there is a change in circumstances within its control. Such assessment involves management judgment and estimate based on information at the time the assessments are made. | ||
Extension options are included in the lease term when the group has an economic incentive to exercise the option. The group considers available evidence at the time of the assessment, including potential favorable terms upon extension, potential termination penalties, the relative costs associated with potential relocation or termination of the lease, and the extent of leasehold improvements undertaken. | ||
The size and the relative importance of the lease premises as well as the availability of easily substitutable assets is taken into consideration when assessing whether the group has an economic incentive to extend a lease for which it holds an option to do so. | ||
(\u20ac in thousands) | Note | 2023 | 2022 | |||
Financial assets | ||||||
Financial assets at amortized cost | ||||||
Trade receivables | 19 | 69,156 | 65,743 | |||
Fixed-term deposits | 22 | 227,662 | 171,000 | |||
Cash and cash equivalents | 22 | 87,532 | 132,729 | |||
Financial assets at fair value through profit or loss | ||||||
Derivative instruments | 21 | 306 | 131 | |||
Financial assets at fair value through other comprehensive income | ||||||
Other investments | \u2014 | 13,814 | ||||
Total financial assets | 384,656 | 383,417 | ||||
Financial liabilities | ||||||
Financial liabilities at amortized cost | ||||||
Trade payables | 23 | 21,168 | 6,102 | |||
Lease liabilities | 16 | 46,713 | 37,725 | |||
Financial liabilities at fair value through profit or loss | ||||||
Derivative instruments | 21 | 84 | 192 | |||
Total financial liabilities | 67,965 | 44,019 |
(\u20ac in thousands) | 2023 | 2022 | ||
Gross accounts receivables | 70,322 | 67,492 | ||
Expected credit loss allowance | -1,166 | -1,749 | ||
Total trade receivables (net) | 69,156 | 65,743 |
(\u20ac in thousands) | 2023 | 2022 | ||
EUR | 59,246 | 40,321 | ||
GBP | 2,234 | 115 | ||
USD | 7,135 | 23,712 | ||
Other | 541 | 1,595 | ||
Total trade receivables (net) | 69,156 | 65,743 |
ACCOUNTING POLICY | ||
Trade receivables that do not contain a significant financing component or for which the group has applied the practical expedient, are measured at the transaction price as disclosed in Revenue from contracts with customers (note 6), less expected credit loss allowances. For details of expected credit losses refer to note 27. | ||
(\u20ac in thousands) | 2023 | 2022 | ||
Prepayments | 26,199 | 27,354 | ||
Corporate income tax, VAT and other taxes | 6,416 | 6,804 | ||
Other receivables | 3,594 | 2,645 | ||
Total other receivables | 36,209 | 36,803 |
(\u20ac in thousands) | 2023 | 2022 | ||||
Assets | Liabilities | Assets | Liabilities | |||
Derivatives at fair value through profit or loss | 306 | -84 | 131 | -192 |
(\u20ac in thousands) | 2023 | 2022 | ||
Personnel-related accruals | 48,634 | 55,567 | ||
Operating expense accruals | 12,712 | 8,760 | ||
Taxes and social security | 6,414 | 7,378 | ||
Total accruals and other liabilities | 67,760 | 71,705 |
(\u20ac in thousands) | 2023 | 2022 | ||
Balance as at 1 January | -1,934 | -2,213 | ||
Additions to provision | -442 | -912 | ||
Receivables written off during the year as uncollectible | 170 | 582 | ||
Unused amounts reversed | 925 | 602 | ||
Currency translation differences | 23 | 7 | ||
Balance as at 31 December | -1,258 | -1,934 |
(\u20ac in thousands) | 2023 | 2022 | ||
Gross unbilled receivables | 42,870 | 48,483 | ||
Gross trade receivables | 70,322 | 67,492 | ||
113,192 | 115,975 | |||
Of which: | ||||
Not overdue | 105,463 | 107,303 | ||
Overdue less than 3 months | 6,275 | 5,007 | ||
Between 3-6 months | 735 | 1,533 | ||
More than 6 months | 719 | 2,132 | ||
Gross receivables | 113,192 | 115,975 |
ACCOUNTING POLICY | ||
In determining the expected credit loss, the group applies the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance for all trade and unbilled receivables. As unbilled receivables share the same risk characteristics as trade receivables for similar types of contracts, the expected loss rates for trade receivables are considered a reasonable approximation of the loss rates for unbilled receivables. The expected credit loss rates are measured by grouping trade and unbilled receivables based on shared credit risk characteristics and days passed due. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. The expected loss allowances and any subsequent recoveries of amounts previously written off, are recognized in operating expenses within \u2018General and administrative\u2019 expenses. | ||
(\u20ac in thousands) | 2023 | 2022 | ||||
Strengthen | Weaken | Strengthen | Weaken | |||
USD | -61 | 61 | 218 | -218 | ||
GBP | -142 | 142 | -324 | 324 | ||
PLN | -630 | 485 | -467 | 464 |
(\u20ac in thousands) | Note | 2023 | 2022 | |||
Financial assets | ||||||
Financial assets at amortized cost | ||||||
Trade receivables | 19 | 69,156 | 65,743 | |||
Fixed-term deposits | 22 | 227,662 | 171,000 | |||
Cash and cash equivalents | 22 | 87,532 | 132,729 | |||
Financial assets at fair value through profit or loss | ||||||
Derivative instruments | 21 | 306 | 131 | |||
Financial assets at fair value through other comprehensive income | ||||||
Other investments | \u2014 | 13,814 | ||||
Total financial assets | 384,656 | 383,417 | ||||
Financial liabilities | ||||||
Financial liabilities at amortized cost | ||||||
Trade payables | 23 | 21,168 | 6,102 | |||
Lease liabilities | 16 | 46,713 | 37,725 | |||
Financial liabilities at fair value through profit or loss | ||||||
Derivative instruments | 21 | 84 | 192 | |||
Total financial liabilities | 67,965 | 44,019 |
ACCOUNTING POLICY | |||
Financial assets | |||
The group classifies its financial assets, at initial recognition, as subsequently measured at amortized cost or at fair value through profit or loss or other comprehensive income. The classification depends on the purpose for which the financial assets were acquired. | |||
Financial assets at amortized cost | |||
Financial assets measured at amortized cost are financial assets which are held for the objective of collecting contractual cash flows which are fixed and determinable and consist solely of payments of principal and interest. They are initially recognized at fair value and subsequently measured at amortized cost (if the effect of time value is material) using the effective interest method, less any expected credit losses. Financial assets are included in current assets, except for those with maturities greater than 12 months after the balance sheet date, which are classified as non-current assets. For further details regarding expected credit losses, refer to note 27 Financial risk management. | |||
Financial assets at fair value through other comprehensive income | |||
Financial assets at fair value through other comprehensive income (OCI) represents investment in equity instruments carried at fair value. The group elected to recognize the changes in fair value through OCI. Dividend income is recognized in the profit or loss when the group's right to receive payment is established. The fair value of such instrument is determined using level 1 input. | |||
Financial assets and liabilities at fair value through profit or loss | |||
Derivatives are categorized at fair value through profit or loss unless they are designated as hedges. Derivatives are recorded as financial assets when the value of the derivative is positive in favor of the company; otherwise the derivative is classified as a financial liability. All derivative financial instruments are classified as current or non-current assets or liabilities based on their maturity dates and are accounted for at trade date. Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the group has substantially transferred all risks and rewards of ownership. | |||
The fair value of financial assets/liabilities carried at fair value through profit or loss is determined using valuation techniques that maximize the use of observable market data where it is available and which rely as little as possible on entity-specific estimates. In accordance with the fair value hierarchy established by IFRS 13, these types of inputs classify as level 2 inputs. | |||
Financial liabilities at amortized cost | |||
Financial liabilities issued by the group are classified according to the substance of the contractual arrangements entered into, and the definitions of a financial liability. Financial liabilities are initially recognized and measured at fair value and subsequently at amortized cost. | |||
Fair value estimation | |||
The group classifies fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. | |||
The fair value hierarchy divides the inputs into the following levels: | |||
\u2022 Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities. \u2022 Level 2: inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly (for example, derived from prices). \u2022 Level 3: inputs for the asset or liability that are not based on observable market data. | |||
(\u20ac in thousands) | 2023 | 2022 | ||
Other financial result | 1 | 392 | ||
Foreign exchange result | -1,740 | 3,219 | ||
Other financial result | -1,739 | 3,611 |
ACCOUNTING POLICY | ||
Interest income and expense are recognized using the effective interest method. Interest expense includes all finance costs such as lease interest expense. | ||
(\u20ac in thousands) | 2023 | 2022 | ||
Finished goods | 9,154 | 7,850 | ||
Components and sub-assemblies | 5,669 | 6,810 | ||
Total inventories | 14,823 | 14,660 |
ACCOUNTING POLICY | ||
Inventories are stated at the lower of cost and net realizable value. The cost of inventories comprises costs of purchase, assembly and conversion to finished products. The cost of inventories is determined using the first-in, first-out (FIFO) method, net of reserves for obsolescence and any excess stock. Net realizable value represents the estimated selling price less an estimate of the costs of completion and direct selling costs. | ||
ACCOUNTING POLICY | ||
Inventories are stated at the lower of cost and net realizable value. The cost of inventories comprises costs of purchase, assembly and conversion to finished products. The cost of inventories is determined using the first-in, first-out (FIFO) method, net of reserves for obsolescence and any excess stock. Net realizable value represents the estimated selling price less an estimate of the costs of completion and direct selling costs. | ||
(\u20ac in thousands) | 2023 | 2022 | ||
Gross accounts receivables | 70,322 | 67,492 | ||
Expected credit loss allowance | -1,166 | -1,749 | ||
Total trade receivables (net) | 69,156 | 65,743 |
(\u20ac in thousands) | 2023 | 2022 | ||
EUR | 59,246 | 40,321 | ||
GBP | 2,234 | 115 | ||
USD | 7,135 | 23,712 | ||
Other | 541 | 1,595 | ||
Total trade receivables (net) | 69,156 | 65,743 |
ACCOUNTING POLICY | ||
Trade receivables that do not contain a significant financing component or for which the group has applied the practical expedient, are measured at the transaction price as disclosed in Revenue from contracts with customers (note 6), less expected credit loss allowances. For details of expected credit losses refer to note 27. | ||
(\u20ac in thousands) | 2023 | 2022 | ||
Prepayments | 26,199 | 27,354 | ||
Corporate income tax, VAT and other taxes | 6,416 | 6,804 | ||
Other receivables | 3,594 | 2,645 | ||
Total other receivables | 36,209 | 36,803 |
(\u20ac in thousands) | 2023 | 2022 | ||
Balance as at 1 January | -1,934 | -2,213 | ||
Additions to provision | -442 | -912 | ||
Receivables written off during the year as uncollectible | 170 | 582 | ||
Unused amounts reversed | 925 | 602 | ||
Currency translation differences | 23 | 7 | ||
Balance as at 31 December | -1,258 | -1,934 |
(\u20ac in thousands) | 2023 | 2022 | ||
Gross unbilled receivables | 42,870 | 48,483 | ||
Gross trade receivables | 70,322 | 67,492 | ||
113,192 | 115,975 | |||
Of which: | ||||
Not overdue | 105,463 | 107,303 | ||
Overdue less than 3 months | 6,275 | 5,007 | ||
Between 3-6 months | 735 | 1,533 | ||
More than 6 months | 719 | 2,132 | ||
Gross receivables | 113,192 | 115,975 |
ACCOUNTING POLICY | ||
In determining the expected credit loss, the group applies the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance for all trade and unbilled receivables. As unbilled receivables share the same risk characteristics as trade receivables for similar types of contracts, the expected loss rates for trade receivables are considered a reasonable approximation of the loss rates for unbilled receivables. The expected credit loss rates are measured by grouping trade and unbilled receivables based on shared credit risk characteristics and days passed due. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. The expected loss allowances and any subsequent recoveries of amounts previously written off, are recognized in operating expenses within \u2018General and administrative\u2019 expenses. | ||
(\u20ac in thousands) | 2023 | 2022 | ||
EUR | 59,246 | 40,321 | ||
GBP | 2,234 | 115 | ||
USD | 7,135 | 23,712 | ||
Other | 541 | 1,595 | ||
Total trade receivables (net) | 69,156 | 65,743 |
(\u20ac in thousands) | 2023 | 2022 | ||||
Strengthen | Weaken | Strengthen | Weaken | |||
USD | -61 | 61 | 218 | -218 | ||
GBP | -142 | 142 | -324 | 324 | ||
PLN | -630 | 485 | -467 | 464 |
ACCOUNTING POLICY | ||
Trade receivables that do not contain a significant financing component or for which the group has applied the practical expedient, are measured at the transaction price as disclosed in Revenue from contracts with customers (note 6), less expected credit loss allowances. For details of expected credit losses refer to note 27. | ||
ACCOUNTING POLICY | ||
In determining the expected credit loss, the group applies the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance for all trade and unbilled receivables. As unbilled receivables share the same risk characteristics as trade receivables for similar types of contracts, the expected loss rates for trade receivables are considered a reasonable approximation of the loss rates for unbilled receivables. The expected credit loss rates are measured by grouping trade and unbilled receivables based on shared credit risk characteristics and days passed due. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. The expected loss allowances and any subsequent recoveries of amounts previously written off, are recognized in operating expenses within \u2018General and administrative\u2019 expenses. | ||
ACCOUNTING POLICY | |||
Financial assets | |||
The group classifies its financial assets, at initial recognition, as subsequently measured at amortized cost or at fair value through profit or loss or other comprehensive income. The classification depends on the purpose for which the financial assets were acquired. | |||
Financial assets at amortized cost | |||
Financial assets measured at amortized cost are financial assets which are held for the objective of collecting contractual cash flows which are fixed and determinable and consist solely of payments of principal and interest. They are initially recognized at fair value and subsequently measured at amortized cost (if the effect of time value is material) using the effective interest method, less any expected credit losses. Financial assets are included in current assets, except for those with maturities greater than 12 months after the balance sheet date, which are classified as non-current assets. For further details regarding expected credit losses, refer to note 27 Financial risk management. | |||
Financial assets at fair value through other comprehensive income | |||
Financial assets at fair value through other comprehensive income (OCI) represents investment in equity instruments carried at fair value. The group elected to recognize the changes in fair value through OCI. Dividend income is recognized in the profit or loss when the group's right to receive payment is established. The fair value of such instrument is determined using level 1 input. | |||
Financial assets and liabilities at fair value through profit or loss | |||
Derivatives are categorized at fair value through profit or loss unless they are designated as hedges. Derivatives are recorded as financial assets when the value of the derivative is positive in favor of the company; otherwise the derivative is classified as a financial liability. All derivative financial instruments are classified as current or non-current assets or liabilities based on their maturity dates and are accounted for at trade date. Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the group has substantially transferred all risks and rewards of ownership. | |||
The fair value of financial assets/liabilities carried at fair value through profit or loss is determined using valuation techniques that maximize the use of observable market data where it is available and which rely as little as possible on entity-specific estimates. In accordance with the fair value hierarchy established by IFRS 13, these types of inputs classify as level 2 inputs. | |||
Financial liabilities at amortized cost | |||
Financial liabilities issued by the group are classified according to the substance of the contractual arrangements entered into, and the definitions of a financial liability. Financial liabilities are initially recognized and measured at fair value and subsequently at amortized cost. | |||
Fair value estimation | |||
The group classifies fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. | |||
The fair value hierarchy divides the inputs into the following levels: | |||
\u2022 Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities. \u2022 Level 2: inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly (for example, derived from prices). \u2022 Level 3: inputs for the asset or liability that are not based on observable market data. | |||
ACCOUNTING POLICY | ||
Interest income and expense are recognized using the effective interest method. Interest expense includes all finance costs such as lease interest expense. | ||
ACCOUNTING POLICY | ||
Trade receivables that do not contain a significant financing component or for which the group has applied the practical expedient, are measured at the transaction price as disclosed in Revenue from contracts with customers (note 6), less expected credit loss allowances. For details of expected credit losses refer to note 27. | ||
ACCOUNTING POLICY | ||
In determining the expected credit loss, the group applies the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance for all trade and unbilled receivables. As unbilled receivables share the same risk characteristics as trade receivables for similar types of contracts, the expected loss rates for trade receivables are considered a reasonable approximation of the loss rates for unbilled receivables. The expected credit loss rates are measured by grouping trade and unbilled receivables based on shared credit risk characteristics and days passed due. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. The expected loss allowances and any subsequent recoveries of amounts previously written off, are recognized in operating expenses within \u2018General and administrative\u2019 expenses. | ||
ACCOUNTING POLICY | ||
Trade receivables that do not contain a significant financing component or for which the group has applied the practical expedient, are measured at the transaction price as disclosed in Revenue from contracts with customers (note 6), less expected credit loss allowances. For details of expected credit losses refer to note 27. | ||
(\u20ac in thousands) | 2023 | 2022 | ||
Prepayments | 26,199 | 27,354 | ||
Corporate income tax, VAT and other taxes | 6,416 | 6,804 | ||
Other receivables | 3,594 | 2,645 | ||
Total other receivables | 36,209 | 36,803 |
(\u20ac in thousands) | 2023 | 2022 | ||||
Assets | Liabilities | Assets | Liabilities | |||
Derivatives at fair value through profit or loss | 306 | -84 | 131 | -192 |
(\u20ac in thousands) | 2023 | 2022 | ||||
Assets | Liabilities | Assets | Liabilities | |||
Derivatives at fair value through profit or loss | 306 | -84 | 131 | -192 |
(\u20ac in thousands) | 2023 | 2022 | ||
Personnel-related accruals | 48,634 | 55,567 | ||
Operating expense accruals | 12,712 | 8,760 | ||
Taxes and social security | 6,414 | 7,378 | ||
Total accruals and other liabilities | 67,760 | 71,705 |
2023 | 2022 | |||||
Number | (\u20ac in thousands) | Number | (\u20ac in thousands) | |||
Authorized: | ||||||
Ordinary shares | 300,000,000 | 60,000 | 300,000,000 | 60,000 | ||
Preferred shares | 150,000,000 | 30,000 | 150,000,000 | 30,000 | ||
Total | 450,000,000 | 90,000 | 450,000,000 | 90,000 | ||
Issued and fully paid: | ||||||
Ordinary shares | 132,366,672 | 26,473 | 132,366,672 | 26,473 | ||
Of which held in treasury | 4,717,362 | 3,974,381 |
(\u20ac in thousands) | Legal reserve participation | Cumulative translation reserve | Total legal reserve | Stock compensation reserve | Total other reserves | |||||
Balance as at 1 January 2022 | 65,757 | 14,475 | 80,232 | 18,940 | 99,172 | |||||
Currency translation differences | 0 | 2,406 | 2,406 | 0 | 2,406 | |||||
Fair value remeasurement of financial instruments | -3,090 | 0 | -3,090 | 0 | -3,090 | |||||
Stock compensation expenses | 0 | 0 | 0 | 10,532 | 10,532 | |||||
Transfers between reserves | -26,622 | 0 | -26,622 | -9,581 | -36,203 | |||||
Balance as at 31 December 2022 | 36,045 | 16,881 | 52,926 | 19,891 | 72,817 | |||||
Currency translation differences | 0 | -570 | -570 | 0 | -570 | |||||
Fair value remeasurement of financial instruments | 995 | 0 | 995 | 0 | 995 | |||||
Stock compensation expenses | 0 | 0 | 0 | 12,801 | 12,801 | |||||
Reclassification from liability | 0 | 0 | 0 | 2,296 | 2,296 | |||||
Transfers between reserves | -21,586 | 0 | -21,586 | -10,008 | -31,594 | |||||
Balance as at 31 December 2023 | 15,454 | 16,311 | 31,765 | 24,980 | 56,745 |
(\u20ac in thousands) | 2023 | 2022 | ||
Net result attributable to ordinary equity holders | -21,008 | -102,735 | ||
Number of shares | ||||
Weighted average number of ordinary shares for basic earnings per share | 128,841 | 127,849 | ||
Effect of dilutive potential ordinary shares | ||||
Stock options and restricted stock units | 3,586 | 2,269 | ||
Weighted average number of ordinary shares for diluted earnings per share | 132,427 | 130,118 | ||
Earnings per share (\u20ac) | ||||
Basic | -0.16 | -0.80 | ||
Diluted | -0.16 | -0.80 |
ACCOUNTING POLICY | ||
Basic earnings per share | ||
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the company by the weighted average number of ordinary shares outstanding during the year. Treasury shares are deducted from the number of ordinary shares outstanding on a weighted average basis. | ||
Diluted earnings per share | ||
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares arising from stock options and other equity-settled stock compensation plans. When the effect of the equity- settled stock compensation plans is anti-dilutive, the number is excluded from the calculation of diluted earnings. | ||
ACCOUNTING POLICY | ||
Basic earnings per share | ||
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the company by the weighted average number of ordinary shares outstanding during the year. Treasury shares are deducted from the number of ordinary shares outstanding on a weighted average basis. | ||
Diluted earnings per share | ||
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares arising from stock options and other equity-settled stock compensation plans. When the effect of the equity- settled stock compensation plans is anti-dilutive, the number is excluded from the calculation of diluted earnings. | ||
(\u20ac in thousands) | 2023 | 2022 | ||
Balance as at 1 January | -1,934 | -2,213 | ||
Additions to provision | -442 | -912 | ||
Receivables written off during the year as uncollectible | 170 | 582 | ||
Unused amounts reversed | 925 | 602 | ||
Currency translation differences | 23 | 7 | ||
Balance as at 31 December | -1,258 | -1,934 |
(\u20ac in thousands) | 2023 | 2022 | ||
Gross unbilled receivables | 42,870 | 48,483 | ||
Gross trade receivables | 70,322 | 67,492 | ||
113,192 | 115,975 | |||
Of which: | ||||
Not overdue | 105,463 | 107,303 | ||
Overdue less than 3 months | 6,275 | 5,007 | ||
Between 3-6 months | 735 | 1,533 | ||
More than 6 months | 719 | 2,132 | ||
Gross receivables | 113,192 | 115,975 |
ACCOUNTING POLICY | ||
In determining the expected credit loss, the group applies the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance for all trade and unbilled receivables. As unbilled receivables share the same risk characteristics as trade receivables for similar types of contracts, the expected loss rates for trade receivables are considered a reasonable approximation of the loss rates for unbilled receivables. The expected credit loss rates are measured by grouping trade and unbilled receivables based on shared credit risk characteristics and days passed due. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. The expected loss allowances and any subsequent recoveries of amounts previously written off, are recognized in operating expenses within \u2018General and administrative\u2019 expenses. | ||
(\u20ac in thousands) | 2023 | 2022 | ||
Balance as at 1 January | -1,934 | -2,213 | ||
Additions to provision | -442 | -912 | ||
Receivables written off during the year as uncollectible | 170 | 582 | ||
Unused amounts reversed | 925 | 602 | ||
Currency translation differences | 23 | 7 | ||
Balance as at 31 December | -1,258 | -1,934 |
(\u20ac in thousands) | 2023 | 2022 | ||
Gross unbilled receivables | 42,870 | 48,483 | ||
Gross trade receivables | 70,322 | 67,492 | ||
113,192 | 115,975 | |||
Of which: | ||||
Not overdue | 105,463 | 107,303 | ||
Overdue less than 3 months | 6,275 | 5,007 | ||
Between 3-6 months | 735 | 1,533 | ||
More than 6 months | 719 | 2,132 | ||
Gross receivables | 113,192 | 115,975 |
ACCOUNTING POLICY | ||
In determining the expected credit loss, the group applies the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance for all trade and unbilled receivables. As unbilled receivables share the same risk characteristics as trade receivables for similar types of contracts, the expected loss rates for trade receivables are considered a reasonable approximation of the loss rates for unbilled receivables. The expected credit loss rates are measured by grouping trade and unbilled receivables based on shared credit risk characteristics and days passed due. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. The expected loss allowances and any subsequent recoveries of amounts previously written off, are recognized in operating expenses within \u2018General and administrative\u2019 expenses. | ||
ACCOUNTING POLICY | ||
In determining the expected credit loss, the group applies the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance for all trade and unbilled receivables. As unbilled receivables share the same risk characteristics as trade receivables for similar types of contracts, the expected loss rates for trade receivables are considered a reasonable approximation of the loss rates for unbilled receivables. The expected credit loss rates are measured by grouping trade and unbilled receivables based on shared credit risk characteristics and days passed due. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. The expected loss allowances and any subsequent recoveries of amounts previously written off, are recognized in operating expenses within \u2018General and administrative\u2019 expenses. | ||
(\u20ac in thousands) | 2023 | 2022 | ||
Other financial result | 1 | 392 | ||
Foreign exchange result | -1,740 | 3,219 | ||
Other financial result | -1,739 | 3,611 |
ACCOUNTING POLICY | ||
Interest income and expense are recognized using the effective interest method. Interest expense includes all finance costs such as lease interest expense. | ||
(\u20ac in thousands) | 2023 | 2022 | ||
Other financial result | 1 | 392 | ||
Foreign exchange result | -1,740 | 3,219 | ||
Other financial result | -1,739 | 3,611 |
ACCOUNTING POLICY | ||
Interest income and expense are recognized using the effective interest method. Interest expense includes all finance costs such as lease interest expense. | ||
(\u20ac in thousands) | 2023 | 2022 | ||
Other financial result | 1 | 392 | ||
Foreign exchange result | -1,740 | 3,219 | ||
Other financial result | -1,739 | 3,611 |
ACCOUNTING POLICY | ||
Interest income and expense are recognized using the effective interest method. Interest expense includes all finance costs such as lease interest expense. | ||
(\u20ac in thousands) | 2023 | 2022 | ||
Other financial result | 1 | 392 | ||
Foreign exchange result | -1,740 | 3,219 | ||
Other financial result | -1,739 | 3,611 |
ACCOUNTING POLICY | ||
Interest income and expense are recognized using the effective interest method. Interest expense includes all finance costs such as lease interest expense. | ||
ACCOUNTING POLICY | ||
Interest income and expense are recognized using the effective interest method. Interest expense includes all finance costs such as lease interest expense. | ||
ACCOUNTING POLICY | ||
Interest income and expense are recognized using the effective interest method. Interest expense includes all finance costs such as lease interest expense. | ||
(\u20ac in thousands) | 2023 | 2022 | ||
Non-current | 14,841 | 18,237 | ||
Current | 10,879 | 11,020 | ||
Total provisions | 25,720 | 29,257 |
(\u20ac in thousands) | Warranty | Claims and litigation | Employee benefits | Other | Total1 | |||||
Balance as at 1 January 2022 | 5,935 | 9,474 | 21,407 | 3,205 | 40,021 | |||||
Increases in provisions | 1,297 | 455 | -429 | 31,054 | 32,377 | |||||
Utilized | -3,657 | 0 | -8,444 | -12,316 | -24,417 | |||||
Released | -204 | -4,441 | 0 | -4,925 | -9,570 | |||||
Reclassified | 0 | 0 | 0 | -9,154 | -9,154 | |||||
Balance as at 31 December 2022 | 3,371 | 5,488 | 12,534 | 7,864 | 29,257 | |||||
Increases in provisions | 1,742 | 206 | 205 | 12,533 | 14,686 | |||||
Utilized | -1,798 | 0 | -172 | -5,597 | -7,567 | |||||
Released1 | -400 | -3,553 | -572 | -55 | -4,580 | |||||
Reclassified | 0 | 0 | 0 | -6,076 | -6,076 | |||||
Balance as at 31 December 2023 | 2,915 | 2,141 | 11,995 | 8,669 | 25,720 |
ACCOUNTING POLICY | |||
Provisions are recognized when: | |||
\u2022 The group has a present obligation as a result of a past event. | |||
\u2022 It is probable that the group will be required to settle that obligation. | |||
\u2022 The amount can be reliably estimated. | |||
Provisions are measured at management\u2019s best estimate of the expenditure required to settle the obligation at the balance sheet date, and are discounted to present value where the effect is material. | |||
Warranty provision | |||
The group offers warranties mainly for its hardware products in Consumer (including Automotive hardware). Provisions for warranty costs are recognized at the date of sale of the relevant products, at management\u2019s best estimate of the expenditure required to settle the group\u2019s obligation. Warranty costs are recorded within cost of sales. | |||
Claims and litigation provision | |||
The group made a provision for potential legal, tax penalties and other risks in various jurisdictions. The legal matters consist mainly of intellectual property infringement issues. In the normal course of business, the group receives claims relating to allegations that it has infringed intellectual property assets. | |||
In such cases, the companies making the claims seek payments that may take the form of licenses and/or damages. While these claims will be resisted, some are likely to be settled by negotiation and others are expected to result in litigation. | |||
The cases and claims against the group often raise difficult and complex factual and legal issues which are subject to many uncertainties and complexities, including but not limited to the facts and circumstances of each particular case and claim, the jurisdiction in which each suit is brought, and the differences in applicable law. In the normal course of business, management consults with legal counsel and certain other experts on matters related to such claims and litigation. The group accrues a liability when it is determined that an adverse outcome is more likely than not, and the amount of the loss can be reasonably estimated. | |||
If the likelihood of an adverse outcome is reasonably possible or an estimate is not determinable, the matter is disclosed, provided it is material. Management is of the opinion that the provision is adequate to resolve these claims. | |||
Employee benefits provision | |||
Employee benefits provision relates mainly to the defined benefit pension plan in Germany and Belgium as disclosed in note 8 and excludes restructuring provision. | |||
Other provision | |||
Other provision includes provisions for restructuring which is recognized only when a detailed formal plan has been finalized and management has raised valid expectation to those affected that the plan will be implemented. | |||
SIGNIFICANT ESTIMATES | ||
Warranty provision | ||
Management estimates the related provision for future warranty claims based on historical warranty claim information, as well as evaluating recent trends that might suggest that past cost information may differ from future claims. From the total warranty provision of \u20ac3 million (2022: \u20ac3 million), it is estimated that an amount of \u20ac1 million (2022: \u20ac2 million) will be utilized within 12 months while the remaining will be utilized between 1-3 years. | ||
Claims and litigation provision | ||
The methodology used to determine the amount of the liability requires significant judgments and estimates regarding the costs of settling asserted claims. Due to the fact that there is limited historical data available, the estimated liability cannot be based upon recent settlement experience for similar types of claims. | ||
Based on the best estimate, the portion of the claims and litigation provision expected to be settled in the coming 12 months amounts to approximately \u20ac0.7 million (2022: \u20ac0.4 million). | ||
(\u20ac in thousands) | 2023 | 2022 | ||
Less than 1 year | 59,187 | 55,692 | ||
Between 1-5 years | 30,305 | 40,064 | ||
More than 5 years | 1,553 | 630 | ||
Total commitments | 91,045 | 96,386 |