1. General
TomTom NV (‘the company’) has its statutory seat and headquarters in Amsterdam, the Netherlands. The consolidated interim financial statements comprise the financial information of the Company and its subsidiaries (together referred to as ‘the group’) and have been prepared by the Management Board and authorised for issue on 19 July 2017.
The consolidated interim financial statements have neither been reviewed nor audited.
2. Summary of significant accounting policies
The principal accounting policies and method of computations applied in these consolidated interim financial statements are consistent with those applied in the annual financial statements for the year ended 31 December 2016, except as described below. These policies have been consistently applied to all the periods presented, unless otherwise stated.
Basis of preparation
The consolidated interim financial statements for the six months ended 30 June 2017 have been prepared in accordance with IAS 34 ‘Interim Financial Reporting’ as endorsed by the EU. As permitted by IAS 34, the consolidated interim financial statements do not include all of the information required for full annual financial statements and the notes to these consolidated interim financial statements are presented in a condensed format. Accordingly, the condensed consolidated interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2016, which have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRIC interpretations as adopted by the European Union. The presentation currency of the group is the euro (€).
Other new accounting standards and developments
To the extent relevant, all IFRS standards and interpretations including amendments that were in issue and effective from 1 January 2017, have been adopted by the group from 1 January 2017.
These standards and interpretations had no material impact for the group.
All IFRS standards and interpretations that were in issue but not yet effective for reporting periods beginning on 1 January 2017 have not yet been adopted. Standards that are expected to have material impact to the group are IFRS 15 and IFRS 16 as disclosed in the 2016 annual financial statements. We are on track with our transition process, amongst others in setting up policy under the new standard, reviewing individual contracts in order to quantify impact, implementing a new accounting tool and providing internal training to the relevant stakeholders. The Telematics revenue will primarily be impacted in the area of assessing whether the control unit sold to the customer as enabler to receive the fleet management service is a distinct performance obligation, while Automotive and Licensing will primarily be impacted by the specific licensing guidance in the standard and the application of the royalty constraint as well as the general requirement to estimate upfront the total consideration of certain types of contract / performance obligations. Consumer will primarily be impacted by the classification of the cash consideration given to customers and to a lesser extent in the area of multiple element arrangements.
Use of estimates
The preparation of these interim financial statements requires management to make certain assumptions, estimates and judgements that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities as of the date of the interim financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of revision and the future periods if the revision affects both current and future periods. For areas involving a higher degree of judgement or areas where assumptions and estimates are significant to the (interim) financial statements, reference is made to note 3 of the Consolidated financial statements in the 2016 Annual Report.
Change in estimates
To better reflect the pace of technological change in the sector, the group has changed the expected useful life of its database content in 2017. All content created from 1 January 2017 onwards will be amortised over 12, 8 or 4 years depending on the type of content, while previously all content is amortised over 20 years.
TomTom historically focused on creating the foundation for maps, which was mainly related to content with a long useful life like road networks, geometry and address points. Customer needs and requirements are changing (e.g. because of Autonomous Driving) and more accurate and detailed map content is required. TomTom is at the forefront of these changes with its new mapmaking platform and the map content we expect to create in the future relates to elements that have a shorter economic life.
The change of this useful life will have limited impact to the group
amortisation charge in 2017 as the database that exists on 31 December
2016 will remain at a useful life of 20 years.
