In a declining PND market, our Consumer business unit generated revenue of €149 million for the quarter, which is slightly lower compared to €155 million in Q2 2012. The relatively flat revenue trend was mainly driven by an increase in market share in Europe, the impact of last year’s GPS chip related product issue and higher Fitness revenue.
The PND market size in Europe during the quarter was 2.1 million units, 14% lower compared to the same quarter last year. The North American market size was 1.3 million units, 27% lower compared to the same quarter last year. Our market share in Europe increased to 50% from 44% in the same quarter last year while our North American market share decreased from 19% to 18% in the same quarter last year.
Automotive revenue for the quarter was €52 million, which is €7.7 million lower compared to Q2 2012 (€60 million). This decrease is mainly due to lower system sales as challenging market conditions continue to affect our automotive partners.
Licensing revenue for the quarter remained flat year on year at €29 million.
Business Solutions continued to grow its subscriber base and generated revenue of €20 million for the quarter, which is a 13% increase compared to the same quarter in the prior year (Q2 2012: €18 million).
Hardware revenue was €155 million for the quarter (Q2 2012: €163 million). Content & Services revenue was €96 million in Q2 2013 compared to €99 million in Q2 2012 mainly due to less revenue from LIVE services. Content & Services revenue represented 38% of total revenue for the quarter (Q2 2012: 38%).
Gross margin
The gross margin of the quarter for the group was 51%. The gross margin decreased by 1 percentage point compared to the same quarter last year.
Operating expenses
Total operating expenses for the quarter were €120 million, which is €1.9 million lower compared to the same quarter last year (Q2 2012: €122 million).
The year on year decrease in operating expenses was mainly the result of lower marketing expenses which was partially offset by higher SG&A expenses.
Marketing expenses for the quarter decreased by €4.3 million year on year to €11 million (Q2 2012: €16 million). SG&A expenses increased by €2.6 million year on year to €44 million (Q2 2012: €41 million) mainly due to higher variable personnel expenses.
As a percentage of revenue, operating expenses were 48% in Q2 2013 compared to 47% in Q2 2012.
Financial results
The net interest charge was €0.3 million in Q2 2013 (Q2 2012: €3.0 million). The interest expense on the loan facilities for Q2 2013 amounted to €0.6 million with related amortisation of transaction costs of €0.3 million. Interest income was €0.6 million in Q2 2013 (Q2 2012: €0.2 million).
The other financial result was -€1.3 million for the quarter. The loss for the quarter consisted primarily of a foreign exchange loss on the revaluation of monetary balance sheet items partly offset by a €0.6 million recovery of previously written-off derivatives.
The result associates of €2.6 million for the quarter included a one-off gain of €2.5 million as a result of the remeasurement of the carrying value of our previously held 49% interest in the associate mapIT (a South Africa based distribution partner) to its fair value when we acquired the remaining 51% interest.
Net result and adjusted EPS
The net result for the quarter was €7.7 million compared to €8.9 million in the prior year, which represents adjusted earnings per share of €0.07 and €0.09 respectively.
Balance Sheet
At the end of the quarter, trade receivables plus other receivables amounted to €175 million compared to €207 million at the end of Q2 2012. The inventory level was €47 million, a decrease of €17 million year on year caused by the timing of the transition to the new PND ranges. Cash and cash equivalents at the end of the quarter were €181 million versus €149 million at the end of Q2 2012.
Current liabilities were €377 million compared to €741 million at the end of the same quarter last year. The year on year decrease is mainly caused by the fact that our outstanding borrowings were presented as current in Q2 of the previous year as they fell due for repayment in December 2012.
The carrying value of our borrowings as at 30 June 2013 was €173 million (Q2 2012: €338 million). Excluding transaction costs, which are netted against the borrowings, our outstanding borrowings amounted to €175 million (Q2 2012: €340 million).
At 30 June 2013 we had a net cash position of €6 million (Q2 2012: net
debt of €191 million). Net cash is the sum of the cash and cash
equivalents at the end of the period (€181 million) minus the borrowings
(€175 million).
