TomTom N.V.

Bisera Grubesic - Head of Treasury & Investor Relations Harold Goddijn - Co-Founder, Chairman of the Management Board and CEO Taco Titulaer - CFO and Member of Management Board

Francois Bouvignies - UBS Marc Hesselink - ABN AMRO Andrew Humphrey - Morgan Stanley Sander van Oort - Kempen Marc Zwartsenburg - ING

Thank you, operator. Good afternoon, and welcome to our conference call, during which we will discuss key highlights and financial results for the second quarter.

With me today are Harold Goddijn, our CEO; and Taco Titulaer, our CFO. You can listen to the call on our website, and a recording of the call will be made available afterwards.

And as usually, I would like to point out that Safe Harbor applies. We will start today with Harold, he will discuss key highlights of the quarter and that will be followed by more detailed look at the financial results from Taco and after that we will then take your questions.

And with that, Harold, I would like to hand over to you.

Thank you, Bisera, andwelcome. Our strategy is to build on our leading position in navigation technologies and to provide location content, software, and services to business customers.

We are developing a growing high margin and recurring revenue stream. Combined Automotive, Licensing and Telematics revenue grew this quarter by 18% year-on-year, which was ahead of our expectation.

We continue to strengthen our network of customers and partners to support our position in Autonomos driving and Smart Mobility. We have seen lower than planned hardware] revenue this quarter and that is mostly because of disappointing sports sales.

The wearables market has fallen short of expectations and because of this and because we want to focus on Autonomos licensing and Telematics businesses we are reviewing strategic options for our sports business. This resulted in a non-cash impairment charge of a €169 million in this quarter.

Today we announced that we aim to launch a share buyback program of up to €50 million and that is equal to around 2.5% of the total issued share capital. This program reflects our confidence in our strategy in the future of TomTom.

I'm very pleased to announce that we will propose to appoint Bernd Leukert to our Supervisory Board. Bernd is a member of the Executive Board of SAP.

Bernd, also a member of the supervisory board of the German Research Center for Artificial Intelligence. He has an impressive track record in software and product development and we're delighted that he is committing to our company.

This concludes my part of the presentation. I'm now handing over to Taco.

Thank you, Harold. Let me make a couple of brief comments on the financials starting with the impairment.

The underperformance in sports resulted in a non-cash impairment charge of €169 million in the quarter. There is no goodwill related to consumer at the left.

The remaining goodwill on our balance sheet is 265 million [ph] of which €192 million is related to Automotive and Licensing and €63 million is related to Telematics. Le me now discuss the business units and the rest of the P&L.

The Q2 revenue was €253 million, that is 4% lower compared to last year. Automotive licensing and Telematics combined grew by 18% year-on-year and that is ahead of our expectations.

Automotives was up 39% to €48 million. The increase was driven by the ramp up of a new contract that went live last year.

But it was also driven by the success of our customers in the – at end market. Licensing revenue grew with 16% year-on-year to €39 million.

The year-on- year increase included in catch up that was recorded in the second quarter of this year. Telematics revenue was flat year-over-year €40 million.

Recurring subscription revenue saw an increase of 7% and then consumer saw an decrease of 20% year-over-year to reach €126 million. Consumer products declined by 18% and automotive hardware revenue declined with 31%.

If you look at the gross result, gross results increased by 11%, gross margin was strong at 63% and increased by 8 percentage point’s year-on-year. For the second part of this year we expect gross margin to remain at the same level as what we saw in the first half.

Our revenue though will be lower year-over-year. So with the same gross margin this will result in a lower gross result in our second half of the year.

The operating expenses for the quarter were €151 million, that is €80 million higher compared with a year ago. Last year however included the one-off gain from a pending customer case, excluding this one-off gain operating expense for the quarter increased by 8%, mainly driven by higher expenses on our long-term employee incentive plan and higher amortization expenses.

For the second half of the year we expect the OpEx to be lower than in H1 and also lower than H2 last year. The biggest contributor to this decline is marketing.

EBITDA grew by 4% year-over-year to €45 million. EBIT was €9 million, excluding impairment charge versus €30 million last year.

The net result adjusted for acquisition related expenses impairments and gains on a post-tax basis was €21 million, which translates to an adjusted earnings per share of €0.09 on a full diluted basis and this compares with €23 million and an adjusted earning per share of $0.10 in Q2 last year. At the end of the quarter, we reported a net cash position of €82 million.

We expect to generate cash in the second half of the year and even assuming the 50 million share repurchase. Now let me go to slide 4.

As shown in the previous quarter this slide show an operational revenue of Automotive. Operational revenue is reported revenue, plus a net change in the deferred revenue position.

As we sell products to Automotive that include multi-year updates and/or subscriptions to some of the revenue is deferred. Operational revenue in the quarter amount of €60 million, an increase of 43% compared to last year.

The total deferred revenue on our balance sheet is €220 million and the main contributors are consumer, which is slowing, declining and is now at €125 million and you have Automotive at €86 million and that position has doubled since last year. We expect Automotive to continue to grow strongly also in the second half of the year.

Slide 5, the full year outlook. To conclude, I would like to give you an update on our outlook for 2017.

As mentioned before, hardware revenues were lower than planned because of disappointing sports sales. As a result, we updated our revenue outlook.

We now expect to deliver full year revenue around €925 million. Adjusted earnings per share of around $0.25 remains unchanged.

We expect the combined revenue of the Automotive licensing and Telematics business to grow to around 15% year-on-year compared to in 2017. And then we expect the level of investments that is both CapEx and OpEx to show most increase compared with 2016.

This excludes acquisitions. Operator, we would now like to start with the Q&A session.

Hello. Thank you for taking my question.

I have a couple if I may. So the first one is on your OpEx trend given on the sports revenue and you expect the OpEx declining year-over-year in H2.

How should we think about beyond I mean, 2017, is it changing your plan of OpEx development obviously for the longer years. If I remember correctly, last quarter you said that the OpEx will I mean - will be growing in the next few years, but nowhere near the 15% CAGR for the non-consumer business.

So I just wanted to have an update on this given what you said on the sports? The second one is on the Automotive markets, how should we think about the reference for growth for this year for the overall markets.

Again, in the next two quarters - the last two quarters Q4 and Q1 you said that the overall size of the market would be higher than ’16, just to have an update on this, nothing related to your bookings, as imagine you don’t want to comment on that. And I have last one if I may just after that.

Yeah, do you want to ask that last question as well or?

Yes, I can. So the last one is on your HD Maps discussion as is now in the market available, I just wanted to have a sense of when do you think you can start having them in your bookings or what or anything about the pricing discussion with your customers.

Any color on that would be would be very helpful?

Okay. So just I’ll take the first question and then leave the comments about the order intake and the HD Maps to Harold.

OpEx, indeed OpEx was up with a 11%. In the first half we expect OpEx to come down, in the second half to be modestly up for the full year.

The main driver of the decline that we expect in H2 is marketing. We spent €80 million on marketing in 2016.

We think that that number is going to be around €60 million in 2017. We need to - we need to look at strategic options as we said in our press release for what we want to do with sports business and with that it is way too early to make any comment or give any color on the OpEx development beyond this year.

The order book for Automotive is - we won't discuss the order book as you rightly said at this call. But it's also true that the available business in the year as a whole is bigger than it was in 2016.

Now that doesn’t say anything about our win rate or where we are, but there are more contracts to be won or lost in 2017 than in 2016. If I look at HD Maps and the discussion there, I’d still - it's still early days.

I think notable - noticeable developments are that Baidu will use our map-making platform for the creation of HD Maps. That is important because that gives a unified map products to software developers that can be applied to for cars both in the western world and in China.

And I think that is good news for software developers that they have one standard that they can work towards. I am also pleased that it is a good acknowledgment by Baidu about the – you know, the state of our platform and tools for HD driving – for self driving.

Now, is the market developing? RFQs are coming our way for HD Maps, not necessarily for Level 5 self-driving applications, but increasingly for Level 2 and Level 3 self-driving.

Yes, self-driving and Autonomos driving are system driving application. So for any applications that software developers and our customers are looking for are lane level guidance, but also more sophisticated adaptive cruise control and other safety features that are based on our HD Map, including some applications for motor management where you know fuel savings can be achieved by having a better understanding of the road ahead and shifting the gearbox and the power of the engine in anticipation of what's going to happen.

There is an expectation that that can reduce fuel consumption. So there is a quiet a you know, range of applications developing ahead of Level 5 self-driving which is good.

We are quoting and for us businesses and trying to win those businesses. So we start to see the emergence of a market for highly detailed maps, all right.

I don’t want to say anything about pricing, I think that’s too early, but we do see some applications being developed for these types of products.

When you say it's too early does it mean that maybe you won't - you don't expect to sign any contracting with HD Map in ‘17 or just trying to understand what you mean by that?

Well, so if you say - the full specification of HD Maps is designed to make self-driving at Level 5 a technical possibility. That we don't see happening before 2020, 2021.

But we do see a market for these type of products and derived products emerging for applications that are – its really difficult to happen earlier and for those businesses we are quoting and we hope to win some business as well and that will help to establish that product - that product category that we can develop and we can develop it from there on.

Okay. Great.

Thank you.

Yeah. Thank you.

My first one is also a follow up on that, the [indiscernible] business in Automotive. And so far I understand you cannot give like a exact success rate, but what do you think you are taking your share of the market, are you winning share or is it too early to tell on that one?

No, I think it's too early to tell. But what I can tell you, is that we feel good about our product portfolio and the state of our technology and we can see that we are you know, we are motoring in that space and on the application side definitely there is a bit of a you know, I think we look strong there giving reasons and essence of products and what have you.

I think those - especially on the application side we are looking strong. So we have confidence that we will further progress our standing in the Automotive world and continue to grow that business.

I can’t say much more at this stage. But other than that we feel good about where we are with our product portfolio.

Okay. It is clear.

And the second question is more on general on the space, like the ecosystem on Autonomous driving. You're announcing quite some partnerships.

Your competitor here has been announcing a lot of partnerships. How do you see this market evolving now, is it going to be like a two player kind of market.

I also hear sometimes stories that those will be like a winner types all kind of markets. What is your view on that one and who will be the driver of this ecosystem, will be the software players or the car companies.

What is your updated view on that one?

Well, I think the currency is still coming to terms with the challenges ahead of them. We see also some developments, partnerships happening.

We see a great level of excitement. It’s a hot space now where the car tech space in general.

But you know, as usual it’s far too early to declare will come to win, and what the structure of that industry is going to be. I don't think it will be a one winner takes all market, there are still different opinions about technologies that need to be applied.

You know, fundamental architecture of the software and how that all is going to work. So there is still lot of fight for and more to be explored and decided.

So it's too early, it’s too early. What we see is a couple of general trends, so software developers believe that maps will be inevitable, unique one, otherwise it's getting too complex to keep those car safe.

I think that’s a big lesson that we've learned in the last two years. There is progress about what a self- driver car can do, but it's also true that we have been correct for them completely.

So there's still a lot to be invested and to go for in this space and that’s true for everybody who is exposed to this market.

Okay. Clear.

And then final question is on the - on Baidu, you mentioned I think in the press release when you announced the Baidu’s contract, that there will not be extra cost related to it. Baidu is going to use your platform and I think you're going to use their, and now that you are on artificial intelligence.

How does this work. Is this purely an R&D working together that you both think your part of this share of sales to cost or is also revenues in there because they are using your platform?

No it is a - so we are providing enabling technology to create HD Maps. So the databases in - database structures and technologies and tools.

Baidu will populate the databases through camera upbringing – camera observations in and doing everything on the database. And you know - and we can generate the license fee when HD Maps are sold in China to certain customers.

So you know, it's a fairly well-defined partnership. It's not going to generate massive amount of money in the short term.

But I think the important message we're giving here is that there is a product that you can use both in Europe and in North America and in China. And TomTom is setting the specification standard for that product.

And I think that's the core message that we want to get across to our partners in the car industry.

Okay. Thank you.

Hi. Thanks for taking my questions.

I’ve got a few if I may. That the first is on the consumer business, you – clearly its too early to kind of talk in detail about what your strategic options might be, but I think in the past you've indicated that part of the reason for keeping a US PND business alive was to provide you share overhead for what you viewed as an opportunity on the consumer side.

Does that change in the light of today's announcement? And my second question is on Telematics, I think last November you talked about opportunities in the leasing space with the replacement vehicles or insurance fleets.

Any more color on that would be great? My third question is around the Bosch agreement.

I'd like to ask how the localization technology you are looking develop with Bosch compares to your own technology department and what you previewed last November? And then finally on the on the buyback, you know, clearly we are certainly in the early innings of an arms race in terms of developing technology around Autonomous driving and mapping, which you know has the possibility of requiring in multiple years of spending.

Any color on how that plays into your thinking with regard to the buyback would be great? Thank you.

Yes. So we said on the sport side that we are evaluating [ph] strategic options.

We are not doing that on the PND side. PND side is different.

It’s very much aligned with our technologies, its cash generative. We have a strong position there.

We are generating cash from that product category. And I think that TomTom is the best – by far the best owner of that asset going forward.

So nothing is changing there. But we have to face the reality that PND remains a declining product category and that's fine we can live with that.

Telematics leasing, connective cars, so you can - broadly speaking separate Telematics product portfolio in two different product categories, one category for fleet management, where you sell your products to a business that's operating a fleet and the other category is connective car services where you sell your products or services to OEMs dealers leasing companies. That last category is new.

We see good potential there. We have signed a couple of deals there that have great potential.

As volumes are high, but ASPs or ARPUs are much more competitive. So it's high volume, low price.

We started to ship in that category and that is [indiscernible] it takes some time to embed it and then get the operations right and what you. But the first results are there and the first contributions in top line from that connective car business are starting to come through in the P&L, but it will take some time before it starts to become a material income stream.

Lastly, the Bosch agreement is about – sorry, there is more two more questions, one is about the Bosch agreement and Bosch have developed a radar technology that it is quite you know, that is an advancement, innovative [ph] rate of technology for self-driving. What we are doing together with Bosch is creating a, let's say a fingerprint of the road of that radar image that we align with our HD Map where the HD Map is to ground through and by having that radar overlay over the HD Map the radar in the car can accurately help the positioning of the car where it is in the direction of travel and so on and so forth.

So we are helping Bosch to get that product aligned and created and that will help - the availability of the product will help Bosch also to sell it in the automotive industry, both as a sensor and a methodology for positioning. Lastly, Autonomous driving, the HD Map itself how it is going and how much money do you think you need for that if I understand your question correctly.

We've always said that it's difficult to create that HD Map, but it's different than a stand up map. Most of it you know, we are working hard to develop the technologies that can help us to create that map to a larger degree of automation.

And that's where R&D and research is coming in through a combination of computer vision and artificial intelligence we think we can achieve a very high degree of automation for the creation of that HD Map. So it's really technology innovation game, rather than a brute force game.

Okay.

And we feel good about the progress we are making there.

Okay. Maybe just to follow up on that.

And I think that some of you’ve touched them on the past in mapping. I guess kind of when you're signing agreements today particularly on the automotive side and are you able to incorporate elements of those agreements that allow you to start harvesting that data around the HD Map more efficiently or are you waiting on cheaper LIDAR [ph] newer technologies to become available before you can stop doing that in earnest?

No, there's a lot of - there is a kind of marketplace starting to emerge driven by the desire of car makers to license the data, do something meaningful and data they collect form vehicles, so there’s one development. But they're also active negotiations going on for building a closed loop technology that will finds its way into production vehicles.

That are too early to comment on that, but we see that as an essential part of the equation where you have a large fleet of relatively cheap sensors connecting, processing data and validating databases that have already been published and constructed. And we see that as an integral part of the challenge.

Okay. That's very helpful.

Thank you.

Good afternoon. Thanks for taking my question.

I'm not the expert on TomTom [indiscernible] with this TomTom work. But the question I had relates to the impairments, could you share some backlight or some background information on the timing of open impairment.

And normally we tend to see these kinds of impairments at the end of the fiscal year and this comes somewhere during the half year. Could you please tell me and provide some color on that?

Yes, sure. Indeed the – you do that annually, but you do it also if there's a triggering event and we started with our sports business in 2011 and since then we have seen growth year-over-year to reach over €100 million at the end of 2016 with growth level of more than 50%.

That said, the - we were not able to make profit at those levels and we knew that we had to grow our business further to at least €200 million to start to be breakeven or to start to make profits. We - in our expectations for 2007 we didn't think we would reach that level already in 2017, but we would get there somewhere in 2018.

But when we saw the first quarter results coming in, they were not great, but we thought that that would be more temporary event, but then after a marketing campaign to Q2 and still no growth year-over-year we decided early July that we couldn’t go along this way and that in itself was the so-called triggering event that led to the review of the impairment model and led to the full impairment of the goodwill at the end of Q2.

Okay. Thank you very much.

Hi. Thank you very much.

Just a couple of questions. In terms of the auto revenue growth of 39%, which is very good, can you - beyond you know, end customer’s volumes which I know you commented was strong?

Can you kind of break out what's driving this high level of growth in terms of take up rate, the extent to which take up rates themselves are increasing. What is driving that increase in take up rates please?

Whether its car companies offering navigation and traffic at standard or the extent to which it is customers, end customers choosing to take on you know, product such as lane departure warnings that require the map and traffic please?

Yeah. So the growth is obviously a function off contract wins generally speaking in the past which you give you those numbers of order intake in – over the last three years if I am correct.

That is what's driving it. So it's a market share - for us it’s a big strong market share.

Now we do – did little bit better than we anticipated and that is mostly because – that is mostly because car sales are strong with a combination of higher take rates and we have some very favourable news from [indiscernible] the year you know, those things helped to sell more and it makes everything a little bit easier. So those are the two big drivers.

Where take up rates are exactly in our customer base at the moment. We don't have a reliable number for that, but we will - we think it's growing to about 30%, across the range of all cars, but it's a very rough number and it's all been verified and cannot be independently verified either.

But I'll make a point to have a look what the – what take up rates are according to industry analysts and where they expect them to go.

And what's driving the increase in take up rates, is it some of these new applications we talked about the Level 2 type stuff or is it just - what is driving it?

Whether it's just driving is a high take rate customers are asking for it - the visibility and the equipment levels are being pushed down to the mid range. The technology is getting better, traffic and dynamic routing are increasingly seen as essential tools in a car because it's getting better.

It does help save time, people start to expect some good quality routing and traffic information in the car and rely on it more. I think those are the - those are the key drivers.

And connectivity is becoming standard as well. That's not just driven by navigational where we have a big part in that because of traffic information.

But there is a general trend towards connected car for multiple purposes and we are benefiting from that because the additional cost to bring navigation services into the vehicle are going down as a result of that. It’s getting easier, technology is better, easier to integrate, maturing rapidly, demand is there and especially dynamic routing is increasingly seen as a must have.

Just in terms of HD Maps, you mentioned that there were potential RFQs, now in terms of the amount of actual roadways you have mapped with an HD Map, it's I guess relatively low. So I guess what I'm trying to understand is, I understood your point on the technology, but you know as RFQs come through and you have to deliver the HD Map, how you know, how populated those HD Map have to be in terms of coverage to start winning you know, to deliver on potential RFQs and how are you going to get there please?

Well, we do have extensive coverage of HD Map. We have the major roads, so those closed entry roads there, so highways, motorways where the technology will be deployed first.

We have covered that for North America and Western Europe. So we can do meaningful applications today with HD Maps that are available in those key markets where we cover 100% of the highest road crosses.

So there is really something that we have an offer and that car makers can buy and we see we see RFQs coming through where our requirements for HD Maps as I said in my earlier remarks. So the product is there, its working.

It's good and it will increasingly be deployed in you know, in kind of applications that will come in before full self driving will be a reality.

Interesting. It was a strong number plus you can defend.

I understand there was some catch up payment, but are there any interesting underlying dynamics driving that growth that new verticals, new need for mapping, Internet of Things or is it just phasing of revenues from you know, your current customer base?

No. I’ll say, what you see is real, there is being replication from our key customers we have disclosure lists.

Our [indiscernible] the next growth needs come from the online services that we are developing now with not so for the zero platform all that is on schedule and we expect to launch that after the summer. So don't expect anything big in the second half of this year in terms of revenues, but we're laying the foundation for an additional revenue stream location based services that was not available to us before that marks [ph] on deals.

So we are excited about that and the technologies we are deploying they are maturing rapidly. So all that is really exciting, not just for us counting the money, but also for the engineers, lot of new opportunities, a lot of innovation happening there, you know, that it keeps everybody excited and innovating.

So yeah, I like what we're doing in that space. And I think when we give our guidance for 2018 we will start to be able to give a little bit of color on the year - on the opportunity from those – that type of services.

Okay. All right.

Thanks, Harold.

Yeah, thanks for taking my questions. Two if I may.

First of all on the partnerships you signed more recently, to what extent on these unique partnerships or is it both also the opportunity to maybe team up with all the industry players at a later stage? And the second question also related to a former question, which you commented that not all – not having correct Autonomos driving today.

So I was wondering is it TomTom that needs to solve these challenges internally or it is just a matter of finding the right partner to – to have to find a right solution and get to the next stage? Thank you.

Yes. So most of those parties are more exclusive and that would make sense either because very few people are in a position now to play.

That's not how it works. People want to work together, but also keep your options open, I think that's healthy and good and that is kind a pattern we see in this - in this industry for a long time.

Self-driving reality yes and there are still lot of things happened, things to happen on our side, things to happen on the lease [ph] side, things need to happen on the Tier 1 side, things need to happen on the regulatory side and it's still a complex puzzle we are putting together here. But you know there's a significant amount of resource committed now to making this technology a reality.

Okay. Thank you.

Yes. Thank you for taking my questions.

I have some phone issues, so maybe some questions are asked, I'll ask them anyway. And start with Telematics, can you give us your view on what the growth prospects are for this business in say the medium to longer term, but also when can we expect to say that the – that we see a higher growth path again going back into your business.

So then on the growth side and then also how do you see this business developing in terms of investments that are needed to keep the product up to standard and to cope with competition et cetera? So that's my first question.

Yeah. I think the underlying industry dynamics and characteristics are still very favourable for Telematics services, so our customers are making money, short return on investment.

We are by far a leader now in Europe. We are operating in across all European countries in all languages.

You know, I think we have a good opportunity in connected car services, what I explained earlier. So we need to figure out how we can go back to growth.

I think it's possible to faster growth. We're still growing, of course.

But we don't grow with the brand any more and that's not good. I think the market can grow faster than what we currently – the rate that we are currently growing at.

There is a couple of things, things that are specific, and so we made big investments in the platform. And if you go through a - and that’s mostly a transition from flash technology to more modern HTML technology, this is all sorts of advantages.

But it's also true in a time when you're working on those transitions that innovation tends to slow down before you go faster again. So we are sitting towards the end of that period.

We have launched now a version of the new platform that's been well received. I think by the end of this year that transition will be completed and then we have all the ducks [ph] in a row again and innovation will grow faster as a result of that.

So that's one thing. The other thing is that we've made considerable commitments in connected car platform technology over the last two years.

We start to sign up customers at the end of 2016 and we now see a period where we start to roll out those technologies to our customers and I expect that that will accelerate in the coming period. So I think that was a positive influence on growth numbers again, but also I feel that we need to do more.

What it is exactly is I don't want to elaborate on that, but I think there is a bigger opportunity than what we can show today in our gross numbers.

Would that require significant investments to deliver that?

No. I think the big investment relative to the size of Telematics has been made and that transition – transitioning the applications from HTML from flash to HTML.

Most of the technologies from the platforms or from the acquisitions we've done the last couple of years have been absorbed. It's not 100% done, but the bulk of the work to bring everything in line on one platform is behind us.

With the exception of Finder but also their [indiscernible] acquisition we did last year or two years ago.

December 2016.

December 2015 to be exact. And – but also Finder has started to stop selling the electric [ph] platform and start selling now the new platform that's based on HTML file.

So there's bit of transition, a bit of cleaning at a kitchen and you know where that explains is it’s completely I'm not 100% sure, but I think we can - we need to get those gross numbers up in the second half and also in 2018.

And in terms of acquisitions now that you do just share buyback, should we also read that as no acquisitions in Telematics or are they so small that it could still fit in the current strategy there or are the targets just too expensive that you've given up on that?

Well, we don't – especially money and as valuations are high, but there are still consolidation taking place and there are opportunities to buy that kind of smallish, medium sized companies reasonable prices and if they – those opportunities happen we will quite happily do that, but there's enough financial room to do that. So that’s multi change in strategy, but it's getting hard to find the product to be totally clear.

There's still [indiscernible] closer every now and then, but it is - its not getting easier.

Clear. Then on the PND side and how do you look to the PNDs in a sense that – how long can you get in current declines still remain cash positive in this business?

Well, quite some time. So as couple of things happening, the PND markets are all declining.

So that's clearly a negative. But within that category we see some niche products that are growing for motorcycles and trucks and that kind of stuff and that’s quite possible.

We see that ASPs are going up and we also see that our market share is going up. And we do that with relatively little investment.

You know, and we can do that because we are benefiting from all the other developments we are doing for location-based services for car industry and I'd like to see this is just another vertical in our product portfolio.

But that’s…

Its fairly well aligned, that it bring to something other that is quite valuable, which is a softer benefit and that is direct contact with an end user who tells us what works or doesn't work, what they like, what they don’t like. And I think that's valuable for us as a company to have that.

So we don't have to rely on our automotive customers with their own interpretation of what customers want. I think it's good to have that direct link for better understanding how the model works, what people are expecting.

And most importantly, you have generating cash there…

So it's still fine as it's part of your mapping R&D so to speak, but at some stage you will hit say a sort of threshold that you get to sort of tipping point that you know, given the declines that it is difficult to remain cash positive on that front or is still allocate positive– enough cost to PNDs. Is that point to say one year or two years or three years from now or can you give us sort of an indication when you might hit that and because I can imagine that it is cash negative that you have to take [indiscernible] perhaps on PNDs?

No, I don't want to speculate anything that’s very helpful, but it's…

Don’t speculate, on various declines, just model…

Yes, I think its right, but its going slower that it has to be. There maybe some pleasant surprises there.

I don't know. We will see - we keep a close eye on the profitability, it should not distract us, it should rise on course.

But for the moment I think it’s a – we the right owner and there is considerable benefit of playing in that space for us, although it is less strategic of course than it used to be in heydays of personal navigation.

Sure. But maybe I’ll back-off of saying we are the best owner, but you're now looking for perhaps an exit for sports category in what way – one way or the other.

What if a potential buyer comes along and says okay, the sports category, but also the PNDs we’re interested in a package deal where you can be open to such a scenario?

We will - every proposal we – that the market is making as we will listen to, evaluated, I don't see that happening. I have seen the likelihood of that scenario more this is highly realistic.

But if someone has a plan you know, we will listen, but I don't expect that to happen in all terms.

Okay. And then on the sports category, you say we are in a current strategic process.

Does it - is there also an option possible in such a scenario to just close it, because you seem quite confident to close it somehow this year, and saying we will provide sort of broad profiles with an update on the Q3 and I think those your outlook and as part of it on the OpEx guidance some indication that you might not invest more into marketing for instance. But the fact that you’re quite confident in closing it, does it also mean that if you don't find a buyer or whatever so, car parts, a new owner will be interested that if that doesn't in the end go through that you might also consider just closing the business for and taking a charge against perhaps [indiscernible] from working capital as you say, okay, we can close it at a minimum amount and we stop the business.

Is that also a possible scenario?

Well, what we said is the business is not developing of course as planned and we don't see a reasonable path to profitability and the conclusion is that we needed our options now. But we will need this quarter to figure out what that - what it is.

And I think I'm quite confident about Q3 we will have a much better picture of what that evaluation has yielded. I don't want you to go much further than that, I don’t think that would be helpful.

But we are signalling today is that the market is disappointing. We need to look at it.

We can’t carry on as we are - as we are going at the moment.

Sure. Can I ask how many people work for instance for the sports category in total for the wearables?

No. I don't - we haven't disclosed that number and I would make it up as we go in our figures that will be right...

No, that’s not useful. And then one on the order book.

Can you give us an update on your success because you mentioned that there are more RFQs this year in the markets. Can you give us perhaps a bit of an update how successful you are in that front and whether the RFQs are still there and whether you're perhaps on track to meet last years order book of anything.

Any color you can give there?

No, I can't give you any color. The general picture is that the total number of orders available is bigger than it was last year.

But that’s still the case?

Of ex-fund.

And that is still the case currently?

Yes, that is still case. So there's more to win or to lose in this year than last year.

And we are obviously involved in those RFQs. We think they will be decided this year, that we come with an update and looking to tackle, normally we do I think at Q3.

No, what we said at the start of the year is that we would go to annual update.

Annual update, so we go to annual update and I think that’s better as well. because those deals are quite lumpy and they happen or they don’t happen, often they are postponed or don't fall exactly in the period that you thought they would fall, so at the end of the year we give you an update what the order book is.

Okay. Now that I'm asking, these things can change and they might disappear from the RFQs, but that’s still unchanged and we get an update at the end of the year.

That’s how we should…

Yes.

Okay. Then a final question on the share buyback and can you perhaps share me - with me the rationale to announce it at – and H1 figures…

Well, there are three reasons. Number one is that with this we wont as comprehensive management team give a signal to the market that we – fairly we believe in our strategy and our future.

The second is that when we look at cash generation in the coming short term period that even with when we consider the buyback of 50 million worth of shares we still think we generate cash in the second half of this year. And the third reason is that there is this availability as we have - we have this ESO [ph] plan the equity share of option plan and we have ongoing commitments to future transactions and we can build - we can build a pool of shares that can create a hedge for future execution of those options and that there will be done in a tax efficient way.

How many dilution - what kind of dilution is currently on the current share price in – on the balance sheet?

Well, if you would - if you would divide the 60 million by the share price of - the share price of yesterday's it was 2.4% dilution.

So it’s exactly the amount of the share buyback, so it’s matched?

No, you mean the number of options that are outstanding, that is a bit higher, that’s higher. So they are - there 6.3 million since outstanding at this point.

So that is roughly 2.7%.

Okay. Very good.

Thank you very much. Those are my questions.

Yes. You’re welcome.

Thank you, Marc. I would like to thank everybody for joining us this afternoon.

This is – we will end the call. And I would like to ask the operator to close the call.