This year we have made considerable progress in shaping the markets and industries in which we are operating, in executing our strategy, and in continuing to move towards achieving our vision.

Financially, we increased revenue by 27% to €1.7 billion and net profit by 43% to €317 million, both new records. Gross margin and operating margin ended up at 44% and 25% – well above our margin targets of 40% and 20% respectively. Net cash from operating activities was a record €441 million and total shareholder return was 57%.

As a business, we extended our product range and made significant technological breakthroughs that really underpin our strategy. We did this alongside the continuing development of our business to business capabilities in the automotive and fleet management industries.

On a ‘personnel’ level, structured month-on-month expansion meant that by year-end we had grown our workforce by more than 60%. Ultimately it is the exceptionally high calibre of my colleagues throughout the organisation that enables us to continue delivering successful, managed growth
on all fronts.

DEVELOPING THE CUSTOMER RELATIONSHIP
We believe that we are heading for a future in which a satellite navigation solution will be found in every vehicle on the road. Although that is still a long way off, I think it is fair to say that during 2007 we made a significant advance towards realising that vision. Take for example our customer base, which passed the 15 million user mark, with 9.6 million PNDs sold in the past year alone.

That said, we are at a stage where market penetration is still low. To get to a stage of total market penetration, TomTom will have to reach new sections of the driving public currently untouched by the satellite navigation revolution.

How do we achieve this? We know that to develop the products, services and technologies that will bring new people into the navigation community, we need to deepen our relationship with our customers. We need to keep on top of their navigation needs, remaining attuned to what people are experiencing and what they want, both now and in the future. Because let’s not forget, this is still a relatively undeveloped consumer sector. What people expect from our products and services is likely to evolve rapidly in the coming years, just as it has over the past decade. Up to now, TomTom has led the industry when it comes to identifying what customers want and look forward to, and we intend to retain that pole position in the years to come.

We have made great advances in extending the relationship we have with our customers. In 2007, we embedded our practice of synchronising customer feedback with product development, which is absolutely critical. We launched two breakthrough technologies that have matured that customer relationship. The first was the introduction of TomTom Map Share™, which allows us to draw on our global community of TomTom users, who now help us enhance the quality of maps. The second is the way we are harnessing community-generated content so that it plays an increasingly important role in improving the quality of our routing technology.

“We are confident TomTom is on the brink of another leap forward in terms of PND market penetration.”

THE NEXT LEVEL OF NAVIGATION
Better maps and better routing are areas where we feel navigation devices and services will need to improve if we are to keep ahead of rising consumer expectations. Better traffic information is also a critical component, and in 2007 we introduced TomTom HD Traffic™ in the Netherlands. This will be followed by roll-outs across other markets during 2008 to achieve our goal of making this service available to 50% of our European customer base by the end of 2008. Traffic services are discussed in greater detail elsewhere in this report, but I would like to say here that this new technology dramatically improves the quality of our solutions. In combination with other technologies, it means that we can give our customers control of the situation and the option to always choose the fastest possible route to their destination.

Better maps, better traffic information and better routing are the three pillars of our strategy, because we are convinced that together they will take navigation to the next level. And having now developed breakthrough technological solutions within each of these pillars, we are confident that TomTom is on the brink of another leap forward in terms of sales and market penetration.

But it is more than linear progress- I see a genuine step-change from where we are now. With these breakthroughs, the PND is evolving from a ‘don’t-get-lost device’ into a true travel companion. As a result, we are confident that this new generation of TomTom devices will become a must-have item, both for current PND users and a significant new section of the motoring public that values a solution that gets them from A to B faster, cheaper, safer and better informed, even when they do know their destination.

Successful delivery of the next generation of navigation services will rely increasingly on affordable and reliable wireless access and connectivity. We have made good progress here in 2007 and introduced our first ‘connected’ PND for consumers in the Netherlands to deliver dynamic content to drivers en route. The connected PNDs use pre-installed SIM cards and work ‘out-of-the-box’, making a separate mobile phone contract unnecessary – this in itself is a major innovation.

Connecting businesses to their fleets, our business division TomTom WORK has already had good success in selling connected navigation solutions, to subscribers that doubled in number last year.

We have invested considerable resources in the supporting software systems and delivery platform to enable the optimal delivery of our services to a broad range of navigation solutions.

TELE ATLAS
Like the rest of TomTom’s management team, I am excited about our proposed acquisition of digital map maker, Tele Atlas. If approved by the European Commission, it will further help us to deliver our core strategy of taking navigation to the next level. And the positive implications go beyond just TomTom. By integrating our technological map innovations and access to large-scale, community-generated map data into their own mapmaking, Tele Atlas will be able to offer far better maps to the entire navigation industry. More effective, real-time maps with the addition of exciting new content, including historical and real-time speed data, will revolutionise navigation and Tele Atlas technologies will be able to integrate this quickly into applications and devices.

ANOTHER RECORD YEAR
2007 has been another record year, but we know that this is no time to sit back. On the contrary, we need to actively deliver our strategy during 2008 and really focus on achieving further market penetration. We will do this by offering products and services that people really want, and our greater understanding of them will give us this insight before we go to market.

But it is not as if we are starting afresh here. TomTom has always been a great business with a great business model and great people delivering that model. So we will continue to build on our track record of developing our full range of products that are best-in-class because they are easy-to-use, smart, high quality and good value. Which is why we will continue to increase investment in R&D. We are also very aware that no product, however smart or competitively priced, will sell by itself. Which is why we continue to support sales by investing in the very best marketing, point-of-sale materials and advertising.

We can look forward to the future with confidence. We continue to be the innovation leader. We have successfully put in place the three technological pillars that will lift navigation to the next level. We continue to roll-out our robust and highly effective business strategy. And we remain on course towards our vision of a TomTom product or service in every vehicle on the road.