We continued our commitment to expanding our map and traffic coverage globally. Currently our navigable map covers 41 million km of roads in 114 countries and we expanded our traffic service to Brazil.

Business Solutions

Our fleet management business enjoyed another quarter of strong growth, and reported revenue of €24 million in Q4 '13, a 19% increase compared to €20 million in Q4 '12. This increase is driven by growth in the WEBFLEET subscriber base and the related recurring revenue. The recurring SaaS revenue amounted €16 million for the quarter, 30% higher compared to Q4 '12.

Revenue for 2013 was €85 million, which represents 16% growth year on year (2012: €73 million). The recurring SaaS revenue amounted €57 million, a 25% increase year on year (2012: €46 million). At the end of the year, Business Solutions reported 27,000 customers, the largest managed fleet management systems customer base in the world, and an installed base of 330,000 active subscribers, a 38% increase from 239,000 at the start of 2013.

Hardware and Content & Services revenue split

Hardware revenue for the quarter was €177 million compared to €191 million in Q4 '12. Content & Services revenue in the quarter was €91 million, 8% lower compared to Q4 '12, mainly due to lower Licensing revenue and lower Consumer service revenue. As a percentage of revenue, Content & Services revenue remained at 34%, the same as in Q4 '12.

On a full year basis, revenue from Content & Services was €371 million (FY '12: €400 million) and accounted for 38% of total revenue (FY '12: 38%). Content & Services revenue was impacted by lower Licensing revenue and by the trend towards bundling lifetime maps and traffic on the sale of a PND.

Geographical revenue split

From a regional perspective, 72% of our revenue in the fourth quarter was generated in Europe (Q4 '12: 66%), 21% in North America (Q4 '12: 27%) and the remaining 7% in the rest of the world (Q4 '12: 7%).

On a full year basis, 74% of our revenue was generated in Europe (FY '12: 73%), 18% in North America (FY '12: 20%) and the remaining 8% in the rest of the world (FY '12: 7%).

Gross margin

The gross margin for the quarter was 54%, which is one percentage point higher compared to 53% in Q4 '12. On a full year basis, we reported a gross margin of 54% in 2013 (FY '12: 52%).

Operating expenses

Total operating expenses for the quarter were €139 million, which is €9.5 million higher compared to the same quarter last year (Q4 '12: €130 million). The increase was mainly caused by higher marketing expenses as we ran radio, outdoor and print campaigns to support our recent product launches.

On a full year basis, total operating expenses totalled €496 million compared to €484 million in 2012, explained by higher SG&A (higher variable personnel expenses) and marketing expenses.

Financial income and expenses

The net interest charge for the quarter was €0.8 million versus an interest charge of €2.4 million in Q4 '12. The lower interest charge reflects a lower interest rate applied against lower outstanding borrowing this year. The other financial result for the quarter was a gain of €0.3 million (Q4 '12: charge of €0.3 million), which consisted primarily of foreign exchange gains.

On a full year basis, the total financial income and expense charge equalled €4.6 million compared to €10.4 million in 2012.

Income tax

The net income tax charge for the quarter was €0.6 million versus a net income tax gain of €77 in Q4 '12. The income tax gain in the prior year resulted from settlement of prior years’ tax discussions with the Dutch tax authorities. The effective tax rate (ETR) for the quarter was 16.5% compared to a normalised ETR of 11.7% in Q4 '12, which excludes the one-off €80 million tax settlement from the Dutch tax authorities in 2012. The ETR for the full year equalled 16.7% compared to 18.8% in 2012. Our ETR reflects benefits from the tax incentives which are made available for companies with significant research and development activities in the Netherlands.

Net result and adjusted¹ EPS

The net result for the quarter was €3 million compared to €99 million in Q4 '12. Excluding the impact of the €80 million one-off tax gain in 2012, the net result for Q4 '12 would have been €19 million. The adjusted EPS for Q4 '13 was €0.06 versus an adjusted EPS of €0.13 in Q4 '12. Adjusted EPS for 2013 was €0.26 compared to the adjusted EPS of €0.40 in 2012.

Balance sheet

Trade receivables at the end of the quarter equalled €115 million compared to €150 million at the end of Q4 '12. The year on year decrease is attributed to better collection results and to lower revenue. Inventory was €42 million, €2 million lower compared to Q4 '12. Cash and cash equivalents increased from €164 million at the end of Q4 '12 to €258 million at the end of Q4 '13.