TIDMARM
RNS Number : 9572P
ARM Holdings PLC
27 July 2010
?
ARM HOLDINGS PLC REPORTS RESULTS FOR THE SECOND QUARTER AND HALF YEAR ENDED 30
JUNE 2010
A presentation of the results will be webcast today at 09:30 BST at
www.arm.com/ir
CAMBRIDGE, UK, 27 July 2010-ARM Holdings plc announces its unaudited financial
results for the second quarter and half year ended 30 June 2010, demonstrating
continuing progress in executing its strategy with multiple design wins taking
ARM further into new markets.
+--------------+--------+--------+--------+--------+--------+--------+
| Q2 | Normalised* | | IFRS |
| 2010 - | | | |
| Financial | | | |
| Summary | | | |
| | | | |
+ +-----------------+-----------------+-----------------+
| | Q2 | Q2 | % | | Q2 | Q2 |
| | 2010 | 2009 |Change | | 2010 | 2009 |
+--------------+--------+--------+--------+--------+--------+--------+
| Revenue | 150.3 | 105.5 | 42% | | 150.3 | 105.5 |
| ($m) | | | | | | | |
+--------------+--------+--------+--------+--------+--------+--------+
| Revenue | 100.0 | 64.8 | 54% | | 100.0 | 64.8 |
| (GBPm) | | | | | | |
| | | | | | | | |
+--------------+--------+--------+--------+--------+--------+--------+
| Operating | 42.7% | 24.7% | | | 28.9% | 9.4% |
| margin | | | | | | |
+--------------+--------+--------+--------+--------+--------+--------+
| Profit | 43.5 | 16.3 | 167% | | 29.6 | 6.4 |
| before | | | | | | |
| tax | | | | | | |
| (GBPm) | | | | | | |
+--------------+--------+--------+--------+--------+--------+--------+
| Earnings | 2.34 | 0.95 | 146% | | 1.62 | 0.50 |
| per | | | | | | |
| share | | | | | | |
| (pence) | | | | | | |
+--------------+--------+--------+--------+--------+--------+--------+
| Net | 30.4 | 11.9 | | | | |
| cash | | | | | | |
| generation** | | | | | | |
+--------------+--------+--------+--------+--------+--------+--------+
| Effective | 1.50 | 1.63 | | | | |
| revenue | | | | | | |
| fx rate | | | | | | |
| ($/GBP) | | | | | | |
+--------------+--------+--------+--------+--------+--------+--------+
| | Q2 2010 revenues and PBT include catch-up PD royalty |
| revenues of $9.0m (GBP6.2m) |
+--------------+--------+--------+--------+--------+--------+--------+
Progress against strategy in Q2
· Growth in mobile applications - ARM opportunity increases as smartphone
growth continues and ARM technology-based mobile computers begin to come to
market
o Average of 2.6 ARM -processor based chips per mobile phone
o 4 processor licenses signed for mobile phone and computing applications
o Major semiconductor company becomes the third lead-licensee for the "Eagle"
Cortex-A(TM) class processor
· Growth beyond mobile - Increased share in target markets such as
consumer electronics and embedded products
o Strong year-on-year growth for shipments of ARM-based chips into digital
TVs, disk drives and microcontrollers
o 13 processor licenses signed for a broad range of applications including
intelligent sensors, networking, smart energy meters and solid state drives
o Leading microcontroller company, Freescale, announced their first major
family of ARM-based microcontrollers
· Growth in new technology outsourcing
o 3 licenses for royalty-bearing platforms of physical IP at both advanced
nodes and mature nodes
o TSMC licenses physical IP for 28nm and 20nm early in Q3
o 3 companies further their commitment to Mali(TM), ARM's graphics processor
· Microsoft signed a multi-year architecture license to be at the
forefront of working with ARM technology, across a broad range of businesses,
addressing multiple application areas
· Interim dividend increased by 20%
Warren East, Chief Executive Officer, said:
"We are pleased to report strong underlying revenue and profit performance in
the first half, in improved trading conditions compared with one year ago. Our
strategy remains on track for growth in mobile, non-mobile and new technology
outsourcing. Major semiconductor vendors and consumer electronics companies are
making long-term commitments to using ARM technology in their future products.
Freescale, Microsoft and TSMC all recently announced adoption of ARM's latest
technology which will further increase ARM's market penetration, and royalty
potential, in a broadening range of end applications. ARM continued to gain
share in the quarter with shipments of ARM-based chips growing faster than the
industry in all target markets."
Outlook
We enter the second half of the year with record order backlog, a robust
opportunity pipeline and strong momentum as ARM continues to increase
penetration across its target markets. Although the impact of the broader
macroeconomic environment on end consumer demand later in the year remains
uncertain, we expect group dollar revenues (excluding catch-up PD royalty
revenues of $9 million reported in Q2) for the full-year 2010 to be in line with
current market expectations.
+--------------+--------+--------+--------+--------+--------+--------+
| H1 | Normalised* | | IFRS |
| 2010 - | | | |
| Financial | | | |
| Summary | | | |
| | | | |
+ +-----------------+-----------------+-----------------+
| | H1 | H1 | % | | H1 | H1 |
| | 2010 | 2009 |Change | | 2010 | 2009 |
+--------------+--------+--------+--------+--------+--------+--------+
| Revenue | 293.6 | 226.4 | 30% | | 293.6 | 226.4 |
| ($m) | | | | | | |
+--------------+--------+--------+--------+--------+--------+--------+
| Revenue | 192.3 | 144.7 | 33% | | 192.3 | 144.7 |
| (GBPm) | | | | | | |
+--------------+--------+--------+--------+--------+--------+--------+
| Operating | 41.4% | 27.3% | | | 28.1% | 13.0% |
| margin | | | | | | |
+--------------+--------+--------+--------+--------+--------+--------+
| Profit | 81.1 | 40.2 | 102% | | 55.5 | 19.5 |
| before | | | | | | |
| tax | | | | | | |
| (GBPm) | | | | | | |
+--------------+--------+--------+--------+--------+--------+--------+
| Earnings | 4.38 | 2.32 | 89% | | 3.09 | 1.26 |
| per | | | | | | |
| share | | | | | | |
| (pence) | | | | | | |
+--------------+--------+--------+--------+--------+--------+--------+
| Net | 74.3 | 27.1 | | | | |
| cash | | | | | | |
| generation** | | | | | | |
+--------------+--------+--------+--------+--------+--------+--------+
| Effective | 1.53 | 1.57 | | | | |
| revenue | | | | | | |
| fx rate | | | | | | |
| ($/GBP) | | | | | | |
+--------------+--------+--------+--------+--------+--------+--------+
+-------------+--------+--------+--------+--------+--------+--------+--------+
| Q2 | Revenue ($m)*** | | Revenue (GBPm) |
| 2010 - | | | |
| Revenue | | | |
| Analysis | | | |
+-------------+--------------------------+--------+--------------------------+
| | Q2 | Q2 | | | Q2 | Q2 | |
| | 2010 | 2009 | | | 2010 | 2009 | |
+-------------+--------+--------+--------+--------+--------+--------+--------+
| PD | | | | | | | |
+-------------+--------+--------+--------+--------+--------+--------+--------+
| Licensing | 36.6 | 29.5 | 24% | | 23.7 | 16.8 | 41% |
+-------------+--------+--------+--------+--------+--------+--------+--------+
| Royalties1 | 72.5 | 41.3 | 76% | | 49.3 | 26.8 | 84% |
+-------------+--------+--------+--------+--------+--------+--------+--------+
| Total | 109.1 | 70.8 | 54% | | 73.0 | 43.6 | 67% |
| PD | | | | | | | |
+-------------+--------+--------+--------+--------+--------+--------+--------+
| PIPD | | | | | | | |
+-------------+--------+--------+--------+--------+--------+--------+--------+
| Licensing | 10.4 | 9.2 | 13% | | 6.7 | 5.2 | 29% |
+-------------+--------+--------+--------+--------+--------+--------+--------+
| Royalties2 | 9.8 | 7.8 | 25% | | 6.6 | 4.9 | 34% |
+-------------+--------+--------+--------+--------+--------+--------+--------+
| Total | 20.2 | 17.0 | 19% | | 13.3 | 10.1 | 31% |
| PIPD | | | | | | | |
+-------------+--------+--------+--------+--------+--------+--------+--------+
| Development | 13.4 | 10.3 | 30% | | 8.9 | 6.5 | 38% |
| Systems | | | | | | | |
+-------------+--------+--------+--------+--------+--------+--------+--------+
| Services | 7.6 | 7.4 | 4% | | 4.8 | 4.6 | 5% |
+-------------+--------+--------+--------+--------+--------+--------+--------+
| Total | 150.3 | 105.5 | 42% | | 100.0 | 64.8 | 54% |
| Revenue | | | | | | | |
+-------------+--------+--------+--------+--------+--------+--------+--------+
1 Includes catch-up PD royalties in Q2 2010 of $9.0m (GBP6.2m).
2 Includes catch-up PIPD royalties in Q2 2010 of $0.2m (GBP0.1m) and in Q2 2009
of $2.6m (GBP1.6m).
+-------------+--------+--------+--------+--------+--------+--------+--------+
| H1 | Revenue ($m)*** | | Revenue (GBPm) |
| 2010 - | | | |
| Revenue | | | |
| Analysis | | | |
+-------------+--------------------------+--------+--------------------------+
| | H1 | H1 | | | H1 | H1 | |
| | 2010 | 2009 | | | 2010 | 2009 | |
+-------------+--------+--------+--------+--------+--------+--------+--------+
| PD | | | | | | | |
+-------------+--------+--------+--------+--------+--------+--------+--------+
| Licensing | 70.8 | 61.5 | 15% | | 45.5 | 36.4 | 25% |
+-------------+--------+--------+--------+--------+--------+--------+--------+
| Royalties1 | 139.2 | 91.6 | 52% | | 92.5 | 61.8 | 50% |
+-------------+--------+--------+--------+--------+--------+--------+--------+
| Total | 210.0 | 153.1 | 37% | | 138.0 | 98.2 | 40% |
| PD | | | | | | | |
+-------------+--------+--------+--------+--------+--------+--------+--------+
| PIPD | | | | | | | |
+-------------+--------+--------+--------+--------+--------+--------+--------+
| Licensing | 19.2 | 17.9 | 7% | | 12.4 | 10.6 | 17% |
+-------------+--------+--------+--------+--------+--------+--------+--------+
| Royalties2 | 20.6 | 15.9 | 29% | | 13.5 | 10.5 | 28% |
+-------------+--------+--------+--------+--------+--------+--------+--------+
| Total | 39.8 | 33.8 | 18% | | 25.9 | 21.1 | 23% |
| PIPD | | | | | | | |
+-------------+--------+--------+--------+--------+--------+--------+--------+
| Development | 28.2 | 24.8 | 13% | | 18.6 | 16.5 | 13% |
| Systems | | | | | | | |
+-------------+--------+--------+--------+--------+--------+--------+--------+
| Services | 15.6 | 14.7 | 7% | | 9.8 | 8.9 | 11% |
+-------------+--------+--------+--------+--------+--------+--------+--------+
| Total | 293.6 | 226.4 | 30% | | 192.3 | 144.7 | 33% |
| Revenue | | | | | | | |
+-------------+--------+--------+--------+--------+--------+--------+--------+
1 Includes catch-up PD royalties in H1 2010 of $9.0m (GBP6.2m).
2 Includes catch-up PIPD royalties in H1 2010 of $0.7m (GBP0.5m) and in H1 2009
of $4.2m (GBP2.6m).
+------+-----------------------------------------------------------------------+
| * | Normalised non-GAAP figures are based on IFRS, adjusted for |
| | acquisition-related charges, share-based payment costs, restructuring |
| | charges, Linaro-related charges and profit on disposal and impairment |
| | of available-for-sale investments. For reconciliation of IFRS |
| | measures to normalised non-IFRS measures detailed in this document, |
| | see notes 6.1 to 6.16. |
+------+-----------------------------------------------------------------------+
| ** | Net cash generation is defined as movement on cash, cash equivalents, |
| | short-term investments and marketable securities, adding back |
| | dividend payments, investment and acquisition consideration, |
| | restructuring payments, other acquisition-related payments, |
| | Linaro-related charges, and share-based payroll taxes, and deducting |
| | inflows from share option exercises and proceeds from investment |
| | disposals - see notes 6.8 to 6.12. |
+------+-----------------------------------------------------------------------+
| *** | Dollar revenues are based on the group's actual dollar invoicing, |
| | where applicable, and using the rate of exchange applicable on the |
| | date of the transaction for invoicing in currencies other than |
| | dollars. Approximately 95% of invoicing is in dollars. |
+------+-----------------------------------------------------------------------+
| **** | Each American Depositary Share (ADS) represents three shares. |
+------+-----------------------------------------------------------------------+
CONTACTS:
Sarah West/Daniel Thole Tim
Score/Ian Thornton
Brunswick
ARM Holdings plc
+44 (0)207 404 5959
+44 (0)1628 427800
Financial review
(IFRS unless otherwise stated)
Total revenues
Total dollar revenues in Q2 2010 were $150.3 million, up 42% on Q2 2009. Q2
sterling revenues were GBP100.0 million, up 54% year-on-year. Excluding the
catch-up royalty payment, total dollar revenues in Q2 2010 were $141.3 million,
up 34% on Q2 2009 and Q2 sterling revenues were GBP93.8 million, up 45%
year-on-year.
Half-year dollar revenues in 2010 amounted to $293.6 million, up 30% on H1 2009.
License revenues
Total dollar license revenues in Q2 2010 increased by 22% year-on-year to
$47.0m, representing 31% of group revenues. License revenues comprised $36.6
million from PD and $10.4 million from PIPD.
Royalty revenues
Total dollar royalty revenues in Q2 2010 increased by 67% to $82.3 million,
representing 55% of group revenues. Royalty revenues comprised $72.5 million
from PD and $9.8 million from PIPD.
Royalty revenues are recognised one quarter in arrears with royalties in Q2
generated from semiconductor unit shipments in Q1. PD royalty revenues in Q2
2010 included a catch-up royalty payment of $9.0m in respect of certain
shipments made between 2007 and 2010. This catch-up royalty was identified by
the customer as part of ARM's ongoing royalty auditing process. PD underlying
royalties of $63.5 million increased 54% year-on-year. This compares with
industry revenues increasing by less than 40% in the shipment period (i.e. Q1
2010 compared to Q1 2009), demonstrating ARM's market share gains over the last
12 months.
Total PIPD royalty revenues of $9.8 million included $0.2 million of catch-up
royalties. Underlying royalty revenues increased by more than 80% year-on-year,
reflecting the rebound in the foundry industry.
Development Systems and Service revenues
Sales of development systems in Q2 2010 increased 30% year-on-year to $13.4
million, representing 9% of group revenues. Due to seasonality, revenue for
development systems in Q3 is often 10% to 20% lower sequentially.
Service revenues in Q2 2010 were up 4% to $7.6 million, representing 5% of group
revenues.
Gross margins
Gross margins in Q2 2010, excluding share-based payment costs of GBP0.7 million
(see below), were 94.9% compared to 93.0% in Q1 2010 and 91.2% in Q2 2009.
Operating expenses and operating margin
Normalised operating expenses (excluding acquisition-related, share-based
payments, Linaro-related and restructuring charges) were GBP52.1 million in Q2
2010 compared to GBP49.0 million in Q1 2010 and GBP43.1 million in Q2 2009.
Normalised operating expenses in Q3 2010 (assuming effective exchange rates
similar to current levels) are expected to be in the range GBP53-55 million as
ARM continues to increase investment in R&D programs.
Normalised research and development expenses were GBP26.4 million in Q2 2010,
representing 26% of revenues, compared to GBP25.2 million in Q1 2010 and GBP22.5
million in Q2 2009. Normalised sales and marketing expenses were GBP12.8
million in Q2 2010, being 13% of revenues, compared to GBP12.0 million in Q1
2010 and GBP11.6 million in Q2 2009. Normalised general and administrative
expenses were GBP12.9 million in Q2 2010, representing 13% of revenues, compared
to GBP11.8 million in Q1 2010 and GBP9.0 million in Q2 2009.
Normalised operating margin was 42.7% (38.9% excluding catch-up royalty revenue
of $9 million) in Q2 2010, compared to 40.0% in Q1 2010 and 24.7% in Q2 2009.
Total operating expenses in Q2 2010 were GBP65.3 million (Q2 2009: GBP52.6
million) including amortisation of intangible assets and other
acquisition-related charges of GBP3.1 million (Q2 2009: GBP4.1 million), GBP8.8
million (Q2 2009: GBP5.3 million) in relation to share-based payment costs and
related payroll taxes and Linaro-related charges of GBP1.2 million, see below,
(restructuring charges in Q2 2009: GBP0.2 million). Total share-based payment
costs and related payroll tax charges of GBP9.5 million in Q2 2010 were included
within cost of revenues (GBP0.7 million), research and development (GBP5.7
million), sales and marketing (GBP1.8 million) and general and administrative
(GBP1.3 million).
Normalised income statements for Q2 2010 and Q2 2009 are included in notes 6.13
and 6.14 below which reconcile IFRS to the normalised non-IFRS measures referred
to in this earnings release.
During Q2, ARM announced, along with several partners, the formation of Linaro,
a not-for-profit company, set up to develop optimised Linux software and tools
for ARM-processor based chips. Linaro will provide underpinning technology for
all major Linux distributions including Android, Chrome, MeeGo, Limo, Ubuntu,
webOS, and others. Founding members have contributed both money and engineering
time to the collaboration. Linaro is currently a 100% controlled subsidiary of
ARM; as other members take up board seats Linaro will cease to be controlled as
a subsidiary. Linaro-related charges in Q2 2010 of GBP1.2m were charged to the
profit and loss account. Linaro-related charges are expected to total about
GBP4.5m in the first 12 months post launch.
Earnings and taxation
Profit before tax was GBP29.6 million in Q2 2010 compared to GBP6.4 million in
Q2 2009. After adjusting for acquisition-related, share-based payment costs,
Linaro-related charges and restructuring charges, normalised profit before tax
was GBP43.5 million in Q2 2010 compared to GBP16.3 million in Q2 2009. The
Group's effective normalised tax rate was 27.4% (IFRS 26.1%) in Q2 2010 compared
to 24.7% (IFRS nil) in Q2 2009.
In Q2 2010, fully diluted earnings per share were 1.62 pence (7.29 cents per
ADS****) compared to earnings per share of 0.50 pence (2.46 cents per ADS****)
in Q2 2009. Normalised fully diluted earnings per share in Q2 2010 were 2.34
pence per share (10.51 cents per ADS****) compared to 0.95 pence (4.69 cents per
ADS****) in Q2 2009.
Balance sheet
Intangible assets at 30 June 2010 were GBP574.1 million, comprising goodwill of
GBP556.0 million and other intangible assets of GBP18.1 million, compared to
GBP549.0 million and GBP21.8 million respectively at 31 March 2010.
Total accounts receivable were GBP91.8 million at 30 June 2010, comprising
GBP80.0 million of trade receivables and GBP11.8 million of amounts recoverable
on contracts, compared to GBP57.9 million at 31 March 2010, comprising GBP45.0
million of trade receivables and GBP12.9 million of amounts recoverable on
contracts. Days sales outstanding (DSOs) were 34 at 30 June 2010 compared to 26
at 31 March 2010.
Cash flow and interim dividend
Net cash was GBP202.3 million at 30 June 2010 compared to GBP196.0 million at 31
March 2010. Normalised free cash flow in Q2 2010 was GBP30.4 million.
In respect of the year to 31 December 2010, the directors are declaring an
interim dividend of 1.16 pence per share, an increase of 20% over the 2009
interim dividend of 0.97 pence per share. This interim dividend will be paid,
out of the UK GAAP distributable reserves of ARM Holdings plc, on 4 October 2010
to shareholders on the register on 3 September 2010.
Backlog
Group order backlog at the end of Q2 2010 is up more than 20% sequentially.
This is ARM's highest ever backlog, driven partly by long-term strategic deals
such as the multi-year architecture license signed with Microsoft and licenses
signed with lead-customers for the Eagle processor. Based on the revenue
recognition profile of these deals and the mix of potential deals in the
opportunity pipeline, prospects for backlog in the second half of 2010 remain
promising.
Operating review
Processor licensing
A total of 17 processor licenses were signed in Q2.
Microsoft signed a multi-year architecture license, to be at the forefront of
working with ARM technology, across a broad range of businesses, addressing
multiple application areas.
Eleven of the licenses were for ARM's advanced Cortex(TM) processors, including
a third lead-customer for ARM's next generation Cortex-A class processor
codenamed "Eagle" for use in mobile and consumer electronics and four licenses
for other Cortex-A class processors. Six of the Cortex licenses were Cortex-M
class processors mainly for use in microcontrollers.
In addition, three companies furthered their commitment to Mali, ARM's graphics
processor, in digital TVs and mobile computers. There was one new license
during the quarter and a further two customers extended the period of the
license grant from a per-use to multi-year term.
Non-mobile devices continue to be a major driver for processor licensing with
thirteen of the new processor licenses being signed for a broad range of digital
products such as microcontrollers, intelligent sensors, medical applications,
smart energy meters, and digital TVs. The remaining four licenses were signed
for use in mobile devices from mobile computers to low-cost smartphones.
During the quarter Freescale, a leading microcontroller company, announced that
they are launching their first major new family of more than 200 ARM-processor
based microcontrollers. ARM is already the highest shipping architecture in the
32-bit microcontroller market and this commitment is a further demonstration of
the growing applicability and adoption of ARM's technology in this
cost-sensitive market.
Q2 2010 and Cumulative Processor Licensing Analysis
+----------+-----------+-----------+---------+------------+
| | Existing | New |Quarter |Cumulative |
| |Customers |Customers | Total | Total* |
+----------+-----------+-----------+---------+------------+
| ARM7 | | | | 173 |
+----------+-----------+-----------+---------+------------+
| ARM9 | 1 | 1 | 2 | 267 |
+----------+-----------+-----------+---------+------------+
| ARM11 | 2 | | 2 | 78 |
+----------+-----------+-----------+---------+------------+
| Cortex-A | 5 | | 5 | 43 |
+----------+-----------+-----------+---------+------------+
| Cortex-R | | | | 18 |
+----------+-----------+-----------+---------+------------+
| Cortex-M | 2 | 4 | 6 | 66 |
+----------+-----------+-----------+---------+------------+
| Mali | 1 | | 1 | 29 |
+----------+-----------+-----------+---------+------------+
| Other | | 1 | 1 | 21 |
+----------+-----------+-----------+---------+------------+
| Total | 11 | 6 | 17 | 695 |
+----------+-----------+-----------+---------+------------+
* Adjusted for licenses that are no longer expected to generate royalties
Processor royalties
Royalties are recognised one quarter in arrears with royalties in Q2 generated
from semiconductor unit shipments in Q1. PD underlying royalty revenues in Q2
2010, excluding catch-up royalty revenues, increased 54% year-on-year. This
compares with industry revenues increasing by less than 40% in the shipment
period (i.e. Q1 2010 compared to Q1 2009), demonstrating ARM's market share
gains over the last 12 months.
Q2 processor royalty revenue came from the sales of 1.4 billion ARM
technology-based chips. The Cortex family now represents 6% of units shipped up
from 1 % in the same quarter one year ago. This increase is primarily due to
shipments of Cortex-M class processors in microcontrollers and wireless
networking chips, and an increase in Cortex-A shipments driven by high-end
smartphones adopting smarter applications processors.
Q2 2010 Processor Unit Shipment Analysis*
+-----------+-----------+----------+------------+-----------+
| Processor | Unit | | Market | Unit |
| Family |Shipments | | Segment |Shipments |
+-----------+-----------+----------+------------+-----------+
| ARM7(TM) | 53% | | Mobile | 62% |
+-----------+-----------+----------+------------+-----------+
| ARM9(TM) | 36% | | Enterprise | 18% |
+-----------+-----------+----------+------------+-----------+
| ARM11(TM) | 5% | | Home | 5% |
+-----------+-----------+----------+------------+-----------+
| Cortex | 6% | | Embedded | 15% |
+-----------+-----------+----------+------------+-----------+
* These calculations do not include any units from catch-up royalties as these
shipments were from prior quarters
ARM continued to gain share in non-mobile end-markets. Shipments of ARM
technology-based microcontrollers grew more than 130% year on year, compared to
80% growth for the overall microcontroller market. Part of this growth was due
to an increase in sales of Cortex-M class based chips. These chips go into a
wide range of price sensitive markets such as toys, consumer white-goods and
industrial controllers. This growth in microcontrollers looks set to continue
with leading microcontroller companies, Freescale and NXP, both announcing ARM
Cortex-based microcontroller products in recent months. In addition, leading
FPGA vendors, Actel and Xilinx, both announced new product lines based on Cortex
processors.
During the quarter ARM saw strong growth not only in microcontrollers, but also
in other low-cost chips such as Bluetooth and smartcard resulting in the average
royalty per chip decreasing to 4.5c in the quarter from 4.8c in the prior
quarter and 5.7c in the same quarter last year.
ARM11 and Cortex class processors typically have a higher royalty rate per chip.
As these processors become a greater proportion of overall ARM shipments, we
are beginning to see an increase in the average percentage royalty per chip,
thereby contributing to the growth in ARM's overall royalty revenue.
The increasing penetration of smartphones continues to benefit ARM. In Q2 2010
ARM's customers reported about a 65% increase in wireless chips sales driven by
50% growth in smartphone shipments. For the quarter, ARM achieved an average of
2.6 ARM technology-based chips per mobile handset, up from 2.4 in the prior
quarter, and up from 2.0 a year ago.
During the quarter, ARM received catch-up royalties of $9.0m in respect of
shipments made between 2007 and 2010. This catch-up royalty was discovered by
the customer as part of ARM's ongoing royalty auditing process.
PIPD licensing
ARM signed three new licenses in Q2 for royalty-bearing platforms of physical
IP, at 65nm and 45nm, with another at 130nm. The base of platform licenses for
physical IP further drives ARM's future royalty potential. Cumulatively, by the
end of Q2, 73 platform licenses have been signed.
Early in Q3, TSMC signed a license for ARM's advanced physical IP platforms at
28nm and 20nm. This long term commitment underlines ARM's technology strategy
to be at the vanguard of developing market-leading physical IP for the latest
manufacturing processes. Semiconductor companies will now be able to reduce
their chip implementation costs by selecting ARM's advanced physical IP for 32nm
and 28nm at all of the major foundries.
In addition, ARM has now released production versions of the complete 32nm
physical IP platform for manufacturing processes at IBM, GLOBALFOUNDRIES and
Samsung. The ARM engineering teams are now focusing on developing 28nm
platforms and are actively engaged in advanced R&D for 22nm and 20nm.
Q2 2010 and Cumulative PIPD Licensing Analysis
+-----------------+------------------+------------------+-+------------+------------------+
| | Process Node | Total | | Platform | Royalty-bearing |
| | | | | analysis | Platforms |
+-----------------+------------------+------------------+-+------------+------------------+
| | (nm) | | | (nm) | at Each Node |
+-----------------+------------------+------------------+-+------------+------------------+
| New Platform | 45/40 | 1 | | 32/28 | 6 |
| Licenses | 65 | 1 | | | |
| | 130 | 1 | | | |
+ + + +-+------------+------------------+
| | | | | 45/40 | 8 |
+ + + + +------------------+------------------+
| | | | | 65 | 11 |
+-----------------+------------------+------------------+-----------------+-----------------+------------------+
| | | | | 90 | 11 |
+-----------------+------------------+------------------+-+------------+------------------+
| | | | | 130 | 17 |
+-----------------+------------------+------------------+-+------------+------------------+
| | | | |180 to 250 | 20 |
+-----------------+------------------+------------------+-+------------+------------------+
| | | | | Total | 73 |
+-----------------+------------------+------------------+-+------------+------------------+
In addition, we signed two further licenses for ARM's physical IP optimised to
enable a Cortex-A9 processor to run at high-speed whilst consuming little power.
PIPD royalties
Physical IP royalties are generated mainly from wafers manufactured in foundries
such as TSMC, UMC and GLOBALFOUNDRIES. Royalties are recognised one quarter in
arrears with royalties in Q2 generated from semiconductor unit shipments in Q1.
Underlying PIPD royalties in Q2 2010 were $9.6 million, up 80% year-on-year,
reflecting the recovery in the foundry industry. ARM is now receiving royalty
revenue from wafer shipments across eleven different advanced processes at 65nm
and below, contributing more than 15% of PIPD's total royalty revenues.
People
At 30 June 2010, ARM had 1,775 full-time employees, a net increase of 65 since
the start of the year, mainly engineers into ARM's processor R&D team. At the
end of June, the group had 726 employees based in the UK, 485 in the US, 207 in
Continental Europe, 267 in India and 90 in the Asia Pacific region.
ARM is continuing to invest in its R&D programs and operations, and expects to
continue to recruit in H2 2010.
Principal risks and uncertainties
The principal risks and uncertainties faced by the Group that could affect the
results in 2010 and beyond are noted within the Annual Report for the year ended
31 December 2009. These include but are not limited to: ARM's quarterly results
may fluctuate significantly and be unpredictable which could adversely affect
the market price of ARM ordinary shares; general economic conditions may reduce
ARM's revenues and harm its business; and ARM competes in the intensely
competitive semiconductor market. There have been no changes to these risks that
would materially impact the Group in the foreseeable future.
ARM Holdings plc
Consolidated balance sheet - IFRS
+------------------------------------+------+-------+-----------+-----------+
| | | 30 June | 31 |
| | | | December |
+-------------------------------------------+-------+-----------+-----------+
| | | 2010 | 2009 |
+-------------------------------------------+-------+-----------+-----------+
| | | Unaudited | Audited |
+-------------------------------------------+-------+-----------+-----------+
| | | GBP'000 | GBP'000 |
+-------------------------------------------+-------+-----------+-----------+
| Assets | | | |
+-------------------------------------------+-------+-----------+-----------+
| Current assets: | | | |
+-------------------------------------------+-------+-----------+-----------+
| Financial assets: Cash and cash | | 53,746 | 34,489 |
| equivalents | | | |
+-------------------------------------------+-------+-----------+-----------+
| | | 148,511 | 105,524 |
| Short-term investments | | | |
+-------------------------------------------+-------+-----------+-----------+
| | | - | 1,795 |
| Short-term marketable securities | | | |
+-------------------------------------------+-------+-----------+-----------+
| Embedded | | 4,943 | 2,480 |
| derivatives | | | |
+-------------------------------------------+-------+-----------+-----------+
| Fair | | - | 457 |
| value of currency exchange contracts | | | |
+-------------------------------------------+-------+-----------+-----------+
| Accounts | | 91,830 | 65,247 |
| receivable (see note 4) | | | |
+-------------------------------------------+-------+-----------+-----------+
| Prepaid expenses and other assets | | 22,297 | 23,635 |
+-------------------------------------------+-------+-----------+-----------+
| Current tax assets | | 1,307 | 350 |
+-------------------------------------------+-------+-----------+-----------+
| Inventories: finished goods | | 1,578 | 1,680 |
+-------------------------------------------+-------+-----------+-----------+
| Assets in disposal group classified as | | 1,180 | - |
| held for sale | | | |
+-------------------------------------------+-------+-----------+-----------+
| Total current assets | | 325,392 | 235,657 |
+-------------------------------------------+-------+-----------+-----------+
| | | | |
+-------------------------------------------+-------+-----------+-----------+
| Non-current assets: | | | |
+-------------------------------------------+-------+-----------+-----------+
| Financial assets: Available-for-sale | | 14,287 | 9,432 |
| investments | | | |
+-------------------------------------------+-------+-----------+-----------+
| Prepaid expenses and other assets | | 1,486 | 1,611 |
+-------------------------------------------+-------+-----------+-----------+
| Property, plant and equipment | | 14,258 | 13,565 |
+-------------------------------------------+-------+-----------+-----------+
| Goodwill | | 555,989 | 516,798 |
+-------------------------------------------+-------+-----------+-----------+
| Other intangible assets | | 18,146 | 24,696 |
+-------------------------------------------+-------+-----------+-----------+
| Deferred tax assets | | 48,408 | 42,724 |
+-------------------------------------------+-------+-----------+-----------+
| Total non-current assets | | 652,574 | 608,826 |
+-------------------------------------------+-------+-----------+-----------+
| | | | |
+-------------------------------------------+-------+-----------+-----------+
| Total assets | | 977,966 | 844,483 |
+-------------------------------------------+-------+-----------+-----------+
| | | | |
+-------------------------------------------+-------+-----------+-----------+
| Liabilities and shareholders' equity | | | |
+-------------------------------------------+-------+-----------+-----------+
| Current liabilities: | | | |
+-------------------------------------------+-------+-----------+-----------+
| Financial liabilities: Accounts payable | | 2,677 | 2,280 |
+-------------------------------------------+-------+-----------+-----------+
| | | 714 | - |
| Fair value of currency exchange contracts | | | |
+-------------------------------------------+-------+-----------+-----------+
| | | 47,392 | 46,688 |
| Accrued and other liabilities | | | |
+-------------------------------------------+-------+-----------+-----------+
| Current tax liabilities | | 12,691 | 16,536 |
+-------------------------------------------+-------+-----------+-----------+
| Liabilities in disposal group classified | | 276 | - |
| as held for sale | | | |
+-------------------------------------------+-------+-----------+-----------+
| Deferred revenue | | 63,704 | 39,562 |
+-------------------------------------------+-------+-----------+-----------+
| Total current liabilities | | 127,454 | 105,066 |
+-------------------------------------------+-------+-----------+-----------+
| | | | |
+-------------------------------------------+-------+-----------+-----------+
| Non-current liabilities: | | | |
+-------------------------------------------+-------+-----------+-----------+
| Deferred tax liabilities | | 391 | 720 |
+-------------------------------------------+-------+-----------+-----------+
| | | | |
+-------------------------------------------+-------+-----------+-----------+
| Total liabilities | | 127,845 | 105,786 |
+-------------------------------------------+-------+-----------+-----------+
| | | | |
+-------------------------------------------+-------+-----------+-----------+
| Net assets | | 850,121 | 738,697 |
+-------------------------------------------+-------+-----------+-----------+
| | | | |
+-------------------------------------------+-------+-----------+-----------+
| Capital and reserves attributable to equity | | |
| holders of the Company | | |
+---------------------------------------------------+-----------+-----------+
| Share capital | | 672 | 672 |
+------------------------------------+--------------+-----------+-----------+
| Share premium account | | 351,578 | 351,578 |
+------------------------------------+--------------+-----------+-----------+
| Share option reserve | | 61,474 | 61,474 |
+------------------------------------+--------------+-----------+-----------+
| Retained earnings | | 311,113 | 241,950 |
+------------------------------------+--------------+-----------+-----------+
| Revaluation reserve | | - | (155) |
+------------------------------------+--------------+-----------+-----------+
| Cumulative translation adjustment | | 125,284 | 83,178 |
+------------------------------------+--------------+-----------+-----------+
| Total equity | | 850,121 | 738,697 |
+------------------------------------+--------------+-----------+-----------+
| | | | | |
+------------------------------------+------+-------+-----------+-----------+
ARM Holdings plc
Consolidated income statement - IFRS
+---------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| | Quarter | Quarter | Six | Six |
| | ended | ended | months | months |
| | | | ended | ended |
+---------------------------------+-----------+-----------+-----------+-----------+
| | 30 | 30 | 30 | 30 |
| | June | June | June | June |
| | 2010 | 2009 | 2010 | 2009 |
+---------------------------------+-----------+-----------+-----------+-----------+
| | Unaudited | Unaudited | Unaudited | Unaudited |
+---------------------------------+-----------+-----------+-----------+-----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+---------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
| | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Revenues | 99,950 | 64,777 | 192,296 | 144,680 |
+---------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Cost of revenues | (5,793) | (6,106) | (12,753) | (14,283) |
+---------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Gross profit | 94,157 | 58,671 | 179,543 | 130,397 |
+---------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Research and | (33,377) | (27,927) | (64,825) | (54,739) |
| development | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Sales and | (16,835) | (14,804) | (32,555) | (30,436) |
| marketing | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| General and | (15,091) | (9,828) | (28,126) | (26,414) |
| administrative | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Total operating expenses, net | (65,303) | (52,559) | (125,506) | (111,589) |
+---------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Profit from operations | 28,854 | 6,112 | 54,037 | 18,808 |
+---------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Investment income | 782 | 317 | 1,484 | 740 |
+---------------------------------+-----------+-----------+-----------+-----------+
| Interest payable | - | (26) | - | (76) |
+---------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Profit before tax | 29,636 | 6,403 | 55,521 | 19,472 |
+---------------------------------+-----------+-----------+-----------+-----------+
| Tax | (7,740) | 19 | (14,053) | (3,265) |
+---------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Profit for the period | 21,896 | 6,422 | 41,468 | 16,207 |
+---------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Earnings per share | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Basic and diluted earnings | 21,896 | 6,422 | 41,468 | 16,207 |
+---------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Number of shares ('000) | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Basic weighted average number | 1,313,775 | 1,262,783 | 1,306,386 | 1,259,748 |
| of shares | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Effect of dilutive securities: | 34,224 | 27,569 | 36,177 | 24,973 |
| Share options and awards | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Diluted weighted average number | 1,347,999 | 1,290,352 | 1,342,563 | 1,284,721 |
| of shares | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Basic EPS (pence) | 1.7 | 0.5 | 3.2 | 1.3 |
+---------------------------------+-----------+-----------+-----------+-----------+
| Diluted EPS (pence) | 1.6 | 0.5 | 3.1 | 1.3 |
+---------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Diluted earnings per ADS | 7.3 | 2.5 | 13.9 | 6.2 |
| (cents) | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
All activities relate to continuing operations.
All of the profit for the period is attributable to the equity shareholders of
the parent.
ARM Holdings plc
Consolidated statement of comprehensive income - IFRS
+--------------------------------+----------+-----------+-----------+-----------+-----------+
| | | | | | |
+--------------------------------+----------+-----------+-----------+-----------+-----------+
| | | Quarter | Quarter | Six | Six |
| | | ended | ended | months | months |
| | | | | ended | ended |
+--------------------------------+----------+-----------+-----------+-----------+-----------+
| | | 30 June | 30 June | 30 June | 30 |
| | | 2010 | 2009 | 2010 | June |
| | | | | | 2009 |
+--------------------------------+----------+-----------+-----------+-----------+-----------+
| | | Unaudited | Unaudited | Unaudited | Unaudited |
+--------------------------------+----------+-----------+-----------+-----------+-----------+
| | | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+--------------------------------+----------+-----------+-----------+-----------+-----------+
| | | | | | |
+--------------------------------+----------+-----------+-----------+-----------+-----------+
| Profit for the period | | 21,896 | 6,422 | 41,468 | 16,207 |
+--------------------------------+----------+-----------+-----------+-----------+-----------+
| Other comprehensive income: | | | | | |
+--------------------------------+----------+-----------+-----------+-----------+-----------+
| Unrealised holding gain on | | | | | |
| available-for-sale | | 169 | 27 | 155 | 141 |
| investments (net of tax of | | | | | |
| GBPnil) | | | | | |
+--------------------------------+----------+-----------+-----------+-----------+-----------+
| Currency translation | | 6,454 | (87,044) | 42,106 | (72,784) |
| adjustment | | | | | |
+--------------------------------+----------+-----------+-----------+-----------+-----------+
| Other comprehensive income | | 6,623 | (87,017) | 42,261 | (72,643) |
| /(loss) for the period | | | | | |
+--------------------------------+----------+-----------+-----------+-----------+-----------+
| Total comprehensive | | 28,519 | (80,595) | 83,729 | (56,436) |
| income/(loss) for the period | | | | | |
+--------------------------------+----------+-----------+-----------+-----------+-----------+
ARM Holdings plc
Consolidated cash flow statement - IFRS
+----------------------------------------+------+-----------+-----------+
| | | Six | Six |
| | | months | months |
+----------------------------------------+------+-----------+-----------+
| | | ended | ended |
+----------------------------------------+------+-----------+-----------+
| | | 30 June | 30 June |
| | | 2010 | 2009 |
+----------------------------------------+------+-----------+-----------+
| | | Unaudited | Unaudited |
+----------------------------------------+------+-----------+-----------+
| | | GBP'000 | GBP'000 |
+----------------------------------------+------+-----------+-----------+
| Operating activities | | | |
+----------------------------------------+------+-----------+-----------+
| Profit before tax | | 55,521 | 19,472 |
+----------------------------------------+------+-----------+-----------+
| Investment income | | (1,484) | (740) |
+----------------------------------------+------+-----------+-----------+
| Depreciation and amortisation of | | 10,417 | 13,279 |
| tangible and intangible assets | | | |
+----------------------------------------+------+-----------+-----------+
| Loss on disposal of property, plant | | 217 | 5 |
| and equipment | | | |
+----------------------------------------+------+-----------+-----------+
| Compensation charge in respect of | | 12,550 | 8,309 |
| share-based payments | | | |
+----------------------------------------+------+-----------+-----------+
| Impairment of available-for-sale | | - | 412 |
| investments | | | |
+----------------------------------------+------+-----------+-----------+
| Profit on disposal of | | - | (224) |
| available-for-sale investments | | | |
+----------------------------------------+------+-----------+-----------+
| Provision for doubtful debts | | (279) | 865 |
+----------------------------------------+------+-----------+-----------+
| Provision for obsolescence of | | (167) | 211 |
| inventory | | | |
+----------------------------------------+------+-----------+-----------+
| Movement in fair value of currency | | 1,171 | (19,812) |
| exchange contracts | | | |
+----------------------------------------+------+-----------+-----------+
| Movement in fair value of embedded | | (2,463) | 9,493 |
| derivatives | | | |
+----------------------------------------+------+-----------+-----------+
| | | | |
+----------------------------------------+------+-----------+-----------+
| Changes in working capital: | | | |
+----------------------------------------+------+-----------+-----------+
| Accounts receivable | | (26,669) | 18,036 |
+----------------------------------------+------+-----------+-----------+
| Inventories | | 269 | (348) |
+----------------------------------------+------+-----------+-----------+
| Prepaid expenses and other assets | | 2,033 | (1,973) |
+----------------------------------------+------+-----------+-----------+
| Accounts payable | | 547 | (4,343) |
+----------------------------------------+------+-----------+-----------+
| Deferred revenue | | 24,238 | 470 |
+----------------------------------------+------+-----------+-----------+
| Accrued and other liabilities | | 755 | (3,156) |
+----------------------------------------+------+-----------+-----------+
| | | | |
+----------------------------------------+------+-----------+-----------+
| Cash generated by operations before | | 76,656 | 39,956 |
| tax | | | |
+----------------------------------------+------+-----------+-----------+
| Income taxes paid | | (7,746) | (5,028) |
+----------------------------------------+------+-----------+-----------+
| | | | |
+----------------------------------------+------+-----------+-----------+
| Net cash from operating activities | | 68,910 | 34,928 |
+----------------------------------------+------+-----------+-----------+
| | | | |
+----------------------------------------+------+-----------+-----------+
| Investing activities | | | |
+----------------------------------------+------+-----------+-----------+
| Interest received | | 1,006 | 767 |
+----------------------------------------+------+-----------+-----------+
| Purchases of property, plant and | | (3,192) | (2,397) |
| equipment | | | |
+----------------------------------------+------+-----------+-----------+
| Purchases of other intangible assets | | (575) | (1,918) |
+----------------------------------------+------+-----------+-----------+
| Purchases of available-for-sale | | (4,977) | (3,663) |
| investments | | | |
+----------------------------------------+------+-----------+-----------+
| Proceeds on disposal of property, | | 168 | 20 |
| plant and equipment | | | |
+----------------------------------------+------+-----------+-----------+
| Proceeds on disposal of | | 105 | 663 |
| available-for-sale investments | | | |
+----------------------------------------+------+-----------+-----------+
| Purchase of short-term investments | | (41,037) | (36,521) |
+----------------------------------------+------+-----------+-----------+
| Purchases of subsidiaries, net of cash | | - | (54) |
| acquired | | | |
+----------------------------------------+------+-----------+-----------+
| | | | |
+----------------------------------------+------+-----------+-----------+
| Net cash used in investing activities | | (48,502) | (43,103) |
+----------------------------------------+------+-----------+-----------+
| | | | |
+----------------------------------------+------+-----------+-----------+
| Financing activities | | | |
+----------------------------------------+------+-----------+-----------+
| Proceeds received on issuance of | | 18,395 | 4,008 |
| shares from treasury | | | |
+----------------------------------------+------+-----------+-----------+
| Dividends paid to shareholders | | (19,022) | (16,634) |
+----------------------------------------+------+-----------+-----------+
| | | | |
+----------------------------------------+------+-----------+-----------+
| Net cash used in financing activities | | (627) | (12,626) |
+----------------------------------------+------+-----------+-----------+
| | | | |
+----------------------------------------+------+-----------+-----------+
| Net increase / (decrease) in cash and | | 19,781 | (20,801) |
| cash equivalents | | | |
+----------------------------------------+------+-----------+-----------+
| Cash and cash equivalents at beginning | | 34,489 | 76,502 |
| of period | | | |
+----------------------------------------+------+-----------+-----------+
| Effect of foreign exchange rate | | 364 | (6,433) |
| changes | | | |
+----------------------------------------+------+-----------+-----------+
| Cash and cash equivalents at end of | | 54,634 | 49,268 |
| period | | | |
+----------------------------------------+------+-----------+-----------+
| | | | |
+----------------------------------------+------+-----------+-----------+
| | | | |
+----------------------------------------+------+-----------+-----------+
| Included in cash and cash equivalents | | 53,746 | 49,268 |
| per the balance sheet | | | |
+----------------------------------------+------+-----------+-----------+
| Included in the assets of the disposal | | 888 | - |
| group | | | |
+----------------------------------------+------+-----------+-----------+
| Cash and cash equivalents at the end | | 54,634 | 49,268 |
| of the period | | | |
+----------------------------------------+------+-----------+-----------+
ARM Holdings plc
Consolidated statement of changes in shareholders' equity - IFRS
+---------------------------------------------+---------+---------+---------+----------+---------+-------------+----------+
| | | Share | Share | | Reval- | Cumulative | |
+---------------------------------------------+---------+---------+---------+----------+---------+-------------+----------+
| | Share | premium | option | Retained | -uation | translation | |
+---------------------------------------------+---------+---------+---------+----------+---------+-------------+----------+
| | capital | account | reserve | earnings | reserve | adjustment | Total |
| | | | | * | | | |
+---------------------------------------------+---------+---------+---------+----------+---------+-------------+----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+---------------------------------------------+---------+---------+---------+----------+---------+-------------+----------+
| | | | | | | | |
+---------------------------------------------+---------+---------+---------+----------+---------+-------------+----------+
| At 1 January 2009 (audited) | 672 | 351,578 | 61,474 | 182,008 | (285) | 144,896 | 740,343 |
+---------------------------------------------+---------+---------+---------+----------+---------+-------------+----------+
| Profit for the period | - | - | - | 16,207 | - | - | 16,207 |
+---------------------------------------------+---------+---------+---------+----------+---------+-------------+----------+
| Other comprehensive income: | | | | | | | |
+---------------------------------------------+---------+---------+---------+----------+---------+-------------+----------+
| Unrealised holding gain on | - | - | - | - | 141 | - | 141 |
| available-for-sale investment | | | | | | | |
+---------------------------------------------+---------+---------+---------+----------+---------+-------------+----------+
| Currency translation adjustment | - | - | - | - | - | (72,784) | (72,784) |
+---------------------------------------------+---------+---------+---------+----------+---------+-------------+----------+
| Total comprehensive income/(expense) for | - | - | - | 16,207 | 141 | (72,784) | (56,436) |
| the period (H1 2009) | | | | | | | |
+---------------------------------------------+---------+---------+---------+----------+---------+-------------+----------+
| Dividends (see note 3) | - | - | - | (16,634) | - | - | (16,634) |
+---------------------------------------------+---------+---------+---------+----------+---------+-------------+----------+
| Credit in respect of employee share schemes | - | - | - | 8,309 | - | - | 8,309 |
+---------------------------------------------+---------+---------+---------+----------+---------+-------------+----------+
| Movement on tax arising on share options | - | - | - | 2,905 | - | - | 2,905 |
| and awards | | | | | | | |
+---------------------------------------------+---------+---------+---------+----------+---------+-------------+----------+
| Proceeds from sale of own shares | - | - | - | 4,008 | - | - | 4,008 |
+---------------------------------------------+---------+---------+---------+----------+---------+-------------+----------+
| | - | - | - | (1,412) | - | - | (1,412) |
+---------------------------------------------+---------+---------+---------+----------+---------+-------------+----------+
| At 30 June 2009 (unaudited) | 672 | 351,578 | 61,474 | 196,803 | (144) | 72,112 | 682,495 |
+---------------------------------------------+---------+---------+---------+----------+---------+-------------+----------+
| | | | | | | | |
| | | | | | | | |
+---------------------------------------------+---------+---------+---------+----------+---------+-------------+----------+
| At 1 January 2010 (audited) | 672 | 351,578 | 61,474 | 241,950 | (155) | 83,178 | 738,697 |
+---------------------------------------------+---------+---------+---------+----------+---------+-------------+----------+
| Profit for the period | - | - | - | 41,468 | - | - | 41,468 |
+---------------------------------------------+---------+---------+---------+----------+---------+-------------+----------+
| Other comprehensive income: | | | | | | | |
+---------------------------------------------+---------+---------+---------+----------+---------+-------------+----------+
| Unrealised holding gain on | - | - | - | - | 155 | - | 155 |
| available-for-sale investments | | | | | | | |
+---------------------------------------------+---------+---------+---------+----------+---------+-------------+----------+
| Currency translation adjustment | - | - | - | - | - | 42,106 | 42,106 |
+---------------------------------------------+---------+---------+---------+----------+---------+-------------+----------+
| Total comprehensive income for the period | - | - | - | 41,468 | 155 | 42,106 | 83,729 |
| (H1 2010) | | | | | | | |
+---------------------------------------------+---------+---------+---------+----------+---------+-------------+----------+
| Dividends (see note 3) | - | - | - | (19,022) | - | - | (19,022) |
+---------------------------------------------+---------+---------+---------+----------+---------+-------------+----------+
| Credit in respect of employee share schemes | - | - | - | 12,550 | - | - | 12,550 |
+---------------------------------------------+---------+---------+---------+----------+---------+-------------+----------+
| Movement on tax arising on share options | - | - | - | 15,772 | - | - | 15,772 |
| and awards | | | | | | | |
+---------------------------------------------+---------+---------+---------+----------+---------+-------------+----------+
| Proceeds from sale of own shares | - | - | - | 18,395 | - | - | 18,395 |
+---------------------------------------------+---------+---------+---------+----------+---------+-------------+----------+
| | - | - | - | 27,695 | - | - | 27,695 |
+---------------------------------------------+---------+---------+---------+----------+---------+-------------+----------+
| At 30 June 2010 (unaudited) | 672 | 351,578 | 61,474 | 311,113 | - | 125,284 | 850,121 |
+---------------------------------------------+---------+---------+---------+----------+---------+-------------+----------+
* During the six-month period to 30 June 2010, GBP36,775,000 (2009:
GBP17,403,000) of treasury shares offset within retained earnings were released
as a result of employee share option exercises and award vestings, being the
cost of 32,577,556 (2009: 12,018,805) shares in the Company. At 30 June 2010,
there was GBP28,327,000 (2009: GBP90,560,000) offset within retained earnings
being the cost of 27,743,805 (2009: 79,141,683) shares in the Company
Notes to the Financial Information
(1) Basis of preparation
The financial information prepared in accordance with the Group's IFRS
accounting policies comprises the consolidated balance sheets as of 30 June 2010
and 31 December 2009, consolidated income statements and consolidated statements
of comprehensive income for the three months and six months ended 30 June 2010
and 2009, and consolidated cash flow statements and consolidated statements of
changes in shareholders' equity for the six months ended 30 June 2010 and 2009,
together with related notes. This condensed set of consolidated interim
financial information for the six months ended 30 June 2010 has been prepared in
accordance with the Disclosure and Transparency Rules of the Financial Services
Authority and with IAS 34, "Interim financial reporting", as adopted by the
European Union. This financial information should be read in conjunction with
the annual financial statements for the year ended 31 December 2009, which have
been prepared in accordance with IFRSs as adopted by the European Union.
The following new standards and amendments to standards are mandatory for the
first time in 2010:
· IFRS 3 (revised), "Business combinations". The revision to this standard
continues to apply the acquisition method to business combinations but there are
significant changes to the treatment of contingent payments, transaction costs,
and the calculation of goodwill. This could impact the Group's financial
statements in the future if it makes any further acquisitions.
· IAS 27 (revised), "Consolidated and separate financial statements". This
amendment revises the accounting for transactions with non-controlling
interests. This is not relevant to the Group as it currently does not have any
non-controlling interests.
· Amendment to IFRS 2, "Share-based payments group cash-settled
transactions". This amendment provides a clear basis to determine the
classification of share-based payment awards in both consolidated and separate
financial statements. This is not relevant to the Group as it currently does
not have any share transactions of this type.
· Improvements to International Financial Reporting Standards 2009 were
issued in April 2009. The effective dates vary standard by standard but most
are effective from 1 January 2010.
The following new standards, amendments to standards, or interpretations are
effective in 2010 but not relevant to the Group:
· IFRIC 17, "Distributions of non-cash assets to owners". This is not
currently applicable to the Group as it has not made any non-cash distributions.
· IFRIC 18, "Transfers of assets from customers". This is not relevant to
the Group as it has not received any assets from customers.
· "Additional exemptions for first-time adopters" (Amendment to IFRS 1).
This is not relevant to the Group as it is an existing IFRS preparer.
(2) Share-based payment costs and acquisition-related expenses
Included within the consolidated income statement for the quarter ended 30 June
2010 are total share-based payment costs (including related payroll taxes) of
GBP9.5 million (2009: GBP5.8 million), allocated GBP0.7 million (2009: GBP0.4
million) in cost of revenues, GBP5.7 million (2009: GBP3.5 million) in research
and development expenses, GBP1.8 million (2009: GBP1.1 million) in sales and
marketing expenses and GBP1.3 million (2009: GBP0.8 million) in general and
administrative expenses.
Included within the consolidated income statement for the six months ended 30
June 2010 are total share-based payment costs (including related payroll taxes)
of GBP18.2 million (2009: GBP10.5 million), allocated GBP1.1 million (2009:
GBP0.7 million) in cost of revenues, GBP11.0 million (2009: GBP6.3 million) in
research and development expenses, GBP3.5 million (2009: GBP2.0 million) in
sales and marketing expenses and GBP2.6 million (2009: GBP1.5 million) in
general and administrative expenses.
Also included within operating expenses for the quarter ended 30 June 2010 is
amortisation of intangibles acquired on business combinations of GBP3.0 million
(2009: GBP4.0 million), allocated GBP1.0 million (2009: GBP2.0 million) in
research and development expenses and GBP2.0 million (2009: GBP2.0 million) in
sales and marketing expenses.
(3) Dividends
+----------------------------------------+-----+-----------+------------+
| | | Six | Six months |
| | | months | ended |
| | | ended | 30 June |
| | | 30 June | 2009 |
| | | 2010 | |
+----------------------------------------+-----+-----------+------------+
| | | GBP'000 | GBP'000 |
+----------------------------------------+-----+-----------+------------+
| Final 2008 paid at 1.32 pence per | | - | 16,634 |
| share | | | |
+----------------------------------------+-----+-----------+------------+
| Final 2009 paid at 1.45 pence per | | 19,022 | - |
| share | | | |
+----------------------------------------+-----+-----------+------------+
| | | 19,022 | 16,634 |
+----------------------------------------+-----+-----------+------------+
| | | | |
+----------------------------------------+-----+-----------+------------+
In respect of the year to 31 December 2010, the directors are declaring an
interim dividend of 1.16 pence per share (an estimated cost of GBP15.3m). This
interim dividend will be paid on 4 October 2010 to shareholders who are on the
register of members on 3 September 2010.
(4) Accounts receivable
Included within accounts receivable at 30 June 2010 are GBP11.8 million (31
December 2009: GBP12.4 million) of amounts recoverable on contracts.
(5) Segmental reporting
At 30 June 2010, the Group is organised on a worldwide basis into three main
business segments:
Processor Division (PD), encompassing those resources that are centred on
microprocessor cores, including specific functions such as graphics IP, fabric
IP and embedded software and configurable digital signal processing IP.
Physical IP Division (PIPD), concerned with the building blocks necessary for
translation of a circuit design into actual silicon.
Systems Design Division (SDD), focused on the tools and models used to create
and debug software and system-on-chip (SoC) designs.
This is based upon the Group's internal organisation and management structure
and is the primary way in which the board of directors is provided with
financial information. Whilst revenues are also reported into four main revenue
streams (namely licensing, royalties, development systems and services), the
costs, operating results and balance sheets are only analysed into these three
divisions.
The following analysis is of revenues (in both GBP and USD), operating expenses,
investment income, interest payable, profit/(loss) before tax, tax,
profit/(loss) for the period, amortisation of intangible assets, share-based
payment costs, goodwill and total assets for each segment and the Group in
total.
+--------------------------------+-----------+----------+----------+-------------+-----------+
| Six months ended 30 June 2010 | Processor | Physical | Systems | Unallocated | Group |
| | | IP | | GBP000 | GBP000 |
| | Division | Division | Design | | |
| | GBP000 | GBP000 | Division | | |
| | | | GBP000 | | |
+--------------------------------+-----------+----------+----------+-------------+-----------+
| Segmental income statement | | | | | |
+--------------------------------+-----------+----------+----------+-------------+-----------+
| Revenues (GBP) | GBP | GBP | GBP | - | GBP |
| | 147,812 | 25,885 | 18,599 | | 192,296 |
+--------------------------------+-----------+----------+----------+-------------+-----------+
| Operating expenses, net | (80,106) | (41,792) | (18,825) | 2,464 | (138,259) |
+--------------------------------+-----------+----------+----------+-------------+-----------+
| Investment income | - | - | - | 1,484 | 1,484 |
+--------------------------------+-----------+----------+----------+-------------+-----------+
| Interest payable | - | - | - | - | - |
+--------------------------------+-----------+----------+----------+-------------+-----------+
| Profit/(loss) before tax | 67,706 | (15,907) | (226) | 3,948 | 55,521 |
+--------------------------------+-----------+----------+----------+-------------+-----------+
| Tax | - | - | - | (14,053) | (14,053) |
+--------------------------------+-----------+----------+----------+-------------+-----------+
| Profit/(loss) for the period | 67,706 | (15,907) | (226) | (10,105) | 41,468 |
+--------------------------------+-----------+----------+----------+-------------+-----------+
| Other segmental items | | | | | |
+--------------------------------+-----------+----------+----------+-------------+-----------+
| Amortisation of intangible | 1,451 | 5,312 | 552 | - | 7,315 |
| assets (including software) | | | | | |
+--------------------------------+-----------+----------+----------+-------------+-----------+
| Share-based payment costs | 7,248 | 3,228 | 2,074 | - | 12,550 |
+--------------------------------+-----------+----------+----------+-------------+-----------+
| Goodwill | 145,418 | 395,342 | 15,229 | - | 555,989 |
+--------------------------------+-----------+----------+----------+-------------+-----------+
| Total assets | 245,809 | 425,823 | 31,975 | 276,648 | 980,255 |
+--------------------------------+-----------+----------+----------+-------------+-----------+
| Revenues (USD) | $ | $ | $ | - | $ |
| | 225,630 | 39,793 | 28,172 | | 293,595 |
+--------------------------------+-----------+----------+----------+-------------+-----------+
+---------------+-----------+----------+----------+-------------+-----------+
| Six | Processor | Physical | Systems | Unallocated | Group |
| months | | IP | | GBP000 | GBP000 |
| ended | Division | Division | Design | | |
| 30 | GBP000 | GBP000 | Division | | |
| June | | | GBP000 | | |
| 2009 | | | | | |
+---------------+-----------+----------+----------+-------------+-----------+
| Segmental | | | | | |
| income | | | | | |
| statement | | | | | |
+---------------+-----------+----------+----------+-------------+-----------+
| Revenues | GBP | GBP | GBP | - | GBP |
| (GBP) | 107,158 | 21,074 | 16,448 | | 144,680 |
+---------------+-----------+----------+----------+-------------+-----------+
| Operating | (70,670) | (40,629) | (14,573) | - | (125,872) |
| expenses, | | | | | |
| net | | | | | |
+---------------+-----------+----------+----------+-------------+-----------+
| Investment | - | - | - | 740 | 740 |
| income | | | | | |
+---------------+-----------+----------+----------+-------------+-----------+
| Interest | - | - | - | (76) | (76) |
| payable | | | | | |
+---------------+-----------+----------+----------+-------------+-----------+
| Profit/(loss) | 36,488 | (19,555) | 1,875 | 664 | 19,472 |
| before tax | | | | | |
+---------------+-----------+----------+----------+-------------+-----------+
| Tax | - | - | - | (3,265) | (3,265) |
+---------------+-----------+----------+----------+-------------+-----------+
| Profit/(loss) | 36,488 | (19,555) | 1,875 | (2,601) | 16,207 |
| for the | | | | | |
| period | | | | | |
+---------------+-----------+----------+----------+-------------+-----------+
| Other | | | | | |
| segmental | | | | | |
| items | | | | | |
+---------------+-----------+----------+----------+-------------+-----------+
| Amortisation | 2,018 | 7,240 | 1,084 | - | 10,342 |
| of | | | | | |
| intangible | | | | | |
| assets | | | | | |
| (including | | | | | |
| software) | | | | | |
+---------------+-----------+----------+----------+-------------+-----------+
| Share-based | 4,676 | 2,216 | 1,417 | - | 8,309 |
| payment | | | | | |
| costs | | | | | |
+---------------+-----------+----------+----------+-------------+-----------+
| Goodwill | 133,303 | 359,141 | 14,423 | - | 506,867 |
+---------------+-----------+----------+----------+-------------+-----------+
| Total | 208,859 | 397,803 | 29,988 | 132,818 | 769,468 |
| assets | | | | | |
+---------------+-----------+----------+----------+-------------+-----------+
| Revenues | $ | $ | $ | - | $ |
| (USD) | 167,744 | 33,845 | 24,839 | | 226,428 |
+---------------+-----------+----------+----------+-------------+-----------+
There are no inter-segment revenues. The results of each segment have been
prepared using accounting policies consistent with those of the Group as a
whole. Unallocated assets include financial assets, current and deferred tax,
VAT, and assets of the disposal group held for sale.
(6) Non-GAAP measures
The following non-GAAP measures, including reconciliations to the IFRS measures,
have been used in this earnings release. These measures have been presented as
they allow a clearer comparison of operating results that exclude
acquisition-related charges, share-based payment costs, restructuring charges,
profit on disposal and impairment of available-for-sale investments, and
Linaro-related charges. Full reconciliations of Q2 2010, Q2 2009, H1 2010 and
H1 2009, are shown in notes 6.13 to 6.16. All figures in GBP'000 unless
otherwise stated.
+----------------------------------+---------+---------+---------+---------+---------+
| Summary normalised figures | Q2 | Q2 | Q1 | H1 | H1 |
| | 2010 | 2009 | 2010 | 2010 | 2009 |
+----------------------------------+---------+---------+---------+---------+---------+
| | | | | | |
+----------------------------------+---------+---------+---------+---------+---------+
| Revenues | 99,950 | 64,777 | 92,346 | 192,296 | 144,680 |
+----------------------------------+---------+---------+---------+---------+---------+
| Revenues ($'000) | 150,299 | 105,542 | 143,296 | 293,595 | 226,428 |
+----------------------------------+---------+---------+---------+---------+---------+
| | | | | | |
+----------------------------------+---------+---------+---------+---------+---------+
| Gross margin | 94.9% | 91.2% | 93.0% | 94.0% | 90.6% |
+----------------------------------+---------+---------+---------+---------+---------+
| Operating expenses | 52,128 | 43,096 | 48,989 | 101,117 | 91,603 |
+----------------------------------+---------+---------+---------+---------+---------+
| Profit from operations | 42,678 | 15,985 | 36,906 | 79,584 | 39,536 |
+----------------------------------+---------+---------+---------+---------+---------+
| Operating margin | 42.7% | 24.7% | 40.0% | 41.4% | 27.3% |
+----------------------------------+---------+---------+---------+---------+---------+
| | | | | | |
+----------------------------------+---------+---------+---------+---------+---------+
| Profit before tax | 43,460 | 16,276 | 37,608 | 81,068 | 40,200 |
+----------------------------------+---------+---------+---------+---------+---------+
| Earnings per share (diluted) | 2.34p | 0.95p | 2.04p | 4.38p | 2.32p |
+----------------------------------+---------+---------+---------+---------+---------+
| | | | | | |
+----------------------------------+---------+---------+---------+---------+---------+
| Cash | 202,257 | 88,217 | 195,950 | 202,257 | 88,217 |
+----------------------------------+---------+---------+---------+---------+---------+
| Cash generation | 30,414 | 11,871 | 43,843 | 74,257 | 27,082 |
+----------------------------------+---------+---------+---------+---------+---------+
+----------------------------------+---------+---------+---------+---------+---------+
| | (6.1) | (6.2) | (6.3) | (6.4) | (6.5) |
+----------------------------------+---------+---------+---------+---------+---------+
| | Q2 | Q2 | Q1 | H1 | H1 |
| | 2010 | 2009 | 2010 | 2010 | 2009 |
+----------------------------------+---------+---------+---------+---------+---------+
| | | | | | |
+----------------------------------+---------+---------+---------+---------+---------+
| Revenues (GBP'000) | 99,950 | 64,777 | 92,346 | 192,296 | 144,680 |
+----------------------------------+---------+---------+---------+---------+---------+
| ARM's effective exchange rate | 1.50 | 1.63 | 1.55 | 1.53 | 1.57 |
| ($/GBP) | | | | | |
+----------------------------------+---------+---------+---------+---------+---------+
| Revenues ($'000) | 150,299 | 105,542 | 143,296 | 293,595 | 226,428 |
+----------------------------------+---------+---------+---------+---------+---------+
+----------------------------------+------+--+-------+---------+----------+
| | | | | (6.6) | (6.7) |
+----------------------------------+------+--+-------+---------+----------+
| | | | | 30 | 31 |
| | | | | June | December |
| | | | | 2010 | 2009 |
+----------------------------------+------+--+-------+---------+----------+
| | | | | | |
+----------------------------------+------+--+-------+---------+----------+
| Cash and cash equivalents | | | | 53,746 | 34,489 |
+----------------------------------+------+--+-------+---------+----------+
| Short-term investments | | | | 148,511 | 105,524 |
+----------------------------------+------+--+-------+---------+----------+
| Short-term marketable securities | | | | - | 1,795 |
+----------------------------------+------+--+-------+---------+----------+
| Normalised cash | | | | 202,257 | 141,808 |
+----------------------------------+------+--+-------+---------+----------+
+----------------------------------+-----------+----------+-----------+-----------+----------+
| | (6.8) | (6.9) | (6.10) | (6.11) | (6.12) |
+----------------------------------+-----------+----------+-----------+-----------+----------+
| | Q2 | Q2 | Q1 | H1 | H1 |
| | 2010 | 2009 | 2010 | 2010 | 2009 |
+----------------------------------+-----------+----------+-----------+-----------+----------+
| | | | | | |
+----------------------------------+-----------+----------+-----------+-----------+----------+
| Normalised cash at end of period | 202,257 | 88,217 | 195,950 | 202,257 | 88,217 |
| (as above) | | | | | |
+----------------------------------+-----------+----------+-----------+-----------+----------+
| Less: Normalised cash at | (195,950) | (91,345) | (141,808) | (141,808) | (78,789) |
| beginning of period | | | | | |
+----------------------------------+-----------+----------+-----------+-----------+----------+
| Add back: Cash outflow from | | | | | |
| investments and acquisitions | 3,872 | 417 | 1,000 | 4,872 | 3,054 |
| (net of cash acquired) | | | | | |
+----------------------------------+-----------+----------+-----------+-----------+----------+
| Add back: Cash outflow from | 19,022 | 16,634 | - | 19,022 | 16,634 |
| payment of dividends | | | | | |
+----------------------------------+-----------+----------+-----------+-----------+----------+
| Add back: Cash outflow from | 2,253 | 157 | 1,887 | 4,140 | 1,434 |
| restructuring payments | | | | | |
+----------------------------------+-----------+----------+-----------+-----------+----------+
| Add back: Cash outflow from | 419 | 126 | 2,512 | 2,931 | 540 |
| share-based payroll taxes | | | | | |
+----------------------------------+-----------+----------+-----------+-----------+----------+
| Add back: Cash outflow from | 1,238 | - | - | 1,238 | - |
| payments related to Linaro | | | | | |
+----------------------------------+-----------+----------+-----------+-----------+----------+
| Less: Cash inflow from exercise | (2,697) | (2,335) | (15,698) | (18,395) | (4,008) |
| of share options | | | | | |
+----------------------------------+-----------+----------+-----------+-----------+----------+
| Normalised cash generation | 30,414 | 11,871 | 43,843 | 74,257 | 27,082 |
+----------------------------------+-----------+----------+-----------+-----------+----------+
(6.13) Normalised income statement for Q2 2010
+------------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| | | | | | | | | | | | |
| | | | | | Normalised | | | Other | | | |
| | | | Share-based | | incl | | Intangible | acquisition | Linaro | | |
| | | | payments | | share-based | | amortisa-tion | -related | -related | | |
| |Normalised | | | | payments | | | charges | charges | | IFRS |
+------------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 | GBP'000 | GBP'000 | | GBP'000 |
+------------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| | | | | | | | | | | | |
+------------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| Revenues | 99,950 | | - | | 99,950 | | - | - | - | | 99,950 |
+------------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| | | | | | | | | | | | |
+------------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| Cost of revenues | (5,144) | | (649) | | (5,793) | | - | - | - | | (5,793) |
+------------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| | | | | | | | | | | | |
+------------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| Gross profit | 94,806 | | (649) | | 94,157 | | - | - | - | | 94,157 |
+------------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| | | | | | | | | | | | |
+------------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| Research and | (26,396) | | (5,707) | | (32,103) | | (1,002) | - | (272) | | (33,377) |
| development | | | | | | | | | | | |
+------------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| Sales and | (12,825) | | (1,809) | | (14,634) | | (1,971) | (114) | (116) | | (16,835) |
| marketing | | | | | | | | | | | |
+------------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| General and | (12,907) | | (1,334) | | (14,241) | | - | - | (850) | | (15,091) |
| administrative | | | | | | | | | | | |
+------------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| Total operating | (52,128) | | (8,850) | | (60,978) | | (2,973) | (114) | (1,238) | | (65,303) |
| expenses | | | | | | | | | | | |
+------------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| | | | | | | | | | | | |
+------------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| Profit from | 42,678 | | (9,499) | | 33,179 | | (2,973) | (114) | (1,238) | | 28,854 |
| operations | | | | | | | | | | | |
+------------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| | | | | | | | | | | | |
+------------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| Investment | 782 | | - | | 782 | | - | - | - | | 782 |
| income | | | | | | | | | | | |
+------------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| | | | | | | | | | | | |
+------------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| Profit before | 43,460 | | (9,499) | | 33,961 | | (2,973) | (114) | (1,238) | | 29,636 |
| tax | | | | | | | | | | | |
+------------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| Tax | (11,899) | | 2,681 | | (9,218) | | 1,099 | 32 | 347 | | (7,740) |
+------------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| | | | | | | | | | | | |
+------------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| Profit for the | 31,561 | | (6,818) | | 24,743 | | (1,874) | (82) | (891) | | 21,896 |
| period | | | | | | | | | | | |
+------------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| | | | | | | | | | | | |
+------------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| Earnings per | | | | | | | | | | | |
| share (assuming | | | | | | | | | | | |
| dilution) | | | | | | | | | | | |
+------------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| Shares | 1,347,999 | | | | 1,347,999 | | | | | | 1,347,999 |
| outstanding | | | | | | | | | | | |
| ('000) | | | | | | | | | | | |
+------------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| Earnings per | 2.34 | | | | 1.84 | | | | | | 1.62 |
| share - pence | | | | | | | | | | | |
+------------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| | | | | | | | | | | | |
+------------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| ADSs outstanding | 449,333 | | | | 449,333 | | | | | | 449,333 |
| ('000) | | | | | | | | | | | |
+------------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| Earnings per ADS | 10.51 | | | | 8.24 | | | | | | 7.29 |
| - cents | | | | | | | | | | | |
+------------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
(6.14) Normalised income statement for Q2 2009
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| | | | | | Normalised | | | | | | | |
| | | | Share-based | | incl | | | Other | Disposal | | | |
| | | | compen-sation | | share-based | | Intangible | acquisition | / | Restruct- | | |
| | | | | | compen-sation | | amortisa-tion | -related | impairment | -uring | | |
| |Normalised | | | | | | | charges | of | charges | | IFRS |
| | | | | | | | | | investments | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 | GBP'000 | GBP'000 | GBP'000 | | GBP'000 |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| Revenues | 64,777 | | - | | 64,777 | | - | - | - | - | | 64,777 |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| Cost of revenues | (5,696) | | (410) | | (6,106) | | - | - | - | - | | (6,106) |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| Gross profit | 59,081 | | (410) | | 58,671 | | - | - | - | - | | 58,671 |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| Research and | (22,487) | | (3,451) | | (25,938) | | (1,989) | - | - | - | | (27,927) |
| development | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| Sales and | (11,571) | | (1,093) | | (12,664) | | (2,026) | (114) | - | - | | (14,804) |
| marketing | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| General and | (9,038) | | (803) | | (9,841) | | (6) | - | 176 | (157) | | (9,828) |
| administrative | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| Total operating | (43,096) | | (5,347) | | (48,443) | | (4,021) | (114) | 176 | (157) | | (52,559) |
| expenses | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| Profit from | 15,985 | | (5,757) | | 10,228 | | (4,021) | (114) | 176 | (157) | | 6,112 |
| operations | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| Investment | 317 | | - | | 317 | | - | - | - | - | | 317 |
| income | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| Interest payable | (26) | | - | | (26) | | - | - | - | - | | (26) |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| Profit before | 16,276 | | (5,757) | | 10,519 | | (4,021) | (114) | 176 | (157) | | 6,403 |
| tax | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| Tax | (4,017) | | 2,500 | | (1,517) | | 1,505 | 32 | (49) | 48 | | 19 |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| Profit for the | 12,259 | | (3,257) | | 9,002 | | (2,516) | (82) | 127 | (109) | | 6,422 |
| period | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| Earnings per | | | | | | | | | | | | |
| share (assuming | | | | | | | | | | | | |
| dilution) | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| Shares | 1,290,352 | | | | 1,290,352 | | | | | | | 1,290,352 |
| outstanding | | | | | | | | | | | | |
| ('000) | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| Earnings per | 0.95 | | | | 0.70 | | | | | | | 0.50 |
| share - pence | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| ADSs outstanding | 430,117 | | | | 430,117 | | | | | | | 430,117 |
| ('000) | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| Earnings per ADS | 4.69 | | | | 3.45 | | | | | | | 2.46 |
| - cents | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
(6.15) Normalised income statement for H1 2010
+-----------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| | | | | | | | | | | | |
| | | | | | Normalised | | | Other | | | |
| | | | Share-based | | incl | | Intangible | acquisition | Linaro | | |
| | | | payments | | share-based | | amortisa-tion | -related | -related | | |
| |Normalised | | | | payments | | | charges | charges | | IFRS |
+-----------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 | GBP'000 | GBP'000 | | GBP'000 |
+-----------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| | | | | | | | | | | | |
+-----------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| Revenues | 192,296 | | - | | 192,296 | | - | - | - | | 192,296 |
+-----------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| | | | | | | | | | | | |
+-----------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| Cost of | (11,595) | | (1,158) | | (12,753) | | - | - | - | | (12,753) |
| revenues | | | | | | | | | | | |
+-----------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| | | | | | | | | | | | |
+-----------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| Gross profit | 180,701 | | (1,158) | | 179,543 | | - | - | - | | 179,543 |
+-----------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| | | | | | | | | | | | |
+-----------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| Research and | (51,558) | | (10,993) | | (62,551) | | (2,002) | - | (272) | | (64,825) |
| development | | | | | | | | | | | |
+-----------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| Sales and | (24,851) | | (3,501) | | (28,352) | | (3,859) | (228) | (116) | | (32,555) |
| marketing | | | | | | | | | | | |
+-----------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| General and | (24,708) | | (2,568) | | (27,276) | | - | - | (850) | | (28,126) |
| administrative | | | | | | | | | | | |
+-----------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| Total operating | (101,117) | | (17,062) | | (118,179) | | (5,861) | (228) | (1,238) | | (125,506) |
| expenses | | | | | | | | | | | |
+-----------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| | | | | | | | | | | | |
+-----------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| Profit from | 79,584 | | (18,220) | | 61,364 | | (5,861) | (228) | (1,238) | | 54,037 |
| operations | | | | | | | | | | | |
+-----------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| | | | | | | | | | | | |
+-----------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| Investment | 1,484 | | - | | 1,484 | | - | - | - | | 1,484 |
| income | | | | | | | | | | | |
+-----------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| | | | | | | | | | | | |
+-----------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| Profit before | 81,068 | | (18,220) | | 62,848 | | (5,861) | (228) | (1,238) | | 55,521 |
| tax | | | | | | | | | | | |
+-----------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| Tax | (22,213) | | 5,584 | | (16,629) | | 2,165 | 64 | 347 | | (14,053) |
+-----------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| | | | | | | | | | | | |
+-----------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| Profit for the | 58,855 | | (12,636) | | 46,219 | | (3,696) | (164) | (891) | | 41,468 |
| period | | | | | | | | | | | |
+-----------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| | | | | | | | | | | | |
+-----------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| Earnings per | | | | | | | | | | | |
| share (assuming | | | | | | | | | | | |
| dilution) | | | | | | | | | | | |
+-----------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| Shares | 1,342,563 | | | | 1,342,563 | | | | | | 1,342,563 |
| outstanding | | | | | | | | | | | |
| ('000) | | | | | | | | | | | |
+-----------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| Earnings per | 4.38 | | | | 3.44 | | | | | | 3.09 |
| share - pence | | | | | | | | | | | |
+-----------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| | | | | | | | | | | | |
+-----------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| ADSs | 447,521 | | | | 447,521 | | | | | | 447,521 |
| outstanding | | | | | | | | | | | |
| ('000) | | | | | | | | | | | |
+-----------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
| Earnings per | 19.68 | | | | 15.45 | | | | | | 13.86 |
| ADS - cents | | | | | | | | | | | |
+-----------------+------------+----------+-------------+----------+-------------+----------+---------------+-------------+----------+----------+-----------+
(6.16) Normalised income statement for H1 2009
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| | | | | | Normalised | | | | | | | |
| | | | Share-based | | incl | | | Other | Disposal | | | |
| | | | compen-sation | | share-based | | Intangible | acquisition | / | Restruct- | | |
| | | | | | compen-sation | | amortisa-tion | -related | impairment | -uring | | |
| |Normalised | | | | | | | charges | of | charges | | IFRS |
| | | | | | | | | | investments | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 | GBP'000 | GBP'000 | GBP'000 | | GBP'000 |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| Revenues | 144,680 | | - | | 144,680 | | - | - | - | - | | 144,680 |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| Cost of revenues | (13,541) | | (742) | | (14,283) | | - | - | - | - | | (14,283) |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| Gross profit | 131,139 | | (742) | | 130,397 | | - | - | - | - | | 130,397 |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| Research and | (44,333) | | (6,264) | | (50,597) | | (4,142) | - | - | - | | (54,739) |
| development | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| Sales and | (23,951) | | (1,987) | | (25,938) | | (4,270) | (228) | - | - | | (30,436) |
| marketing | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| General and | (23,319) | | (1,461) | | (24,780) | | (12) | - | (188) | (1,434) | | (26,414) |
| administrative | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| Total operating | (91,603) | | (9,712) | | (101,315) | | (8,424) | (228) | (188) | (1,434) | | (111,589) |
| expenses | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| Profit from | 39,536 | | (10,454) | | 29,082 | | (8,424) | (228) | (188) | (1,434) | | 18,808 |
| operations | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| Investment | 740 | | - | | 740 | | - | - | - | - | | 740 |
| income | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| Interest payable | (76) | | - | | (76) | | - | - | - | - | | (76) |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| Profit before | 40,200 | | (10,454) | | 29,746 | | (8,424) | (228) | (188) | (1,434) | | 19,472 |
| tax | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| Tax | (10,349) | | 3,405 | | (6,944) | | 3,157 | 64 | 53 | 405 | | (3,265) |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| Profit for the | 29,851 | | (7,049) | | 22,802 | | (5,267) | (164) | (135) | (1,029) | | 16,207 |
| period | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| Earnings per | | | | | | | | | | | | |
| share (assuming | | | | | | | | | | | | |
| dilution) | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| Shares | 1,284,721 | | | | 1,284,721 | | | | | | | 1,284,721 |
| outstanding | | | | | | | | | | | | |
| ('000) | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| Earnings per | 2.32 | | | | 1.77 | | | | | | | 1.26 |
| share - pence | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| ADSs outstanding | 428,240 | | | | 428,240 | | | | | | | 428,240 |
| ('000) | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
| Earnings per ADS | 11.48 | | | | 8.77 | | | | | | | 6.23 |
| - cents | | | | | | | | | | | | |
+------------------+------------+----------+---------------+----------+---------------+----------+---------------+-------------+-------------+-----------+----------+-----------+
Statement of directors' responsibilities
The directors confirm that, to the best of their knowledge, this condensed set
of consolidated interim financial information has been prepared in accordance
with IAS 34 as adopted by the European Union. The interim management report
includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R,
namely:
- An indication of important events that have occurred during the first
six months and their impact on the condensed set of financial statements, and a
description of the principal risks and uncertainties for the remaining six
months of the financial year; and
- Material related-party transactions in the first six months and any
material changes in the related-party transactions described in the last annual
report.
The directors of ARM Holdings plc are listed in the ARM Holdings plc Annual
Report for the year ended 31 December 2009.
By order of the Board
Tim Score
Chief Financial Officer
27 July 2010
Independent review report to ARM Holdings plc
Introduction
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30 June
2010, which comprise the IFRS consolidated income statement, the IFRS
consolidated balance sheet as at 30 June 2010, the IFRS consolidated statement
of comprehensive income, the IFRS consolidated cash flow statement, the IFRS
consolidated statement of changes in equity, and related notes. We have read the
other information contained in the half-yearly financial report and considered
whether it contains any apparent misstatements or material inconsistencies with
the information in the condensed set of financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved
by, the directors. The directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure and Transparency Rules of the
United Kingdom's Financial Services Authority.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with IFRSs as adopted by the European Union. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with International Accounting Standard
34, "Interim Financial Reporting", as adopted by the European Union.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review. This report, including the conclusion, has been prepared for and only
for the company for the purpose of the Disclosure and Transparency Rules of the
Financial Services Authority and for no other purpose. We do not, in producing
this report, accept or assume responsibility for any other purpose or to any
other person to whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information
Performed by the Independent Auditor of the Entity' issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly, we
do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of financial statements in the half-yearly financial
report for the six months ended 30 June 2010 is not prepared, in all material
respects, in accordance with International Accounting Standard 34 as adopted by
the European Union and the Disclosure and Transparency Rules of the United
Kingdom's Financial Services Authority.
PricewaterhouseCoopers LLP
Chartered Accountants
27 July 2010
London
Notes:
(a) The maintenance and integrity of the ARM Holdings plc website is the
responsibility of the directors; the work carried out by the auditors does not
involve consideration of these matters and, accordingly, the auditors accept no
responsibility for any changes that may have occurred to the financial
statements since they were initially presented on the website.
(b) Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in other
jurisdictions.
Notes
The results shown for Q2 2010, Q2 2009, H1 2010, and H1 2009 are unaudited. The
results shown for FY 2009 are audited. The consolidated financial information
contained in this announcement does not constitute statutory accounts within the
meaning of Section 434 of the Companies Act 2006. Statutory accounts of the
Company in respect of the financial year ended 31 December 2009 were approved by
the Board of directors on 31 March 2010 and delivered to the Registrar of
Companies. The report of the auditors on those accounts was unqualified and did
not contain an emphasis of matter paragraph nor any statement under Section 498
of the Companies Act 2006.
The results for ARM for Q2 2010 and previous quarters as shown reflect the
accounting policies as stated in Note 1 to the financial statements in the
Annual Report and Accounts filed with Companies House in the UK for the fiscal
year ended 31 December 2009 and in the Annual Report on Form 20-F for the fiscal
year ended 31 December 2009.
This document contains forward-looking statements as defined in section 102 of
the Private Securities Litigation Reform Act of 1995. These statements are
subject to risk factors associated with the semiconductor and intellectual
property businesses. When used in this document, the words "anticipates", "may",
"can", "believes", "expects", "projects", "intends", "likely", similar
expressions and any other statements that are not historical facts, in each case
as they relate to ARM, its management or its businesses and financial
performance and condition are intended to identify those assertions as
forward-looking statements. It is believed that the expectations reflected in
these statements are reasonable, but they may be affected by a number of
variables, many of which are beyond our control. These variables could cause
actual results or trends to differ materially and include, but are not limited
to: failure to realize the benefits of our recent acquisitions, unforeseen
liabilities arising from our recent acquisitions, price fluctuations, actual
demand, the availability of software and operating systems compatible with our
intellectual property, the continued demand for products including ARM's
intellectual property, delays in the design process or delays in a customer's
project that uses ARM's technology, the success of our semiconductor partners,
loss of market and industry competition, exchange and currency fluctuations, any
future strategic investments or acquisitions, rapid technological change,
regulatory developments, ARM's ability to negotiate, structure, monitor and
enforce agreements for the determination and payment of royalties, actual or
potential litigation, changes in tax laws, interest rates and access to capital
markets, political, economic and financial market conditions in various
countries and regions and capital expenditure requirements.
More information about potential factors that could affect ARM's business and
financial results is included in ARM's Annual Report on Form 20-F for the fiscal
year ended 31 December 2009 including (without limitation) under the captions,
"Risk Factors"(on pages 4 to 11) which is on file with the Securities and
Exchange Commission (the "SEC") and available at the SEC's website at
www.sec.gov.
About ARM
ARM designs the technology that lies at the heart of advanced digital products,
from wireless, networking and consumer entertainment solutions to imaging,
automotive, security and storage devices. ARM's comprehensive product offering
includes 32-bit RISC microprocessors, graphics processors, video engines,
enabling software, cell libraries, embedded memories, high-speed connectivity
products, peripherals and development tools. Combined with comprehensive design
services, training, support and maintenance, and the company's broad Partner
community, they provide a total system solution that offers a fast, reliable
path to market for leading electronics companies. More information on ARM is
available at http://www.arm.com.
ARM is a registered trademarks of ARM Limited. ARM7, ARM9, ARM11, Cortex and
Mali are trademarks of ARM Limited. All other brands or product names are the
property of their respective holders. "ARM" is used to represent ARM Holdings
plc; its operating company ARM Limited; and the regional subsidiaries: ARM Inc.;
ARM KK; ARM Korea Ltd.; ARM Taiwan Limited; ARM France SAS; ARM Consulting
(Shanghai) Co. Ltd.; ARM Belgium Services BVBA; ARM Germany GmbH; ARM Embedded
Technologies Pvt. Ltd.; ARM Norway AS; and ARM Sweden AB.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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