ARM Holdings plc Consolidated balance sheet - IFRS

Transcription

1 ARM Holdings plc Consolidated balance sheet - IFRS 31 December Unaudited Audited m m Assets Current assets: Cash and cash equivalents Short-term deposits Fair value of currency exchange contracts Accounts receivable Available-for-sale financial assets (see note 4) 62.0 Prepaid expenses and other assets (see note 4) Current tax assets Inventories: finished goods Total current assets Non-current assets: Long-term deposits Loans and receivables Available-for-sale financial assets Investment in joint venture Prepaid expenses and other assets Property, plant and equipment Goodwill Other intangible assets (see note 4) Deferred tax assets Total non-current assets Total assets 1, ,466.8 Liabilities and shareholders equity Current liabilities: Accounts payable Embedded derivatives Accrued and other liabilities (see note 3) Finance lease liabilities Current tax liabilities 16.6 Deferred revenue Total current liabilities Non-current liabilities: Deferred tax liabilities 0.7 Finance lease liabilities Deferred revenue Total non-current liabilities Total liabilities Net assets 1, ,206.1 Capital and reserves attributable to owners of the Company Share capital Share premium account Capital reserve Share option reserve Retained earnings Cumulative translation adjustment Total equity 1, , of 13

2 ARM Holdings plc Consolidated income statement IFRS Quarter Quarter Nine months Nine months Unaudited Unaudited Unaudited Unaudited m m m m Revenues Cost of revenues (9.5) (8.3) (30.0) (23.3) Gross profit Research and development (49.9) (39.6) (149.1) (120.0) Sales and marketing (22.5) (17.6) (64.7) (51.7) General and administrative (35.8) (27.4) (137.8) (66.3) Total operating expenses, net (108.2) (84.6) (351.6) (238.0) Profit from operations Investment income, net Share of results of joint venture (1.2) (3.5) Profit before tax Tax (19.8) (14.0) (39.4) (43.3) Profit for the period Earnings per share Basic and diluted earnings Number of shares (millions) Basic weighted average number of shares 1, , , ,373.4 Effect of dilutive securities: Share options and awards Diluted weighted average number of shares 1, , , ,393.6 Basic EPS (pence) Diluted EPS (pence) Diluted earnings per ADS (cents) All activities relate to continuing operations. All of the profit for the period is attributable to the owners of the parent. 2 of 13

3 ARM Holdings plc Consolidated statement of comprehensive income - IFRS Quarter Quarter Nine months Nine months Unaudited Unaudited Unaudited Unaudited m m m m Profit for the period Other comprehensive losses: Unrealised holding loss on available-for-sale financial asset (net of tax of nil)* (1.0) Currency translation adjustment* (43.0) (16.7) (1.6) (22.9) Other comprehensive loss for the period (43.0) (17.7) (1.6) (22.9) Total comprehensive income for the period *These items may be reclassified to profit or loss if certain conditions are met. 3 of 13

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5 ARM Holdings plc Consolidated statement of changes in shareholders equity IFRS Share Share Reval- Cumulative Share premium Capital option Retained -uation translation capital account reserve * reserve** earnings reserve adjustment Total m m m m m m m m At 1 January 2012 (audited) ,061.2 Profit for the period Other comprehensive losses: Currency translation adjustment (22.9) (22.9) Total comprehensive income/(loss) for the nine month period (22.9) 95.4 Shares issued on exercise of share options and awards Dividends (28.8) (28.8) Credit in respect of employee share schemes Movement on tax arising on share options and awards Refund of costs related to share issue *** At 2012 (unaudited) ,165.1 At 1 January 2013 (audited) ,206.1 Profit for the period Other comprehensive losses: Currency translation adjustment (1.6) (1.6) Total comprehensive income/(loss) for nine month period (1.6) Shares issued on exercise of share options and awards Dividends (39.5) (39.5) Credit in respect of employee share schemes Movement on tax arising on share options and awards At 2013 (unaudited) ,331.8 * Capital reserve. In 2004, the premium on the shares issued in part consideration for the acquisition of Artisan Components Inc. was credited to reserves on consolidation in accordance with Section 131 of the Companies Act This capital reserve is clearly distinguished from the share premium arising on shares issued. ** Share option reserve. The share option reserve represents the fair value of options granted on the acquisition of Artisan Components Inc. in *** Refund of costs related to share issue. During 2012, it was confirmed by HMRC that they would not challenge a ruling that the stamp duty incurred on the issue of shares of a UK company to a depositary of clearance system outside the EU was in breach of EU law. ARM was therefore able to claim a full refund of 2.7 million for stamp duty incurred on the issue of shares for the acquisition of Artisan Components Inc. in of 13

6 Notes to the Financial Information (1) Basis of preparation The financial information prepared in accordance with the Group's IFRS accounting policies (consistent with those stated in the financial statements for the year 31 December 2012 with the exception of government grants as described below) comprises the consolidated balance sheets at 2013 and 31 December 2012, consolidated income statements and consolidated statements of comprehensive income for the three months and nine months 2013 and 2012, and consolidated statements of changes in shareholders equity for the nine months 2013 and 2012, together with related notes. This condensed set of consolidated interim financial information for the nine months 2013 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority. This financial information should be read in conjunction with the annual financial statements for the year 31 December 2012, which have been prepared in accordance with IFRSs as adopted by the European Union. Government grants Grants in respect of specific research and development projects are recognised as receivable when there is reasonable assurance that they will be received and the conditions to obtain them have been complied with. They are credited to the income statement in the same period as the related research and development costs for which the grant is compensating. The grant income is presented as a deduction from the related expense. (2) Share-based payment costs Included within the consolidated income statement for the quarter 2013 are total share-based payment costs (including related payroll taxes) of 19.3 million (2012: 11.1 million), allocated 0.5 million (2012: 0.5 million) in cost of revenues, 11.8 million (2012: 6.1 million) in research and development expenses, 3.0 million (2012: 1.8 million) in sales and marketing expenses and 4.0 million (2012: 2.7 million) in general and administrative expenses. Included within the consolidated income statement for the nine months 2013 are total share-based payment costs (including related payroll taxes) of 54.0 million (2012: 29.2 million), allocated 1.5 million (2012: 1.4 million) in cost of revenues, 32.7 million (2012: 17.6 million) in research and development expenses, 8.9 million (2012: 5.1 million) in sales and marketing expenses and 10.9 million (2012: 5.1 million) in general and administrative expenses. (3) Accrued and other liabilities Included within accrued and other liabilities at 2013 are 11.8 million (31 December 2012: 16.5 million) relating to the provision for payroll taxes on share awards, and 19.5 million (31 December 2012: 23.8 million) relating to employee bonus and sales commission provisions. (4) Available-for sale financial assets, prepaid expenses and other assets, and other intangible assets Prepaid expenses and other assets at 31 December 2012 included an advance payment amounting to million, being the Group s contribution to a consortium to acquire rights to MIPS Technologies, Inc s portfolio of patents. This transaction was completed on 6 February Of the Group s total contribution, 62.1 million (after translation at 2013 exchange rates) has been classified within current available-for-sale financial assets and 38.6 million (after amortisation to 2013) has been classified within other intangible assets. The available-for-sale financial asset represents the right to receive cash from the Group's financial interest in the consortium. The other intangible asset consists of intellectual property rights that are being amortised over a period of eight and a half years, being the average remaining life of the underlying patent portfolio. The allocation of the Group s total contribution between available-for-sale financial asset and intangible asset reflected, primarily, ARM s initial expectations of future cash flows from its financial interest in the consortium. Various alternative mechanisms for realising ARM s financial interest in the consortium are under consideration, which might, in future quarters, give rise to changes in the relative and absolute carrying value of the elements. 6 of 13

7 (5) Acquisition On 19 July 2013, the Group purchased the entire share capital of Sensinode Oy for $11.7 million. This purchase has been accounted for as an acquisition. Sensinode, a company based in Oulu, Finland, is a provider of software technology for the Internet of Things (IoT). Sensinode is a pioneer in software for low cost low power internet connected devices and has been a key contributor to open standards for IoT. This acquisition enables Sensinode s expertise and technology to be accessible to the ARM Partnership and through the ARM mbed project it will enable rapid deployment of new and innovative IoT applications. For these reasons, combined with the ability to hire the workforce of Sensinode, including the founders and the management team, the Group paid a premium for the company giving rise to goodwill. All intangible assets were recognised at their fair values, with the residual excess over net assets being recognised as goodwill. The following table summarises the consideration and provisional fair values of the assets acquired and liabilities assumed as at 19 July m $m Cash, accounts receivable and other current assets Intangible assets Accrued and other liabilities (0.5) (0.8) Loans payable (1.1) (1.6) Deferred tax liabilities (0.7) (1.0) Net assets acquired Goodwill Consideration The consideration was all paid in cash. All transaction expenses incurred by the Group have been charged to the income statement. 7 of 13

8 (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, intangible amortisation, share-based payment costs, share of results of joint venture, profit/(loss) on disposal and impairment of available-for-sale financial assets, IP Indemnity and similar charges, and Linaro-related charges. Full reconciliations of Q3 2013, Q3 2012, 9M 2013 and 9M 2012, are shown in notes 6.13 to All figures in millions unless otherwise stated. Summary normalised figures Q Q Q M M 2012 Revenues Revenues ($m) Gross margin 95.1% 94.6% 94.3% 94.6% 94.7% Operating expenses Profit from operations Operating margin 48.6% 44.6% 48.6% 49.2% 45.2% Profit before tax Earnings per share (diluted) p 4.89p 15.30p 10.63p Net cash Cash generation (6.1) (6.2) (6.3) (6.4) (6.5) Q Q Q M M 2012 Revenues ( m) ARM s effective exchange rate ($/ ) Revenues ($m) (6.6) (6.7) September December Cash and cash equivalents Short-term deposits Long-term deposits Less: Interest accrued (6.6) (7.4) Total net cash (6.8) (6.9) (6.10) (6.11) (6.12) Q Q Q M M 2012 cash at end of period (as above) Less: cash at beginning of period (613.1) (495.9) (562.4) (520.2) (424.0) Add back: Cash outflow from advance payment (see note 4) Add back: Cash (inflow)/outflow from investments and acquisitions (net of cash acquired and advance for loans) (9.0) Add back: Cash outflow from investment in joint venture Add back: Cash outflow from acquisition-related charges Add back: Cash outflow from payment of dividends Add back: Cash outflow from share-based payroll taxes Add back: Cash outflow from payments related to Linaro Add back: Cash outflow from IP indemnity and similar charges Less: Cash inflow from exercise of share options and awards (0.9) (2.5) (0.3) (3.7) (4.8) cash generation of 13

9 (6.13) income statement for Q Intangible Share-based incl sharebased amortisation and acquisitionrelated Impairment of availablefor-sale financial Share of results of joint IFRS payments payments charges assets venture m m m m m m m Revenues Cost of revenues (9.0) (0.5) (9.5) (9.5) Gross profit (0.5) Research and development (35.7) (11.8) (47.5) (2.4) (49.9) Sales and marketing (19.3) (3.0) (22.3) (0.2) (22.5) General and administrative (30.6) (4.0) (34.6) (0.8) (0.4) (35.8) Total operating expenses (85.6) (18.8) (104.4) (3.4) (0.4) (108.2) Profit from operations 89.4 (19.3) 70.1 (3.4) (0.4) 66.3 Investment income, net Share of results of joint venture (1.2) (1.2) Profit before tax 92.6 (19.3) 73.3 (3.4) (0.4) (1.2) 68.3 Tax (20.4) (0.3) (20.7) 0.9 (19.8) Profit for the period 72.2 (19.6) 52.6 (2.5) (0.4) (1.2) 48.5 Earnings per share (assuming dilution) Shares outstanding (millions) 1, , ,411.4 Earnings per share pence ADSs outstanding (millions) Earnings per ADS cents of 13

10 (6.14) income statement for Q Sharebased payments incl sharebased payments Intangible amortisation Acquisition -related charges IFRS m m m m m m Revenues Cost of revenues (7.8) (0.5) (8.3) (8.3) Gross profit (0.5) Research and development (32.2) (6.1) (38.3) (0.6) (0.7) (39.6) Sales and marketing (15.6) (1.8) (17.4) (0.1) (0.1) (17.6) General and administrative (24.5) (2.7) (27.2) (0.2) (27.4) Total operating expenses (72.3) (10.6) (82.9) (0.7) (1.0) (84.6) Profit from operations 64.5 (11.1) 53.4 (0.7) (1.0) 51.7 Investment income, net Profit before tax 68.1 (11.1) 57.0 (0.7) (1.0) 55.3 Tax (16.3) 1.8 (14.5) (14.0) Profit for the period 51.8 (9.3) 42.5 (0.5) (0.7) 41.3 Earnings per share (assuming dilution) Shares outstanding (millions) 1, , ,395.9 Earnings per share pence ADSs outstanding (millions) Earnings per ADS cents of 13

11 (6.15) income statement for 9M 2013 incl sharebased payments Intangible amortisation and acquisitio n related charges Impairment of availablefor-sale financial assets IP indemnity and similar charges Linaro related charges and share of results of joint venture Sharebased payments IFRS m m m m m m m m Revenues Cost of revenues (28.5) (1.5) (30.0) (30.0) Gross profit (1.5) Research and development (109.4) (32.7) (142.1) (7.0) (149.1) Sales and marketing (55.4) (8.9) (64.3) (0.4) (64.7) General and administrative (73.6) (10.9) (84.5) (1.3) (3.1) (41.8) (7.1) (137.8) Total operating expenses (238.4) (52.5) (290.9) (8.7) (3.1) (41.8) (7.1) (351.6) Profit from operations (54.0) (8.7) (3.1) (41.8) (7.1) Investment income, net Share of results of joint venture (3.5) (3.5) Profit before tax (54.0) (8.7) (3.1) (41.8) (10.6) Tax (53.0) (0.2) (53.2) (39.4) Profit for the period (54.2) (6.3) (3.1) (32.1) (8.9) Earnings per share (assuming dilution) Shares outstanding (millions) 1, , ,409.8 Earnings per share pence ADSs outstanding (millions) Earnings per ADS cents of 13

12 (6.16) income statement for 9M 2012 Sharebased payments incl sharebased payments Intangible amortisation Acquisition -related charges Linaro - related charges IFRS m m m m m m m Revenues Cost of revenues (21.9) (1.4) (23.3) (23.3) Gross profit (1.4) Research and development (97.2) (17.6) (114.8) (1.7) (3.5) (120.0) Sales and marketing (45.9) (5.1) (51.0) (0.4) (0.3) (51.7) General and administrative (61.3) (5.1) (66.4) - (0.5) 0.6 (66.3) Total operating expenses (204.4) (27.8) (232.2) (2.1) (4.3) 0.6 (238.0) Profit from operations (29.2) (2.1) (4.3) Investment income, net Profit before tax (29.2) (2.1) (4.3) Tax (48.4) 2.8 (45.6) (43.3) Profit for the period (26.4) (1.4) (2.9) Earnings per share (assuming dilution) Shares outstanding (millions) 1, , ,393.6 Earnings per share pence ADSs outstanding (millions) Earnings per ADS cents of 13

13 Notes The results shown for Q3 2013, Q2 2013, Q3 2012, 9M 2013, and 9M 2012 are unaudited. The results shown for FY 2012 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 Statutory accounts of the Company in respect of the financial year 31 December 2012 were approved by the Board of directors on 27 February 2013 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 The results for ARM for Q 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 31 December 2012 and in the Annual Report on Form 20-F for the fiscal year 31 December This document contains forward-looking statements as defined in section 102 of the Private Securities Litigation Reform Act of 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 int 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 acquisitions, unforeseen liabilities arising from 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 31 December 2012 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 About ARM ARM designs the technology that is 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 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 ARM, Artisan, AMBA and Cortex are registered trademarks of ARM Limited. CoreLink, big.little, Mali and POP 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 Limited.; ARM Taiwan Limited; ARM France SAS; ARM Consulting (Shanghai) Co. Ltd.; ARM Germany GmbH; ARM Embedded Technologies Pvt. Ltd.; ARM Norway, AS, ARM Sweden AB, and ARM Finland Oy. 13 of 13