Annual Report and Accounts 2010

2Segmental reporting

At 31 December 2010 the Group was organised on a world-wide basis into three main business segments:

Processor Division (PD), encompassing those resources that are centred around microprocessor cores, including specific functions such as graphics IP, fabric IP, 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.

System 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 CODM 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. Further, the information provided to the CODM is based on normalised profit before tax and therefore this information is provided as well as the equivalent profit stated under IFRS.

The reconciling items: intangible amortisation and other acquisition related charges; share-based payments costs including employers taxes; restructuring and investment related charges are analysed below in addition to an analysis of revenues; operating costs; investment income; interest payable and similar charges; profit/(loss) before tax; tax; profit/(loss) after tax; depreciation; capital expenditure; total assets and liabilities; net assets and goodwill for each segment and the Group in total.

Business segment information

There are no inter-segment revenues. Unallocated operating costs are foreign exchange revaluation on monetary items, including cash and cash equivalents. Unallocated assets and liabilities include: cash and cash equivalents; short- and long-term deposits; available-for-sale investments; marketable securities; loans and receivables; embedded derivatives; fair value of currency exchange contracts; deferred tax balances; current tax and VAT. Capital expenditure comprises additions to property, plant and equipment and other intangible assets, including additions resulting from acquisitions through business combinations.

The results of each segment have been prepared using accounting policies consistent with those of the Group as a whole.

Geographical information

The Group manages its business segments on a global basis. The operations are based in three main geographical areas. The UK is the home country of the parent. The main operations are in the following principal territories:
–Europe
–United States
–Asia Pacific

Analysis of revenue by destination*:

*Destination is defined as the location of ARM’s customers.

The Group’s revenue within the home country of the parent company amounted to £3.8 million and £1.7 million for the years ended 31 December 2010 and 2009 respectively. The Group’s exports from the UK were £391.0 million and £293.2 million for the years ended 31 December 2010 and 2009 respectively.

Analysis of revenue by origin:

*Includes the UK which had total revenues of £394.8 million in 2010 (2009: £295.0 million).

Analysis of revenue by revenue stream:

Analysis of non-current assets (excluding deferred tax assets, goodwill and other intangible assets):

*Includes the UK which had non-current assets (excluding deferred tax assets, goodwill and other intangible assets) of £42.7 million in 2010    (2009: £14.0 million).