ARM Annual Report 2012

ARM Holdings plc
110 Fulbourn Road

Cambridge CB1 9NJ ARM Holdings plc
United Kingdom Annual Report & Accounts 2012
Telephone +44 (0)1223 400400
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www.arm.com
Annual Report & Accounts 2012

ARM Holdings plc
ARM
ARM
We are
connecting
intelligence
ARM
ARM
ARM
More information available online at:

www.arm.com/reporting2012
Overview 01 Financials and risk 45
– Chairman’s overview 02 – Financial review 46
– Operational highlights 04 – Risk management 52
– Financial highlights 05
– Our business model 06
Governance 55
– Chairman’s introduction 56
Our marketplace 08 – Board of directors 59
– Corporate governance 62
– Where the market is now 09
– Directors’ report 73
– Where the market is heading 10
– Remuneration report 78
Strategy and performance 11 Financial statements 92

– Our strategy for long-term growth 12 – Independent auditors’ report to the members
of ARM Holdings plc 92
– Consolidated income statement 94
Our partnership approach 21 – Consolidated statement of
comprehensive income 94
– Warren East, Chief Executive Officer – Consolidated balance sheet 95
Ecosystem strategy 22 – Consolidated cash flow statement 96
– Mobile computing 24 – Consolidated statement of changes
– Machine-to-machine 28 in shareholders’ equity 97
– Network infrastructure 32 – Notes to the financial statements 98
– An external perspective 36 – Company balance sheet/UK GAAP 142
– Notes to the financial statements /UK GAAP 143
– Independent auditors’ report to the members
Our commitment 40 of ARM Holdings plc 149
– Corporate responsibility and sustainability within ARM 41
– ARM’s wider role 42 Glossary and Group directory 150
– Glossary 150
– Group directory 151
– Key shareholder information 152
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Overview Our marketplace Strategy and Our partnership Our commitment Financials and risk Governance Financial statements
performance approach
ARM
We develop and deploy

energy-efficient technology
that gives a smart consumer
product its intelligence.
We have assembled an ecosystem
of leading companies, enabling
them to connect and
collaborate. Together
we are creating some
of the world’s most
innovative products.
Creating shareholder value
ARM processor‑based Profit before tax Normalised profit

chips shipped Revenues under IFRS before tax
8.7bn £577m £221m £277m
1
ARM Holdings plc
Chairman’s
overview Connecting
The Dots
ARM develops and licenses processor and other technology
designs that leading semiconductor companies incorporate
into silicon chips. These chips go into a wide range of mobile,
consumer and embedded electronics that are connecting
people to their friends, their workplace and their personal data.
We are paid a one-off licence fee for a company to gain access
to each design, and we receive a royalty payment for every chip
that contains ARM technology.
2012 Financial summary Success in a challenging environment

During 2012, Group revenue grew 16% ARM is developing and licensing advanced
to $913.1 million (£576.9 million). Revenue technology for the mobile and embedded
Sir John Buchanan growth has enabled us to continue to invest computing markets. Our latest technology is
Chairman in more staff and infrastructure to develop also opening up new markets such as PCs,
and deploy new technology. Balancing servers and enterprise networking, and we
increased revenue growth and investment saw our first design wins in 2012.
plans, we were able to increase the dividend
by 29% to 4.5 pence per share following an ARM is facing well funded competition in these
increase in normalised profit before tax by 20% new markets and also in the smartphone
to £276.5 million. The IFRS profit before tax market where ARM has a high share. ARM
increased by 41% to £221.0 million. and our Partners are continuing to innovate
and develop new technology to make products
2012 Operational highlights that are even more capable in a wide range of
2012 Financial summary consumer and embedded electronic devices.
• ARM signed 110 processor licences as more
companies made commitments to using The ARM team
Licence revenue ($339.3m)
ARM technology in future products The knowledge and creativity of our people
+ 19% • 8.7 billion ARM processor-based chips

reported as sold, representing a 32% share
and the ability to deliver customer satisfaction
in an ever demanding and competitive
environment are all key determinants of our
of the total available market
Royalty revenue ($473.9m) success. We continue to attract outstanding
+ 17%
• Google and Microsoft both announced ARM people and in 2012 we hired a net 276
processor-based mobile computers using additional employees, the majority of them
versions of their PC operating systems and engineers. These new hires were a mix of
application software new graduates and experienced talent from
Other revenues ($99.9m)
all over the world.
+ 7% • ARM’s Cortex-A class processors were

shipped in about 700 million phones,
tablets and TVs
Profit before tax under IFRS
£221.0m
Normalised profit before tax
£276.5m
2
We are living in an increasingly

digitally connected world.
People are connecting together
wherever they go using their
phones and mobile computers.
Board changes Early impressions On a personal note, I would like to thank the
I feel privileged to have been invited to The clear ARM strategy continues to serve the Board, Warren and the leadership team,
become Chairman of this fine company. Group well. The delivery of it shows quality, and all of ARM’s employees for their effective
Doug Dunn announced his plans to retire as as do the leadership, talent development and contribution in 2012. I look forward to
Chairman and a director at the 2011 AGM, strong culture. Innovation thrives through a continuing to work in the ARM team as we
and handed over to me following the AGM wide range of mutually beneficial partnerships. plan, invent, design, deploy and support our
in May 2012. Doug had been on ARM’s Board That is an impressive base. However, we must products and help our Partners create and
from 1998, and served as Chairman since not underestimate the challenges of the wider realise their future ambitions.
2006, giving many years of leadership economic environment nor of the strength
and guidance to CEO Warren East and and quality of the competition in the markets
the ARM executive team. we serve. Sir John Buchanan
In May 2012, Tudor Brown, President, Looking forward
retired from ARM, the company he helped We are living in an increasingly digitally
to found in 1990. Tudor has made an connected world. People are connecting
excellent contribution to ARM, its employees together wherever they go using their phones
and Partners over the past 22 years. and mobile computers. Machines are
Mike Inglis, Chief Commercial Officer, becoming smarter and their connections
retires in March 2013. In his 11 years at ARM, enable more effective control and more
Mike has run marketing and sales, and was efficient energy use. ARM technology is highly
General Manager of the Processor Division. suitable for our Partners to take advantage
Young Sohn, non-executive director, also of these trends. We intend to develop and
stepped down from the Board in December deploy the right technology to maximise the
2012 to take up an executive position outside benefit for our Partners, communities,
the Group. shareholders and employees.
The Nomination Committee is actively seeking
new candidates as independent non-executive
directors with in depth knowledge and
experience of the technology sector.
Doug, Tudor, Mike and Young leave with our
deep thanks and good wishes for the future.
3
ARM Holdings plc
Operational
highlights Progressing
our strategy
ARM introduced its latest 64-bit processor technology, which Read more on page 32
opens up new markets such as computing, enterprise networking

and servers. 15 companies have licensed this technology including
AMD, AppliedMicro, Broadcom, Calxeda, Cavium, HiSilicon,
NVIDIA, Samsung and STMicroelectronics.
ARM maintained a >95% market share of smartphones and Read more on page 14
tablets, with shipments of its most advanced Cortex‑A family

processors increasing by more than 100% year-on-year.
Shipments of ARM‑based processors in non‑mobile devices grew Read more on page 15
25% in the year, driven by increasing penetration in digital TVs,

microcontrollers and wireless networking chips.
Microsoft launched Windows 8/RT, its latest PC operating system Read more on page 24
which now includes support for ARM processor-based chips.
ARM’s Mali 3D graphics processor shipments increased Read more on page 18
three‑fold year-on-year with important design wins in

the Samsung Galaxy SIII and Hisense digital TV.
ARM announced advanced physical IP to accelerate the Read more on page 18
implementation of ARM’s processors and graphics processors on

next generation manufacturing processes to 14nm and below.
4
Financial
highlights Another year
of growth
Revenues £m/$m
08 298.9 546.2
09 305.0 489.5
10 406.6 631.3
11 491.8 785.0
12 576.9 913.1
Revenues £m Revenues $m
ARM’s revenue growth is sustained by our customers incorporating ARM technology in more of their product lines.
Operating expenses £m
08 169.5 206.1
09 186.2 233.9
10 219.0 273.6
11 245.9 315.2
12 284.2 336.9
Operating expenses under IFRS Normalised* operating expenses
ARM is increasing investment in the development and deployment of technology.
Operating margin %
08 20.1 32.7
09 15.0 31.2
10 26.3 40.4
11 30.3 45.1
12 36.1 45.6
Operating margin under IFRS Normalised* operating margin
Continued financial discipline drives ARM’s profitability.
Earnings per share pence
08 3.39 5.66
09 3.11 5.45
10 6.36 9.34
* Normalised figures are based on IFRS, adjusted
11 8.19 12.45
for acquisition-related charges, share-based
payment costs, profit or loss on disposal and 12 11.51 14.70
impairment of available-for-sale investments,
restructuring charges, share of results in joint Diluted EPS under IFRS Normalised* diluted EPS
ventures and Linaro™-related charges. Revenue growth and margin expansion drive higher earnings per share.
5
ARM Holdings plc
Our business
model How AND where
we make money
ARM is the world’s leading semiconductor intellectual
property (IP) supplier. The technology we design was at the
heart of many of the digital electronic products sold in 2012.
ARM has an innovative business model. We license our
technology to a network of Partners, mainly leading
semiconductor manufacturers. Our Partners incorporate
our designs alongside their own technology to create
smart, energy‑efficient chips suitable for modern
electronic devices.
Our business model When the chip starts to ship, ARM receives a royalty
ARM designs technology to go into energy-efficient on every chip that uses the design. Typically our royalty
chips for a broad range of end-markets. ARM licenses is based on the price of the chip.
each design to multiple semiconductor companies. Each ARM design is suitable for a wide range of end
Every company pays an upfront licence fee to gain applications and so can be reused in different chip
access to the design. families addressing multiple markets. Each new chip
The semiconductor company will incorporate the family generates a new stream of royalties. An ARM
ARM technology design into their chip. It can take design may be used in many different chips and may
2–3 years to build a chip and a further year for an OEM ship for over 20 years.
to build their product, such as a digital TV or mobile ARM’s flexible business model has proven to be suitable
phone, containing the chip. for different technologies, end products, licensing
strategies and a broad range of ecosystem partners.
Business development
ARM
technology to Partner SemiCo OEM
ARM
Licence Partner Customer
fee
OEM sells consumer products
Per chip
royalty
Partner develops chips
6
Why semiconductor companies Technologies that are suitable How ARM creates value
use ARM technology for the ARM business model ARM endeavours to recover its costs from the
ARM designs technology that would be ARM’s licensing business started in the early licence revenues of each technology, leaving
difficult and expensive for our Partners’ R&D 1990s with the development of our first the majority of royalties to be reinvested back
teams to develop for themselves. It is cheaper processor. The processor is like the brain of into the business or to be returned to
for them to license the technology from ARM the chip; it is where the software runs and it shareholders. Over the medium-term, we
than to develop it internally. controls the functionality of the product. ARM expect ARM to become more profitable as
designs each processor to be applicable to a our partners design our technology into a
The design of a processor or a library of broad range of end‑markets to maximise the broader range of end-markets.
physical IP requires a large amount of R&D number of Partners that can license each
investment and expertise. We estimate that processor and to maximise the number of As our customers are the world’s largest
a major semiconductor company would need markets in which the Partner can deploy semiconductor manufacturers, their regular
to spend over $100 million every year to that technology. royalty payments have become a reliable cash
reproduce what ARM does. This represents flow. ARM’s business model is strongly
more than $20 billion of annual costs for the In most years ARM introduces 2–3 new cash generative.
industry. By designing once and licensing many processor designs. Over the past 10 years,
times, ARM spreads the R&D costs over ARM has developed other technologies
the whole industry, making digital suitable for a licensing and royalty business
electronics cheaper. model, such as graphics processors and
physical IP components. Both of these
technologies are now widely licensed and are
delivering royalty revenues.
Our global markets ARM revenue by location of customer

The majority of ARM’s revenues are earned from 2012 2011 Rest of North Asia
semiconductor companies that are based all over the £m £m UK Europe America Pacific
world. These companies sell their ARM‑based chips
1%10% 38% 51%

to OEMs building consumer electronics, which are UK 5.5 1.5
also based in all major economies. The OEMs sell Rest of Europe 58.7 59.5
their products to consumers and enterprises in every
North America 217.1 189.5
country. ARM’s royalty revenues are derived from
the chips in these OEM products, and ARM therefore Asia Pacific 295.6 241.3
benefits from the growth in all economies and
countries around the world.
Demand for consumer products has been growing Consumer products by destination
rapidly, especially in emerging markets such as Brazil Consumer Automotive
and China. Handsets Electronics Computers Multimedia
Europe 20% 28% 25% 22%

North America 23% 23% 31% 19%
Asia Pacific 41% 31% 32% 46%
Rest of the World 16% 18% 12% 13%
Source: GfK Digital World, produced by GfK in association with the Consumer Electronics Association of the USA.
ARM employees by location
UK 42%
Rest of Europe 12%
North America 24%
Asia Pacific 22%
7
ARM Holdings plc
ARM
We benefit from
long-term growth
markets from mobile phones to
computers and smart sensors
to energy-efficient servers.
Our technology is connecting
the world together, where
every electronic device can
communicate with another.
In this section
Where the market is now Read more on page 9
Where the market is heading Read more on page 10
8
Where the
market is now
The semiconductor industry develops computer chips that
control all of the world’s electronic devices. PCs, mobile phones
and even modern washing machines have some form of computer
chip providing their intelligence. Each generation of chip is smarter
than its predecessor, enabling more capable and more efficient
consumer and embedded products.
Overview of a semiconductor Disaggregated industry Where ARM fits within the industry
A semiconductor, or silicon chip is the The semiconductor industry has disaggregated ARM is the global leader in the design of
electronic controller that manages many into specialist companies that focus on each semiconductor IP components that form some
of the digital devices that we use every day. stage in the creation, design and manufacture of the critical elements within System-on-Chip
Computers, mobile phones, televisions, of a silicon chip (see diagram below). This designs. ARM is best known for its family of
washing machines and cars all can contain allows each company to invest and innovate processor designs that are used in a range of
many silicon chips. Also many enterprise in an area where they can add the most applications from mobile phones to car
and industrial applications are made smarter expertise in the value chain. braking systems.
and more efficient by silicon chips, from
sensors to servers. Some companies specialise in designing the There are a handful of other IP component
chip; other companies specialise in designing designers that mainly specialise in
In 2012, about 650 billion silicon chips were critical IP components within the design; complementary areas. Their IP can often
manufactured. Of these about 27 billion others in building the tools needed to be found alongside an ARM processor in
contained a processor. The processor is the manufacture the chips; others in the chip the same chip design.
brain of the chip, and controls not just the fabrication; and others in developing
operation of the chip, but also the operation software, such as operating systems and apps. ARM works closely with the semiconductor
of the product that chip goes into. All of these companies work closely ecosystem to ensure that its technology works
together as a single ecosystem of partners. well with other companies’ products, and that
ARM processor designs were in about Each collaborates with the others as if they a silicon chip designer can quickly build a
8.7 billion chips, a 32% market share. were a single organisation. low-power and high-performance chip, and
The remaining market share mainly consists an OEM can create complex programs using
of our customers’ own processor designs. In 2012, there were over 1,000 companies a combination of third-party and in-house
ARM gains share when our customers in ARM’s Connected Community®. operating systems and applications.
outsource their processor design. ARM shares knowledge, experience and
innovations with these companies, enabling As silicon chip designs become more complex
greater collaboration. it is expected that the semiconductor industry
will continue to license semiconductor IP.
As the global leader, ARM is well-positioned
Our disaggregated industry to benefit from this trend.
100s of chip 1,000s 1,000,000,000s

design companies of OEMs of consumers
<10 IP <10 Tools <10 <10 1,000s of

Operating 1,000s of service
specialists providers Fabricators application developers
Systems providers
9
ARM Holdings plc
Mobile computing in 2017
Where the market

3 billion
Analysts forecast that the market for mobile
is heading
computers, including smartphones and Trends within the semiconductor industry and its
tablets, will nearly double over the next five
years, to about 3 billion devices. marketplace are bringing new opportunities and new
competitive threats.
Mobile computing – connecting us Internet of Things – connecting billions Efficient networking – moving more
to each other, and our data of smart sensors data, without using more energy
Mobile phones have been getting smarter Advances in manufacturing technology are With mobile computing connecting us to each
and more capable. No longer just connecting enabling the creation of new low-cost smart other, and increased machine-to-machine
us via telephone calls and text messages, sensors. These devices usually combine three communications between smart sensors, it
smartphones can now send email, browse main elements: is forecasted that internet traffic will increase
the internet and allow us to engage with 18 fold between 2011 and 2016*. As IT and
our friends on social networking sites. • one or more environmental sensors communications equipment is already using an
Meanwhile PCs have been getting smaller (temperature, pressure, yaw, pitch etc.); increasing proportion of the world’s energy,
and lighter, with a longer battery life, and such an increase is not sustainable.
better connectivity. The mobile phone • a smart computer to process the data
and PC markets are converging, enabling gathered by the sensor; and Network operators and data centre
us to connect more easily to each other, managers are now looking for lower power
• a wireless radio to connect the smart sensor technology to better transport, distribute,
and to our personal and workplace data.
to the internet. analyse and store data across the internet.
This convergence is bringing new
opportunities and threats for the industry. This is leading to increased levels of
Data gathered from these sensors can then experimentation and innovation as companies
In October 2012 Microsoft launched their be collated anywhere in the world enabling try to cope with increased demand for data
Windows 8 operating system. Previous remote monitoring of the sensors such as: throughput, without having to increase the
versions of this operating system were energy required.
targeted at the PC market and only supported • Industrial automation where factory
the x86 architecture. Microsoft Windows 8 ARM technology-based System-on-Chip
equipment in a region can be monitored designs are well placed to provide lower
extended the market for their Operating from a head office
System to include other consumer electronics power options for enterprise applications
such as tablets and digital TVs, and also • Home automation where appliances in such as servers and networking equipment.
included support for chips based on the the home can be monitored and controlled
ARM architecture. Read more on page 32
by the home owner wherever they are
This enables ARM-based chips to enter the
PC market, including laptops and desktop Collectively these technologies are referred
PCs, but also enables companies making chips to as the “Internet of Things”. These smart
for PCs to more effectively compete in the sensors need to be very low-cost (the chips
mobile market. within them often cost less than $1) but they
could be deployed in very high volume.
Read more on page 24
* Cisco Visual Networking Index Feb 2012.

10
ARM
Our strategy is to
develop technology for
long-term growth markets,
enabling our Partners to
connect with both emerging
trends and established
high-volume markets.
Together we meet the
needs of our Partners’
customers and create
value for our shareholders.
In this section
ARM
Increase market
penetration Read more on page 14
Increase value per smart

electronic device Read more on page 17
Generate additional royalties

from complementary
technology Read more on page 18
Reinvestment and
shareholder return Read more on page 19
11
ARM Holdings plc
Our strategy for

long-term growth
ARM’s strategy is for our technology to continue to gain
market share in long-term growth markets, such as mobile
phones, tablets, consumer electronics and embedded
digital devices, and to increase the value ARM receives
from each device, including developing new technologies
that can generate additional royalty revenue.
Our three growth drivers:
1 Increase market
penetration
2 Increase value per smart

electronic device
3 Generate additional royalties

from complementary technology
= Reinvestment and
shareholder return
12
More ARM technology-based

products can be found on our
Pinterest gadget guide:
pinterest.com/ARMLtd/
arm-holiday-gadget-guide-2012/
KPIs:
ARM has achieved a more than 95% • Building the base of licences that • Increasing market penetration in
penetration of mobile handsets. will drive future royalties target end-markets
As other end-markets require smarter • Growing the number of
processors, we expect ARM technology ARM processor-based chips
to become more penetrated in other
application areas.
As consumer products become smarter • Increasing the value that ARM receives

they often contain multiple ARM for every smart device sold
processor-based chips, increasing our
royalty opportunity. Smarter phones and
TVs can generate 5–10 times more royalty
than a basic model.
ARM has introduced complementary • Developing and licensing

technologies which we believe are suitable new technology to generate
for R&D outsourcing and can command an additional royalty streams
up-front licence fee and an ongoing royalty.
ARM’s financial discipline balances the need • Investing in ARM’s product • Growing normalised operating
for continued investment to generate development and margins, EPS, cash generation
long-term future growth, whilst increasing deployment capability and dividends
today’s profitability and shareholder returns.
13
ARM Holdings plc
1 Increase market
penetration
Every licence represents the opportunity for
a future royalty stream. In recent years ARM
has added about 100 processor licences per
About a quarter of the deals signed in 2012
were signed with companies taking their first
ARM processor licence. The majority of these
year to its existing base of licences. In 2012, new Partners are established semiconductor
we signed 110 processor licences taking the companies choosing ARM technology for
licensing base to more than 950 licences. the first time. As the trend towards smarter
This growth in the number of licences signed products gains pace, so semiconductor
KPI is largely due to existing customers upgrading companies are finding ARM technology
Building the base of their ARM processor to the next generation; instrumental in helping them gain share in
existing customers choosing to deploy ARM
licences that will drive technology into another part of their product
an increasingly competitive marketplace.
future royalties portfolio; and new customers taking their first The future opportunity
ever ARM processor licence.
ARM expects that its customers will
Our Partners are planning to develop chips continue to re-equip their R&D teams with
for a broad range of end-markets from the the latest processors for existing product lines.
simplest of microcontrollers to the most In addition, ARM’s technology is becoming
advanced servers. These include: increasingly relevant to growing markets
such as sensors, computers and servers,
• internet connected consumer devices such leading to more new customers taking
as digital TVs, mobile phones and mobile their first ARM licence.
computers;
• deeply embedded products such as
microcontrollers, sensors and smartcards;
and
• enterprise applications such as networking
and servers.
ARM licences
08 +61
09 +87
10 +91
11 +121
12 +110
ARM signed 110 processor licences in 2012, taking the total number of processor licences signed to 954.
Internet connected devices Number of licences signed by end-market Number of licences signed by processor type
Mobile 29% ARM7/9/11 4%

Embedded 25% Cortex-A family 32%
Enterprise 17% Cortex-R family 8%
Home 13% Cortex-M family 37%
Multiple* 16% Mali 15%
Other** 4%
More than half of the licences signed in 2012

were with companies intending to develop a chip
for smartphones, tablets or digital TVs.
* 16% of licences were signed with companies **Other includes architecture and subscription licences.
intending to use ARM technology in multiple
end‑markets.
14
In 2012, ARM’s customers reported 8.7 billion The future opportunity

chips shipped, a 9% increase over 2011. By ARM expects unit shipments and royalty
comparison, the industry declined 2% in the revenues to grow faster than the
equivalent period.* This demonstrates ARM’s semiconductor industry as ARM continues
increasing relevance to equipment to gain market share. Shipments of ARM
manufacturers as they choose ARM processor‑based chips are growing most
processor‑based chips over chips containing rapidly in microcontrollers as several major
KPI proprietary processor designs. semiconductor vendors ramp into full
Growing the number ARM’s total market share rose to 32%, up production, and also in mobile computing
of ARM processor- from 29%† in the prior year. The mobile phone products such as smartphones and tablets.
based chips was the first consumer electronic device
where ARM processor‑based chips started to
be widely deployed. In 2012, ARM
processor‑based chips could be found in more
than 95% of the world’s mobile phones. ARM’s
Partners sold 4.6 billion chips into mobile
devices, driven by the growth in the number
of smartphones and mobile computers.
ARM has been seeing rapid adoption of its
processor technology into markets such as
digital TVs and microcontrollers. Overall
ARM’s Partners sold 4.1 billion chips into
non‑mobile devices, an increase of
approximately 20%, year-on-year.
* Source – Gartner, January 2013.
Excludes memory and analog chips.
† Market increased since 2011.
Now includes Enterprise Networking.
Shipments of ARM processor-based chips bn
08 4.0
09 3.9
10 6.1
11 7.9
12 8.7
ARM Partners reported the highest ever number of ARM processor-based chips shipped in 2012.
ARM processor-based chips shipped Chip shipments by end-market Chip shipments by processor type 2012*
8.7bn
Mobile 53% ARM7 36%
Embedded 26% ARM9 21%
Enterprise 16% ARM11 9%
Home 5% Cortex-A Family 9%
Cortex-R Family 3%
Cortex-M Family 22%
ARM processor-based chips
* Nearly all Mali graphics processors were in chips

containing a Cortex-A family processor.
15
ARM Holdings plc
ARM has increased market penetration into Digital TVs 45%

each of its key end‑markets in mobile phones, As digital TVs become smarter they are more
set‑top boxes and digital TVs, disk drive likely to need an ARM processor-based chip.
controllers and microcontrollers. ARM has In a smart TV these chips can run the
announced new technology developments operating system and applications.
that will position our customers to enter
markets such as computers, servers and Microcontrollers 18%
KPI medical devices. The microcontroller and connected sensor
Increasing market Mobile phones >95%
market is highly fragmented and OEMs
penetration in target For many years, mobile phones have used
are increasingly requesting that their
semiconductor suppliers use a common
end-markets ARM processor‑based chips in most of the processor architecture. ARM is often the
applications processors and baseband modems. choice as it is a suitable architecture that
Networking 35% is available to all semiconductor suppliers.
Most of ARM’s share is in WiFi routers The future opportunity
in homes and businesses. ARM has seen
All of these target end‑markets have promising
increased design activity in enterprise
long‑term growth prospects and ARM’s
networking, but we do not expect the
market share gains look set to continue as
first shipments until 2013.
many of ARM’s Partners have announced
new products in these areas.
Market penetration
Mobile Digital Micro
phones Networking TVs controllers
Year (%) (%) (%) (%)
08 95 15 25 5
09 95 15 30 5
10 95 20 35 8
11 95 25 40 15
12 95 35 45 18
ARM has gained share in all its target end‑markets. Market share is calculated as the penetration of ARM
processor-based chips as a proportion of chips estimated to contain some form of processor technology.
Market data from Gartner, January 2013.
Mobile phones Microcontrollers Enterprise networking
More than 95% of mobile phones contained ARM processor-based microcontollers are In 2012, several Partners announced ARM
at least one ARM processor-based chip. embedded computers used in everything from processor-based chips for use in enterprise
white goods to industrial automation. products such as networking and servers.
16
2 Increase value per smart

electronic device
Sales of chips into smart devices such as
smartphones and high‑end digital TVs
generate higher royalty revenue than basic
The future opportunity
ARM expects that as consumer electronic
devices become smarter they will incorporate
phones and TVs. more chips that could be ARM
Typically, ARM’s royalty revenue per device technology-based. Some of these chips
can increase the smarter the device gets. may be based on the Cortex‑A family of
processors, thus generating higher royalty
KPI Smarter devices may generate more royalty
revenue per device.
revenue because they may contain:
Increasing the value that
ARM receives for every • more chips than basic models;
smart device sold • more expensive chips than basic models; and
• more advanced ARM technology that
commands a higher per-chip royalty.
During 2012, the total number of smartphones

sold increased by 45%.* We also saw sales of
ARM processor‑based mobile computers, such
as tablets, grow to 160 million. In this period,
shipments of ARM’s advanced Cortex‑A family
of processor more than doubled to 765 million.
Cortex‑A processors typically command a
higher percentage per-chip royalty than
previous ARM families, which helped ARM’s
dollar royalty revenue to grow by 17% despite
the overall industry declining by 2%.*
* Gartner, January 2013.
ARM value per mobile phone (indexed to 2008)
08 1.00
09 0.85
10 1.00
11 1.13
12 1.18
ARM royalty per mobile phone has continued to increase.
Smartphones Cortex-A family processors
A typical smartphone can contain multiple chips

75%
About 75% of all smartphones had a Cortex-A
based on an ARM processor. family processor in the main chip.
17
ARM Holdings plc
3 Generate additional
royalties from
During 2012, ARM continued to develop
new technologies that are suitable for
licensing to leading semiconductor companies,
Physical IP for advanced manufacturing
processes
ARM develops physical IP for use by leading
complementary and for generating additional royalty streams semiconductor companies that manufacture
in the future.
technology chips using advanced manufacturing processes.
Multimedia IP for 3D gaming and ARM is already the leading physical IP provider
KPI HD video and is well placed as semiconductor companies
increasingly outsource manufacturing to
Developing and licensing Many consumer electronic devices are utilising ARM’s foundry Partners.
3D graphics and High‑Definition (HD) video
new technology to to improve the visual experience and make During 2012, ARM saw strong licensing,
generate additional games more engaging. Mobile phones, digital especially for advanced processes, signing
royalty streams TVs and computers are familiar, but other nine foundry platform licences for ARM’s
applications such as cars, media players and physical IP that will drive future royalty
navigation devices are emerging. revenues. In addition, ARM signed 17 licences
for POP IP (pre-configured physical IP
During 2012, ARM signed 17 Mali graphics IP components) which assist Partners
licences, and leading technology companies implementing ARM processors.
such as Google and Samsung launched
computing, mobile and consumer electronics The future opportunity
devices incorporating chips based on ARM’s With a growing base of customers just starting
multimedia IP. to sell their chips in high quantities, we expect
that the number of chips enabled by ARM’s
physical IP and Mali graphics technology will
continue to grow in the future.
Physical IP revenues ($m)
08 44.6 40.3
09 35.9 36.2
10 41.3 43.8
11 49.2 48.7
12 52.2 56.2
Physical IP Licensing
Physical IP Royalty
Physical IP penetration into smartphones Mali graphics growth in 2012 Mali graphics processors with Cortex-A processors
40%
Application processors in smartphones that
5.5x
ARM’s partners reported a 5.5 fold increase in
20%
One in five chips containing a Cortex-A family
were developed with ARM’s physical IP. the shipments of Mali processor-based chips. processor also had a Mali graphics processor.
18
= Reinvestment and
shareholder return
ARM specialises in designing innovative
technology and developing a sophisticated
community of Partners to bring that
The future opportunity
ARM expects to continue to invest in its
employees as we develop our engineering
technology to market. Our people are our capability and operational execution.
strength for designing the next generation As ARM technology is designed into more
of technology, delivering it to our customers, end-markets, we expect the business to
and for growing and maintaining the ARM become more profitable.
KPI Partnership. ARM invests in our employees
Investing in ARM’s through hiring a mix of graduates and
seasoned industry experts, developing them
product development and providing a supportive culture to maximise
and deployment capability their capability and potential.
In 2012, ARM hired an additional net 276
people. The majority of our new hires were
engineers, to increase our R&D capability.
Most of this investment was in our processor
and multimedia engineering teams to take
advantage of the opportunities for new
ARM technology in servers, computing
and 3D graphics.
ARM also invests in the infrastructure our
engineers need to develop and test complex
technology. In 2012 we opened our new
data centre, which hosts our development
tools and test software.
Read more about our data centre on page 42
Number of employees at year-end
08 1,071 1,740
09 1,024 1,710
10 1,191 1,889
11 1,382 2,116
12 1,652 2,392
Number of engineers
Total employees
Investing in R&D
69%
The majority of new employees
in 2012 were engineers
Approximately two thirds of ARM’s employees

are engineers, supporting our customers and
developing new technology.
19
ARM Holdings plc
ARM’s business model and exposure to During 2012, ARM generated £267.3 million of
structural growth markets means that ARM cash, up 31% over the prior year. The increase
is well positioned to grow its profitability, to in cash generation is primarily due to the
generate cash and to support a progressive increase in revenue. Since 2004, ARM
dividend. ARM intends to cover most of its has returned £496 million of cash
operational costs from the licence revenues of to shareholders through a combination
each new technology. This leaves the majority of share buybacks and dividends. In 2012 ARM
KPI of royalties as profits. increased the dividend by 29% to 4.5 pence.
Growing normalised In 2012, ARM’s financial discipline focused The future opportunity
operating margins, investment in areas of maximum opportunity
As royalty revenues become a greater
EPS, cash generation such as the recruitment of more engineers to
proportion of ARM’s overall revenues,
develop the next generation of technology.
and dividends ARM’s profitability and cash generation
As our customers are the world’s largest is expected to increase.
semiconductor manufacturers, their regular
royalty payments have become a reliable cash
flow. Given our broad base of Partners and
end‑markets, ARM is not overly reliant on any
one company or consumer product for its
future profits and cash.
Operating margin % Earnings per share pence

08 20.1 32.7 08 3.39 5.66
09 15.0 31.2 09 3.11 5.45
10 26.3 40.4 10 6.36 9.34
11 30.3 45.1 11 8.19 12.45
12 36.1 45.6 12 11.51 14.70
Operating margin under IFRS Diluted EPS under IFRS

Normalised* operating margin Normalised* diluted EPS
Normalised net cash generation** £m Dividend per share pence

08 95.3 08 2.20
09 86.1 09 2.42
10 179.9 10 2.90
11 203.8 11 3.48
12 267.3 12 4.50
* Normalised figures are based on IFRS, adjusted for acquisition-related charges, share-based payment costs,
profit or loss on disposal and impairment of available-for-sale investments, restructuring charges, share of
results in joint ventures and Linaro™-related charges.
**Normalised net cash generation is defined as movement on cash, cash equivalents, short-term and
long-term deposits, adding back dividend payments, investment and acquisition consideration, restructuring
payments, other acquisition-related payments, share-based payroll taxes, payments to joint ventures and
Linaro, and deducting inflows from share option exercises and investment disposal proceeds.
20
We have created a
unique community of
companies to deliver smarter
technology. This ecosystem
connects hundreds of
companies who work
together to develop
solutions and services
around ARM products.
In this section
Ecosystem strategy Read more on page 22
Mobile computing Read more on page 24
Machine-to-machine Read more on page 28
Network infrastructure Read more on page 32
An external perspective Read more on page 36
21
ARM Holdings plc
Ecosystem Connecting Intelligence:

strategy
Internally and Externally
In 2012, 8.7 billion ARM processor-based chips were shipped,
going into many of the consumer, industrial and enterprise
electronic products sold last year. We have achieved this breadth
by developing the ARM ecosystem, a network of more than one
thousand companies building products around a common
platform. We pour effort into nurturing this ecosystem, and have
developed an internal culture and organisational structure that
encourages leaders who can manage complex teams, enabling
everyone to contribute their creativity, for the mutual success
of all concerned.
Employing about 2,400 people, ARM has For the business to succeed we want to see
29 offices around the world, including design the number of ARM technology-based chips
Warren East centres in the UK, China, Taiwan, France, continue to grow. Our business model means
Chief Executive Officer India, Norway, Sweden, and the US. Any that this requires our Partners succeed too
company which has people distributed across and hence we do not limit the connectivity
so many regions and time zones will find it and idea-sharing to just within the company.
challenging to get those teams working About half our commercial team,
effectively and efficiently together. As with approximately 150 people, are tasked with
most companies, we need to achieve a balance forming connections with our external
between regional autonomy and centralised ecosystem; with our customers and other
processes and policies. At ARM we emphasise influential market leaders across the
cross-company communication, thinking value-chain. We link with semiconductor
and decision making. Our leadership team vendors and manufacturers, OEMs and
dedicates effort to keeping conversations operators, hardware and software tools
flowing within and between our various sites developers, OS and apps developers, and
ARM brings its Partners together in a series and functional teams. We use internal TV content and service creators. As well as
of conferences throughout the year. streams, video conferencing and social media connecting these companies to ARM, we
to ensure ideas can flow across the company. also bring them together to encourage
Face-to-face meetings remain one of the most interconnectivity, either in small meetings
effective means of sparking new innovations, or in a series of Partnership conferences
and there are regular cross-company that we host throughout the year. Our main
engineering and functional conferences Partner conference is held in August. We invite
so our people are well versed in the latest more than 500 senior managers from across
advances and able to think laterally and to our ecosystem to the ARM Partner Meeting in
spot opportunities for new technology. Cambridge – a series of presentations and
small group meetings to exchange plans and
ideas for the future. In 2013, we are further
investing in the ARM Connected Community,
facilitating new ways for our Partners to
connect, collaborate and create.
22
Our partners trust us to leave

them the space and freedom
to add value, by differentiating
their products, investing in their
businesses and making profits for
their shareholders.
Connections between companies can only The improved people-to-people connectivity With more consumers connecting together
result in creativity when there is trust. is now being taken a step further, and we are using smartphones and mobile computers,
Where appropriate, our Partners share seeing more machine-to-machine connections. and even machines interconnecting across vast
with us their product roadmaps, business This interconnection between the physical networks, the planet’s data requirements will
plans and market intelligence so we can help and digital worlds is creating an “Internet of continue to spiral upwards, along with the
create the technology to take them forward. Things”, where smart sensors can enable energy requirements to enable all that data
They trust us to leave them the space and communication, measurement and control to move around. ARM and our Partners are
freedom to add value, by differentiating their from anywhere in the world. This evolution working to develop the right technology to
products, investing in their businesses and requires multiple technologies to come contribute towards sustainable connectivity in
making profits for their shareholders. together, and the ARM ecosystem is well the future. These opportunities are potentially
suited to the challenge given the breadth huge; CISCO has forecasted that by 2050
Over the next few pages, we explain how and diversity within it. there will be over a trillion connected devices
the ARM ecosystem is developing new in use worldwide. We are helping our Partners
technology that will help to make the world This sharing of data between individuals and and their customers to prepare for this
a better place for everyone. Smartphones between devices will significantly increase the demand, to the benefit of their shareholders
and mobile computers, such as tablets, have data bandwidth requirements across existing and our own.
quickly become established as the primary, mobile networks and internet infrastructure.
go-to device in our modern lives. Nearly all of IT equipment already accounts for an
these have an ARM processor in the main chip, increasing proportion of global energy use,
but with many different companies integrating and operators are seeking to provide Warren East
their technology alongside the ARM processor, increased data bandwidth, but at much greater
creating a rich and diverse set of products and levels of energy efficiency. This is unlocking
services for consumers and companies alike. exciting new markets and opportunities for
ARM and ARM’s Partners to build smart,
low-power technology.
23
ARM Holdings plc
Engage with ARM on

our Facebook page:
http://www.facebook.com/
ARMfans
Mobile
computing
Always Connected.
Always On.
Always With Us.
Over the past five years mobile computing has changed the way
that consumers and workers interact with each other, with their
data, and with the services they use. Smartphones, and then
tablets, have become the primary, go-to devices for many people
– always connected, always on, and always with you. This has
been enabled by increases in performance and capability,
without compromising energy-efficiency.
2012 saw another plethora of new devices 2012 saw the first mobile devices with
and applications launched, and consumers’ quad-core processors, the first computers
habits are shifting to take advantage of the with chips based on our Cortex-A15
functionality they bring. Gone are the days technology, and we also saw rapid adoption
when telephone calls were the primary of both LTE handsets and higher resolution
function of mobile phones. Increasingly emails displays putting mobile devices at the forefront
are being read on mobile devices, rather than of improving user experience. The net result
desktops. 60% of one billion Facebook users is evident in the marketplace today as tablets
access their accounts from their mobile. are expected to outsell laptops in 2013.
Laurence Bryant (top) Apps developers have seen a 100% growth
in revenues over the past year. ARM’s technology is at the core of these
Director of Mobile Solutions
devices. Scores of our semiconductor
Laurence has led ARM’s Mobile Segment Marketing 2012 was also marked by the real beginning of Partners are developing low-power ARM
team since 2009. He and his team maintain the post-PC era, as the mobile device became technology-based chips. OEMs can then
relationships throughout the mobile value chain, the primary computer enabled by major develop the high-performance, energy‑
including influential handset OEMs, network
operators and major software developers for advancement in hardware performance and efficient devices that give users the highly
mobile devices. innovative operating systems that changed mobile and high quality devices they expect.
consumer behaviour. The launches of the Software developers are taking advantage
Microsoft Surface, Nexus 10 and Google of the breadth of form factors, based on
Roy Chen (bottom) Chromebook are blurring the lines around the ARM architecture, to create new types
Director of Client Computing what a conventional personal computer is. of applications, services and experiences.
Roy joined ARM in 2007. His primary role is to work
with leading OEMs and to help connect them into
the rest of the ARM ecosystem of semiconductor
and software vendors.
24
Follow ARM on twitter:

@ARMCommunity
@ARMEmbedded
@ARMMobile
@ARMSoC
@ARMjobs
In the past three years the capability of mobile China remains an extremely exciting market Mobile technology is creating unparalleled
devices has accelerated. In 2009 most and a source of new products, manufacturing opportunities for people and businesses
new smartphones had a single-core ARM ideas and consumer trends. In 2013, we expect across the world. Over the next few years,
processor. Today almost all high end that sales of tablets in China will outstrip the up to one billion more people will get their
smartphones are dual-core, and many are combined sales in the rest of the world. ARM first mobile phone or tablet and become
now moving to quad-core processors. In 2013 has found that its ecosystem approach is highly “connected”. Meanwhile the information
we expect to see multiple chipset solutions compatible with China’s approach to business and services available to the billions that are
with a quad-core processor becoming and over 130 Chinese Partners now belong already connected will continue to increase.
available for entry-level smartphones, and we to the ARM Connected Community. The challenge for ARM and our Partners
also expect the first shipments of chips based is to continue to develop and deploy
on our innovative big.LITTLE technology. It is not just established economies that are high-performance, low-power technology
big.LITTLE uses an asymmetric multi-core benefiting from mobile devices. The social that will enable this explosion in connectivity
processor that can adjust to dynamic and economic benefits of mobile phones and content sharing as we all enjoy the benefits
computing needs by switching tasks between across Africa are already hard to overstate. of a mobile society.
different cores within the processor. This Smartphones are becoming tools for accessing
smart approach means the right processor is health services, receiving information (eg crop
used for the right task, giving consumers more information for farmers, weather reports for
battery life as well as more performance. fishermen) or starting a business. Educators
worldwide, including those in emerging
We have also seen the penetration of Mali, markets, are working with tablet devices that
ARM’s graphics processor, grow to more than are well suited for today’s fast-paced, modern
20% of Android smartphones and over 50% learning environments. Digital versions of
of Android tablets worldwide. Mali powers textbooks, with interactive and visual tools
advanced computer games, and innovative for teachers, appeal to the preferences of
user interfaces that help make mobile devices increasingly connected students.
interactive and easy to use. Developers of
computer games often launch new titles on
mobile devices before they are available on
traditional platforms, a trend we expect will
accelerate as the resolution of mobile devices
exceeds that of traditional platforms.
25
ARM Holdings plc
Smartphones and tablets

have become the primary,
go-to devices for many
people – always on, always
connected and always
with you.
Laurence Bryant
Director of Mobile Solutions, ARM
NVIDIA® Tegra 3™
NVIDIA’s Tegra 3 was the first quad‑core
mobile processor based on ARM Cortex‑A9
technology. It enables new mobile applications,
new experiences, more robust multitasking,
higher quality gaming, and faster web‑browsing.
The combination of high‑performance
quad‑core Cortex‑A9s with a fifth Cortex‑A9
optimised for power consumption enables
Tegra 3 to deliver higher performance and
longer battery life than previous generation
single- and dual‑core devices.
26
Microsoft Surface
Surface with Windows RT delivers a
compelling experience for consumers and
enterprises who need a device that is great
for both entertainment and productivity.
Surface is thin and light, has great battery life
and offers a great integrated experience across
Microsoft devices. It is powered by NVIDIA®
Tegra™ 3 processor, which is based on a
quad‑core ARM® Cortex™-A9 processor.
The challenge for ARM and our

Partners is to continue to develop
and deploy high-performance,
low-power technology that will
enable this explosion in connectivity
and content sharing as we all enjoy
the benefits of a mobile society.
Roy Chen
Director of Client Computing, ARM
27
ARM Holdings plc
Developers share and discuss

ideas on the ARM-based
LinkedIn page:
www.linkedin.com search
for “ARM based group”
Machine-
to-machine
The Internet of
Things: Connecting
the Machines
The market for embedded computers is one of the fastest
growing opportunities for ARM and its Partners. It includes
deeply embedded chips going into automotive, industrial and
medical applications, and provides the intelligence that will enable
the “Internet of Things”. ARM processor-based chips span from
ultra low-power microcontrollers up to embedded computing.
This enables a huge breadth of use cases including in-vehicle
entertainment systems, anti-lock braking devices, intelligent
lighting, smart washing machines and so on.
Eight out of the world’s top 10 leading semiconductor manufacturers use ARM technology
to develop microcontrollers. In 2012, leading microcontroller vendors announced new
ARM-based microcontrollers including:
Atmel Ultra low-power microcontrollers for NXP Low-power microcontrollers for office
industrial automation, smart grid, and lighting systems
building and home control
Gary Atkinson (top) Freescale Kinetis chips for machine-to-machine Renesas Connected applications demanding
communication and network connectivity high-speed data processing and a
Director of Embedded Computing
human-machine interface
Gary Atkinson joined ARM in 2010 to lead the
development of ARM’s strategy in embedded chips Fujitsu Up to 500 new ARM processor-based ST High-performance microcontrollers
in automotive applications, smartcards and microcontrollers for industrial, home for utility metering, renewable energy,
microcontrollers.
appliance and medical applications and healthcare
Ian Thornton (bottom) Infineon Microcontrollers for digital power Toshiba Microcontrollers for smart meters
VP Marketing conversion in solar invertors and the
automation of manufacturing applications
After 12 years at ARM, Ian is currently responsible
for ARM’s ecosystem development. He is also head
of corporate communications and investor relations.
28
Read more from the

technologists at ARM
in their blogs:
blogs.arm.com/
The ARM partnership model enables silicon intelligence to even smaller, lower cost Innovative companies are connecting together
vendors to focus on bringing their unique chips. We believe that this extra intelligence networked intelligent sensors and are creating
competencies to bear in the creation of combined with additional connectivity, brings new business models, products and services
optimised, differentiated solutions that address the possibility of new products with huge for individuals, communities and industries.
diverse market needs. ARM technology implications for efficiency and innovation. Many of these networks will utilise ARM
scales across performance points, enabling The Internet of Things is the concept processor-based chips.
a standard architecture across multiple where everything has both intelligence
and connectivity – this is directly enabled ARM is proactively working to lower the
application types for software reuse. barrier to innovation in the Internet of
This allows OEMs to reduce their software by efficient, low-cost, low-power ARM
microcontrollers. Things. We founded the “Internet of Things
development costs by sharing software Association” forum to ensure interoperability,
costs and expertise across multiple Environmental sensors, networked together, and are also promoting the Weightless
product lines. In addition to reducing costs, can give an overview of temperature, pressure standard for low-power, long distance
ARM processor-based microcontrollers and humidity in a home, office, vehicle wireless data communications.
offer significant energy efficiency benefits or construction site. Personal sensors,
compared to older, proprietary designs. networked together, can inform medical Together with our Partners, we are paving
professionals on an individual’s health by the way towards unimaginable connections
ARM technology can already be found in measuring such things as activity levels, in many future Internet of Things applications.
billions of embedded microcontroller chips, heart rate and glucose levels.
providing additional smartness to products
that have traditionally been fairly dumb. In
2012, we announced Cortex-M0+, our
smallest and most power-efficient processor
to date. This processor brings greater
29
ARM Holdings plc
“As a new high-tech company, we combine

the best technologies to create a genuinely
innovative solution to a decades-old problem.
We work with established and well respected
companies such as ARM and ST, and that gives
us an excellent embedded platform to monitor
and log power switching performance.”
Bryn Parry
Founder, Amantys
Richard Ord, Marketing Director,

Amantys talking to Ian Thornton,
VP Marketing, ARM
“We use an ARM Cortex-M processor-
based chip because it is becoming ubiquitous
in industrial electronics. We chose
STMicroelectronics’ STM32 chip because it is
proven to be reliable even in the extreme
environments that our products can go into
– from wind turbines in the North Sea to
electrical systems in locomotives.”
Richard Ord
Marketing Director, Amantys
30
STMicroelectronics STM32 F1 series

The STMicroelectronics STM32 F1 series
incorporates a high-performance ARM
Cortex-M3 processor, high-speed
embedded memories, and an extensive
range of enhanced peripherals and I/Os.
The chip efficiently operates in temperature
ranges from –40 to +105 °C, making it
suitable for a wide range of applications
in environments where robust technology
is required.
Amantys Power Drive

Amantys is an independent design and
manufacturing company of innovative medium
and high voltage, power electronic switching
products. They combine advanced digital
control techniques with power system designs
to monitor and control the switching of power
devices. The first application of the technology
is for wind turbines. Future applications
include motor drives, traction control, electric
and hybrid vehicles, UPS, transformers and
HVDC infrastructure.
31
ARM Holdings plc
Network Huawei™ BTS3900 is a compact macro

infrastructure Base Transceiver Station which features a
large capacity and good extensibility, and
is small and lightweight. It is integrated
with HiSilicon’s Hi1380, the industry’s first
eight core ARM Cortex-A9 network SoC.
The platform provides innovative
multicore technology, which allows it to
address global market opportunities with
highly competitive solutions. The Hi1380’s
high-performance and low-cost meets the
need of GSM/UMTS/LTE base stations.
A Fully
Connected World
The server and enterprise networking markets must evolve to
be more power and cost efficient to realise the vision of a fully
connected world. With the current cost and availability of energy,
IT infrastructure cannot meet the needs of the next billion users,
or the evolving needs of currently supported users.
In some companies, especially where “data As energy consumption has become more
is the business”, the servers generate the important to network operators, ARM and
revenue and are also the source of much our Partners are helping them create lower
of the organisation’s cost. Such companies power servers and networking equipment.
include social networking businesses, and One way to reduce power consumption in a
online retailers. Unlike more general-purpose complex system design is to create a highly
platforms that are deployed in conventional integrated chip that features the appropriate
enterprises, these servers run one specific combination of heterogeneous processing,
application. Reducing the acquisition cost storage and networking functionality. In the
of the server infrastructure and improving last few years we have seen the first design
the system’s efficiency directly impacts wins for ARM technology in integrated
the company’s bottom line. Systems-on-Chip within both servers and
enterprise networking equipment. ARM’s
Smartphones and tablets are becoming our Cortex-A family of processors have enabled
primary compute devices and this is putting some of our Partners to build multi-core chips
a huge demand on mobile infrastructure, that deliver higher performance at lower
the vast networks that enable consumers’
Lakshmi Mandayam (top)
mobile devices to be always on and always
power than existing chips used by the industry.
Director of Server Systems
connected, worldwide. Current demand for In networking equipment, this can be seen
With ARM since 2008, Lakshmi has focused on the data is forecast to multiply 18-fold between by the adoption of ARM processors by
enterprise market including networking and mobile 2011 and 2016*, yet much of the present semiconductor companies such as Cavium,
infrastructure. Recently she also started to manage infrastructure is not scalable or able to adapt. Freescale, Huawei, LSI, Mindspeed and
ARM’s server initiative.
This presents a key challenge for network Texas Instruments, with software support
operators. They need to deliver high quality, by Montavista and Wind River.
Ian Ferguson (bottom) competitively priced services and higher
VP of Segment Marketing bandwidth for an increasing density of
subscribers, against a background of rising
Ian joined ARM in 2007, and led the strategy to open
energy costs.
up the server market for the adoption of ARM
technology. In January 2013, Ian took over managing
ARM’s segment marketing team.
* Cisco Visual Networking Index Feb 2012.

32
Join ARM at our Google+

hangouts where we discuss
new technologies and markets:
plus.google.com/+arm/posts
In servers, a broad range of semiconductor 2013 will also be an important year for ARM
companies including AMD, AppliedMicro, in server technology. We expect to see the
Calxeda, Marvell and Texas Instruments first 32-bit ARM powered servers go into full
have announced ARM processor-based chips. production. We expect the first prototype
A server ecosystem around ARM technology- 64-bit ARM processor-based chips and
based servers is beginning to develop with hardware platforms to be available. Initially,
platform announcements from Boston, Dell, these will be deployed to leading server
HP, MiTAC and ZT Systems. In 2012, Dell companies and to third-party software
started shipping ARM technology-based developers. In 2012, companies such as Oracle
servers with Marvell’s quad-core Armada XP and Red Hat released new Java and Linux
SoC products. HP’s Moonshot platform and technologies for ARM technology-based
Houston-based Discovery Lab will enable servers and in 2013, the Linaro Enterprise
the development of ARM technology-based Group is well placed to advance software
server applications. HP cites the potential standards so more companies can benefit
of the ARM technology-based server from ARM’s ecosystem approach.
architecture solution to use 89% less energy,
94% less space and 63% less cost. In the future, the demands on IT infrastructure
such as servers and enterprise networking
In 2013, we will see more ARM technology- equipment and mobile infrastructure will
based mobile infrastructure start shipping into continue to increase. With energy costs
energy-efficient macro base stations. We can already rising, IT departments know that they
also look forward to new types of products need to deliver more for less. ARM and our
such as small-cell base stations which can be Partners have connected together to enable
more cheaply deployed where mobile data equipment manufacturers to design new
coverage is challenging, whether in rural, or classes of low-power products to meet these
less developed areas or densely populated challenging demands. The ARM ecosystem is
metropolitan areas. reshaping IT and operator economics and
meeting the needs of business in a fully
connected world.
33
ARM Holdings plc
In 2013 we expect to see the first 32-bit ARM

powered servers go into full production.
We also expect the first prototype 64-bit
ARM processor-based systems to be available,
which will accelerate the efforts by our
Partners in the software ecosystem.
Ian Ferguson
VP of Segment Marketing
Calxeda EnergyCore
The Calxeda EnergyCore ECX-1000 Series
is a family of Server-on-Chip products
that brings the power efficiency of ARM
processors to the data centre. By tightly
integrating these hardware and software
capabilities together with ARM processors and
I/O subsystems, each ECX-1000 SoC delivers
the scalability and intelligence needed for
building the industry’s most power and
space-efficient server clusters.
34
The server and enterprise networking

markets must evolve to be more power
and cost-efficient to realise the vision
of a fully connected world. With the
current cost and availability of energy,
IT infrastructure cannot meet the needs
of the next billion users, or the evolving
needs of currently supported users.
Lakshmi Mandayam
Director of Server Systems
Boston Viridis
The Boston Viridis is a self contained, highly
extensible, 48 node ultra low-power cluster
of quad-core ARM® Cortex™-A9 and
Cortex-M3 powered server processors
(that feature on-chip high-speed interconnect)
within a standard single 2U rack.
35
ARM Holdings plc
An External
Perspective
Leadership and strategy

in the age of business ecosystems
The ARM processor had its origins in the late 1980s. A small British company, Acorn,
developed the technology whilst working on a quasi-public computer project for schools,
funded by the BBC. After the ARM processor was adopted by Apple for the Newton
PDA, the 12 founders were spun out of Acorn into a small start up. With little money and
few resources they decided to collaborate and work together with other companies who
wanted to use their design. These early decisions set the values and the business model
for the Company more than 20 years later. The business model then and today is to make
available intellectual property that enables other companies to work together to create
successful digital products. ARM’s values include leveraging a relatively small number of
employees, seeking to help ARM Partners grow into successful enterprises and helping
link these companies together into an ecosystem where each gains from the strength
Dr. James F. Moore of the others.
Academic and author
Obviously ARM and its business ecosystem are effective by any conventional business
measure. Today ARM is a relatively small company, employing about 2,400 people
worldwide – and yet it leads a business ecosystem comprising many of the world’s
About the author largest technology companies. As we will see, ARM does this by respecting its Partners
Dr. James F. Moore has studied and taught leadership
and strategy in business ecosystems for three decades. and learning from them, as well as teaching. As one ARM executive told me recently,
He is the author of the seminal book on the subject, “we don’t know everything and we don’t want to – if we did we would require far more
The Death of Competition (HarperCollins 1996). than 2,400 people. We want to rely on others. We get better specific leadership from
He conducted research at Stanford and Harvard,
and has advised leaders of many of the world’s top our Partners, and we are free to focus on what we do best – which includes helping to
technology organisations. connect Partners across our ecosystem.”
36
Leading a business ecosystem requires

championing the shared purpose of
the community, creating opportunities
for members to strategise and to act
as an ecosystem.
Leading a business ecosystem requires championing the shared purpose of the

community, creating opportunities for members to strategise and act as an ecosystem,
helping members meet and do business, and assisting them in their work together.
ARM promotes a vision of its ecosystem as a place for collaboration and shared learning:
“A better world, all together.” “We see a world where billions of people can collaborate
and connect every day.” “We work alongside the world’s technology companies fostering
a vibrant, diverse ecosystem, unleashing the creativity of many, providing market
opportunities for all.”
ARM and its Partners jointly strategise and act. Joint strategy making – and the
transparency required – is facilitated because at the highest level of discussion ARM
believes in the sharing of total ecosystem revenues and profits with its Partners.
ARM argues that for an ecosystem to succeed as a whole, the members need to thrive.
This opens the door to recognising the ecosystem itself as an asset and a public good, and
to working with Partners to maximise business for all. The ARM ecosystem provides a
living critique of other ecosystems where the dominant players take most of the profits.
Some processes for joint strategy-making are ARM-centric, with ARM either leading the
conversation or making a platform for others. The annual discussion schedule revolves
around an invitation-only Partners meeting in the summer and an open technology
conference later in the autumn. These events punctuate the near-constant strategic
conversations and initiatives active among members. ARM executives tell stories of being
influenced by others in these exchanges. One of my favourite stories is from the early
years of ARM, when a major Partner wanted chips for mobile phones. This company
suggested that ARM limit its processor to a 250 milliwatt budget for electrical power –
tiny by computer standards – and asked that ARM learn how to double the processing
capability of chips every 18 months while keeping power constant. Of course ARM
could have rejected this technology strategy but, by embracing it, ARM learned how
to do sophisticated power saving in advance of its competitors. This in turn helped the
entire ecosystem to succeed with small devices of all kinds, and energy efficiency is
today one of ARM’s most distinctive competencies. A current strategic collaboration
that will improve energy efficiency further is ARM’s joint work with foundries, such as
GLOBALFOUNDRIES, Samsung and TSMC, on developing the most advanced, small-
feature-size chips using FinFET (also called “3D Transistor”) manufacturing technology.
37
ARM Holdings plc
In 2010 ARM helped launch Linaro,

an open source software
not-for-profit organisation
which enriches the software
toolkit for Android phones.
www.linaro.org/
There are also ecosystem-centric strategic processes that ARM fosters. For example,
in 2010 ARM helped launch Linaro, an open source software not-for-profit organisation
which enriches the software toolkit for Android phones. By summer 2012 the results
looked pretty impressive, with a reported 100% performance improvement for the
Android 4 operating system*. ARM and its Partners are active in establishing these kinds
of initiatives where the ecosystem can benefit.
Leading a business ecosystem means enabling Partners to make business deals between
themselves to further their own interests and to succeed. This “connecting the dots” –
as one ARM person calls it – is critical to the ARM business model. ARM’s intellectual
property is of value only if it can be made into chips that succeed in devices. And ARM
does neither itself. So it creates an environment that helps companies come to
agreements between themselves. For example, as part of the activity to break into
the mobile computing ecosystem, ARM created a formal programme to introduce
its semiconductor and software Partners to OEMs and ODMs in China and Taiwan.
This helped to accelerate the learning for both groups on how ARM technology could
be used in tablets and laptops. To create a catalyst for entry into both the microcontroller
and server markets – two markets at polar opposites of the compute spectrum –
ARM encourages its ecosystem by investing in start-up companies to pioneer
into these emergent markets.
Multiple members of the ARM team told me the Company intentionally “leaves room for
others to differentiate on the chip.” This is another way of expressing the ARM value of
joint wealth creation and shared fruits. Chip customers can mix and match designs for
technology elements and combine them on one chip, buying the intellectual property
for the elements from any of several sources, and then working with these sources
and ARM and a foundry to make the combination succeed. Currently the parts that
can be combined within the Systems-on-Chip are going beyond the typical
microprocessor and graphics and becoming quite varied. This puts ARM continually
in the middle of complex business action, helping as chip capabilities are designed
and simulated, fabricated and tested.
* L ucian Armasu, June 2012

http://www.androidauthority.com/linaro-android-is-up-to-twice-as-fast-as-stock-android-92831/
38
Several features of the ARM ecosystem stand out. The first is that the stance that ARM
people take towards the others around them is remarkably humble. ARM has an agenda;
it has points of view and a strong identity. But at the core of that strength is a willingness
to learn, to give and take, and to share in the service of the ecosystem. Humility is a
surprising characteristic in a technology company – and even more interesting in a highly
influential and profitable leader of a fast-growing business ecosystem. When did you last
hear an executive in a technology company say that he or she wants the company to stay
compact? That the company doesn’t want to solve every problem, and wants to leave
room for other companies to invest and become profitable? That is not to say that
companies don’t focus – they do – but they don’t talk about it in this way. This stance is
reinforced with remarkable consistency in ARM’s actions – they have limited their size,
they do learn from others, and they are open to new Partners – and they have Partners
who thrive.
My second observation is that the values ARM expresses and the ecosystem that has
resulted are well-adapted to the world that is unfolding. There was a business era when
only large integrated semiconductor companies could supply what the world needed.
But over time this changed. Scientific knowledge spread from large companies to open
communities, seeded by entrepreneurial individuals working peer-to-peer, university
labs, and the “open source” and DIY social movements to share technology. Integrated
companies in some cases aided this movement where it suited them, for example
licensing advanced technologies, supporting open standards initiatives, and spinning off
divisions into new industry-serving foundries. Within this radically open environment
the barriers to entry for device makers are very low. Those wanting chips today find
themselves with an enormous range of choices – but they need fundamental designs,
they need standards, they need to share resources such as foundries with others –
and most of all they need help connecting the dots, making their own personal
ecosystems successful. ARM provides access to these.
My third observation is that ARM’s success depends on maintaining trust across the
ecosystem. ARM’s stated strategy is to grow by expanding the success of the collective
ecosystem, and not by squeezing its Partners or taking away their businesses. This approach,
documented in history, helps assure current and prospective Partners that they will be
treated fairly. Face-to‑face, ARM professionals are connectors, problem solvers and
facilitators. As one person pointed out, in many cases ARM professionals have worked
with their counterparts in other companies for years – people have track records of
commitments met, of help given and of successful outcomes. Hundreds of management
studies demonstrate the value of trust to businesses, especially in conditions of uncertainty,
and when working across group, organisational and professional lines. One of the limits one
can see to business ecosystems is their ability to keep up with change in society, science
and technology. However when I consider the ARM ecosystem I’m optimistic, given its
willingness to reward Partners, to embrace new ideas and to maintain a culture of trust.
ARM’s success depends on maintaining trust

across the ecosystem. ARM’s stated strategy
is to grow by expanding the success of the
collective ecosystem, and not by squeezing
its partners or taking away their businesses.
39
ARM Holdings plc
We are committed
to connecting
sustainability with every
element of our business,
integrating it as a
central part of our
long-term success.
In this section
Corporate responsibility
and sustainability within ARM Read more on page 41
ARM’s wider role Read more on page 42
40
Overview Our marketplace Strategy and Our partnership Our Financials and risk Governance Financial statements
performance approach commitment
Our
commitment Creating a More
Connected and
Sustainable Society
From smart meters helping people to manage energy in their homes
to digital controllers making wind turbines more productive, ARM
technology is changing the way we use resources. Products containing
our technology are connecting everyone together, enabling people
and machines to use resources more efficiently. Whilst no single
company can deliver on technology’s potential in solving sustainability
issues, ARM’s low-power processors and ecosystem business model
are enabling us to play an increasingly important role.
Corporate responsibility and (Project Diamond) which acts as a

sustainability within ARM communication channel with the Group-wide
decision making body, the Energy Use and
Our approach is to integrate sustainability and Climate Change Committee (EUCCC).
corporate responsibility into the core business. The EUCCC decides which ideas should
We focus on increasing the power efficiency of be proposed at a corporate level. Everyone,
products containing our technology as well as from recent graduates to the Chief Operating
on how these products can have a positive Officer, is included in this process with major
global impact. decisions going up to the highest level in
the Group.
ARM’s new data centre is the first in the world Within ARM’s operations, our priorities are to:
to be awarded the CEEDA Gold certification “Our people are our most important asset”
for its energy efficiency. is an over-used and often incorrect statement
• continue building and retaining an – but it is true for ARM as a company that
exceptional team; depends on the continual development of
• act with integrity in our interactions intellectual property. ARM is still a small
with all stakeholders; company relative to its global influence.
This means that we place great importance
• support charitable and sustainability initiatives on ensuring that our culture endures and our
where ARM can add real value; and ability to innovate remains strong.
• continue reducing our environmental impact. This is especially so given ARM’s success and
the need to develop our team. Our workforce
Corporate responsibility (CR) and governance grew by more than 10% in 2012 and further
at ARM are established and reach throughout growth is anticipated during 2013. By the end
the Group. The Board underpins ARM’s of 2012, ARM employed 2,392 people with
sustainability and CR strategies, receiving operations in 13 countries. A clear indication
of the importance ARM places on its global
updates twice a year. The associated
team can be seen in the provision of the
committees develop the Group’s CR strategy
same benefits and policies to all our full and
and ensure a good flow of information and
For further information please refer to our full
part-time staff, wherever they are located.
ideas around the business. Our local offices
report on ARM’s corporate responsibility:
also develop their own priorities within the To sustain ARM’s success, we need strong
strategy established for the Group and report internal networks and a company culture
back into the committees. For environmental that is maintained at all levels of the business.
issues, local teams (the Green Teams) feed This is achieved through intensive technical
ideas and priorities into a central committee conferences and effective team building
activities.
41
ARM Holdings plc
From the two-week Global Graduate Alongside our growing team, another ARM’s direct environmental impact is low.
Conference to the ARM Leadership consequence of ARM’s success is an increase Emissions come only from energy use in
Programme for those in senior positions, we in our data-processing requirements. We offices, our data centres and flights. The Ethical
focus on training and personal development needed more processing power to help us Investment Research and Information Service
for all employees. As ARM continues to design the next generation of processors and (EIRIS) has graded ARM as an environmentally
evolve, leadership plays an increasingly so, in 2012, we completed a new data centre “Low Impact” business. Nevertheless during
important role at many levels by aligning in Cambridge. Our goal was to provide 2010 we set the target of reducing our CO2
people, purpose and performance. scalable computing power with the lowest emissions per employee by 30% before 2020
environmental impact possible. and we are confident of making significant
These programmes are already achieving progress over the next twelve months.
results. Figures from the 2012 Interim Global The new facility has become the first data
Employee Opinion Survey show that leaders centre in the world to be awarded a gold ARM’s wider role
at ARM feel more confident and their teams CEEDA (Certified Energy Efficient Data We have the opportunity to develop
consider them more in tune with ARM’s values Centre Award) for its energy efficiency, with technology that can really improve people’s
and culture. a projected annualised efficiency ratio (PUE) lives and global sustainability. Our technology
of well below 1.1. This sets the standard for is bringing even more capability to the mobile
all ARM’s future data centre projects and computers that we carry with us every day.
demonstrates our company-wide commitment In 2012 we introduced big.LITTLE, an innovative
to energy efficiency and carbon reduction. approach to ensuring that the processor uses as
Corporate Responsibility at ARM
Local office Team

Green Teams ARM
Charitable
Donations and
Project
Sustainability
Diamond
Committee
CR (CDSC)
Team
Energy Use and Climate

Change Committee (EUCCC)
Executive Committee
Holdings Board
42
Overview Our marketplace Strategy and Our partnership Our Financials and risk Governance Financial statements
performance approach commitment
little power as possible to perform a given task. It is for innovations like big.LITTLE that ARM We are supporting a variety of research
ARM’s big.LITTLE technology is a combination has been recognised by Forbes as one of the projects to improve understanding of how
of our Cortex-A15 and Cortex-A7 processors. most innovative companies in the world. our technology and ecosystem might be able
Combined they deliver twice the performance It also demonstrates why we are seen as to support a more energy-efficient future.
of today’s smartphones, but with up to a 70% being central to the future of energy-efficient
power saving. technology. In 2012 the Smart Electronics ARM is partnering with the Carbon Trust
Initiative (SEI) identified ARM as a clear on a project to model the global energy and
Read more on page 25 innovator in energy-efficiency and asked us carbon reduction potential of introducing our
to help them bring a new wave of efficiency low-powered chips into computer servers.
innovation to California. Their goal is to The research will look at a number of different
ARM technology is also enabling a new maintain the state’s energy consumption at the scenarios with different assumptions and will
generation of lower power server and current rate of 30% below the US average. also use measured data from some prototype
networking products, helping network ARM technology-based servers.
operators and infrastructure providers SEI is putting a spotlight on the huge
operate more efficiently. At the other energy-efficiency savings that new consumer We have continued our collaboration with
end of the spectrum, the frugal and tiny electronic devices (such as set-top boxes, The American Council for an Energy
Cortex-M0+ processor has great potential computers and televisions) can have in cutting Efficient Economy (ACEEE), supporting the
to deliver on the promise of the Internet of over 20% of the current energy consumption development of their 2012 Intelligent Efficiency
Things and the smart cities of the future. drawn from appliance use. SEI, ARM and report. This has led to a new research project
some of our Partner companies are working exploring how smart appliances can reduce
Read more on page 28 with California policy-makers to expand energy consumption. In 2013, the ACEEE will
the research, design, manufacture and sale bring together a wide range of experts to
of more efficient products both in state quantify the impact that smart connected
and around the globe. appliances can have on achieving a sustainable
energy future.
Our CR programme for 2012 continued
to focus on energy-efficiency as well as on
Information Communication Technology
as an enabler for economic development
and growth in developing countries. To find out more visit:
www.smart-electronics.org
&
http://aceee.org/research-report/e125
Team ARM is a programme that helps

strengthen our values and culture whilst
raising funds for charities through
employee-led events. 2012 has been a
great year, raising over £100k through
employee led activities, helped by
matched funding from ARM.
43
ARM Holdings plc
Information Technology has a key role to play Literacy Bridge develops low-cost technology ARM is committed to building sustainability
in international development and Information aimed at alleviating poverty. At present, considerations into every element of our
Communication Technology for Development Literacy Bridge is focusing on poor subsistence commercial activity. We expect our
(ICT4D) has become a focus for farming communities in Northern Ghana contribution to a more sustainable world to
Non-Governmental Organisations (NGOs) where its Talking Book device, that is based prove central to our future success.
and the United Nations. Unfortunately the around ARM’s technology, helps deliver key
results promised by technology often do not agricultural information to farmers. With the
materialise. One reason for this is that next generation of this device, Literacy Bridge
hardware and supporting systems fail as they hope to expand into areas such as health
are designed for countries with extensive and education, and also to other countries.
infrastructure and reliable grid power
connectivity. This section intends to provide a brief
overview and examples of our CR and
To understand how technology might be sustainability activities in 2012.
designed more appropriately for use in
developing countries, we have formed a
partnership with Inveneo, a NGO focussed Our full 2012 Corporate Responsibility
Report is published on our website at
on delivering appropriate technology to those www.arm.com/reporting2012
who need it most. Through its ICT Works
programme, Inveneo is gathering information
on why IT systems tend to fail during
charitable projects in developing countries.
The intention is to use this analysis to catalyse
the development of new products that will
better meet the needs of individuals and
organisations.
ARM and Literacy Bridge are entering into a
Literacy Bridge develops low-cost
strategic three year partnership. Over this
technology aimed at alleviating poverty.
period we hope that our collaboration will ARM and Literacy Bridge are entering
help improve the health and livelihoods of into a three year partnership.
more than 100,000 people.
To find out more visit:

www.inveneo.org
&
www.literacybridge.org
44
Overview Our marketplace Strategy and Our partnership Our commitment Financials Governance Financial statements
performance approach and risk
ARM’s approach is to

connect our business model,
strategy, and financial and
risk management. This enables
us to grow our profits
and OUR returns to
shareholders.
In this section
Financial review Read more on page 46
Risk management Read more on page 52
45
ARM Holdings plc
Financial review
Our financial
discipline
Balancing revenue growth and increased investment in the
business has led to increased profit before tax and higher
returns to shareholders.
Financial performance Record profitability and strong cash generation

This review discusses the Group’s results underpin growth in dividends. Normalised
against our key financial performance cash generation for the Group in 2012 was
indicators, being revenues, profit, earnings £267.3 million (2011: £203.8 million) and the
per share and cash generation, and provides directors are recommending payment of a
information on our treasury and tax strategies. total dividend of 4.5 pence per share in respect
of 2012, representing an increase of 29%
During 2012, we achieved record revenues year-on-year.
and profits at the same time as increasing
investment in both our research and Over recent years, ARM has acquired a number
development capability and the business of companies giving rise to the recognition of
Tim Score infrastructure that underpins our growth. intangible assets other than goodwill. These
Chief Financial Officer Licensing revenues reached new highs in are amortised over their expected useful lives,
the year as our existing and new customers with the cost recorded against research and
deploy ARM technology across a broadening development, sales and marketing or general
range of end-markets. More information on the and administrative expenses as appropriate.
Processor Division (PD) and Physical IP Division In addition, the issuance of ARM share-based
(PIPD) licences signed during the year is provided remuneration to employees of the Group gives
in the Strategy and performance section. rise to share-based payment charges. Figures
excluding these charges, restructuring charges,
US dollar royalty revenues increased by 17% Linaro™-related charges, ARM’s share of the
from 2011 to 2012. An analysis of ARM-based results in joint venture and changes in the value
unit shipments in 2012 is provided in the of available-for-sale investments are referred
Strategy and performance section. to as “normalised” in this narrative to
aid comparability.
Dividend per share pence Selected financial data/IFRS
08 2.20 2012 2011 2010 2009 2008

£m £m £m £m £m
09 2.42 Revenues 576.9 491.8 406.6 305.0 298.9
10 2.90 Cost of revenues (31.9) (27.7) (26.1) (25.5) (32.8)
Gross profit 545.0 464.1 380.5 279.5 266.1
11 3.48
Total operating expenses (336.9) (315.2) (273.5) (233.9) (206.1)
12 4.50 Profit from operations 208.1 148.9 107.0 45.6 60.0
Operating margin 36.1% 30.3% 26.3% 15.0% 20.1%
Investment income, net 13.6 8.0 3.1 1.6 3.2
Share of results in joint venture (0.7) – – – –
Profit before tax 221.0 156.9 110.1 47.2 63.2
Tax (60.3) (44.3) (24.1) (6.8) (19.6)
Profit for the year 160.7 112.6 86.0 40.4 43.6
Dividends paid 51.8 42.2 34.3 29.0 26.4
Capital expenditure 33.2 13.0 7.4 6.9 8.7
Research and development expenditure 166.3 165.4 139.7 112.2 87.6
Cash, short- and long-term deposits 527.6 429.0 291.8 141.8 78.8
Shareholders’ funds 1,206.1 1,061.2 894.9 738.7 740.3
Employees at end of year (number) 2,392 2,116 1,889 1,710 1,740
46
Revenues PD royalty revenue was generated by our We have invested in our research and
Total revenues for the year ended 31 December customers shipping 8.7 billion chips, up from development teams in both our Processor
2012 amounted to £576.9 million (2011: 7.9 billion in 2011, demonstrating the increasing and Physical IP divisions in 2012, ensuring
£491.8 million). In US dollars, revenues were penetration of ARM technology in a wide that we continue to develop market-leading
$913.1 million in 2012 compared to $785.0 range of end-markets. innovative technology including the
million in 2011, an increase of 16% compared acceleration of the development of our
Other revenues portfolio of graphics processors.
to overall industry revenues that were down Total revenues from sales of development
2% over the same period. The average dollar systems and services were £63.1 million in Sales and marketing costs in 2012 were
exchange rate for ARM revenues in 2012 was 2012, compared to £58.9 million in 2011. In US £72.9 million compared to £72.6 million in
$1.58, compared to $1.60 in 2011. dollars, revenues from sales of development 2011. Normalised sales and marketing costs in
Licensing revenues systems and services were $99.9 million in 2012 were £64.3 million (2011: £60.5 million).
Total licensing revenues in 2012 were £214.0 2012, up 7% on $93.7 million in 2011. Additional investment in sales and marketing
million (2011: £180.5 million), comprising has contributed to strong revenue growth,
Profit and operating expenditure record shipments of ARM-based products
£181.1 million from PD (2011: £149.3 million)
and £32.9 million (2011: £31.2 million) from Gross margin and an order backlog at the end of 2012
PIPD. In US dollars, total licensing revenues Gross margin in 2012 was 94.5% compared which is more than three times as high as at
in 2012 were $339.3 million compared to to 94.4% in 2011. Normalised gross margin the end of 2009.
$285.7 million in 2011, an increase of 19%. in 2012 was 94.8% (2011: 95.1%).
General and administrative costs in 2012
PD licensing revenues of $287.1 million were Operating expenses were £97.7 million compared to £77.2 million
21% higher than 2011 whilst PIPD licensing Total operating expenses in the year to in 2011. Normalised general and administrative
revenues of $52.2 million were 6% up on 2011. 31 December 2012 were £336.9 million, costs in 2012 were £85.9 million (2011: £66.6
Royalty revenues compared to £315.2 million in 2011. million). The increase is largely attributable
Total royalty revenues in 2012 were £299.8 Total normalised operating expenses in 2012 to increased investment in the IT and other
million (2011: £252.4 million), comprising were £284.2 million (2011: £245.9 million), business infrastructure required to support
£264.4 million (2011: £222.2 million) from PD an increase of 16%. growth and a charge in 2012 of £1.8 million
and £35.4 million (2011: £30.2 million) from due to the impact of a weaker dollar on the
Research and development expenses in accounting for derivative instruments
PIPD. Dollar royalty revenues earned in PD 2012 were £166.3 million compared to
were $417.7 million, an increase of 17% over (2011: £3.0 million credit).
£165.4 million in 2011. Normalised research
2011. Dollar royalty revenues in PIPD were and development expenses in 2012 were
$56.2 million, an increase of 15% over 2011. £134.0 million (2011: £118.8 million). Average
headcount in research and development
increased to 1,581 in 2012 from 1,366 in 2011.
Revenues $m The following table shows normalised costs and expenses reconciled to IFRS costs and expenses
08 546.2 Disposal/
Share- Acquisition- impairment Linaro™-
09 489.5 based Intangible related of related
Normalised payments amortisation charges investments charges IFRS
10 631.3 £m £m £m £m £m £m £m
2012
11 785.0
Cost of revenues 29.8 2.1 – – – – 31.9
12 913.1 Research and development expenses 134.0 25.8 2.2 4.3 – – 166.3
Sales and marketing expenses 64.3 7.7 0.5 0.4 – – 72.9
General and administrative expenses 85.9 9.8 – 1.4 0.6 – 97.7
Revenues £m
Total net operating expenses 284.2 43.3 2.7 6.1 0.6 – 336.9
08 298.9 2011
09 305.0 Cost of revenues 24.2 3.5 – – – – 27.7
Research and development expenses 118.8 34.8 2.4 2.5 – 6.9 165.4
10 406.6 Sales and marketing expenses 60.5 11.3 0.8 – – – 72.6
11 491.8 General and administrative expenses 66.6 8.1 – 0.7 1.8 – 77.2
Total net operating expenses 245.9 54.2 3.2 3.2 1.8 6.9 315.2
12 576.9
Royalty Licencing Other
47
ARM Holdings plc
Segmental reporting reported into four main revenue streams Cortex family of products and the Mali 3D
ARM designs technology that is used in (namely licensing, royalties, development graphics processors. Royalty rates increased
energy-efficient chips in a broad range of systems and services), the costs, operating in 2012, as products incorporating newer,
end-markets. Information on ARM’s position results and balance sheet are only analysed high-end technology contributed to the
in the industry and the markets in which it into these three divisions. strong growth in overall royalty revenues.
operates is described in the preceding pages. PD revenues (including revenues from services) PIPD revenues in 2012 were £68.3 million
Internally, ARM is organised on a worldwide in 2012 were £473.9 million ($749.8 million), ($108.4 million), compared with £61.3 million
basis into three main business segments, being compared with £397.6 million ($634.7 million) ($97.9 million) in 2011. The increase in licence
PD, PIPD and the System Design Division in 2011. PD licensing revenues are driven by and royalty revenues was due to continued
(SDD). This is based upon the Group’s internal customers’ ongoing R&D programmes. The higher licensing activity and further utilisation
organisation and management structure and is portfolio of licensable products comprises a of ARM physical IP by foundries. SDD
the primary way in which the Chief Operating rich mix of ARM technology, with the main revenues in 2012 were £34.7 million
Decision Maker is provided with financial revenue growth in the year coming from the ($54.9 million), compared with £32.9 million
information. Whilst revenues are also ($52.4 million) in 2011.
PD PIPD SDD Unallocated Group

£m £m £m £m £m
Year ended 31 December 2012
Segmental income statement
Revenues (GBP) 473.9 68.3 34.7 – 576.9
Operating costs (243.3) (82.8) (40.1) (2.6) (368.8)
Investment income, net – – – 13.6 13.6
Share of results in joint venture – – – (0.7) (0.7)
Profit/(loss) before tax 230.6 (14.5) (5.4) 10.3 221.0
Tax – – – (60.3) (60.3)
Profit/(loss) for the period 230.6 (14.5) (5.4) (50.0) 160.7
Reconciliation to normalised profit/(loss) before tax
Intangible amortisation 2.4 0.8 – – 3.2
Acquisition-related charges 3.1 1.7 – 0.8 5.6
Share-based payment costs including payroll taxes 30.0 8.6 6.8 – 45.4
Profit on sale of investments, net of impairment 0.6 – – – 0.6
Share of results in joint venture – – – 0.7 0.7
Normalised profit/(loss) for the period before tax 266.7 (3.4) 1.4 11.8 276.5
Goodwill 138.0 367.0 14.4 – 519.4
Total assets 284.6 409.2 32.5 740.5 1,466.8
Revenues (USD) 749.8 108.4 54.9 – 913.1
Year ended 31 December 2011
Revenues (GBP) 397.6 61.3 32.9 – 491.8
Operating costs (223.8) (81.1) (41.2) 3.2 (342.9)
Investment income, net – – – 8.0 8.0
Tax – – – (44.3) (44.3)
Profit/(loss) for the period 173.8 (19.8) (8.3) (33.1) 112.6
Reconciliation to normalised profit/(loss) before tax
Acquisition-related charges 2.4 0.6 0.2 – 3.2
Disposal/impairment of investments – 1.7 0.1 – 1.8
Linaro™-related charges 6.9 – – – 6.9
Normalised profit/(loss) for the period before tax 222.2 (4.4) 0.7 11.2 229.7
Goodwill 143.7 383.9 14.9 – 542.5
Total assets 274.6 419.9 30.9 574.4 1,299.8
Revenues (USD) 634.7 97.9 52.4 – 785.0
48
Profit before tax in the year for PD was Earnings, taxation and returns
£230.6 million, compared to £173.8 million to shareholders
in 2011. Normalised profit before tax in 2012 Earnings and taxation
for PD was £266.7 million, compared to Profit before tax in 2012 was £221.0 million or
£222.2 million in 2011. 38% of revenues, compared to £156.9 million
Loss before tax in the year for PIPD or 32% of revenues in 2011. Normalised profit
was £14.5 million, compared to a loss of before tax in 2012 was £276.5 million or 48%
£19.8 million in 2011. Normalised loss of revenues, compared to £229.7 million
before tax in 2012 for PIPD was £3.4 million, or 47% of revenues in 2011.
compared to £4.4 million in 2011. Loss before The Group’s effective taxation rate in 2012
tax in the period for SDD was £5.4 million, was 27.3%, compared to 28.2% in 2011.
compared to £8.3 million in 2011. Normalised
profit before tax in 2012 for SDD was Fully diluted earnings per share in 2012 were
£1.4 million, compared to £0.7 million in 2011. 11.5 pence compared to 8.2 pence in 2011.
The improved results in both of these Normalised diluted earnings per share in 2012
business segments are primarily due to were 14.7 pence (2011: 12.5 pence).
increased revenues.
Profit from operations £m The following table shows non-GAAP measures used in this annual report, including reconciliations from the
IFRS measures. They exclude acquisition-related charges, share-based payment costs and restructuring charges,
08 60.0 97.7 and profit on disposal and impairment of available-for-sale investments, share of results in joint venture and
Linaro™-related costs.
09 45.6 95.1
2012 2011 2010 2009 2008
10 107.0 164.3 £m £m £m £m £m
Profit from operations
11 148.9 221.7
(per IFRS income statement) 208.1 148.9 107.0 45.6 60.0
12 208.1 262.9 Intangible amortisation 2.7 3.2 11.4 16.2 19.6
Acquisition-related charges 6.1 3.2 – – 0.4
Profit under IFRS Normalised profit
Share-based payment costs and related payroll taxes 45.4 57.7 41.9 24.7 15.9
Operating margin % Restructuring charges – – (0.4) 8.4 1.8
08 20.1 32.7 Profit/loss on sale/impairment of investments 0.6 1.8 – 0.2 –
Linaro™-related charges – 6.9 4.4 – –
09 15.0 31.2 Normalised profit from operations 262.9 221.7 164.3 95.1 97.7
10 26.3 40.4 Normalised operating margin 45.6% 45.1% 40.4% 31.2% 32.7%
Investment income, net 13.6 8.0 3.1 1.6 3.2
11 30.3 45.1
Normalised profit before tax 276.5 229.7 167.4 96.7 100.9
12 36.1 45.6 Tax (per IFRS income statement) (60.3) (44.3) (24.1) (6.8) (19.6)
Operating margin under IFRS Tax impact of above charges (11.0) (14.2) (17.0) (19.1) (8.5)
Normalised operating margin Normalised profit after tax 205.2 171.2 126.3 70.8 72.8
Earnings per share pence Normalised diluted EPS (pence) 14.70 12.45 9.34 5.45 5.66
IFRS diluted EPS (pence) 11.51 8.19 6.36 3.11 3.39
08 3.39 5.66
09 3.11 5.45
10 6.36 9.34
11 8.19 12.45
12 11.51 14.70
Diluted EPS under IFRS
Normalised diluted EPS
49
ARM Holdings plc
Dividend Balance sheet Treasury and taxation strategies

The directors are recommending payment Goodwill at 31 December 2012 was Treasury
of a final dividend in respect of 2012 of £519.4 million, compared to £542.5 million at The Group has established treasury policies
2.83 pence per share which, taken together 31 December 2011. The decrease in goodwill aimed both at mitigating the impact of foreign
with the interim dividend of 1.67 pence per in 2012 is due to foreign exchange movements. exchange fluctuations on reported profits and
share paid in October 2012, gives a total Goodwill is not amortised under IFRS, but is cash flows and at ensuring appropriate returns
dividend in respect of 2012 of 4.50 pence subject to impairment review on at least an are earned on the Group’s cash resources.1
per share, an increase of 29% over 3.48 pence annual basis. During the year, the directors
per share in 2011, continuing the steady performed the review which involved making The consolidated cash, cash equivalents, and
growth in dividends in recent years through various assumptions regarding the future deposits was £520.2 million net of accrued
challenging economic cycles. Subject to performance of the business. After considering interest of £7.4 million as at 31 December 2012
shareholder approval, the final dividend will various scenarios that could reasonably occur, (2011: £424.0 million net of accrued interest
be paid on 17 May 2013 to shareholders on the directors concluded that no impairment of £5.0 million).
the register on 19 April 2013. Total dividends was required. For more details, please see Net investment income was £13.6 million
actually paid in 2012 amounted to £51.8 million note 15 to the financial statements. for 2012 compared to £8.0 million in 2011.
(2011: £42.2 million).
Other intangible assets at 31 December The increase is due primarily to the higher
Share buybacks 2012 were £11.2 million, compared to cash balance carried by the Group
Between 2005 and 2008, the Company £12.5 million at 31 December 2011. Further throughout 2012.
bought back 213 million shares (being 16% analysis can be found in note 16 to the financial
of issued share capital) at a total cost of statements. Other intangible assets are
£261 million. No share buybacks have been amortised over their estimated useful lives.
undertaken since 2008. The rolling authority
to buy back shares given by the shareholders Accounts receivable at 31 December 2012
at the 2012 AGM remains in place and a were £124.5 million, compared to £119.6
resolution to authorise the directors to make million at 31 December 2011. The allowance
purchases in appropriate circumstances will against receivables was £2.4 million at
be proposed at the 2013 AGM. 31 December 2012, compared to £1.7 million
at 31 December 2011. Deferred revenues
Cumulative cash returned £m were £150.6 million at 31 December 2012,
compared to £116.8 million at the end of 2011.
08 77 261 338
Prepaid expenses and other assets at
09 106 261 367 31 December 2012 were £137.6 million,
10 141 261 402 compared to £33.0 million at 31 December
2011. Included in the 2012 balance is a
11 183 261 444 prepayment amounting to £103.7 million,
12 235 261 496 being ARM’s contribution to a consortium
to acquire rights to MIPS Technologies, Inc’s
Dividends Share buybacks
portfolio of patents.
Normalised cash generation £m
Capital structure
08 95.3 The authorised share capital of the Company
is 2,200,000,000 ordinary shares at 0.05 pence
09 86.1
each (2011: 2,200,000,000). The issued
10 179.9 share capital at 31 December 2012 was
1,380,768,350 ordinary shares of 0.05 pence
11 203.8
each (2011: 1,351,315,597).
12 267.3
1 The Group’s treasury policies are discussed in detail

in note 1c “Financial risk management”.
50
2012 2011 2010 2009 2008

£m £m £m £m £m
Cash and cash equivalents 46.3 26.8 29.4 34.5 76.5
Short-term deposits 340.0 319.1 247.4 105.5 0.5
Short-term marketable securities – – – 1.8 1.8
Long-term deposits 141.3 83.1 15.0 – –
Less: interest accrued (7.4) (5.0) (1.7) – –
Normalised net cash, at end of year 520.2 424.0 290.1 141.8 78.8
Less: Normalised net cash, at start of year (424.0) (290.1) (141.8) (78.8) (51.3)
Cash inflow from exercise of share options (5.6) (8.5) (24.0) (19.1) (5.6)
Cash inflow from sale of available-for-sale securities – – (0.1) (0.7) (6.3)
Add back: Cash outflow from payment of dividends 51.8 42.2 34.3 29.0 26.4
Cash outflow from purchase of own shares – – – – 40.3
Cash outflow from advance payment to the MIPS patent consortium 104.5 – – – –
Cash (inflow)/outflow from investments and acquisitions (net of cash acquired) (8.8) 17.3 11.0 9.7 8.4
Cash outflow from investment in joint venture 7.5 – – – –
Cash outflow from restructuring payments – – 4.5 3.5 1.9
Cash outflow from other acquisition-related payments 3.8 3.1 – – 2.2
Cash outflow from share-based payroll taxes 14.4 12.4 3.2 0.7 0.5
Cash outflow from payments related to Linaro 3.5 3.4 2.7 – –
Normalised net cash generation 267.3 203.8 179.9 86.1 95.3
Taxation rate, and we have worked with the UK Principal risks and uncertainties
ARM’s tax strategy is to enhance shareholder Government on new initiatives, most recently In line with the guidance for the preparation of
value by minimising its tax liabilities through on the new patent box regime, to help create an operating and financial review, the principal
the use of legitimate tax exemptions and tax a competitive tax environment for innovative risk factors faced by the Group are identified
reliefs. ARM is committed to paying the high-tech companies in the UK. in the “Risk Management and Principal Risks”
correct taxes in each relevant jurisdiction and section. Details of other risks and uncertainties
follows a policy of full disclosure in its dealings In line with other global companies in the faced by the Group are noted within the
with the tax authorities worldwide. The Board technology sector, ARM encourages employee Annual Report on Form 20-F for the year
has oversight of ARM’s tax strategy and participation in the business through the use of ended 31 December 2012 which is available
regularly reviews key developments that may employee share schemes. The increase in on ARM’s website at www.arm.com.
influence the Group’s global tax position. ARM’s share price has benefited its employees, Further details of the Group’s internal controls
leading to higher taxes being collected by ARM and risk management procedures are included
ARM is a UK-headquartered business with on behalf of tax authorities, in addition to in the Corporate Governance report.
significant operations based in the UK. More regular payroll and social security taxes.
than 99% of Group revenues are generated
outside the UK, however 90% of the Group’s ARM’s profit before tax in 2012 was
worldwide profits are earned in the UK and £221.0 million. ARM’s total tax contribution Tim Score
are subject to UK corporation tax. In addition, worldwide in 2012 amounted to £152.4 million Chief Financial Officer
ARM pays taxes in other countries where our (2011: £139.0 million), of which £121.7 million
customers and employees are based. ARM (2011: £112.1 million) related to tax collected
reinvests about 30% of its revenues in research on behalf of the tax authorities for employee
and development and so benefits from R&D payroll taxes, £26.1 million (2011: £22.4
tax credits both in the UK and overseas. ARM million) related to corporation taxes, £1.3
has also benefited in recent years from the million (2011: £1.4 million) to property taxes
reduction in the headline UK corporation tax and £3.3 million (2011: £3.1 million) related
to other taxes.
51
ARM Holdings plc
Risk
management RISK MANAGEMENT
AND PRINCIPAL RISKS
ARM has a robust risk management process that follows a
sequence of risk identification, assessment of probability and
impact, and assigns an owner to manage mitigation activities.
At a strategic level, our risk management Corporate Risk Register have an action plan that mitigates or further
objectives are to: Corporate risks are identified and assessed reduces the probability of the risk occurring
within the Corporate Risk Register (CRR). and/or its impact. Risk management action
• identify the Group’s most significant risks; The CRR includes a description of the risk, plans are managed within the relevant
identifies the owner, the inherent probability operational plans of the divisions and
• develop plans to mitigate and manage risks, corporate functions.
and impact of that risk occurring, the Group’s
with a clear owner assigned to each risk;
current processes and internal control The Risk Review Committee typically
• ensure that business growth plans are activities, remaining residual risk and the meets on a quarterly basis to review the
properly supported by effective risk planned activities to further mitigate it. CRR and identify other risks that need to
infrastructure; and be incorporated. Each risk owner is required
Risk review process
to review and demonstrate that residual risks
• help executives improve the control Common business risks and company specific
are being appropriately mitigated via the
and co-ordination of risk taking across risks are examined for relevance to the Group.
operational plans. A more detailed
the business. Relevant risks are entered onto the CRR and
explanation of the Risk Review Committee’s
given an owner. Risks are classified against
activities is included in the Governance section
A register is kept of corporate risks and is probability assessment criteria and impact
on page 70.
monitored by the Risk Review Committee, assessment criteria.
chaired by Mike Muller, Chief Technology Internal audit assurance
The Group’s ongoing operations and internal
Officer. The Audit Committee is responsible controls may mitigate the probability and/or ARM’s internal audit function regularly audits
for ensuring that the risk management process the impact of the risk. However, there will be the Group’s compliance with its policies,
is operating effectively. The Executive some level of residual risk, and the risk owner processes and procedures, including
Committee and the Board review the risk determines the extent to which the residual international standards and regulations.
register on a regular basis. risk is at an acceptable level, or whether The programme of audits is intended to
further action is required. Residual risks that provide assurance that processes, internal
are not at an acceptable level are required to controls, and policies are operating effectively.
Risk model
Audit Committee
Executive Committee
Risk Review Committee
Corporate Risk Register Operational Plans

Description Internal controls
New risk Owner Residual Risk Residual risk
Probability Action plan
Impact Activities to mitigate risk
Internal Audit Programmes
52
Our principal risks arise

from our business model,
technology and ecosystem.
The information below summarises the We depend largely on a small number We operate in the intensely
principal risks and uncertainties that may have of customers and products competitive semiconductor industry
a material impact on the Group’s operating Our revenues depend largely on a small The Group faces competition from a wide
results, reputation and share price. These risks number of licensees and products. range of companies with different technologies,
should be carefully considered in evaluating the business models and partners, from nimble
Group’s business. This annual report contains Both licence and royalty revenues in a particular start-ups to very well resourced corporations.
forward-looking statements that involve risks period are generally concentrated in a small Competition is based on a variety of factors
and uncertainties. Our actual results could number of licensees. If we fail to achieve the including price, performance, features, product
differ materially from those anticipated in the performance required under a single licence quality, software availability, marketing and
forward-looking statements as a result of contract or if a single customer fails to make distribution capability, customer support, name
many factors, including the risks set out below its milestone payments, our business, financial recognition and financial strength. Further, given
and elsewhere in this annual report. condition and results of operations could be our reliance on our semiconductor Partners,
materially adversely affected. our competitive position is dependent on their
Our business and future operating
results may be adversely affected In addition, any failure to develop successor competitive position. They operate in an
products which offer significant competitive intensely competitive market, that is
by a challenging macroeconomic
advantages to these customers in a timely characterised by rapid technological change,
environment and other events
manner or any decrease in demand for ARM and they may lose their market position due
outside of our control
technology could materially adversely affect us. to stronger competitors using alternative
We are subject to risks arising from adverse architectures. In addition, some of our
changes in global economic conditions. Due to Changes in technology trends and/or semiconductor Partners also design, develop,
economic uncertainties in many of our key economic conditions may cause companies manufacture and market microprocessors
markets, many companies may delay or within the semiconductor industry to based on their own architectures or on
reduce technology purchases and investments. consolidate further or for industry other non-ARM architectures.
The impact of this on us is difficult to predict, concentration to intensify, thereby reducing
but if businesses defer licensing our technology the number of customers that the Group may Some semiconductor companies have
or if consumers defer purchases of new sell its technology to and potentially making developed their own proprietary architecture
products which incorporate our technology, the Group more dependent on a smaller for specific markets or applications.
our revenue could decline. number of customers. These companies may reuse their proprietary
architecture to penetrate markets where ARM
Mitigation Mitigation is currently the architecture of choice, or where
ARM’s licence and royalty business model The Group has licensed its processor ARM may be used in the future, making it
delivers revenues from diverse sources. Much technology to more than 300 semiconductor harder for ARM to penetrate those markets.
of ARM’s licence revenues in 2012 came from companies, about half of which are now
backlog, which is at a record high, and the paying royalty revenues. Much of our royalty Mitigation
remainder came from licences signed in the and licence revenues are generated by the To improve their competitive advantage many
year. Semiconductor companies license new top 20 semiconductor companies. semiconductor companies look to lower the
ARM technology to develop chips that will be price of their chips by designing smaller chips
sold approximately three years later, so are The Group typically develops 2–3 new and by reducing their own costs. ARM’s
based on a company’s long-term view processors each year, reducing the impact technology has been designed to be small
of their prospects. of a product failure. ARM has rigorous quality and efficient, and by using an ARM processor
assurance, and verification and validation rather than developing their own, many
Royalty revenues are driven by sales of processes to reduce the risk of faults or bugs. companies can reduce their R&D expenditure.
consumer electronics and embedded devices. As consumer electronics become smarter, and
ARM is exposed to multiple end-markets and as processors become more complex to build,
a broad geographic spread. more companies are choosing to use ARM
processors in their chip designs.
53
ARM Holdings plc
Our business will be adversely affected We may have to defend ourselves A successful patent infringement claim
if we do not efficiently manage the against third parties who claim that we or a significant damage award would
significant changes in the number have infringed their proprietary rights adversely impact our operating results
of our employees and the size of Whilst we take great care to establish The semiconductor industry is characterised
our operations and maintain the integrity of our products, we by frequent litigation regarding patent and
The number of our employees and the size may have to protect our intellectual property other intellectual property rights. From
of our operations have grown both organically or defend our technology against claims that time-to-time, third parties, including our
and by acquisition. If this growth continues it we have infringed others’ proprietary rights. competitors, may assert patent, copyright
could place a strain on our management and and other intellectual property rights to
Mitigation technologies that are important to our
other resources. We face challenges inherent
We focus on designing and implementing business. We cannot be certain that we would
in efficiently managing an increased number
our products without the use of intellectual ultimately prevail in any dispute or be able to
of employees over large geographic distances,
property belonging to third parties, except license any valid and infringed patents from
including the need to implement appropriate
under strictly maintained procedures and third parties on commercially reasonable
systems, policies, benefits and compliance
with the benefit of appropriate licence rights. terms. Any infringement claim brought against
programmes in different jurisdictions.
In the event that a third party successfully us or our Partners, could result in substantial
Mitigation cost to us, divert management’s attention
proves that it has intellectual property rights
The Group has consistently grown its and resources, be time-consuming to defend,
covering a product that we have licensed
workforce by about 10% per year over the result in substantial damage awards, harm
to customers, we will take steps to either
last three years. the company’s reputation, cause product
purchase a licence to use the relevant
The Group is also investing in the technology or work around the technology shipment delays or require us to seek to enter
infrastructure necessary to support larger by developing our own solution so as to avoid into royalty or other licensing agreements.
engineering teams including buildings, IT infringement of that third party’s intellectual Any assertion of intellectual property rights
systems and support staff. property rights. by a third party against our technology could
Also, from time-to-time ARM enters into result in our licensees becoming the target of
cross-licensing agreements and non-assert litigation and we may be bound to indemnify
agreements with leading technology such licensees under the terms of our licence
companies. In 2013, ARM was part of a agreements. In addition to the time and
consortium of companies that acquired the expense required for us to satisfy our support
patent portfolio of MIPS Technologies Inc. and indemnification obligations to our
that removes the potential risk of future customers and strategic Partners, a licensee’s
litigation from those patents. development, marketing and sales of ARM
architecture-based products could be severely
disrupted or discontinued as a result of
litigation, which in turn could damage our
relations with them.
Mitigation
The Group’s indemnification obligations are
generally subject to a maximum amount,
limiting any liability.
54
We believe
that effective governance is
fundamental to successful
management. Our processes
enable us to connect
leadership, ethical behaviour
and collaboration; and to
demonstrate transparent,
consistent and effective
governance to all
our stakeholders.
In this section
Chairman’s introduction Read more on page 56
Board of directors Read more on page 59
Corporate governance Read more on page 62
Directors’ report Read more on page 73
Remuneration report Read more on page 78
55
ARM Holdings plc
Chairman’s
introduction
“Good governance requires a clear understanding of roles in order
to manage the business effectively, responsibly and with integrity,
so that we demonstrate accountability and maintain the trust
of all our stakeholders. We have a broad range of skills on the
Board and I actively encourage all Board members to use
their experience and knowledge to express their views in
the spirit of constructive challenge.”
Introduction Directors and succession planning

I was delighted to join ARM as Chairman As part of our planned and continuing
in May 2012 and am very pleased to be evolution of the Board, there were a number
Sir John Buchanan introducing the Corporate Governance report of changes in 2012 and there are some further
Chairman for 2012. Governance is a very important changes scheduled for 2013.
contributor to the success of the Group
and we continue to take great pride not only As planned, Tudor Brown and Doug Dunn
in what we do but also the way in which we retired from the Board on 3 May 2012 after
do it. The Board leads this process and sets long and distinguished service to the Group.
This section explains the the standards that we expect from all As previously announced, Young Sohn retired
Board’s approach to corporate our employees. from the Board at the end of 2012 and Mike
Inglis retires from the Board on 31 March 2013.
governance and corporate This report explains how we comply with Simon Segars took on the role of President
responsibility. We believe that good corporate governance principles, with effect from 1 January 2013 and will be
describes how the Board and its committees taking on some of Mike Inglis’ commercial
effective governance requires work and our approach to risk management responsibilities. I have paid tribute to Young
leadership, ethical behaviour and internal control. Risk management and and Mike elsewhere in this report and wish
and collaboration. principal risks are also covered on pages 52 them well for the future.
to 54. The main function of the Board as a
whole is the direction and oversight of the Reports from the various Board committees
Group on behalf of the shareholders. and details of their current composition are
Within this, the Board actively considers covered in more detail in the Corporate
long-term strategy, monitors and supports Governance and Remuneration reports below.
the work of the Executive Committee and The Board reflects a balance between
is responsible for Board and executive financial, technology sector, commercial and
management succession. My role as general business skills, with a highly
Chairman is to provide the leadership to experienced international team leading the
ensure high quality decision making in all areas business in both executive and non-executive
of strategy, performance, responsibility and roles. Following the retirement of Young Sohn
accountability. As a Board, we have ultimate from the Board at the end of 2012, the
responsibility for the Group’s performance Nomination Committee is actively seeking
and for overseeing the management of risk. new candidates as independent non-executive
We seek to do this through a strong and directors with in-depth knowledge and
effective governance system. experience of the technology sector.
56
The Board played an important role in Development of strategy Remuneration

successfully guiding ARM through the The Board’s work on defining our short- and ARM’s remuneration policy seeks to align
challenging economic environment in 2012, long-term strategic priorities at this important the interests of executive directors and
providing clear strategic direction and ensuring stage in the Group’s development is ongoing. shareholders and is structured to enable the
that the Group’s performance and standards We undertook a detailed Strategy Review in Group to attract, motivate and retain the
of conduct met its expectations. September and have organised an extra talent required to deliver the business strategy.
The roles and specific expertise of the current strategy meeting in May 2013 in addition to The Remuneration Committee, under Philip
members of the Board are set out in the our normal in-depth review in September. Rowley’s chairmanship, undertook a review of
biographies section on pages 59 to 61. This meeting will focus on progress to date executive remuneration policy during 2012 in
and future plans to take advantage of the conjunction with external advisers and has
Diversity significant opportunities that have been been consulting with shareholders over the
After the changes referred to above, the identified. These opportunities are in areas proposed new Long Term Incentive Plan which
Board will comprise nine men (82%) and two that include the evolving Internet of Things, will be put to shareholders for approval at the
women (18%) which reflects the gender efficient networking, ARM powered servers 2013 AGM. The changes, which will be
diversity of ARM’s workforce as a whole. and security applications. More details are implemented in 2014, reflect the latest
The gender split of engineering undergraduate included in the strategy and performance guidelines and the desire of shareholders for:
entrants in the UK in 2012 was 84% men section earlier in this report.
and 16% women. • simplification of incentive plans for executives;
Corporate governance framework
Gender split – Board and role of the Board • longer holding periods for shares; and
The Group’s corporate governance
Men 82% • increased share ownership requirements.
framework is built around three pillars:
Women 18%
• organisation and structure; The Board is cognisant of the general

sensitivity relating to executive director
• the internal control framework; and remuneration. We are committed to the
principle that there should be no reward for
• independent assurance.
failure and believe that the increased emphasis
on long-term performance-related pay is
ARM has its primary listing on the London appropriate and ensures that ARM’s
Gender split – Workforce
Stock Exchange and is also listed on the remuneration policy does not encourage
Men 83% NASDAQ Stock Market in the US. inappropriate risk taking. Full details are
Women 17% Throughout 2012, the Group complied fully included in the Remuneration report and the
with the UK Corporate Governance Code Circular to shareholders. We also include total
and also with the Sarbanes-Oxley Act 2002 remuneration figures for executive directors
(US). The Board values good corporate this year, in line with best practice.
governance and this is reflected in
our governance principles, policies and
practices and our everyday working
processes. This approach is backed
The Board noted the publication of Lord by continuous improvement based on
Davies’ Review into Women on Boards in measurement against internal objectives,
February 2011 and the proposals published by external audits and benchmarking and a
the European Commission in November 2012
rigorous approach to risk management.
(which include an objective that 40% of
non-executive directors should be women
by 2020). We believe that diversity should
be considered broadly, as well as focusing on
gender. It is important to achieve the correct
balance of skills, knowledge and experience
on the Board. We are committed to
continuing to increase the proportion of
women on the Board. We will continue
to make appointments on merit and also
to value diversity in its broadest context.
57
ARM Holdings plc
Ethics and values ARM’s technology is inherently low-power Awards received during 2012 include:
All directors and employees are required to and enables smarter, more energy-efficient
act fairly, honestly and with integrity and to products to be created. ARM is continuously • London Stock Exchange techMARK
demonstrate that they have read and seeking to improve its own low carbon Innovation award 2012 for success in
understand ARM’s Code of Business Conduct business operation and during 2010 we set commercialising new technologies;
and Ethics, a copy of which is published on goals of:
• certified as one of Britain’s Top Employers
the corporate website at www.arm.com.
• 30% emission reduction in tons of CO2 in 2012 by the CRF Institute;
As part of our commitment to the highest emission per employee by 2020; and • finalist in the 2012 FTSE 100 Business of the
standards of business conduct and ethics,
• 15% energy use reduction measured in Year in the UK National Business Awards;
we have implemented an enhanced
communication and training programme KWh per employee by 2020. • Best Data Centre Project Award at the
to ensure that all employees worldwide 2012 UK IT Industry Awards by the BCS
understand the requirements of the Bribery Between 2009 and 2012 we achieved a (Chartered Institute for IT);
Act 2010 and its global reach. The Compliance 7.6% reduction in tons of CO2 emission per
Committee reviews a range of activities across • 8th in new Sociagility ranking of best-
employee and a 10.9% reduction in KWh
the Group, sets appropriate policies and performing FTSE 100 companies and the
per employee across ARM globally.
procedures and takes the lead in ensuring number one Tech/Telecoms company;
compliance with them and encouraging good ARM increased its support for the
• second highest YouTube channel score in the
practice. It reports on its activities to the communities in which we operate during 2012.
FTSE 100 and, measured on PRINT™ social
Board through the Audit Committee. We have four particular areas of focus:
attributes, the highest Receptiveness score;
Corporate responsibility and
• STEM education (Science, Technology,
In 2012, ARM was again recognised for its Engineering and Mathematics); • Cortex-A50 series processors selected as
commitment to environmental, social and one of Electronics Product Magazine’s
governance issues through inclusion in the • Information and Communication Technology products of the year.
FTSE4Good Index, designed to measure for Development;
the performance of companies that meet
• Environment; and I hope the following reports demonstrate that
globally-recognised corporate responsibility
setting the corporate governance framework
standards. • Local Communities.
continues to be a key focus for the Board.
ARM also demonstrated leadership in We must always be conscious of the fact
corporate responsibility by continuing its Employee involvement is encouraged through that the Board’s primary responsibility is
participation in UN LEAD, which was set providing paid volunteer time, a Matching to promote the long-term success of the
up by the United Nations Global Compact Gift Donation programme and a global Company for the benefit of customers,
(“UNGC”). UN LEAD is a platform through teambuilding and fundraising group. More employees and shareholders and I believe
which each participant is challenged to details about our charitable giving are included that we are well positioned to continue to
implement the Blueprint for Corporate in the Directors’ report on page 74. provide value to all our stakeholders.
Sustainability Leadership and share lessons
learned with other UNGC companies. More details about our approach to corporate
ARM’s Corporate Responsibility report responsibility are set out in the Corporate
Responsibility report on page 40 and in the full Sir John Buchanan
contains details of how we have incorporated
the Blueprint into our reporting and Corporate Responsibility report which can be Chairman
communications. found at www.arm.com/reporting2012.
27 February 2013
58
Board of
directors The experience
of the team
ARM’s Board has the breadth and depth of experience necessary
to guide the Group as it seeks to take full advantage of new
opportunities and contend with new challenges. Biographical
details of the directors as at the date of this report are as follows:
Sir John Buchanan 69 Warren East 51 Simon Segars 45

Chairman Chief Executive Officer President
Committees Committees Committees

Nomination Committee (Chairman) None None
Current directorships Current directorships Current directorships
Smith & Nephew plc (Chairman) De La Rue plc (Non-Executive Director and SOI Industry Consortium (Director)
BHP Billiton plc (Senior Independent Director) Chairman of the Audit Committee) EDA Consortium (Director)
International Chamber of Commerce (UK) Time on Board Time on Board
(Chairman) 12 years 5 months 8 years 2 months
Chairman of the UK Trustees for the Expertise
Christchurch Earthquake appeal Expertise
Warren East joined ARM in 1994 to set up ARM’s Simon Segars joined the Board in January 2005
Time on Board consulting business. He was Vice President, Business and was appointed President in January 2013,
10 months Operations from February 1998. In October 2000 continuing to lead the IP divisions and represent
he was appointed to the Board as Chief Operating them on the Board. He was previously EVP and
Expertise Officer and in October 2001 was appointed Chief General Manager of the Processor and Physical IP
John Buchanan joined the Board as Chairman on Executive Officer. Before joining ARM he was with Divisions. Earlier senior roles included EVP,
3 May 2012. He has broad international experience Texas Instruments. He is a chartered engineer, Engineering, EVP, Worldwide Sales and EVP,
gained in large and complex businesses. He has Fellow of the Institution of Engineering and Business Development. He joined ARM in early
experience and knowledge of the international Technology, Fellow of the Royal Academy of 1991 and worked on many of the early ARM CPU
investor community and has held various leadership Engineering and a Companion of the Chartered products. He led the development of the ARM7
roles in strategic, financial, operational and Management Institute. He has an honorary and ARM9 Thumb® families. He holds a number of
marketing positions, including executive experience doctorate from Cranfield University. patents in the field of embedded CPU architectures.
in different countries. He is a former Chief Financial
Officer of BP plc and a former Deputy Chairman
and senior independent director of Vodafone
Group plc.
59
ARM Holdings plc
Tim Score 52 Andy Green 57

Chief Financial Officer Independent
Non‑Executive Director
Committees Committees
Risk Review Committee Remuneration Committee
Compliance Committee Nomination Committee
Current directorships Current directorships
National Express Group plc (Senior Independent Dock On AG (Chairman)
Director and Chairman of the Audit Committee) Networking People (UK) Limited (Chairman)
Time on Board ABESU (Trustee and Director)
11 years
Time on Board
Expertise 2 years 1 month
Tim Score joined ARM as Chief Financial Officer
and director in March 2002. Before joining ARM, he Expertise
was Finance Director of Rebus Group Limited. He Andy Green joined the Board in February 2011.
was previously Group Finance Director of William He was CEO of Logica plc from 2008 to 2012.
Baird plc, Group Controller at LucasVarity plc and He is a former CEO of BT Global Services and a
Group Financial Controller at BTR plc. former CEO of Group Strategy and Operations
at BT plc and was CEO of BT Openworld. He is
Chair of e-Skills UK (the UK Sector Skills Council
for Business and Information Technology), is on
the Board and the President’s Committee of the
CBI and is a Companion of the Chartered
Management Institute.
Mike Muller 54 Kathleen O’Donovan 55

Chief Technology Officer Senior Independent
Risk Review Committee (Chairman) Audit Committee (Chairman)
Current directorships Nomination Committee
Intelligent Energy Limited Current directorships
Time on Board Invensys Pension Trustee Ltd (Chairman)
11 years 5 months Trinity Mirror plc (Non-Executive Director and
Chairman of the Audit Committee)
Expertise
Mike Muller was one of the founders of ARM. D S Smith Plc (Non-Executive Director)
Before joining the Group, he was responsible for Time on Board
hardware strategy and the development of portable 6 years 3 months
products at Acorn Computers. He was previously
at Orbis Computers. At ARM he was VP, Marketing Expertise
from 1992 to 1996 and EVP, Business Development Kathleen O’Donovan joined the Board in
until October 2000 when he was appointed Chief December 2006. Previously she was a
Technology Officer. In October 2001, he was non-executive director and Chairman of the
appointed to the Board. Audit Committees of the Court of the Bank of
England, Great Portland Estates plc, EMI Group plc
and Prudential plc and a non-executive director of
O2 plc. Prior to that, she was Chief Financial Officer
of BTR plc and Invensys plc and before that she
was a Partner at Ernst & Young.
60
Larry Hirst 61 Mike Inglis 53

Independent Chief Commercial Officer
Audit Committee None
Remuneration Committee Current directorships
Current directorships Pace plc (Non-Executive Director)
MITIE Group plc (Non-Executive Director) Time on Board
Time on Board 11 years
2 years 2 months Expertise
Expertise Mike Inglis joined ARM in 2002 and became Chief
Larry Hirst joined the Board in January 2011. He is Commercial Officer in April 2012 having previously
the former Chairman of IBM Europe, Middle East been EVP and General Manager of the Processor
and Africa. He retired from IBM in 2010 having Division since July 2008. Prior to that he was EVP,
previously held a wide range of senior positions Sales and Marketing. Before joining ARM, he
since joining the company in 1977. He currently worked in management consultancy with A.T.
chairs the Imperial College Digital Cities Exchange. Kearney and held a number of senior operational
He is also an Ambassador to Monitise plc and on and marketing positions at Motorola, Texas
the International Advisory Board for British Instruments, Fairchild and BIS Macintosh and gained
Airways. Former roles include being a UK Business his initial industrial experience with GEC
Ambassador, a Commissioner for the Commission Telecommunications. He is a chartered engineer
for Employment and Skills and Chair of e-skills UK and a Member of the Chartered Institute of
(the UK Sector Skills Council for Business and Marketing. As previously announced, he will be
Information Technology). He was awarded a CBE retiring from the Board in March 2013.
in 2006.
Janice Roberts 57 Philip Rowley 60

Independent Independent
Non‑Executive Director Non‑Executive Director
Audit Committee Remuneration Committee (Chairman)
Remuneration Committee Audit Committee
Current directorships Nomination Committee
Mayfield Fund (Managing Director) Current directorships
RealNetworks, Inc. (Non-Executive Director) Promethean World plc (Non-Executive Director
and Chairman of the Audit Committee)
Time on Board
2 years 2 months Livestation Limited (Chairman)
Pouncer Media Limited (Chairman)
Expertise
Janice Roberts joined the Board in January 2011. Time on Board
She has been a Managing Director at Mayfield Fund 8 years 2 months
since 2000, a Silicon Valley-based venture capital
firm with approximately $3 billion under Expertise
management, where she focuses on the mobile, Philip Rowley joined the Board in January 2005.
wireless, communications and consumer technology He was Chairman and CEO of AOL Europe, the
industries. Prior to that, she held various executive internet services and web brands provider until
positions at 3Com Corporation including President February 2007. He is a qualified chartered accountant
Palm Computing, President 3Com Ventures and and was Group Finance Director of Kingfisher plc
Senior Vice President, Business Development from 1998 to 2000 and Deputy CEO and CFO
and Global Marketing. She is a director of several of the General Merchandise Division until 2001.
private technology companies in the US. Prior to that, his roles included EVP, Chief Financial
Officer of EMI Music Worldwide. He recently
resigned as Chairman of HMV Group plc.
61
ARM Holdings plc
Corporate
governance Corporate
governance
This section and the Remuneration report detail how the Group
has applied the principles of good governance contained in the UK
Corporate Governance Code 2010. The revisions to the Code
published by the Financial Reporting Council in 2012 take effect
for financial years beginning on or after 1 October 2012. We are
voluntarily reporting on some of these changes in this report and
will report fully in our 2013 annual report.
Compliance Statement Board

The Group has complied with the provisions The Board is collectively responsible for the
of the UK Corporate Governance Code 2010 overall conduct of the Group’s business.
throughout 2012 and to the date of this
document. The Group also achieved full The Board’s core activities include:
compliance with the requirements of section
404 of the Sarbanes-Oxley Act 2002 (US) for • providing leadership for the Group;
the seventh successive year. The Company’s
• active engagement in developing the Group’s
American Depositary Shares are listed on
long-term strategy;
NASDAQ and we are therefore subject
to and comply fully with NASDAQ rules, • monitoring executive actions, standards of
US Securities laws and Securities and Exchange conduct, performance against business plans
Commission rules to the extent that they and budgets and ensuring that the necessary
apply to foreign private issuers. We explain financial and human resources are in place
in the reports below how we applied the for it to meet its objectives;
provisions and principles of the FSA Listing
Rules, the Disclosure and Transparency Rules • obtaining assurance that material risks to
and the UK Corporate Governance Code the Group are identified and appropriate
throughout the year. systems of risk management and control
exist to mitigate such risks and defining
the Group’s appetite for risk;
• Board and executive management
succession;
• responsibility for the long-term success of the
Group having regard to the interests of all
stakeholders; and
• responsibility for ensuring the effectiveness
of and reporting on our system of corporate
governance.
62
The Board has a formal schedule of matters Independence Board meetings

specifically reserved for its decision, which The Board reviews the independence of the Before each meeting, the Board is provided
include: non-executive directors on appointment and at with information concerning the state of the
appropriate intervals and considers each of the business and its performance in a form and of a
• Group strategy and major business issues five non-executive directors to be independent quality appropriate for it to discharge its duties.
including atypical licence agreements; in character, judgment and behaviour, based The non-executive directors are encouraged
on both participation and performance at to suggest matters for Board discussions and
• annual budgets and long-term finance plans;
Board and committee meetings. There are in 2012 they were active in contributing to the
• major capital expenditure, acquisitions, no relationships or circumstances which are agenda for the strategic review and ensuring
disposals and investments; likely to affect the judgment of any of them. the amount of time spent on strategic and
The Chairman was regarded as independent operational issues was appropriately balanced.
• financial reporting, controls and financial at the time of his appointment. Through this process, an additional strategy
structure; meeting has been scheduled during 2013.
Non-executive directors’ expertise
• shareholder communications; Key senior executives attend Board meetings
Kathleen O’Donovan has been the Senior
Independent Director since January 2011. throughout the year which gives the
• key policies; and
The Senior Independent Director provides non-executive directors greater visibility
• key advisers. a communication channel between the of executive talent and potential
Chairman and the non-executive directors management succession.
and is available to discuss matters with In the event that directors are unable to attend
Composition and operation shareholders, if required. During 2012,
of the Board a meeting or a conference call they receive and
she led the Nomination Committee through read the documents for consideration at that
The UK Corporate Governance Code 2010 the process to identify and recommend the meeting and have the opportunity to relay
requires that at least half of the Board, recruitment of the new Chairman. their comments and, if necessary, to follow
excluding the Chairman, should comprise up with the Chairman or the Chief Executive
independent non-executive directors. The Janice Roberts (who is based in Silicon Valley),
Larry Hirst and Andy Green all have a broad Officer after the meeting.
Board currently comprises five executive
directors, five independent non-executive understanding of the Group’s technology and During 2012, the retiring Chairman and the
directors and the Chairman. The number of the practices of major US-based technology new Chairman both held meetings with the
executive directors will reduce to four when companies. Philip Rowley and Kathleen non-executive directors without the
the Chief Commercial Officer, Mike Inglis, O’Donovan are both financial experts with executives present and the non-executive
retires on 31 March 2013. strong financial backgrounds. Biographies of directors met on at least one occasion without
the directors appear on pages 59 to 61. the Chairman being present.
The continuing executive directors are the The beneficial interests of the directors in the
Chief Executive Officer, the Chief Financial share capital of the Company are set out in the The table below shows directors’ attendance
Officer, the President and the Chief Remuneration report. In the opinion of the at scheduled Board meetings and conference
Technology Officer all of whom play significant Board, Philip Rowley’s modest shareholding calls or ad hoc meetings which they were
roles in the day-to-day management of does not detract from his independent status. eligible to attend during the 2012 financial year:
the business.
Authority is delegated to various committees Scheduled Board meetings Conference calls/ad hoc meetings
that are constituted within written terms
Number 6 10
of reference and chaired by independent
Sir John Buchanan (appointed 3 May 2012) 3/3 6/6
non-executive directors where required by
Warren East 6/6 10/10
the UK Corporate Governance Code 2010.
Andy Green 6/6 10/10
Conflicts Larry Hirst 5/6 10/10
All directors have completed conflicts of Mike Inglis 6/6 10/10
interest questionnaires and any planned Mike Muller 6/6 10/10
changes in their directorships outside the Kathleen O’Donovan 6/6 10/10
Group are subject to prior approval by the Janice Roberts 6/6 10/10
Board. In order to avoid a potential conflict Philip Rowley 6/6 8/10
of interest, Young Sohn stood down from Tim Score 6/6 8/10
the Board on 31 December 2012 in order Simon Segars 6/6 10/10
to take up an executive position outside the Young Sohn (retired 31 December 2012) 6/6 8/10
Group. No conflicts of interest arose in 2012 Tudor Brown (retired 3 May 2012) 3/3 2/4
or to date in 2013 and no other situations were Doug Dunn (retired 3 May 2012) 3/3 4/4
or have since been identified that might lead to
a conflict of interest.
63
ARM Holdings plc
Chairman Main responsibilities of the Chairman include: Company Secretary

The Chairman is also chairman of Smith & Patricia Alsop acts as Secretary to the Board
Nephew plc and the International Chamber • leadership of the Board and creating the and Board committees and all Board members
of Commerce (UK) and is Senior Independent conditions for overall Board and individual have individual access to her advice. She
Director of BHP Billiton plc. He has attended director effectiveness and a constructive ensures that the Board receives all relevant
all meetings and conference calls since the date relationship with good communications information in a timely manner, organises
of his appointment and has attended several between the executive and non-executive induction and training programmes and
induction sessions, meeting members of the directors; facilitates the Board evaluation in years when
executive team and a range of senior managers this is conducted internally. She is also
• ensuring that the Board as a whole plays a full
to increase his knowledge and understanding responsible for ensuring that the correct
and constructive part in the development of
of the various parts of the business and its Board and committee procedures are
strategy and overall commercial objectives;
operations. He also participated with the followed and advises the Board on corporate
Chairman of the Remuneration Committee • chairing the Nomination Committee which governance matters. The established
in some meetings and discussions with major initiates succession planning to retain and procedure under which directors can, where
shareholders over the proposed new Long build an effective and complementary Board; appropriate, obtain independent legal or other
Term Incentive Plan, details of which are set professional advice at the Group’s expense is
out in the Remuneration report and the • ensuring that there is effective communication also administered through her.
Circular to shareholders. Further induction with shareholders and that members of the
sessions are planned for 2013. Board develop an understanding of the views Annual report, information and
of the major investors in the Group; communication with shareholders
The Chairman has primary responsibility for and other stakeholders
running the Board and the Chief Executive • promoting the highest standards of integrity,
The ultimate responsibility for reviewing and
Officer has executive responsibility for the probity and corporate governance throughout
approving the annual report and accounts
operations and results of the Group and for the Group, particularly at Board level; and
and the quarterly earnings releases and
making proposals to the Board in relation for ensuring that they present a balanced
• ensuring that the performance of the Board
to the strategic development of the Group. assessment of the Group’s position, lies
as a whole, its committees, and individual
There are clear and documented divisions of with the Board.
directors is formally and rigorously evaluated
accountability and responsibility for the roles
at least once a year.
of Chairman and Chief Executive Officer. The Board delegates day-to-day responsibility
for managing the Group to the Executive
Main responsibilities of the Chief Executive Committee and has a number of other
Approximate allocation of Board agenda time in 2012
Officer include: committees, details of which are set out
Strategy and risk 57% on the following pages.
Business updates/ • proposing and developing the Group’s
financial reporting 23%
Governance 9% strategy and overall commercial objectives in
Division and conjunction with the Executive Committee;
function updates 11%
• day-to-day management of the Group;
• managing the Executive Committee;
• leading the communication programme with
shareholders and analysts; and
• fostering good relationships with key
stakeholders.
64
Investor relations AGM The overall conclusion was that individual

The Board makes considerable efforts to The Board actively encourages participation at Board members are satisfied that the Board
establish and maintain good relationships with the AGM, scheduled for 2 May 2013, which is works well and operates effectively in an
shareholders and the wider investment the principal forum for dialogue with private environment where there is constructive
community. There is regular dialogue with shareholders. A presentation is made outlining challenge from the non-executive directors.
institutional investors during the year other recent developments in the business and an They are also satisfied with the contribution
than during close periods. The main channel of open question-and-answer session follows to made by their colleagues and that Board
communication continues to be through the enable shareholders to ask questions about committees operate properly and efficiently.
Chief Executive Officer, the Chief Financial the business in general. In response to points raised in the evaluation,
Officer and the VP of Investor Relations. there will in 2013 be increased Board time
The Chairman, the Senior Independent All resolutions proposed at the 2013 AGM will
and focus on:
Director and the other directors are available be decided on a poll and the voting results will
to engage in dialogue with major shareholders be published via RNS and the SEC and will be
available on the Group’s website. • the strategy agenda – with an additional
as appropriate. During 2012 the Chairman meeting scheduled for May 2013;
of the Remuneration Committee and the Board evaluation
Chairman consulted with shareholders on • succession planning; and
the terms of the proposed new Long Term The Board undertakes an annual Board
Incentive Plan, details of which are set out evaluation. During 2012, this exercise was • risk appetite.
in the Remuneration report and the Circular conducted internally using a questionnaire and
to Shareholders. was facilitated by the Company Secretary. An An externally facilitated board evaluation will
external evaluation last took place in 2010 and
take place during 2013.
The Board also encourages communication the Board plans to continue with a cycle of
with private investors and part of the Group’s external evaluations every three years and Induction
website is dedicated to providing accurate and internal evaluations in between. A full, formal induction programme is arranged
timely information for all investors, including for new directors, tailored to their specific
responses to frequently asked questions, the The 2012 evaluation covered:
requirements, the aim of which is to introduce
investment case, product information, press them to key executives across the business
releases, RNS and Securities and Exchange • strategic development, execution and
monitoring; and to enhance their knowledge and
Commission (SEC) announcements and an understanding of the Group and its activities.
online version of the annual report. • risk management and control; In 2012, this included a programme for the
At present, over 30 sell-side analysts write new Chairman and further meetings between
• leadership development and succession the non-executive directors who joined in
research reports on the Group and their planning;
details appear on the Group’s website. 2011 and a range of senior employees.
Shareholders can also obtain telephone • shareholder and stakeholder communication; Non-executive directors are encouraged to
numbers from the website, enabling them to spend time outside Board meetings with
listen to earnings presentations and audio • performance management;
members of the Executive Committee and
conference calls with analysts. In addition, • Board structure, committees and their the management team. All members of the
webcasts or audiocasts of key presentations operation; Board are invited to attend the Annual Partner
are made available through the website. Meeting in the UK which is the Group’s key
• induction and development; and customer event of the year and/or the ARM
Members of the Board develop an
understanding of the views of major • assessment of the performance of individual TechCon in the US. Board members are
shareholders through any direct contact that committees and the Chairman. also invited to attend the annual Analyst
may be initiated by shareholders, or through and Investor Day. These events offer the
analysts’ and brokers’ briefings. The Board also opportunity to understand more about
receives feedback from the Group’s brokers the business, products, technology
and financial PR advisers, who in turn obtain development roadmap, customer base
feedback from analysts and brokers following and investor perspective.
investor roadshows. All shareholders may
register to receive the Group’s press releases
via the internet.
65
ARM Holdings plc
Training The Committee is also responsible for & Commercial Development, Marketing &
Board members receive guidance on the ensuring that risks identified through the Business Development, Strategy, Human
regulatory regimes and corporate governance Operational Planning process, particularly Resources, the General Counsel and the
framework that the Group operates under. corporate level risks are managed and Company Secretary. Executive Committee
In particular, during 2012 the Board received mitigated to the extent possible. meetings are attended by other senior
an update from the Company Secretary on operational personnel, as appropriate.
Three Executive Committee observers
current governance topics including executive were appointed from the senior management Biographies of the members of the Executive
remuneration and board diversity. The Group team in April 2012. Tom Cronk is responsible Committee appear on the Group’s website
has a commitment to training and all directors, for the Processor Division, Dipesh Patel is at www.arm.com.
executive or non-executive, are encouraged responsible for the Physical IP Division and
to attend suitable training courses at the Pete Hutton is responsible for the Media Management structure
Group’s expense. Processing Business Unit. They became full The Group has a traditional UK board
The terms of reference of the Audit, members of the Committee with effect structure with a unitary Group board
Remuneration and Nomination Committees from 1 January 2013. comprising the Chairman, executive and
are published on the Group’s website at non-executive directors. The Audit and
Variations from the budget and changes in Remuneration Committees are made up of
www.arm.com. strategy require approval from the main Board independent non-executive directors and they,
Executive Committee of the Group. The Executive Committee, together with the Nomination Committee,
which meets monthly, now comprises the report to the Board. The divisions and
The Executive Committee is responsible for
Chief Executive Officer, Chief Financial Officer, functions report to the Executive Committee.
developing and implementing the strategy
the President, the Chief Commercial Officer, The Risk Review Committee reports
approved by the Board. In particular, the
the Chief Technology Officer, the Chief periodically to the Executive Committee,
Committee is responsible for ensuring that
Operating Officer, the EVPs and General Audit Committee and the Board. The VP
the Group’s budget and forecasts are
Managers of the Processor, Physical IP and Business Assurance/Head of Internal Audit
properly prepared, that targets are met
System Design Divisions and the Media also has a separate reporting line to the
and for generally managing and developing
Processing Business Unit, the EVPs of Regional Chairman of the Audit Committee.
the business within the overall budget.
Management structure
Remuneration Committee
Holdings Board Audit Committee
Nomination Committee
Board
Executive Disclosure
Divisions Committee Committee
Energy Use & Business

Travel Policy Operations Risk Review Compliance
Climage Change Assurance /
Committee Committee Committee Committee
Committee Internal audit
Charitable Donations Organisational

& Sustainability Development IT Committee
Committee Committee
Committees
Operations Management Customer Corporate Product Business Review Sales Commission

Review Team System Team Satisfaction Team Approval Team Meeting Meeting
Security Estates Business Data Governance KPI Financial

Review Team Review Team Continuity Team Team Sign Off Meeting
Governance Review Teams Operational Review Meetings
66
Audit Committee
“The Committee’s key objective is to provide effective financial governance
and to assist the Board in ensuring the integrity of the Group’s financial
reporting. The Committee oversees the external and internal audit
processes and reviews the appropriateness of the Group’s system of internal
controls. The Committee will continue to evolve its activities in the light
of guidance from regulators and prevailing economic conditions.”
Audit Committee composition and meeting attendance during 2012
Name of director Position Meetings attended
Kathleen O’Donovan Senior Independent Director, Committee Chairman 6/6
Larry Hirst Independent non-executive director 5/6
Janice Roberts Independent non-executive director 6/6
Philip Rowley Independent non-executive director 6/6
Kathleen O’Donovan has chaired the Principal activities during 2012:

Committee since January 2011. She is qualified
as the Audit Committee financial expert as • further work to enhance the Corporate
defined in the Sarbanes-Oxley Act 2002 (US). Risk Register including increased linkage
Philip Rowley is also qualified to fulfil this role. to operational and internal audit plans,
Both have recent and relevant financial giving the Board greater visibility of risk
expertise. The external auditors, Chief assessment and mitigation within the Group.
Executive Officer, Chief Financial Officer, the This enhanced the Board’s understanding of
VP Finance, ARM Group, the VP Business the level of residual risk and gave a greater
Assurance/Head of Internal Audit, the Head level of assurance. It also enabled a better
of Tax and the Company Secretary attend all comparison with the risks that are applicable
meetings in order to ensure that all the to comparable companies. The Board was
information required by the Audit Committee able to conclude from this that the steps
for it to operate effectively is available. The being taken to mitigate risk are appropriate
Group Chairman and other Board members and that the level of residual risk is at an
also attend Audit Committee meetings from acceptable level;
time to time. • reviewing the 2012 internal audit plans;
Representatives of the Group’s external • reviewing the 2012 external audit plans and
auditors have a private session with the Audit reports including overseas subsidiaries;
Committee at the start of each meeting,
without other management being present. • considering and approving the assumptions
The Chairman of the Audit Committee also in the annual goodwill impairment review,
has separate meetings with the VP Business prior to approval by the full Board;
Assurance/Head of Internal Audit and the
Chairman of the Risk Review Committee • reviewing the status of Sarbanes-Oxley
during the year to discuss their ongoing compliance and testing;
work and any areas of concern. • considering any whistleblowing reports and
During 2012 the Chairman of the Audit following up on subsequent actions;
Committee and the external audit partner • developing and implementing policy on the
organised a meeting for the UK-based engagement of the external auditors to
PricewaterhouseCoopers LLP audit and tax supply non-audit services and assessing
teams and the ARM finance and tax teams their nature, extent and cost effectiveness;
to give them some insights into how the
Committee operates, the corporate • assessing the external auditors’ independence
governance environment and the Group’s and objectivity, the effectiveness of the audit
expectations from the internal and external process and fees;
audit processes.
• undertaking an assessment of the
effectiveness of the Audit Committee
(which took place early in 2013 and concluded
that its performance was effective).
67
ARM Holdings plc
• monitoring the integrity of the financial of expressing an opinion under section 404 of the safeguards in place, and the contents of
statements of the Group and any formal the Sarbanes-Oxley Act. The results of those the Transparency Report, as well as noting
announcements relating to the Group’s procedures were reported in January and the regular and recent rotation of the audit
financial performance and reviewing any February 2013. No material misstatements partner, the Committee is satisfied that the
significant financial reporting judgements; remained unadjusted in the financial statements. auditors’ procedures are sufficient to
maintain their independence and objectivity.
• reviewing the effectiveness of the Group’s The Committee has also considered the level
internal controls over financial reporting; Auditor effectiveness and
of non-audit fees and believes that these are
partner rotation
• providing oversight of the Group’s risk at a level which does not compromise their
PricewaterhouseCoopers LLP have been the objectivity or independence in any way.
management process;
Group’s auditors since it listed on the London
• making recommendations to the Board in Stock Exchange in April 1998. The external There are no contractual obligations restricting
relation to the appointment, remuneration auditors are required to rotate the audit the Group’s choice of external auditor. The
and resignation or dismissal of the Group’s partner responsible for the Group and Committee also keeps under review the value
external auditors; and subsidiary audits every fifth year-end. The audit for money of the audit.
partner rotation took place in accordance with
• considering compliance with legal Policy on auditors providing
this timetable after the conclusion of the 2011
requirements, accounting standards, the non‑audit services
year-end audit, early in 2012.
Listing Rules of the Financial Services To avoid the possibility of the auditors’ objectivity
Authority and the requirements of the SEC. Following this rotation, PricewaterhouseCoopers and independence being compromised, there
LLP’s internal review group undertook an is an agreed policy in place on the provision of
assessment of audit process effectiveness. non-audit services by the auditors, which sets out
Financial reporting judgments:
This involved in-depth interviews with the arrangements for approving:
Each quarter, the Audit Committee reviewed Group’s senior managers including the Group
accounting papers prepared by management Chairman, the Chairman of the Audit • services that have general pre-approval
on areas of financial reporting judgment. Committee, the Chief Executive Officer, the by the Audit Committee;
These included: Chief Finance Officer and the Company
Secretary. The resulting report was considered • services that require specific pre-approval
• consideration of the accounting treatment by the Audit Committee in July 2012. by the Audit Committee before work
of substantial transactions, including any commences; and
judgemental matters in relation to revenue The Audit Committee considers that the
recognition for major licence contracts relationship with the auditors is working well • services that cannot be provided by
with customers; and remains satisfied with their objectivity the auditors.
and effectiveness.
• consideration of the judgments surrounding
This non-audit services policy is reviewed
the goodwill impairment review performed in This view was further supported by a review of
annually. The Group’s tax advisory work is
the fourth quarter of 2012. In light of the strong the effectiveness of the external audit process
carried out by the auditors only in cases where
performance of the PIPD business in the year which was undertaken early in 2013 involving
and a robust order backlog, the Committee they are deemed to be best suited to perform
Audit Committee members and senior
was comfortable with management’s managers who interact with the auditors. It the work in a cost effective manner, given their
assessment that no reasonable variation in key looked at the robustness of the audit, quality familiarity with the Group’s business. In other
assumptions would impact the conclusion that of delivery and quality of people and service cases, the Group has engaged another
no impairment in carrying value was required; and concluded that the services provided by independent firm of accountants to perform tax
the auditors and their mode of delivery are advisory work. The Group does not normally
• consideration of management’s judgment of effective. Accordingly, the Audit Committee has award general consulting work to the auditors.
the level of provision required to be carried in not considered it necessary to date to require From time to time, however, the Group will
relation to ongoing litigation involving either the the firm to tender for the audit work. This engage the auditors to perform work on matters
Group or its licensees and in particular where situation will be kept under regular review. relating to benchmarking of the internal audit
the Group may be required to indemnify its function, human resources, and royalty audits.
licensees, including receiving regular updates Auditor independence A breakdown of fees paid to the auditors can
from the Group’s General Counsel; and The auditors are required to and do be found in note 5 to the financial statements.
• consideration of the key judgements made in communicate with the Committee at least
estimating the Group’s tax charge. annually whether there are any threats to their
independence and objectivity and, if there are, Kathleen O’Donovan
what safeguards have been applied. The
In July 2012, the external auditors explained Audit Committee Chairman
Committee has also reviewed the auditors’
their programme of work to address the Transparency Report, paying particular
significant risks of financial reporting attention to the sections covering internal
misstatement, including the interaction with controls, independence policies and the results
their work on internal control for the purposes of external regulator reviews. Having reviewed
68
Nomination Committee
“The Committee, led for this purpose by the Senior Independent Director,
was active in the early part of 2012 in finalising arrangements for the
appointment of a new Chairman and I was delighted to join the Group in
May 2012. The Committee’s focus since then has been on defining the skills
and attributes required for future non-executive director appointments and
interviewing prospective candidates to replace Young Sohn, who retired at
the end of 2012. Our key objective is to ensure that the Board is made up
of individuals with the requisite skills, knowledge and experience to ensure
that it is effective in discharging its duties.”
Nomination Committee composition and meeting attendance during 2012
Name of director Position Meetings attended
Sir John Buchanan Sir John Buchanan Chairman (appointed 3 May 2012) 4/4
Nomination Committee Chairman Kathleen O’Donovan Senior Independent Director 6/6
Philip Rowley Independent non-executive director 6/6
Young Sohn Independent non-executive director
(retired 31 December 2012) 6/6
Doug Dunn Chairman (retired 3 May 2012) 2/2
During the year, the activities of the The Nomination Committee’s general
Committee included: responsibilities include:
• identifying suitable candidates for the • leading the process for Board appointments
role of Chairman, interviewing and and making recommendations to the Board
recommending the appointment of in relation to new appointments of executive
Sir John Buchanan to the Board; and non-executive directors;
• engaging an external search firm to seek • reviewing succession planning, Board
and introduce suitable candidates as a new composition and balance; and
non-executive director and conducting
interviews with a number of prospective • considering the roles and capabilities
candidates; and required for each new appointment, based
on an evaluation of the skills and experience
• reviewing succession plans for the of the existing directors.
executive team.
Kathleen O’Donovan, in her capacity as the

Senior Independent Director, led the process
Sir John Buchanan
for the appointment of the new Chairman and
Nomination Committee Chairman
chaired relevant meetings of the Nomination
Committee. The recruitment process involved
a review by the Board of all aspects of the
role of Chairman, its requirements, board
dynamics and how best the new Chairman
should interact with the Board, the Executive
Committee, shareholders and other
stakeholders.
Andy Green joined the Committee in
February 2013. His business and skills
background will contribute valuable
experience to our work.
69
ARM Holdings plc
Corporate governance report

Internal control/risk management issuers in 2006. This is reported on in more Risk Review Committee
The Group fully complies with the UK detail in the annual report on Form 20-F that Membership of the Risk Review Committee
Corporate Governance Code 2010’s is filed with the SEC. The processes and was widened during 2012 to include the Chief
provisions on internal control, having procedures for identifying, evaluating and Operating Officer and now consists of the Chief
established procedures to implement in full the managing the significant business, operational, Technology Officer, the Chief Financial Officer,
Turnbull Guidance “Internal Control: Revised financial, compliance and other risks facing the the Chief Operating Officer, the VP Finance,
Guidance for Directors on the Combined Group have been successfully integrated into ARM Group, the VP Business Assurance/Head
Code”. The Group’s risks are managed within day-to-day business operations through our of Internal Audit and the Company Secretary.
a systematic process of risk identification and internal control system. This is known as The Committee established a Corporate Risk
assessment. The detailed risk management the ARM Management System and is Register (CRR) some years ago, within which
process is explained in the Risk Management proven to provide a sustainable solution corporate risks are identified and assessed.
section on pages 52 to 54. for ongoing compliance. The CRR includes a description of the risk,
identifies the owner, the inherent probability
The Audit Committee is responsible for The ARM Management System, which covers and impact of that risk occurring, the Group’s
ensuring that the risk management process financial, compliance and operational controls, current processes and internal control
is operating effectively. The Executive is fully documented and compliance is activities, remaining residual risk and the
Committee and the Board review the risk monitored through periodic controls testing planned activities to further mitigate it.
register on a regular basis. The Board confirms during each year. The effectiveness of individual
that the necessary actions have been or are controls is also reviewed with their owners Common business risks and company specific
being taken to remedy any significant failings within the divisions and functions to ensure risks are examined for relevance to the Group.
or weaknesses identified from this process efficacy and relevance. The Business Assurance Relevant risks are entered onto the CRR and
in a timely manner. function reports on the status of the ARM given an owner. Risks are classified against
Management System to the Audit Committee probability assessment criteria and impact
The Board has overall responsibility for ensuring assessment criteria.
that the Group maintains an adequate system at least twice each year. The Compliance and
of internal control and risk management and Audit Committees also monitor the The Group’s ongoing operations may mitigate
for reviewing its effectiveness, while satisfactory remediation of any identified the probability and/or the impact of the risk.
implementation of internal control systems is control issues with Group level significance. However, there will be some level of residual
the responsibility of management. The Group The Board has reviewed and approved the risk, and the risk owner determines the extent
has implemented an internal control system system of internal control, including internal to which the residual risk is at an acceptable
designed to help ensure: controls over the consolidation process and level, or whether further action is required.
financial reporting, which have been in place Residual risks that are not at an acceptable
• the effective and efficient operation of for the year under review and up to the date level, are required to have an action plan that
the Group and its divisions by enabling of approval of the Annual report and financial further reduces the probability of the risk
management to respond appropriately to statements. These controls consist of extensive occurring and/or its impact. Risk management
significant risks to achieving the Group’s reviews by qualified and experienced individuals action plans are managed within the relevant
business objectives; underpinned by a system of checklists that operational plans of the divisions and
ensures that all elements of the financial corporate functions.
• the safeguarding of assets from inappropriate
statements and appropriate disclosures are The Risk Review Committee typically meets
use or from loss and fraud and ensuring that
considered and accurately stated. on a quarterly basis to review the CRR and
liabilities are identified and managed;
Control systems are designed to manage identify other risks that need to be
• the quality of internal and external reporting; incorporated. Each risk owner is required
rather than eliminate the risks inherent in a
fast-moving, high-technology business and can, to review and demonstrate that residual
• compliance with applicable laws and
therefore, provide only reasonable and not risks are being appropriately mitigated
regulations and with internal policies on
absolute assurance against material via the operational plans.
the conduct of the Group’s business; and
misstatement or loss. The divisions’ and corporate functions’
• the ability to recover in a timely manner
Remuneration Committee operational plans are updated quarterly.
from the effects of disasters or major
Changes that could impact the CRR are
accidents which originate outside the A description of the composition,
reviewed by the Committee.
Group’s direct control. responsibilities and operation of the
Remuneration Committee is set out The Committee reports formally on the CRR
Compliance with section 404 of the in the Remuneration report. to the Executive Committee twice a year
Sarbanes-Oxley Act 2002 (US) has been where its findings are considered and
The Group has a number of other committees
successfully achieved for each financial year challenged. It also reports to the Board and
and bodies which contribute to the overall
since it became effective for foreign private to the Audit Committee at least once a year
control environment. These include:
and provides periodic updates to the
Audit Committee.
70
The Board and the Audit Committee receive Business Review Meeting chaired by the programme. The management system is
copies of the minutes of Risk Review Chief Operating Officer, the purpose of audited externally by Lloyd’s Register
Committee meetings. which is to monitor and control all main Quality Assurance for compliance with
business activities, revenue forecasts and other the requirements of ISO 9001:2008, ISO
This gives the Board greater visibility of the matters requiring approval. Through this 27001:2005, ISO 22301:2012 and as part of
range of risks, the ways in which such risks structure management reviews (with its Business Assurance scheme supports the
are mitigated and an assessment of the level representatives from the divisions and Sarbanes-Oxley compliance activity.
and acceptability of residual risk. functions) revenues, orders booked, costs,
product and project delivery dates and levels Any significant control failings identified through
The Board reviewed its risk appetite during the internal audit function or the independent
2012 and confirmed that the level of residual risk of defects found in products in development.
The outputs of these meetings are reviewed auditors are brought to the attention of the
is regarded as acceptable and within normal Compliance Committee and undergo a detailed
parameters for a company operating within by the Operations Committee which escalates
relevant issues to the Executive Committee process of evaluation of both the failing and the
ARM’s sphere of business. A further Board steps taken to remedy it. There is then a process
review of risk appetite is scheduled for 2013. which, in turn, raises relevant issues with the
Board of the Group. for communication of any significant control
More information on industry trends and failures to the Audit Committee. There were
associated risks and opportunities are included During 2012 the structure, process and no significant control failures during 2012 or up
in the Risk Management section on pages 52 reporting arrangements for the committees, to 25 February 2013, being the latest practicable
to 54 and in the Annual Report on Form 20-F eight Governance Review Teams and three date before the printing of this report.
for the year ended 31 December 2012 Operational Review meetings were improved
and formalised. These Governance Review Whistleblowing procedures
which is available on the Group’s website
at www.arm.com. Teams and Operational Review meetings all The Group operates a whistleblowing policy
report to the Operations Committee which in which provides for employees to report
Compliance Committee turn reports to the Executive Committee. concerns about any unethical business practices
The Compliance Committee membership was to senior management in strict confidence or,
Internal audit function if they prefer, anonymously through an
widened during 2012 to include the VP
Operations and now consists of the General The Group has an internal audit function independent third-party telephone line.
Counsel, the Chief Operating Officer, the Chief that meets criteria set out in the key practice They can do so without fear of recrimination.
Financial Officer, the EVP, Human Resources, standards prescribed by the Institute of The Audit Committee receives details of any
the VP Business Assurance/Head of Internal Internal Auditors. The internal audit function such confidential reports from the Compliance
Audit, the Chief Information Officer, the VP undertook a range of financial and operational Committee. There were two whistleblowing
Operations and the Company Secretary. It audits in line with the plan agreed with the reports in 2012, neither of which was of a
oversees compliance throughout the business Audit Committee. Additional resource was serious nature. Both were investigated
with all relevant international regulations, provided by co-sourcing arrangements in 2012 thoroughly: one required no further action and
trading requirements and standards, including and this will continue in 2013. the other was resolved by reinforcing existing
direct oversight of financial, employment, health policies. There have been no whistleblowing
At the start of 2012, the Group successfully reports in 2013 up to 25 February 2013, being
and safety, environmental, business continuity achieved certification for ISO 27001, the
and security processes and policies. the latest practicable date before the printing
international standard for Information Security of this report. The third-party telephone line is
Disclosure Committee Management and this was maintained tested to ensure that employees can use it if
throughout the year. During 2012, the Group they have occasion to.
The Disclosure Committee comprises the also successfully achieved certification for ISO
Chief Executive Officer, the Chief Financial 22301, the international standard for Business Anti-bribery and anti-corruption
Officer, the VP Finance, ARM Group, the Continuity Management. measures
General Counsel, the VP Investor Relations
and the Company Secretary. It is responsible The Group’s Management System documents The Group’s Code of Business Conduct and
for ensuring that disclosures made by the processes and responsibilities across all Ethics, which is available on the Group’s
Group to its shareholders and the investment business functions and operations. As an website, and the Company Rules incorporate
community are accurate, complete and fairly autonomous part of this system, the internal appropriate provisions to meet our obligations
present the Group’s financial condition in all audit function carries out a programme of under the UK Bribery Act 2010. An enhanced
material respects. audits to assess its effectiveness and efficiency, training and communication programme was
resulting in continuous maintenance and developed during 2012 and is in place to ensure
Management structure improvement of the system, adapting to that employees understand the requirements
In addition, there are various committees, changes in business operations as necessary. of the Act and the reporting procedures.
Governance Review Teams and Operational This is targeted at employees in roles or
Review Meetings that span the Group, as To demonstrate compliance with the working in countries that are regarded as
shown in the management structure chart Sarbanes-Oxley Act, the internal audit higher risk. Arrangements with contractors
on page 66. These include the regular function also maintains the documented and suppliers have been and will continue
Executive Committee meetings chaired by controls over financial reporting and confirms to be reviewed and updated to reflect the
the Chief Executive Officer and the weekly the operation of them either by direct testing requirements of the Act. The Compliance
or through a monitored self assessment
71
ARM Holdings plc
Committee oversees the reporting procedures The Group and our Partners are seeing the nominated for a number of other awards
and monitors and escalates reports in benefits of our University Programme, as based on its environmental credentials.
appropriate circumstances. There were no students graduate with experience in designing
reports of concern during 2012 or up to with ARM products and as university The Group has also partnered with AquaMV,
25 February 2013, being the latest practicable engineering departments base their own Enlight and Photonstar to incorporate building
date before the printing of this report. research around ARM technology. technologies into its offices in Cambridge to
improve environmental performance and use
Human rights and equal opportunities Environmental, social, corporate energy-efficient ARM technology. Areas such
The Group has signed the Universal governance and ethical policies as lighting control and environmental
Declaration of Human Rights and has While the Group is accountable to its monitoring of plant for improved building
integrated relevant human rights principles shareholders, it also endeavours to take into efficiency are being developed with these
into its policies for employees and contractors. account the interests of all its stakeholders, partners and will be extended to other key
The Group strives for equal opportunities for including employees, customers and suppliers sites from 2013. The Group enhanced its
all its employees and does not tolerate any and the local communities and environments environmental data collection and reporting
harassment of, or discrimination against, its in which it operates. The Chief Executive ability during 2012 and this supports the work
staff. The Group endeavours to be honest Officer and the Chief Financial Officer take of the new Energy Use and Climate Change
and fair in its relationships with its customers responsibility for these matters, which are Committee that has been formed to drive
and suppliers and to be a good corporate considered at Board level. improvements in environmental performance
citizen respecting the laws of the countries and to provide recommendations on
in which it operates. A Corporate Responsibility (CR) summary is improving the Group’s green credentials
included in this report on pages 40 to 44 and a to the Executive Committee.
University Programme more detailed report is available via the Group’s
website www.arm.com/reporting2012. The Group’s environmental policy is published
ARM’s University Programme is an important on its website within the CR report. In line
initiative for the future of the Group and our The Group regularly monitors employees’
awareness of Group policies and procedures, with the Companies Act 2006, the articles
relationships with business partners. The of association enable the Group to send
Group engages with universities around the including its conduct and ethical policies.
Employees and temporary contractors information to shareholders electronically
world, developing the next generation of ARM and make documents available through the
engineers, donating equipment and software, reconfirm their understanding of key policies
each year to help reinforce awareness. website rather than in hard copy, which
helping to design courses and textbooks and provide both environmental and cost benefits.
providing technical support and training to The Group operates from a global portfolio of Shareholders can opt to continue receiving
students and faculties. In 2012, following a offices with a total in excess of 500,000 sq ft a printed copy of the Annual Report, subject
thorough selection process, the Group located in 13 countries. The portfolio is made to availability.
appointed a new University Programme up entirely of offices since the Group has no
manager with a strong UK University manufacturing activities. As such there are Health and safety
background, who joined in January 2013. no hazardous substances nor complex waste The Group operates in an industry and in
The Group is seeking to increase the scalability streams to be managed as part of our business environments which are considered low risk
of the University Programme through operations. The Group’s principal activity from a health and safety perspective.
partnership. This partnership strategy was involves the use of IT based engineering tools to However the safety and welfare of employees,
a focus area in 2012 with exploratory create intellectual property. With the exception contractors and visitors is a priority in all
discussions which will result in the addition of development systems products, the majority Group workplaces worldwide. The Group
of industry partners during 2013. The of “products” sold by the Group comprise continues to improve its management
partnership programme is supported by the microprocessor core and physical IP designs systems in this area with an audit programme
development of high quality course materials that are delivered electronically to customers. that includes external auditing of processes
during 2012, resulting in a more attractive and offices.
The Group’s ongoing environmental impact
offering to any members of the academic analysis informs management about key More detail about the Group’s approach to
community wishing to migrate their courses to environmental factors and how it can reduce environmental matters and health and safety
the ARM architecture during 2013. the impacts associated with them. As a is included in the CR report.
2012 saw increased focus on universities in business whose day-to-day activities require
reliable and advanced compute resource, Business model
China and India, resulting in some increase
of ARM architecture adoption in course the Group commissioned a new state of the A detailed description of ARM’s business
materials and increased donations by the art data centre at its Cambridge UK campus model is set out on page 6.
Group of equipment and software to in 2012. Specified to incorporate best practice
By order of the Board
University labs. This regional focus is solutions, the data centre has been awarded
continuing in 2013 with increased attention a gold CEEDA (Certified Energy Efficient Data
to the role of Government in influencing the Centre Award) for its energy efficiency, with
a projected annualised efficiency ratio (PUE) Patricia Alsop
processor architecture choices of universities.
of well below 1:1. It won European Data Company Secretary
Centre of the Year 2012 and has been
72
Directors’
report Directors’ report
The following additional disclosures are made in compliance with
the Companies Act 2006, the Disclosure and Transparency Rules
and the UK Corporate Governance Code 2010.
Description of operations, principal Future developments

activities and review of business The Group’s stated objective is to establish
The principal operations and activities of the a global standard for its RISC architecture,
Group and its subsidiaries are the licensing, physical IP and other products in the
marketing, research and development of embedded microprocessor and
RISC‑based microprocessors, fabric system IP, semiconductor markets. The directors
graphics processors, physical IP and associated believe that, in order to achieve this goal, it is
systems IP, software and tools. The nature important to expand the number and range
of the global semiconductor industry is such of potential customers for its technology.
that most of the Group’s business originates
overseas and, to serve its customers better, The Group intends to enter into licence
the Group has sales offices around the world. agreements with new customers and
These include eight offices in the US and to increase the range of new technology
offices in Shanghai, Shenzhen and Beijing, PR supplied to existing customers. Relationships
China; Shin-Yokohama, Japan; Seoul, South will continue to be established with third-party
Korea; Taipei, Taiwan; Kfar Saba, Israel; Paris, tools and software vendors to ensure that
France; Grasbrunn, Germany and Bangalore, their products will operate with the Group’s
India. Design offices are based in Cambridge, products. As a result of its position in the
Sheffield and Blackburn, UK; Sophia Antipolis semiconductor industry, the Group is
and Grenoble, France; Grasbrunn, Germany; presented with many opportunities to acquire
Trondheim, Norway; Sentjernej, Slovenia; complementary technology or resources and
Lund, Sweden; Austin, Texas; Olympia, it intends to continue to make appropriate
Washington and San Jose, California in the investments and acquisitions from
US; Shanghai, PR China; Hsinchu, Taiwan time-to-time.
and Bangalore, India. Going concern
More information about the business, its After dividend payments of £51.8 million
operations and key performance indicators and the contribution of $167.5 million to
are set out in the Overview and Our the consortium to acquire rights to MIPS
marketplace sections on pages 1 to 10, the Technologies, Inc’s portfolio of patents in 2012,
Financial review incorporating a section on the highly cash generative nature of the
Risk management on pages 52 to 54, and in the business enabled the Group to increase
Corporate responsibility summary on pages its cash, cash equivalents and deposits to
40 to 44. The Group’s statement on corporate £520.2 million (net of accrued interest
governance can be found in the Corporate of £7.4 million) at the end of 2012. This was
governance report on pages 62 to 72 of these an increase from £424.0 million (net of accrued
financial statements. The Risk management interest of £5.0 million) at the start of the year.
section of the Financial review and the The consortium transaction received MIPS
Corporate Governance report form part of Technologies, Inc’s shareholder approval on
this section and are incorporated into it by 6 February 2013. After reviewing the 2013
cross reference. budget and longer term plans and considering
any reasonably likely scenarios that may occur,
the directors are satisfied that, at the time
of approving the financial statements, it is
appropriate to adopt the going concern basis
in preparing the financial statements of both
the Group and the parent Company.
73
ARM Holdings plc
Dividends Donations Re-election of directors

The directors recommend payment of During the year the Group made donations As previously announced, Mike Inglis is retiring
a final dividend in respect of the year to for charitable purposes of £276,811 from the Board on 31 March 2013. All of the
31 December 2012 of 2.83 pence per share (2011: £108,546). The total amounts given for other directors will be standing for re-election
which, subject to approval at the AGM on each such purpose were: at the 2013 AGM. In line with the provisions
2 May 2013, will be paid on 17 May 2013 to of the UK Corporate Governance Code 2010,
£
shareholders on the register on 19 April 2013. all directors will present themselves for
This final dividend, combined with the interim Promotion of education 141,954 re-election annually (if eligible) unless the
dividend of 1.67 pence per share paid in Relief of poverty 55,268 directors have agreed otherwise.
October 2012, makes a total of 4.5 pence per Other 39,046
share for the year, an increase of 29% on the Medical research 26,546 See pages 59 to 61 for the biographies
total dividend of 3.48 pence per share for 2011. Local charities 13,997 of the directors at the date of this report.
Total 276,811
Share buyback programme The interests of the directors in the
Company’s ordinary shares of 0.05 pence,
No share buybacks were undertaken in 2012 ARM’s investment of £2.5 million in an all of which were beneficially held, are
and no shares have been re-purchased to date interest-free charitable bond in Future disclosed in the Remuneration report.
in 2013. The rolling authority to buyback Business, made in 2010, remains in place.
shares given by the shareholders at the AGM Future Business is a Cambridge-based social The directors have the benefit of directors’
in May 2012 remains in place and a resolution enterprise, which provides business advice, and officers’ liability insurance.
to authorise the directors to make purchases coaching and affordable workspace to
in appropriate circumstances will be proposed entrepreneurs, start-up businesses, charities Appointment of directors
at the 2013 AGM. and voluntary organisations. ARM shareholders may by ordinary resolution
appoint any person to be a director. ARM
Research and development (R&D) ARM employees are encouraged to offer must have not less than two and no more than
R&D is of major importance and, as part of their time and expertise to help charities 16 directors holding office at all times. ARM
its research activities, the Group collaborates and other groups in need. The Group may by ordinary resolution from time to time
closely with universities worldwide and plans operates a Matching Gift Donation vary the minimum and/or maximum number
to continue its successful engagement with programme for individual employees’ of directors.
Michigan University. Key areas of product fundraising efforts. The Group does not
development for 2013 include the make any political donations. The directors may appoint a director to fill
development of further energy-efficient, a casual vacancy or as an additional director
Directors in the year to hold office until the next AGM, who shall
high-performance processors such as ARM
cores based on symmetric multicore and The following served as directors of then be eligible for election.
superscalar technology. The Group is investing the Company during the year ended
in future physical IP development including 31 December 2012:
low-power, low-leakage technologies for both Sir John Buchanan (Chairman – appointed
bulk CMOS (complementary metal oxide 3 May 2012)
semiconductor) and SOI (silicon on insulator) Warren East (Chief Executive Officer)
processes to ensure leadership in this market. Tim Score (Chief Financial Officer)
In addition, the Group will continue to develop Mike Muller (Chief Technology Officer)
and deliver tools, graphics processors and Mike Inglis (Chief Commercial Officer)
system IP to enable its customers to design Simon Segars (President)
and programme SoCs. Andy Green (independent non-executive
The Group incurred R&D expenses director)
of £166.3 million in 2012, representing 29% Larry Hirst CBE (independent non-executive
of revenues, compared with £165.4 million director)
in 2011, representing 34% of revenues. R&D Kathleen O’Donovan (Senior Independent
expenses have been charged in full to the Director and financial expert)
income statement since the requirements for Janice Roberts (independent non-executive
capitalisation were not met. The requirements director)
for capitalisation are considered in more detail Philip Rowley (independent non-executive
in note 1 to the financial statements. director and financial expert)
Doug Dunn (former Chairman – retired
3 May 2012)
Tudor Brown (former President – retired
3 May 2012)
Young Sohn (former independent
non‑executive director – retired
31 December 2012)
74
Share capital There are no restrictions on the transfer Articles of association

At 31 December 2012, ARM’s share capital of ordinary shares in ARM other than: ARM’s articles of association may be amended
comprised a single class of ordinary shares only by a special resolution at a general
of 0.05 pence each and there were • restrictions that may from time to time meeting of shareholders.
1,380,768,350 ordinary shares in issue, none be imposed by laws and regulations (for
of which were held in treasury (2011: no example, those relating to market abuse Directors’ authority
shares held in treasury). The rights attached and insider dealing); The directors are responsible for the
to treasury shares are restricted in accordance management of the business of ARM and
• restrictions that may be imposed pursuant may exercise all powers of ARM subject to
with the Companies Act.
to the Listing Rules of the Financial Services applicable legislation and regulation and the
The rights attached to ordinary shares are Authority under which certain employees of articles of association.
as follows: ARM require the approval of the Company
to deal in shares; At the 2012 AGM, the directors were given
1. On a show of hands at a general meeting, authority to buyback a maximum number
every shareholder present in person • restrictions on the transfer of shares that of 137,579,000 ordinary shares at a minimum
(or, in the case of a corporation, present at may be imposed under article 61.2 of ARM’s price of 0.05 pence each. The maximum price
the meeting by way of a representative) and articles of association or under Part 22 of the was an amount equal to 105% of the average
entitled to vote shall have one vote and every Companies Act 2006, in either case following of the closing mid-market prices of ARM’s
proxy present who has been duly appointed a failure to supply information required to be ordinary shares as derived from the London
by a shareholder entitled to vote on the disclosed following service of a request under Stock Exchange Daily Official List for the five
resolution shall have one vote; section 793 of the Companies Act 2006; and business days immediately preceding the day
2. On a poll, every shareholder present • restrictions on transfer of shares held under on which such ordinary shares are contracted
in person (or in the case of a corporation, certain of the Company’s employee share to be purchased. This authority will expire at
present at the meeting by way of a plans while they remain subject to the plan. the earlier of the conclusion of the 2013 AGM
representative) or by proxy and entitled or 30 June 2013.
to vote shall have one vote for every ordinary Substantial shareholdings Accordingly, resolution 19 will be proposed
share held; The directors are aware of the following as a special resolution at the 2013 AGM
3. Shareholders are entitled to a dividend substantial interests in the issued share capital to give ARM authority to acquire up to
where declared or paid out of profits available of the Company as at 25 February 2013: 139,650,000 ordinary shares following expiry
for such purposes; and of the current authority. The directors will use
Percentage of
issued ordinary
this authority only after careful consideration,
4. Shareholders are entitled to participate share capital taking into account market conditions
in a return of capital on a winding-up. The Capital Group Companies, Inc 6.9 prevailing at the time, other investment
Blackrock, Inc 5.0 opportunities, appropriate gearing levels and
The notice of the AGM specifies deadlines the overall position of ARM. In particular, this
Thornburg Investment Management 5.0
for exercising voting rights and appointing authority will be exercised only if the directors
a proxy or proxies to vote in relation to Fidelity Management and Research
Corporation 5.0 believe that it is in the best interests of
resolutions to be passed at the AGM. All shareholders generally and will increase
Legal and General Investment
proxy votes are counted and the numbers earnings per share.
Management 3.8
for, against or withheld in relation to each
Janus Capital Management LLC 3.6
resolution are announced at the AGM and
published on ARM’s website after the meeting.
Save for the above, the Company has not
been notified, as at 25 February 2013,
of any material interest of 3% or more or
any non-material interest exceeding 10%
of the issued share capital of the Company.
75
ARM Holdings plc
Resolution 17 to be proposed at the 2013 Diversity Financial instruments

AGM will authorise the directors generally to The Group is committed to employment The Group’s financial risk management and
allot up to £230,424 in nominal amount of policies, which follow best practice, based policies and exposure to risks in relation to
ordinary shares and, in addition, will authorise on equal opportunities for all employees, financial instruments are detailed in note 1c.
the directors to allot up to a further £230,424 irrespective of sex, race, colour, disability
in nominal amount of ordinary shares in or marital status. The Group has a strong Essential contracts
connection with a rights issue (as defined in demand for highly qualified staff and disability There are a large number of contracts in place
resolution 17). Further, resolution 18 will is not seen to be an inhibitor to employment with the Group’s Partners, some of which
authorise the directors to allot ordinary shares or career development. Appropriate are described in more detail in the “Our
(or sell treasury shares) for cash (i) otherwise arrangements are made for the continued partnership approach” section starting on
than in connection with a “pre-emptive offer” employment and training, career development page 21. There are no parties with whom
(as defined in resolution 18) up to an aggregate and promotion of disabled persons employed the Group has contractual or other
nominal amount of £34,912 or (ii) in connection by the Group. In the event of any staff becoming arrangements which are essential to the
with a pre-emptive offer up to an aggregate disabled while with the Group, their needs and business of the Group.
nominal amount of £34,912, or (iii) in abilities would be assessed and the Group
connection with a rights issue up to a further would, where possible, seek to offer alternative There is one Company which accounted for
nominal amount of £34,912, in each case as employment to them if they were no longer 15% of Group revenues in 2012 (2011: 11%),
if section 561(1) of the Companies Act 2006 able to continue in their current role. which is referred to in note 2 on page 116.
did not apply to such allotment (or sale).
Employee involvement Annual General Meeting (AGM)
The period of authorisation will in each case
expire at the earlier of the conclusion of the As the Group is an IP enterprise, it is vital that The AGM will be held at 110 Fulbourn Road,
2014 AGM or on 30 June 2014. all levels of staff are consulted and involved Cambridge CB1 9NJ, UK, on 2 May 2013 at
in its decision-making processes. To this end, 2.00pm. A presentation will be made at this
Qualifying indemnity provision meeting outlining recent developments in
internal conferences and communications
Article 139 of the Company’s articles of meetings are held regularly which involve the business. All voting at the meeting will be
association provides for the indemnification employees from all parts of the Group conducted on a poll where every shareholder
of directors of the Company against liability in discussions on future strategy and present in person or by proxy will have one
incurred by them in certain situations, and is developments. Furthermore, employee share vote for each share of which they are the
a “qualifying indemnity provision” within the ownership is encouraged and all employees owner. The Group will convey the results
meaning of section 236 of the Companies are able to participate in one of the Group’s of the poll on the website after the AGM.
Act 2006. schemes to encourage share ownership. Shareholders are invited to submit written
The Group has an informal and delegated questions in advance of the meeting.
The qualifying indemnity was in force during Questions should be sent to The Company
the financial year and up to the date of signing organisation structure. It does not presently
operate any collective agreements with any Secretary, ARM Holdings plc, 110 Fulbourn
the Annual Report. Road, Cambridge CB1 9NJ, UK.
trade unions.
Change of control A resolution to reappoint
Information about the Group’s employees and
All of ARM’s equity-based plans contain policies are contained in the Remuneration PricewaterhouseCoopers LLP as auditors
provisions relating to a change of control. report, the “Our commitment” section to the Group will be proposed at the AGM.
Outstanding awards and options would and the Corporate Governance report. Details of other resolutions to be proposed
normally vest and become exercisable on Information about environmental matters, at the meeting are set out in the Circular
a change of control, subject to the satisfaction social and community policies and their and Notice of AGM 2013 which will be made
of any performance conditions at that time. effectiveness is contained in the “Our available to all shareholders together with
commitment” section and in the full a proxy card.
There are no significant agreements to which
ARM is a party that take effect, alter or Corporate Responsibility report available
terminate upon a change of control. on our website.
Policy on payment of creditors
The Group’s policy is to pay suppliers before
the end of the month following the month of
receipt of the invoice, unless alternative terms
have been specifically agreed in advance.
This policy and any specific terms agreed with
suppliers are made known to the appropriate
staff and to suppliers on request. Trade
creditors of the Group at 31 December 2012
were equivalent to 15 days’ purchases for
the Group (2011: 27 days) and nil days for
the Company (2011: nil).
76
Statement of directors’ responsibilities The directors are responsible for keeping Disclosure of information to auditors
The directors are responsible for preparing adequate accounting records that are sufficient In the case of each director in office at the date
the annual report, the Remuneration report to show and explain the Company’s the Directors’ report is approved, that:
and the financial statements in accordance transactions and disclose with reasonable
with applicable law and regulations. accuracy at any time the financial position (a) so far as the director is aware, there is
of the Company and the Group and enable no relevant audit information of which the
Company law requires the directors to them to ensure that the financial statements Company’s auditors are unaware; and
prepare financial statements for each financial and the Remuneration report comply with
year. Under that law the directors have (b) the director has taken all the steps that
the Companies Act 2006 and, as regards
prepared the Group financial statements in he or she ought to have taken as a director
the Group financial statements, Article 4 of the
accordance with International Financial in order to make themselves aware of any
IAS Regulation. They are also responsible for
Reporting Standards (IFRSs) as adopted by relevant audit information and to establish
safeguarding the assets of the Company and
the European Union, and the parent Company that the Company’s auditors are aware of
the Group and hence for taking reasonable
financial statements in accordance with United that information.
steps for the prevention and detection of fraud
Kingdom Generally Accepted Accounting and other irregularities.
Practice (United Kingdom Accounting
Standards and applicable law). Under company The directors are responsible for the By order of the Board
law the directors must not approve the maintenance and integrity of the Annual
financial statements unless they are satisfied Report included on the Group’s website
that they give a true and fair view of the state in accordance with the United Kingdom
Patricia Alsop
of affairs of the Group and the Company and legislation governing the preparation and
Company Secretary
of the profit or loss of the Group for that dissemination of financial statements.
period. In preparing these financial statements, Legislation in the United Kingdom governing ARM Holdings plc
the directors are required to: the preparation and dissemination of financial Company Number: 2548782
statements may differ from legislation in
• select suitable accounting policies and then other jurisdictions.
apply them consistently; Each of the directors, whose names and
• make judgments and accounting estimates functions are listed in the biographies on
that are reasonable and prudent; pages 59 to 61 confirm that, to the best
of their knowledge:
• state whether IFRSs as adopted by the
European Union and applicable UK • the Group financial statements, which have
Accounting Standards have been followed, been prepared in accordance with IFRSs as
subject to any material departures disclosed adopted by the EU, give a true and fair view
and explained in the Group and parent of the assets, liabilities, financial position and
Company financial statements profit of the Group; and
respectively; and
• this Directors’ report on pages 73 to 77
• prepare the financial statements on the going and the Financial review and the Risk
concern basis unless it is inappropriate to management sections on pages 46 to 54
presume that the Company will continue includes a fair review of the development
in business. and performance of the business and
the position of the Group, together with
a description of the principal risks and
uncertainties that it faces.
77
ARM Holdings plc
Remuneration report
Remuneration Committee design company, and also to tie pay to
Executive pay is rightly the subject of increased performance. At the same time the
focus both for shareholders and the wider Committee worked to ensure that the
public and ARM’s Remuneration Committee Group’s overall remuneration packages will be
is mindful of this and of the consultation papers able to attract, retain and motivate people.
issued during 2012 by the UK Government’s Key decisions on remuneration taken in
department of Business Innovation and Skills relation to 2012 include:
(“BIS”). The final BIS regulations are expected
in April 2013 and we will review these carefully.
• approval of an average executive team base
We have changed the format of this report a pay increase of 4.0% for 2012 and 3.85%
little this year to provide increased transparency for 2013 compared to the average increases
and clarity on past pay and future policy. for the workforce as a whole of 4.7% for
Philip Rowley We have also given full consideration to 2012 and 4.7% for 2013;
Remuneration Committee Chairman the principles set out in the UK Corporate
• continuing the practice of setting stretching
Governance Code 2010, the Listing Rules of
performance targets for the LTIP and DAB
the Financial Services Authority and the ABI
Plan which will operate for the last time in
Principles of Remuneration published in
2013 and, subject to shareholder approval,
November 2012.
will be replaced by the new Long Term
The main activity for the Committee during Incentive Plan in 2014;
2012 was the development of the proposed
• approval of increased disclosure
new Long Term Incentive Plan (“LTIP”) and
arrangements in circumstances where an
consultation thereon with major shareholders
executive retires (to ensure that vesting of
and representative bodies. This will be put to
accrued benefits under the current DAB Plan
shareholders for approval at the 2013 AGM
and LTIP happens only on genuine retirement
and is planned to take effect in 2014 and for
from full time commercial employment); and
any new hires after May 2013. The consultation
involved physical meetings, telephone • approval of the structure of the new LTIP
conference calls and written responses and we and consultation with major shareholders.
were heartened by the positive feedback and
general support for the proposals. Above all
Notwithstanding the tough market conditions
the new plan, which will replace both the
that continued during 2012, the minimum
existing LTIP and the Deferred Annual Bonus
targets, established three years ago under
Plan (“DAB Plan”), is intended to provide
both the LTIP and DAB Plan were exceeded
greater simplicity, a longer holding period
and our teams have been rewarded for their
for shares and an increased individual
performance as detailed in the following
shareholding requirement for participants.
report. It is encouraging that shareholders
A detailed description of these proposals is
have been supportive of our remuneration
set out in this report and in the accompanying
policies to date and the Remuneration report
Circular to Shareholders.
received a 97.4% vote in favour at the 2012
The approach of the Committee in preparing AGM. We take an active interest in investors’
for the work of developing the new LTIP was views, which we have been able to discuss
to spend time understanding the key elements directly with the larger shareholders through
of the developing debate about executive pay, the new LTIP consultation and we have sought
and also considering other research, for to accommodate their feedback as far as
example into understanding how executives possible and to follow best practice in the
value long-term rather than short-term pay. design of the proposed new LTIP.
It was generally considered that the current
LTIP had served the Group well, and one
option could have therefore been to continue Philip Rowley
with a similar structure. However the Remuneration Committee Chairman
Committee wanted to ensure that certain
objectives were met, including simplicity,
matching the payment cycle to the business
cycle, which is quite long as a semiconductor
78
Remuneration Committee Operation of the Remuneration

In this section we describe the composition Committee
and activities of the Committee during 2012. The Chief Executive Officer and the EVP,
Human Resources attend each meeting for
Remuneration Committee composition at least part of the time to ensure that the
and meeting attendance during 2012 Committee is able to obtain their views on the
Name of director Position Total number level of compensation for executive directors
of Meetings/
Meetings
and other senior executives, although they are
attended not present when their own remuneration is
Philip Rowley Independent 5/5 discussed. The Company Secretary advises
non-executive director the Committee on corporate governance
(Committee Chairman) guidelines and acts as Secretary to
Andy Green Independent 5/5 the Committee.
non-executive director
Larry Hirst Independent 5/5
The principal items of business discussed at the
non-executive director five Committee meetings during 2012 were:
Young Sohn Independent 5/5
non-executive director • reviewing total compensation packages for
(retired 31 December 2012) the executive directors and senior executives
of the Group including approval of 2012 base
Given their diverse business experience, the salaries and vesting of 2009 LTIP and DAB
independent non-executive directors who Plan awards. This included oversight of the
made up the Committee in 2012 offer a Group’s salary review process for senior
balanced view and international expertise executives to ensure consistency of
in relation to remuneration matters for the application. The Committee also reviews
Group. Janice Roberts joined the Committee in executive remuneration in the context of pay
February 2013 and will add valuable expertise, and benefits for the workforce as a whole;
particularly on US compensation matters.
• development of the new LTIP proposals,
External advisers consultation with major shareholders
The Committee has access to independent and representative bodies and feedback
professional advice and Towers Watson were to the Board;
appointed as advisers to the Committee in • approval of retirement arrangements under
2010 and advised on current market practice, the LTIP and DAB Plan for individuals wishing
in particular in connection with the proposed to retire, in particular Tudor Brown and Mike
new LTIP. Other advisers who provided Inglis. For retirements in 2013 onwards, these
services during 2012 were: include disclosure of future intentions to the
Committee, non-competition undertakings
• KPMG who provided general advice on and clawback arrangements in order to be
remuneration and benefits, including tax treated as good leavers on retirement;
advice for employees who are seconded
overseas. They also provided royalty • agreeing the remuneration of the
audit services; new Chairman;
• Linklaters, Norton Rose and Slaughter and • setting the 2012 LTIP and DAB Plan
May who provided legal services in relation performance measures and targets; and
to equity plans and corporate matters; • reviewing the Remuneration report to
• Deloitte who provided salary survey data, shareholders, prior to its approval by the
royalty audit services and tax training; and Board and by shareholders at the AGM.
• Kepler Associates who provided The Committee’s terms of reference

independent verification of Total Shareholder are published on the corporate website
Return (TSR) calculations for the LTIP.
at www.arm.com.
Advisers are usually appointed by the EVP,

Human Resources and are reviewed and
approved by the Committee. The EVP,
Human Resources also provided advice
to the Committee in 2012.
79
ARM Holdings plc
Remuneration policy The Committee believes that it is important

The Group operates a remuneration policy to select an appropriate peer group and
and framework for executive directors methodology for comparator group purposes.
designed to ensure that it attracts, retains and For the existing and new LTIPs, TSR
motivates high calibre people with the skills calculations are based on comparisons
necessary to achieve its goal of sustained with the FTSE 350 and the FTSE All World
growth in corporate performance. We believe Technology Index. It is recognised that there
that this sustained growth can be successfully are differing views among shareholders and
achieved only with a high level of employee representative bodies on whether one or
engagement and motivation. Our policy seeks two indices should be used and, after due
to provide rewards and incentives for the consideration, the Committee believes that
remuneration of executive directors that there is merit in the continued use of these
reflect their performance and align with the two indices. The FTSE All World Technology
objectives of the Group. These comprise Index is not a perfect comparator for ARM
a mix of performance-related and due to the fairly unique nature of our business
non-performance-related remuneration. model in the technology world and the FTSE
The Committee believes that a director’s total 350 is a better UK comparator index due to
remuneration should be monitored against the small number of technology companies in
their worth in the external market and, to this the FTSE 100.
end, obtains information from independently
Proposed changes to executive
published remuneration surveys, benchmarks
directors’ remuneration from 2014
the total remuneration package and applies
the following principles: The existing LTIP approved in 2003 is due to
expire in 2013. Therefore the Committee took
• base salaries are set at a relatively the opportunity in 2012 to review its entire
modest level; approach to executive pay, where the current
arrangements have been in place since 2006
• a significant amount (i.e. more than 80%) when the DAB Plan was introduced.
of total potential remuneration is The objective of the review was to ensure
performance-related; that ARM’s approach remains fit for purpose
over the next phase of its development.
• there should be reward for performance The Committee concluded that a number
but not for failure with an opportunity for of modifications would be appropriate in an
upside for exceptional performance; effort to both simplify the elements of total
• benchmarking provides a useful reference remuneration and more closely align the
point but not a target range for salaries arrangements with ARM’s longer term
or other benefits; business cycle.
• a significant element of performance-related The proposed changes (which are planned to

remuneration is provided in the form of take effect in 2014 and for any new hires after
shares; May 2013) will not result in any increases to the
maximum quantum of reward delivered via
• elements of performance-related variable the new LTIP.
remuneration are subject to deferral; and
• the performance of divisional general
managers is measured both at division
and Group level.
The Committee is able to consider corporate

performance on environmental, social and
corporate governance issues when setting the
remuneration of executive directors.
80
Pay element Current policy Proposed policy from 2014 Linkage to strategy
Base salary Conservative approach relative No change The structure of lower base salaries
to companies of similar and higher potential incentives has proved
market capitalisation motivational and successful in achieving
strong business performance
Pension allowance 10% of base salary either into the No change

Group Personal Pension Plan or as
a cash allowance for those in excess
of the lifetime allowance
Annual bonus • Maximum and target bonus opportunity • Maximum and target bonus opportunity • Delivery of revenue and profit growth are
of 150% and 100% of salary respectively reduced to 125% and 85% of salary regarded as the best drivers to increase
• Bonus split 50/50 cash and deferred respectively market share and continue the Group’s
shares based on normalised operating • All bonus to be paid in cash outperformance of semiconductor
profit (NOP), total revenue and • Deferred bonus share awards will cease market growth
individual performance • No change to performance metrics • Individual performance measures are
• Compulsory deferral into shares which will continue to be NOP, focused on objectives that are specific
for three years total revenue and individual performance to each executive director
Bonus matching shares • 0.3 to 2 for 1 match on any deferred bonus • The final award under the DAB Plan will
shares subject to three year EPS growth of be made in respect of 2013 performance
CPI + 4% to CPI +12% p.a., respectively
• Sliding scale vesting
LTIP • Annual awards normally at 100% of salary • Annual awards under the revised plan will • From 2014, long-term incentives will have
for senior executives with the potential increase to a maximum potential of 375% performance conditions that incorporate
to vest at 200% of salary for upper decile of salary from 2014 onwards with a both relative TSR and EPS growth
performance and with a maximum limit maximum limit in exceptional circumstances
in exceptional circumstances of 400% of 600% of salary
of salary • Vesting based on:
• Vesting based on three year o three year relative TSR growth relative
relative TSR versus to the FTSE All World Technology Index
FTSE All World Technology Index (25% of the award);
and FTSE 350 (50/50) o three year relative TSR growth relative
• Threshold vesting to the FTSE 350 (25% of the award); and
commencing at median ranking o three year EPS growth (50% of the award)
of TSR group (25% of award) • Targets to be determined ahead of the
rising to 100% vesting first annual awards in 2014
for an upper decile ranking • Full vesting of the TSR components
on a straight-line basis for upper quintile performance
Holding period beyond None 50% of the vested shares will be subject to These additional holding periods align the
three years additional holding periods with 25% vesting interests of executives and shareholders
after four years and the remaining 25% vesting more closely and require sustained long-term
after five years. During these new holding performance
periods shares may not be sold even if the
participant has left the Group
Share 100% of salary over a five year period 200% of base salary to be achieved through Increased individual holding requirements
ownership guidelines retention of at least 50% of all net vested align executive and investor interests
awards
81
ARM Holdings plc
Before pension, the current total aggregate We are aware that this is higher than the limit Current incentive arrangements
package assuming maximum performance can of 5% over ten years in respect of discretionary and their operation for 2012
deliver a total incentive opportunity of up to awards and 10% over ten years in respect of For 2012 there were four key incentive
five times salary for superior performance. all schemes adopted by many UK companies schemes in operation across the workforce
Assuming an on-target bonus and LTIP vesting and preferred by many institutional investors. as a whole. These are the annual bonus under
at 50% of maximum, the package delivers The reasons for this higher limit, which was the DAB Plan and an annual conditional award
around 2.5 times salary after three years. approved by shareholders when the LTIP under the LTIP for executive directors and
As mentioned above, this long-standing was introduced, are at least as strong today. senior managers and awards under the
arrangement has been effective at aligning pay These are the broad based nature of our Employee Equity Plan and Annual Bonus Plan
with performance. However, the expiry of the schemes which cover all employees and for all other employees. Option grants to
LTIP in 2013 has given the Committee the the need to be able to compete with US executive directors ceased in 2006
opportunity to re-visit the Group’s executive companies worldwide for the high calibre (although the facility to grant options exists
reward objectives to ensure that they are the engineers and executives required to secure in exceptional circumstances) and the move
most appropriate ones for the next phase in the Group’s future success. The Committee away from options to restricted shares for all
the Group’s development. is keenly aware of this issue, and will continue employees reduces potential dilution and has
to keep well below the 10% upper limit. simplified remuneration arrangements.
The Committee believes that the revised
arrangements provide a much simpler package Shareholding guideline We significantly out-performed our
(similar to the approach adopted in a largely Share ownership is considered important in international peer group over the last three
US dominated sector) and one that rewards aligning the interests of the senior management years which resulted in full vesting of both the
only sustained longer term performance. The team with other ARM shareholders. In LTIP and DAB Plan awards made in 2010,
chart below highlights the proposed change. addition to reducing the proportion of shares when the share price was 205 pence per
released to participants under the new LTIP share. To put the awards that are currently
Potential maximum bonus % of salary
after three years, it is proposed that the outstanding under the LTIP and DAB Plan into
600
shareholding guideline will increase from 100% context, the share price was 611 pence per
500 to 200% of base salary for executive directors share at the time awards were made in 2011
400 and Executive Committee members with and 568 pence per share for the 2012 awards.
300
effect from the first grants under the new LTIP. The share price was 924.5 pence per share
For other participants in the new LTIP, the on 7 February 2013, being the day before the
200 491.8
shareholding guideline will increase from 50% 2013 LTIP and DAB Plan awards were made.
100 to 100%
576.9 of base salary. Until these levels are Following the subsequent sustained increase
Current Proposed achieved, no more than 50% of shares in share price, the number of shares awarded
Base Cash bonus Potential DAB received through the DAB Plan and LTIP under these plans in 2011, 2012 and 2013 are
Potential DAB match LTIP (after the automatic sale of shares to satisfy tax at much lower levels.
liabilities) can be disposed of by participants.
Impact of proposed changes At the present share price, all of the executive Deferred Annual Bonus Plan
directors currently meet the 200% of base (DAB Plan) for 2012
The impact of the proposed changes is to
rebalance the package towards long-term salary shareholding guideline. As demonstrated in the table earlier in this
performance and materially reduce the total report, there is a high variable element to
Collectively the Executive Committee, executive directors’ remuneration. For 2012
quantum released under the package after including the executive directors, held
three years. In addition, the introduction of the target and maximum bonus of 100% and 150%
5.0 million shares with a value of £47.3 million of base salary respectively (after application of
new holding periods and increased share at 25 February 2013. This currently equates
ownership guidelines will result in longer term a personal performance multiplier which flexes
to a multiple of 12 times base salaries. the payment by 0.75 to 1.25) could be earned
performance alignment. Therefore, if share
price performance is sustained during the Base salary increase for 2012 and 2013 through the DAB Plan if all targets were met.
holding period, then participants are For 2012, the average increase in base salaries The strong performance of the Group in 2012
rewarded. If share price performance is not for the executive directors was 4.0% and the resulted in partial achievement of both of the
sustained during the holding period then average increase for the workforce as a whole equally weighted bonus targets, as set out below:
participants are worse off than under the old was 4.7%. For 2013 the average increases are
arrangements. 3.85% for the executive directors and 4.7% for
Bonus %
achieved
Share dilution the workforce as a whole. Within the overall of base
increase for 2013, the range was 3.6% for the 2012 Bonus targets Target Actual salary
It is proposed that the Group will continue US rising to 8.9% in Asia reflecting local market Revenue US$917.0m US$913.1m 48.3%
to manage dilution within the context of conditions and salary inflation. The higher Normalised
maintaining award levels within a 10% limit increase of 7.1% for Simon Segars reflects operating profit* £253.1m £257.7m 57.6%
over five years (excluding rolled over Artisan increased responsibilities in his new role as Total 105.9%
options), the limit that has applied since 2003. President of the Group.
* Normalised operating profit for bonus purposes is
calculated using the Group budget exchange rate of
£1:US$1.60 for 2012.
82
Each of the executive directors achieved a Linkage of bonus targets to business Awards under the DAB Plan will be made for
personal performance multiplier of at least 1.2 strategy the last time in respect of 2013, subject to
for 2012 which means bonus received was in The personal performance multiplier depends approval of the new LTIP at the 2013 AGM.
the range 127% to 132% of salary half of which on the achievement of pre-determined The Committee has decided to adopt the
was compulsorily deferred into shares for objectives which are reviewed and approved same bonus target arrangement for 2013 as
three years. Actual bonuses are detailed in by the Committee each year. These include applied in 2012 so that 50% of bonus will be
the table on page 90. key strategic objectives related to each dependent on achieving a US dollar revenue
director’s role and responsibilities including target and 50% on achieving a NOP target
The revenue target is set in US dollars to calculated at the Group budget exchange rate
reflect the main currency in which revenues compliance with the Management Charter
which is designed to foster employee of £1:US$1.60. The Committee believes that
are earned. these targets have been set at levels that are
development, understanding of the overall
The normalised operating profit (NOP) target vision and strategy of the Group and good challenging but achievable at high rates of
range was from zero payout at £218.8 million governance. There is compulsory deferral into performance.
up to 25% at £233.8 million and 50% at shares of 50% of the bonus earned and an Long Term Incentive Plan
£253.1 million, all at the Group budget opportunity to earn an equity match of up to
exchange rate of £1:US$1.60. 2:1, subject to achievement of an EPS Annual grants to executive directors are
performance condition. At the end of the normally made at a level equivalent to base
Shares representing the deferred element of three year deferral period the shares and any salary. Conditional awards vest to the extent
bonus earned in 2009 and awarded in 2010 matching shares earned are satisfied through that the performance criteria are satisfied
vested in February 2013, with the maximum the issue of new shares (any treasury shares over a three year performance period from
2:1 ratio of matching shares being triggered. available would be used first). 1 January of the year of award, with no
This ratio was achieved because EPS growth subsequent retesting permitted. The
was 170% which is greater than CPI plus 12% At EPS growth equal to the increase in the performance conditions are based on
per annum on average for the three years Consumer Prices Index (CPI) plus 4% per the Company’s TSR when measured against
making up the performance period. annum, the deferred shares will be matched that of two comparator groups (each testing
on a 0.3:1 basis, rising to 2:1 when EPS growth half of the shares comprised in the award).
The targets set by the Committee for the is in excess of CPI plus 12% per annum. These The first index comprises UK companies
DAB Plan each year are intended to be targets are directly related to the Group’s across all sectors (FTSE 350) and the second
stretching but motivational and average bonus financial results and encourage achievement comprises predominantly US companies
paid to the executive directors over the past of the Group’s short-term financial goals, while within the hi-tech sector (FTSE All World
five years was 112% of salary (with a range the deferral and matching elements encourage Technology Index).
from 70% payout for 2008 to 150% for 2011) a longer term view of the success of the
as shown below: Group. The deferred shares can be forfeited For each comparator group, the number of
in the event of gross misconduct and the shares that may vest may be up to a maximum
matching shares are subject to forfeiture of 200% of the relevant half of the shares
for “bad leavers”. comprised in the conditional award if the
Company’s TSR ranks in the upper decile, 50%
of the relevant half of the shares will vest in the
event of median performance and between
median and upper decile performance vesting
will increase on a straight-line basis. Additional
shares may vest to cover dividends paid by the
Company during the performance period. No
shares will be received for below-median
Average percentage bonus paid over the past five years to executive directors performance. In addition, no shares will vest
150% unless the Committee is satisfied that there
has been a sustained improvement in the
underlying financial performance of the Group.
% of base salary
100%
The vesting of the 2010 LTIP awards in
February 2013 was at the maximum level as a
50% 491.8
result of our significant out-performance
576.9 compared to our international peer group
0% 2008 2009 2010 2011 2012 over the past three years.
Notes Awards under the existing LTIP are being

2010 bonus was limited to 125% of base salary under the DAB Plan rules applicable at that time made for the last time in 2013, anticipating
approval of the new LTIP at the 2013 AGM.
All bonuses are subject to a performance multiplier on an individual basis but remain subject to the overall limit of 150%
83
ARM Holdings plc
Former share option schemes Performance graphs to six months following termination of

The remaining shares of the final option grant A performance graph showing the Company’s employment relating to non-competition,
to executive directors made in 2006 vested TSR together with the TSRs for the FTSE non-solicitation of the Group’s customers,
in accordance with the rules of the scheme in All-World Technology Index and the FTSE 350 non-dealing with customers and non-
February 2013. The performance conditions from 31 December 2007 is shown below. The solicitation of the Group’s suppliers and
relating to this option grant are set out in more TSR has been calculated in accordance with employees. In addition, each service contract
detail in the table later in this report. the Directors’ Remuneration Report contains an express obligation of confidentiality
Regulations 2002. in respect of the Group’s trade secrets and
Pensions confidential information and provides for
The Group does not operate its own pension The TSR for the Company’s shares was 558% the Group to own any intellectual property
scheme but makes payments into a group over this period compared with 8% for the rights created by the directors in the course
personal pension plan, which is a money FTSE All-World Technology Index for the of their employment.
purchase scheme. For executive directors, the same period.
The dates of the service contracts of each
normal rate of Group contribution is 10% of The Committee considers the FTSE All-World person who served as an executive director
the executive’s basic salary plus additional Technology Index to be an appropriate choice during the financial year are as follows:
amounts in accordance with the Group’s salary as the Index contains companies from the US,
sacrifice scheme. Full details of Group Asia and Europe and therefore reflects the Director Date
contributions are set out in the directors’ global environment in which the Group Warren East 29 January 2001
emoluments table later in this report. operates. In addition, the Index includes many Tim Score 1 March 2002
Since 2011, to the extent that contributions companies that are currently the Group’s Mike Inglis 17 July 2002
cannot be made in a tax efficient way at the customers, as well as companies which use Mike Muller 31 January 1996
10% of basic salary level, the difference is paid ARM technology in their end products. Simon Segars 4 January 2005
as an additional cash allowance (and subject Tudor Brown (retired 3 May 2012) 3 April 1996
to appropriate tax and other deductions). Service contracts
Executive directors have service contracts Where notice is served to terminate the
Executive Directors’ remuneration 2012 % of salary that may be terminated by either party on appointment, whether by the Group or the
1,500 one year’s notice. These agreements provide executive director, the Group in its absolute
for each of the directors to provide services discretion is entitled to terminate the
1,000 to the Group on a full-time basis and contain appointment by paying to the executive
restrictive covenants for periods of three director his salary in lieu of any required
period of notice.
500 491.8
576.9
Base Cash bonus DAB bonus
Option gains DAB match LTIP
ARM total shareholder return performance from 31 December 2007 to 31 December 2012
700
600
500
400
300
200
100
0
Dec 07
Jun 08
Dec 08
Jun 09
Dec 09
Jun 10
Dec 10
Jun 11
Dec 11
Jun 12
Dec 12
ARM FTSE All-World Technology FTSE 350
84
Non-executive directors Directors’ shareholdings

During 2012, the Chairmen of the Audit and in the Company
Remuneration Committees each received a The directors’ beneficial interests in the
total fee of £65,000 per annum and the other Company’s ordinary shares of 0.05 pence,
non-executive directors each received a total which exclude interests under its share option
fee of £52,000 per annum. The remuneration schemes, Long Term Incentive Plan and
of the non-executive directors was reviewed Deferred Annual Bonus Plan, are set out below.
following the appointment of the new
31 December 2012
Chairman. In line with fee arrangements in At date of or date of retirement
place in other companies of similar size and report if earlier 31 December 2011
complexity the executive directors have Director Number Number Number
implemented new arrangements from Sir John Buchanan (appointed 3 May 2012) – – –
1 January 2013 as follows: Warren East 1,418,465 1,289,522 1,194,914
Tim Score 739,094 654,297 289,151
• standard fee £55,000 per annum; and Mike Inglis 99,857 101,238 101,007
Mike Muller 1,338,367 1,343,625 1,158,163
• additional fee for Committee Chairmen Simon Segars 478,568 356,956 265,846
and Senior Independent Director £15,000 Andy Green – – –
per annum. Larry Hirst – – –
Kathleen O’Donovan – – –
This is believed to more fairly reflect the Janice Roberts – – –
workload undertaken by Committee Philip Rowley 50,000 50,000 50,000
Chairmen and the Senior Independent Tudor Brown (retired 3 May 2012) N/A 895,814 542,617
Director. The additional fee of $2,500 per Doug Dunn (retired 3 May 2012) N/A 48,000 48,000
meeting which is paid to non-executive Young Sohn (retired 31 December 2012) N/A – 84,000
directors who are based in the US and travel
to the UK for Board meetings will continue at In addition to the interests disclosed above,
this level. This is to reflect their additional time the executive directors have interests in
commitment. The term of appointment for dividend shares that could be awarded
non-executive directors is three years, which under the Long Term Incentive Plan and the
can be rolled forward for a further period of Deferred Annual Bonus Plan, the amount
three years and is subject to annual review. of which will depend on the extent to which
Fees paid to non-executive directors are the performance criteria are satisfied and the
reviewed annually with effect from 1 January. dividends declared during the performance
period. Changes in directors’ interests in the
The Chairman’s fee for 2012 and 2013
Company’s shares that have taken place in
is at the rate of £390,000 per annum.
the period from 31 December 2012 to the
Non-executive directors do not have service date of approval of the Remuneration report
contracts and are not eligible to participate in are shown above.
bonus or share incentive arrangements. Their
Audited information
service does not qualify for pension purposes
or other benefits and no element of their fees The following information has been
is performance-related. audited by the Company’s auditors,
PricewaterhouseCoopers LLP, as required
by the Companies Act 2006.
85
ARM Holdings plc
Interests in share options

Details of discretionary options beneficially held by directors are set out below:
As at
As at 31 December Exercise Earliest
1 January 2012 Granted Exercised Lapsed 2012 price date of Expiry
Director Number Number Number Number Number £ exercise date
Warren East 62,559 – 62,559 – – 1.055 04/02/08 06/02/12*
136,513 – – – 136,513 1.325 01/02/09 06/02/13*
199,072 – 62,559 – 136,513
Tim Score 50,047 – 50,047 – – 1.055 04/02/08 06/02/12*
114,959 – – – 114,959 1.325 01/02/09 06/02/13*
165,006 – 50,047 – 114,959
Mike Inglis 40,038 – 40,038 – – 1.055 04/02/08 06/02/12*
80,830 – – – 80,830 1.325 01/02/09 06/02/13*
120,868 – 40,038 – 80,830
Mike Muller 42,040 – 42,040 – – 1.055 04/02/08 06/02/12*
80,830 – – – 80,830 1.325 01/02/09 06/02/13*
122,870 – 42,040 – 80,830
Simon Segars 36,034 – 36,034 – – 1.055 04/02/08 06/02/12*
75,441 – – – 75,441 1.325 01/02/09 06/02/13*
111,475 – 36,034 – 75,441
Tudor Brown 46,044 – 46,044 – – 1.055 04/02/08 06/02/12*
(retired 3 May 2012) 93,404 – 93,404 – – 1.325 01/02/09 06/02/13*
139,448 – 139,448 – –
* Denotes share options issued under the Group’s Unapproved Share Option Scheme with performance conditions attached.
For options granted in 2005 the performance conditions were satisfied to the extent that 89.44% of the options vested on 8 February 2008 and the
balance vested on 6 February 2012.
For the final grant of options in 2006 the performance conditions were satisfied to the extent that 76.2% of the options vested on 8 February 2009 and
the balance vested on 6 February 2013. The expiry date was extended to the first day of the open period in accordance with the rules of the Scheme.
Details of options held by directors under the Group’s Save As You Earn option schemes are set out below:
As at
As at 31 December Exercise Earliest
1 January 2012 Granted Exercised 2012 price date of Expiry
Director Number Number Number Number £ exercise date
Warren East 4,620 – – 4,620 1.948 01/08/13 31/01/14
Tim Score 18,208 – – 18,208 0.854 01/08/14 31/01/15
Mike Inglis 10,626 – 10,626 – 0.854 01/08/12 31/01/13
Options issued under this scheme are issued at a 20% discount to market value.
Details of options exercised by directors during the year are as follows:
Market price
Exercise on date of Gains on
Number price exercise exercise
Director of shares £ £ £
Warren East 62,559 1.055 5.77 294,966
Tim Score 50,047 1.055 5.77 235,972
Tudor Brown (retired 3 May 2012) 46,044 1.055 5.77 217,097
93,404 1.325 5.833 421,065
Tudor Brown 139,448 638,162
Mike Inglis 40,038 1.055 5.77 188,779
10,626 0.854 7.725 73,011
Mike Inglis 50,664 261,790
Mike Muller 42,040 1.055 5.77 198,219
Simon Segars 36,034 1.055 5.77 169,900
Total 380,792 1,799,009
86
Details of options exercised by directors after the year end are as follows:
Market price
Exercise on date of Gains on
Number price exercise exercise
Director of shares £ £ £
Warren East 136,513 1.325 9.2943 1,087,911
Tim Score 114,959 1.325 9.2213 907,749
Mike Inglis 80,830 1.325 9.3014 644,736
Mike Muller 80,830 1.325 9.2211 638,241
Simon Segars 75,441 1.325 9.2168 595,362
Total 488,573 3,873,999
Long Term Incentive Plan

A Long Term Incentive Plan was approved by shareholders at the 2003 AGM. Conditional share awards held by directors are as follows:
Performance Market price at As at Awarded As at
period ending Award date of award 1 January in year Vested Lapsed 31 December Vesting
Director 31 December date £ Number Number Number Number Number date
Warren East 2011 8 February 2009 0.9975 416,040 – 416,040 – – February 2012*
2012 8 February 2010 2.05 209,756 – – – 209,756 February 2013**
2013 8 February 2011 6.11 77,741 – – – 77,741 February 2014
2014 8 February 2012 5.68 – 86,267 – – 86,267 February 2015
703,537 86,267 416,040 – 373,764
Tim Score 2011 8 February 2009 0.9975 360,902 – 360,902 – – February 2012*
604,073 70,422 360,902 – 313,593
Mike Inglis 2011 8 February 2009 0.9975 250,627 – 250,627 – – February 2012*
421,646 49,295 250,627 – 220,314
Mike Muller 2011 8 February 2009 0.9975 245,614 – 245,614 – – February 2012*
413,376 48,415 245,614 – 216,177
Simon Segars 2011 8 February 2009 0.9975 250,627 – 250,627 – – February 2012*
420,343 49,295 250,627 – 219,011
Tudor Brown 2011 8 February 2009 0.9975 214,286 – 214,286 – – February 2012*
(retired 3 May 2012 8 February 2010 2.05 106,341 – 106,341 – – February 2013**
2012) 2013 8 February 2011 6.11 36,007 – 27,649 8,358 – February 2014
356,634 – 348,276 8,358 –
* The performance conditions applicable to the 2009 conditional awards were satisfied to the extent of 200% plus dividend shares.
** The performance conditions applicable to the 2010 conditional awards were satisfied to the extent of 200% plus dividend shares.
87
ARM Holdings plc
LTIP vesting in 2012

As detailed in the 2011 annual report the performance conditions applicable to the conditional awards granted on 8 February 2009 were satisfied
in respect of the performance period ended 31 December 2011 to the extent of 200% plus dividend shares which vested on 8 February 2012,
as follows:
Conditional Vested Dividend Total Market value
award award shares award at vesting
Director Number Number Number Number £
Warren East 416,040 832,080 27,348 859,428 4,868,660
Tim Score 360,902 721,804 23,724 745,528 4,223,416
Mike Inglis 250,627 501,254 16,475 517,729 2,932,935
Mike Muller 245,614 491,228 16,145 507,373 2,874,268
Simon Segars 250,627 501,254 16,475 517,729 2,932,935
Tudor Brown (retired 3 May 2012) 214,286 428,572 14,086 442,658 2,507,658
Total 1,738,096 3,476,192 114,253 3,590,445 20,339,872
The amount vested above represents the maximum award under the LTIP. This is based on the total shareholder return as calculated below:
Comparator Group ARM TSR percentile rank Implied vesting
FTSE 350 index 99.6% 200%
FTSE All World Technology Index 99.5% 200%
Overall 200%
LTIP vesting in 2013

The performance conditions applicable to the conditional awards granted on 8 February 2010 were satisfied in respect of the performance period
ended 31 December 2012 to the extent of 200% plus dividend shares which vested on 8 February 2013, as follows:
Director Number Number Number Number £
Warren East 209,756 419,512 8,911 428,423 3,960,771
Tim Score 180,487 360,974 7,667 368,641 3,408,086
Mike Inglis 126,829 253,658 5,388 259,046 2,394,880
Mike Muller 124,390 248,780 5,284 254,064 2,348,822
Simon Segars 125,853 251,706 5,346 257,052 2,376,446
Total 767,315 1,534,630 32,596 1,567,226 14,489,005
The amount vesting above represents the maximum award under the LTIP. This is based on the total shareholder return as calculated below:
Comparator Group ARM TSR percentile rank Implied vesting
FTSE 350 index 99.4% 200%
FTSE All World Technology Index 100% 200%
Overall 200%
In accordance with the rules of the LTIP, on his retirement on 3 May 2012, Tudor Brown received the following shares under the Plan calculated
on a pro rata basis and reflecting the extent to which the performance conditions were satisfied at that date:
Grant Number Number Number Number £
8 February 2010 106,341 165,679 – 165,679 796,088
8 February 2011 36,007 27,649 – 27,649 132,853
The following conditional awards over ordinary shares were made under the LTIP on 8 February 2013: Warren East 54,083; Tim Score 44,889;
Mike Muller 30,827 and Simon Segars 32,449. The mid-market closing price of an ordinary share on 7 February 2013, being the business day prior
to the date of these conditional awards, was 924.5 pence.
88
Deferred Annual Bonus Plan (DAB Plan)

As described above, there is a compulsory deferral of 50% of the annual bonus earned by executive directors in the year. The emoluments detailed
below include the full bonus earned for 2012, although only half has been settled in cash and the deferred elements will be settled in shares after
three years.
The total number of deferred shares held under the DAB Plan by the directors following confirmation of 2012 bonus is:
Shares Shares Shares
deferred as deferred as deferred as
part of the part of the part of the Total
2010 bonus 2011 bonus 2012 bonus awards
Director Number Number Number Number
Warren East 43,985 62,720 33,677 140,382
Tim Score 37,847 50,572 28,637 117,056
Mike Inglis 26,595 35,651 19,244 81,490
Mike Muller 26,084 34,991 18,900 79,975
Simon Segars 26,391 35,387 20,045 81,823
Total 160,902 219,321 120,503 500,726
The performance conditions applicable to the matching awards relating to the deferred elements of the annual bonus for 2009 were satisfied to the
extent of 200% matching shares plus dividend shares which vested on 8 February 2013, as follows:
Shares
deferred as
part of the Matching Dividend Total
2009 bonus shares shares award
Director Number Number Number Number
Warren East 85,024 170,048 1,804 256,876
Tim Score 74,370 148,740 1,578 224,688
Mike Inglis 51,219 102,438 1,087 154,744
Mike Muller 50,195 100,390 1,065 151,650
Simon Segars 51,006 102,012 1,082 154,100
Total 311,814 623,628 6,616 942,058
The market value of an ARM share on the date of vesting was 924.5 pence. The matching shares vesting above represent the maximum award
under the DAB Plan. This award is based on an EPS growth rate before inflation of 170% per annum compared with a target growth rate of CPI plus
12% per annum on average for the three years making up the performance period.
In accordance with the rules of the DAB Plan, on his retirement on 3 May 2012, Tudor Brown received the following shares calculated on a pro rata
basis and reflecting the extent to which the performance conditions were satisfied at that date:
Shares
deferred as
part of the Matching Dividend Total
bonus shares shares award
Grant Number Number Number Number
2010 43,427 67,659 – 111,086
2011 22,299 19,875 – 42,174
2012 29,049 6,527 – 35,576
Except as described above, there have been no changes in directors’ interests under the Group’s equity schemes since the end of the 2012 financial
year up to the date of approval of the Remuneration report.
The Company’s register of directors’ interests contains full details of directors’ shareholdings and options to subscribe and conditional awards
under the LTIP.
Share prices
The market value of the shares of the Company as at 31 December 2012 was 768 pence. The closing mid-price ranged from 469 pence to
782.5 pence during the year.
89
ARM Holdings plc
Directors’ emoluments
The emoluments of the executive and non-executive directors of the Group in respect of services to the Group were paid through its wholly
owned subsidiary, ARM Limited with the exception of Simon Segars, Janice Roberts and Young Sohn who were paid through ARM Inc., and were
as follows:
Pension
Basic Bonus Pension Total Subtotal contributions Total
Fees salary Benefits* payments** Subtotal contributions 2012 2011 2011 2011
Director £ £ £ £ £ £ £ £ £ £
Executive
Warren East – 490,000 64,087 622,617 1,176,704 – 1,176,704 1,238,179 13,557 1,251,736
Tim Score – 400,000 25,178 529,436 954,614 42,560 997,174 982,736 40,703 1,023,439
Mike Inglis – 280,000 38,025 355,781 673,806 5,085 678,891 689,673 29,827 719,500
Mike Muller – 275,000 15,087 349,428 639,515 31,020 670,535 677,554 29,826 707,380
Simon Segars – 280,000 93,284 370,605 743,889 30,800 774,689 858,949 29,480 888,429
Tudor Brown (retired 3 May 2012) – 77,586 13,491 – 91,077 6,417 97,494 561,554 38,328 599,882
Total 1,802,586 249,152 2,227,867 4,279,605 115,882 4,395,487 5,008,645 181,721 5,190,366
Non-executive
Sir John Buchanan (appointed 3 May 2012) 258,879 – – – 258,879 – 258,879 – – –
Andy Green 52,000 – – – 52,000 – 52,000 42,816 – 42,816
Larry Hirst 52,000 – – – 52,000 – 52,000 46,791 – 46,791
Kathleen O’Donovan 65,000 – – – 65,000 – 65,000 60,000 – 60,000
Janice Roberts 58,314 – – – 58,314 – 58,314 53,084 – 53,084
Philip Rowley 65,000 – – – 65,000 – 65,000 60,000 – 60,000
Doug Dunn (retired 3 May 2012) 62,069 – – – 62,069 – 62,069 175,000 – 175,000
John Scarisbrick
(retired 12 May 2011) – – – – – – – 18,391 – 18,391
Jeremy Scudamore
(retired 31 January 2011) – – – – – – – 5,000 – 5,000
Young Sohn
(retired 31 December 2012) 59,906 – – – 59,906 – 59,906 56,324 – 56,324
Total 673,168 – – – 673,168 – 673,168 517,406 – 517,406
Total 673,168 1,802,586 249,152 2,227,867 4,952,773 115,882 5,068,655 5,526,051 181,721 5,707,772
* A
ll the executive directors receive family healthcare and annual travel insurance as part of their benefits in kind. In addition, Tim Score has the use of a company car with fuel
benefit and Warren East, Tudor Brown, Mike Inglis and Mike Muller received a car and petrol allowance. Simon Segars receives living, transportation and other allowances as
part of his placement in the US. Warren East, Mike Inglis and Tudor Brown received an additional cash allowance in place of Group pension contributions that can no longer be
contributed in a tax-efficient way.
** The bonus payments above represent the full bonus earned during 2012. According to the terms of the DAB Plan, 50% of this bonus is not paid in cash, but is deferred and
becomes payable in shares after three years. Details of the awards made in February 2012 in respect of these deferrals are detailed above.
Warren East is the highest paid employee in the Company.

The following information is unaudited.
Total directors’ pay
The Group has defined total directors’ pay as the total of basic salary, benefits, bonus and pension contributions during 2012, plus the gains made
on share options exercised during the year and the value of shares vesting under the LTIP and the DAB Plan in respect of that year. The LTIP and
DAB shares that vested in February 2013 have been included since 31 December 2012 is the end of the three year performance period for these
awards. The amount previously reported in the 2009 Annual Report as part of 2009 bonus has been deducted, as this is included within the value
of the DAB shares awarded.
90
The total directors’ pay for 2012 for each of the executive directors was as follows:
Salary, benefits, Market value of Market value of Less DAB Plan
bonus and Share option LTIP awards DAB Plan awards previously disclosed Total
pension for gains during relating to 2012 relating to 2012 in 2009 Report as director
2012 2012 (received 2013) (received 2013) part of 2009 bonus pay
Director £ £ £ £ £ £
Warren East 1,176,704 294,966 3,960,771 2,374,819 (174,300) 7,632,960
Tim Score 997,174 235,972 3,408,086 2,077,241 (152,460) 6,566,013
Mike Inglis 678,891 261,790 2,394,880 1,430,608 (105,000) 4,661,169
Mike Muller 670,535 198,219 2,348,822 1,402,004 (103,400) 4,516,180
Simon Segars 774,689 169,900 2,376,446 1,424,655 (104,563) 4,641,127
Tudor Brown 97,494 638,162 928,941* 907,357* (89,027) 2,482,927
Total 4,395,487 1,799,009 15,417,946 9,616,684 (728,750) 30,500,376
* These represent gains made by Tudor Brown on LTIP and DAB plans on his retirement on 3 May 2012.
The total directors’ pay for 2011 for each of the executive directors was as follows:
Less DAB Plan
previously disclosed
Salary, benefits, Share option LTIP gains DAB Plan gains in 2008 report Total
bonus and gains during relating to 2011 relating to 2011 as part of director
pension for 2011 2011 (received 2012) (received 2012) 2008 bonus pay
Director £ £ £ £ £ £
Warren East 1,251,736 1,068,619 4,868,660 2,463,567 (143,251) 9,509,331
Tim Score 1,023,439 – 4,223,416 2,189,613 (127,322) 7,309,146
Mike Inglis 719,500 – 2,932,935 1,520,565 (88,282) 5,084,718
Mike Muller 707,380 5,416 2,874,268 1,454,381 (85,570) 4,955,875
Simon Segars 888,429 16,980 2,932,935 1,520,565 (88,418) 5,270,491
Tudor Brown 599,882 5,071 2,507,658 1,480,344 (86,080) 4,506,875
Total 5,190,366 1,096,086 20,339,872 10,629,035 (618,923) 36,636,436
2013 Salary Review

The Committee has approved the following increases in basic salary with effect from 1 January 2013:
Basic salary £ % increase
Warren East 500,000 2.04
Tim Score 415,000 3.75
Mike Inglis 285,000 1.79
Mike Muller 285,000 3.64
Simon Segars 300,000 7.14
It is the Company’s policy to allow executive directors to hold non-executive positions at other companies and to receive remuneration for their
services. The Board believes that experience of the operations of other companies and their boards and committees is valuable to the
development of the executive directors.
Details of executive directors’ roles within other companies and their remuneration are as follows:
Warren East is a non-executive director of De La Rue plc and he received remuneration totalling £49,000 up to 31 December 2012 (2011: £47,000).
Mike Inglis is a non-executive director of Pace plc and he received remuneration totalling £42,000 up to 31 December 2012 (2011: £42,000).
Tim Score is a non-executive director of National Express Group plc and he received remuneration totalling £60,500 up to 31 December 2012
(2011: £60,500). Mike Muller became a non-executive director of Intelligent Energy Limited in July 2012 and he received fees totalling £16,666 up to
31 December 2012. Tudor Brown was a non-executive director of ANT plc and he received remuneration totalling £4,000 up to his retirement
on 3 May 2012 (2011: £12,000 for the full year).
All of the executive directors are accruing benefits under a money purchase pension scheme as a result of their services to the Group.
Contributions to the scheme or the alternative cash allowance as described in the Pensions section above were fully paid during the year.
By order of the Board
Philip Rowley
Remuneration Committee Chairman
91
ARM Holdings plc
Independent auditors’ report to the members

of ARM Holdings plc
We have audited the Group financial statements of ARM Holdings plc for the year ended 31 December 2012 which comprise the consolidated
income statement, the consolidated statement of comprehensive income, the consolidated balance sheet, the consolidated cash flow statement,
the consolidated statement of changes in shareholders’ equity and the related notes. The financial reporting framework that has been applied in
their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.
Respective responsibilities of directors and auditors
As explained more fully in the Statement of directors’ responsibilities included in the Directors’ report, the directors are responsible for the
preparation of the Group financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express
an opinion on the Group financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland).
Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.
This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with Chapter 3 of
Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, 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 the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the
financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting
policies are appropriate to the Group’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant
accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and
non-financial information in the Annual Report and Accounts to identify material inconsistencies with the audited financial statements. If we
become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.
Opinion on financial statements
In our opinion the Group financial statements:
• give a true and fair view of the state of the Group’s affairs as at 31 December 2012 and of its profit and cash flows for the year then ended;
• have been properly prepared in accordance with IFRSs as adopted by the European Union; and
• have been prepared in accordance with the requirements of the Companies Act 2006 and Article 4 of the IAS Regulation.
Opinion on other matter prescribed by the Companies Act 2006

In our opinion the information given in the Directors’ report for the financial year for which the Group financial statements are prepared
is consistent with the Group financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following:
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Under the Listing Rules we are required to review:
• the directors’ statement in the Directors’ report in relation to going concern;
• the part of the Corporate Governance statement relating to the Company’s compliance with the nine provisions of the UK Corporate
Governance Code specified for our review; and
• certain elements of the report to shareholders by the Board on directors’ remuneration.
Other matter
We have reported separately on the parent company financial statements of ARM Holdings plc for the year ended 31 December 2012 and on the
information in the Remuneration report that is described as having been audited.
Charles Bowman (Senior Statutory Auditor)

for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London, 27 February 2013
92
Overview Our marketplace Strategy and Our partnership Our commitment Financials and risk Governance Financial
performance approach statements
In this section
Consolidated income statement Read more on page 94
Consolidated statement of
comprehensive income Read more on page 94
Consolidated balance sheet Read more on page 95
Consolidated cash flow statement Read more on page 96
Consolidated statement of changes

in shareholders’ equity Read more on page 97
Notes to the financial statements Read more on page 98
Company balance sheet/UK GAAP Read more on page 142
Notes to the financial statements/

UK GAAP Read more on page 143
Independent auditors’ report to

the members of ARM Holdings plc Read more on page 149
Glossary Read more on page 150
Group directory Read more on page 151
Key shareholder information Read more on page 152
93
ARM Holdings plc
Consolidated income statement
2012 2011
For the year ended 31 December Note £m £m
Revenues 2 576.9 491.8
Cost of revenues (31.9) (27.7)
Gross profit 545.0 464.1
Operating expenses
Research and development (166.3) (165.4)
Sales and marketing (72.9) (72.6)
General and administrative (97.7) (77.2)
Total operating expenses (336.9) (315.2)
Profit from operations 208.1 148.9
Investment income 13.9 8.0
Interest payable and similar charges (0.3) –
Share of results in joint venture 29 (0.7) –
Profit before tax 2, 5 221.0 156.9
Tax 6 (60.3) (44.3)
Profit for the year 2 160.7 112.6
Earnings per share
Basic and diluted earnings 160.7 112.6
Number of shares (millions)
Basic weighted average number of shares 1,375.1 1,345.0
Effect of dilutive securities: Employee incentive schemes 20.7 31.0
Diluted weighted average number of shares 1,395.8 1,376.0
Basic EPS 8 11.7p 8.4p
Diluted EPS 8 11.5p 8.2p
All the profit for the year is attributable to the owners of the Company. The Company has opted to present its own accounts under UK GAAP as
shown on pages 142 to 148.
Details of dividends paid and proposed are in notes 7 and 28 of the financial statements respectively.
Consolidated statement of comprehensive income
2012 2011
Profit for the year 160.7 112.6
Other comprehensive income:
Unrealised holding (loss)/gain on available-for-sale financial assets (net of tax of £0.1m (2011: £0.1m)) 13 (0.3) 0.3
Currency translation adjustment (26.8) 1.2
Other comprehensive (loss)/income for the year (27.1) 1.5
Total comprehensive income for the year 133.6 114.1
The accompanying notes are an integral part of the financial statements.
94
Consolidated balance sheet
2012 2011
At 31 December Note £m £m
Assets
Current assets:
Cash and cash equivalents 9, 19 46.3 26.8
Short-term deposits 19 340.0 319.1
Fair value of currency exchange contracts 19 1.4 –
Embedded derivatives 19 – 1.2
Accounts receivable 10 124.5 119.6
Prepaid expenses and other assets 11 135.6 30.7
Current tax assets 13.9 6.2
Inventories 12 2.3 2.5
Total current assets 664.0 506.1
Non-current assets:
Long-term deposits 19 141.3 83.1
Loans and receivables 19 2.1 2.0
Available-for-sale financial assets 13, 19 13.8 27.3
Investment in joint venture 29 6.8 –
Prepaid expenses and other assets 11 2.0 2.3
Property, plant and equipment 14 36.1 18.1
Goodwill 15 519.4 542.5
Other intangible assets 16 11.2 12.5
Deferred tax assets 6 70.1 105.9
Total non-current assets 802.8 793.7
Total assets 1,466.8 1,299.8
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable 19 5.9 8.7
Fair value of currency exchange contracts 19 – 1.5
Embedded derivatives 19 2.5 –
Accrued and other liabilities 17 79.3 84.9
Finance lease liabilities 18 2.9 –
Current tax liabilities 16.6 26.7
Deferred revenue 126.4 102.2
Total current liabilities 233.6 224.0
Non-current liabilities:
Finance lease liabilities 18 2.9 –
Total non-current liabilities 27.1 14.6
Total liabilities 260.7 238.6
Net assets 1,206.1 1,061.2
Capital and reserves attributable to owners of the Company
Share capital 20 0.7 0.7
Share premium account 12.2 6.6
Capital reserve 354.3 351.6
Share option reserve 61.4 61.4
Retained earnings 703.3 539.6
Revaluation reserve – 0.3
Cumulative translation adjustment 74.2 101.0
Total equity 1,206.1 1,061.2
The accompanying notes are an integral part of the financial statements. The financial statements on pages 94 to 141 were approved by the Board of
directors on 27 February 2013 and were signed on its behalf by:
Sir John Buchanan,
Chairman 95
ARM Holdings plc
Consolidated cash flow statement
2012 2011
Profit before tax 221.0 156.9
Investment income (net of interest payable and similar charges) (13.6) (8.0)
Share of results in joint venture 0.7 –
Profit from operations 208.1 148.9
Adjustments for:
Depreciation and amortisation of property, plant and equipment and intangible assets 17.4 13.2
Compensation charge in respect of share-based payments 37.1 40.5
Impairment of available-for-sale financial assets 1.4 1.6
(Profit)/loss on disposal of available-for-sale financial assets (0.8) 0.1
Provision for doubtful debts 0.4 –
Non-cash foreign currency gains (0.7) (2.2)
Movement in fair value of currency exchange contracts (2.9) 1.3
Movement in fair value of embedded derivatives 3.7 1.2
Changes in working capital
Accounts receivable (5.7) (13.4)
Inventories 0.1 (0.6)
Prepaid expenses and other assets 11 (104.8) (12.3)
Accounts payable (2.8) 4.3
Accrued and other liabilities (4.8) 10.2
Cash generated by operations before tax 183.0 216.1
Income taxes paid (26.1) (22.3)
Net cash from operating activities 156.9 193.8
Investing activities
Interest received 11.5 4.2
Interest paid (0.3) –
Purchases of property, plant and equipment (20.2) (12.1)
Purchases of other intangible assets 16 (5.4) (0.8)
Purchases of available-for-sale financial assets 13 (3.0) (8.3)
Proceeds on disposal of available-for-sale financial assets 11.8 –
Purchase of short- and long-term deposits, net (76.8) (136.4)
Purchase of subsidiaries, net of cash acquired 22 – (9.0)
Investment in joint venture 29 (7.5) –
Net cash used in investing activities (89.9) (162.4)
Financing activities
Proceeds from borrowings 99.8 –
Proceeds received on issuance of shares from treasury – 1.9
Proceeds received on issuance of shares 20 5.6 6.6
Refund of costs related to share issue 2.7 –
Dividends paid to shareholders 7 (51.8) (42.2)
Repayment of borrowings (99.8) –
Repayment of finance lease liabilities (3.3) –
Net cash used in financing activities (46.8) (33.7)
Net increase/(decrease) in cash and cash equivalents 20.2 (2.3)
Cash and cash equivalents at beginning of the year 9 26.8 29.4
Effect of foreign exchange rate changes (0.7) (0.3)
Cash and cash equivalents at end of the year 9 46.3 26.8
96
Consolidated statement of changes in shareholders’ equity
Attributable to the owners of the Company
Share Share Cumulative

Share premium Capital option Retained Revaluation translation
capital account reserve* reserve** earnings reserve*** adjustment Total
For the year ended 31 December £m £m £m £m £m £m £m £m
Balance at 1 January 2011 0.7 – 351.6 61.4 381.4 – 99.8 894.9
Profit for the year – – – – 112.6 – – 112.6
Unrealised holding gain on available-for-sale financial assets (net of
tax of £0.1 million) – – – – – 0.3 – 0.3
Currency translation adjustment – – – – – – 1.2 1.2
Total comprehensive income for the year – – – – 112.6 0.3 1.2 114.1
Shares issued on exercise of share options and awards (note 20) – 6.6 – – – – – 6.6
Dividends (note 7) – – – – (42.2) – – (42.2)
Credit in respect of employee share schemes – – – – 40.5 – – 40.5
Movement on tax arising on share options and awards – – – – 45.4 – – 45.4
Proceeds from sale of own shares – – – – 1.9 – – 1.9
– 6.6 – – 45.6 – – 52.2
Balance at 31 December 2011 0.7 6.6 351.6 61.4 539.6 0.3 101.0 1,061.2
Profit for the year – – – – 160.7 – – 160.7
Unrealised holding loss on available-for-sale financial assets (net of
tax of £0.1 million) – – – – – (0.3) – (0.3)
Currency translation adjustment – – – – – – (26.8) (26.8)
Total comprehensive income for the year – – – – 160.7 (0.3) (26.8) 133.6
Shares issued on exercise of share options and awards (note 20) – 5.6 – – – – – 5.6
Dividends (note 7) – – – – (51.8) – – (51.8)
Credit in respect of employee share schemes – – – – 37.1 – – 37.1
Movement on tax arising on share options and awards – – – – 17.7 – – 17.7
Refund of costs related to share issue **** – – 2.7 – – – – 2.7
– 5.6 2.7 – 3.0 – – 11.3
Balance at 31 December 2012 0.7 12.2 354.3 61.4 703.3 – 74.2 1,206.1
* 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 1985. The reserve has been classified as a capital reserve to reflect the nature of the original credit to equity arising on acquisition. This capital reserve is clearly distinguished from the share
premium arising on share issues.
** Share option reserve. This represents the fair value of options granted on the acquisition of Artisan Components Inc. in 2004.
*** Revaluation reserve. The Group includes on its balance sheet equity investments that are not publicly traded, which are classified as available-for-sale financial assets. These are carried at fair value plus
transaction costs. Unrealised holding gains or losses on such investments are included, net of related taxes, within the revaluation reserve (except where there is evidence of permanent impairment, in which
case losses would be recognised within the income statement). Any unrealised gains within this reserve are undistributable.
**** 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 or
clearance system outside the EU was in breach of EU law. The Group has therefore been 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 2004.
97
ARM Holdings plc
Notes to the financial statements
1 The Group and a summary of its significant accounting policies and financial risk management
1a General information about the Group
The business of the Group
ARM Holdings plc and its subsidiary companies (“ARM” or “the Group”) designs microprocessors, physical IP and related technology and software, and
sells development tools, to enhance the performance, cost-effectiveness and energy-efficiency of high-volume embedded applications.
The Group licenses and sells its technology and products to leading international electronics companies, which in turn manufacture, market and sell
microcontrollers, application-specific integrated circuits (ASICs) and application-specific standard processors (ASSPs) based on ARM’s technology to
systems companies for incorporation into a wide variety of end products.
By creating a network of Partners, and working with them to best utilise ARM’s technology, the Group is establishing its processor architecture and
physical IP for use in many high-volume embedded microprocessor applications, including mobile phones, tablets, digital televisions and PC peripherals
and for use in many growing markets, including smart cards and microcontrollers.
The Group also licenses and sells development tools direct to systems companies and provides support services to its licensees, systems companies and
other systems designers.
The Group’s principal geographic markets are Europe, the US and Asia Pacific.
Incorporation and history
ARM is a public limited company incorporated and domiciled under the laws of England and Wales. The registered office of the Company is 110
Fulbourn Road, Cambridge, CB1 9NJ, UK.
The Company was formed on 16 October 1990, as a joint venture between Apple Computer (UK) Limited and Acorn Computers Limited, and
operated under the name Advanced RISC Machines Holdings Limited until 10 March 1998, when its name was changed to ARM Holdings plc. Its initial
public offering was on 17 April 1998.
Group undertakings include ARM Limited (incorporated in the UK), ARM Inc. (incorporated in the US), ARM KK (incorporated in Japan), ARM Korea
Limited (incorporated in South Korea), ARM France SAS (incorporated in France), ARM Germany GmbH (incorporated in Germany), ARM Norway
AS (incorporated in Norway), ARM Sweden AB (incorporated in Sweden), ARM Embedded Technologies Pvt. Limited (incorporated in India), ARM
Taiwan Limited (incorporated in Taiwan) and ARM Consulting (Shanghai) Co. Limited (incorporated in PR China).
1b Summary of significant accounting policies
The principal accounting policies applied in the presentation of these consolidated financial statements are set out below. These policies have been
consistently applied to all the years presented, unless otherwise stated.
Basis of preparation
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the
EU, IFRIC interpretations and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
The consolidated financial statements have been prepared under the historical cost convention as modified by: the revaluation to fair value of available-
for-sale financial assets; financial assets and liabilities (including derivative instruments) at fair value through the income statement; and embedded
derivatives.
Critical accounting estimates and judgments
The preparation of these financial statements requires the directors to make critical accounting estimates and judgments that affect the amounts
reported in the financial statements and accompanying notes. These estimates and judgments are summarised in note 1d.
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1b Summary of significant accounting policies continued

New standards, amendments and interpretations
Standards, amendments and interpretations that are not yet effective and have not been early adopted
IFRS 9 “Financial instruments on classification and measurement” This is the first part of a new standard to replace IAS 39. IFRS 9 has two
measurement categories: amortised cost and fair value. All equity instruments are measured at fair value. A debt instrument is measured at amortised
cost only if the entity is holding it to collect contractual cash flows and the cash flows represent principal and interest. Otherwise it is measured at fair
value through the income statement. This standard is not expected to have a material impact on the results of the Group. Published by the IASB in
November 2009, this is effective for accounting periods beginning on or after 1 January 2015. This standard is not yet endorsed by the EU.
IFRS 10 “Consolidated financial statements” IFRS 10 replaces the guidance on control and consolidation in IAS 27 “Consolidated and separate financial
statements”, and SIC-12 “Consolidation – special purpose entities” and changes the definition of control so that the same criteria are applied to all
entities. The revised definition of control focuses on the need to have both power and variable returns before control is present. Power is the current
ability to direct the activities that significantly influence returns. Returns must vary and can be positive, negative or both. This standard is not expected to
have a material impact on the results of the Group. The standard is effective for annual periods beginning on or after 1 January 2013 and was endorsed
by the EU in December 2012.
IFRS 11 “Joint arrangements” Changes in the definitions have reduced the “types” of joint arrangements to two: joint operations and joint ventures.
The existing policy choice of proportionate consolidation for jointly controlled entities has been eliminated. Equity accounting is mandatory for
participants in joint ventures. Entities that participate in joint operations will follow accounting much like that for joint assets or joint operations today,
whereby a joint operator will recognise its interest based on its involvement in the joint operation (that is, based on its direct rights and obligations)
rather than on the participation interest it has in the joint arrangement. In contrast, a joint venture does not have rights to individual assets or obligations
for individual liabilities of the joint venture. Instead, joint venturers share in the net assets and, in turn, the outcome (profit or loss) of the activity
undertaken by the joint venture. This standard is not expected to have a material impact on the results of the Group. This standard is effective for
annual periods beginning on or after 1 January 2013 and was endorsed by the EU in December 2012.
IFRS 12 “Disclosure of interests in other entities” IFRS 12 sets out the required disclosures for entities reporting under the two new standards, IFRS 10
“Consolidated financial statements”, and IFRS 11 “Joint arrangements”. The new standard, IFRS 12, requires entities to disclose information that helps
financial statement readers to evaluate the nature, risks and financial effects associated with the entity’s interests in subsidiaries, associates, joint
arrangements and unconsolidated structured entities. This standard is not expected to have a material impact on the results of the Group. The standard
is effective for annual periods beginning on or after 1 January 2013 and was endorsed by the EU in December 2012.
IFRS 13 “Fair value measurement” The requirements do not extend the use of fair value accounting but provide guidance on how it should be applied
where its use is already required or permitted by other standards. IFRS 13 aims to improve consistency and reduce complexity by providing a precise
definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs. This standard is not expected to
have a material impact on the results of the Group. The standard is effective for annual periods beginning on or after 1 January 2013 and was endorsed
by the EU in December 2012.
IAS 28 (Revised) “Investments in associates and joint ventures” IAS 28 defines “significant influence” and the “equity method” and provides guidance on
their practical application. The revised standard incorporates the accounting for joint ventures as well as the consensus from SIC-13 “Jointly controlled
entities”. The disclosure requirements have now been relocated to IFRS 12. This new guidance may impact the classification of investments acquired in
the future. This standard is not expected to have a material impact on the results of the Group. This standard is effective for annual periods beginning on
or after 1 January 2013 and was endorsed by the EU in December 2012.
Amendment to IAS 1 “Financial statement presentation” The main change resulting from this amendment is a requirement for entities to group items
presented in other comprehensive income (OCI) on the basis of whether they are potentially reclassifiable to the income statement subsequently
(reclassification adjustments). This standard is effective for accounting periods beginning on or after 1 July 2012 and was endorsed by the EU in June
2012. It is not expected to have a material impact on the Group.
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ARM Holdings plc
Notes to the financial statements continued

New standards, amendments and interpretations continued
IAS 27 (revised 2011) “Separate financial statements” This standard includes the provisions on separate financial statements that are left after the
control provisions of IAS 27 have been included in the new IFRS 10. This standard is effective for accounting periods beginning on or after 1 January
2013 and was endorsed by the EU in December 2012. It is not expected to have a material impact on the Group.
Amendment to IAS 32 “Financial instruments: Presentation” This amendment updates the application guidance in IAS 32 to clarify some of the
requirements for offsetting financial assets and financial liabilities on the balance sheet. This standard is effective for accounting periods beginning on or
after 1 January 2014 and was endorsed by the EU in December 2012. It is not expected to have a material impact on the Group.
Annual improvements 2011 This set of amendments includes changes to five standards. These amendments are not yet endorsed by the EU and are
not expected to have a material impact on the Group when they become effective for accounting periods beginning on or after 1 January 2013.
Segment reporting
At 31 December 2012, the Group was organised on a world-wide basis into three business segments, namely the Processor Division (PD), the Physical
IP Division (PIPD) and the System Design Division (SDD). This is based upon the Group’s internal organisation and management structure and is the
primary way in which the Chief Operating Decision Maker (CODM) and the rest of the Board are provided with financial information. The directors
believe that the CODM is the Chief Executive Officer of the Group.
Segment expenses are expenses that are directly attributable to a segment together with the relevant portion of other expenses that can reasonably be
allocated by segment. Foreign exchange gains or losses, investment income, interest payable and similar charges, share of joint venture results, and tax
are not allocated by segment.
Segment assets and liabilities include items that are directly attributable to a segment plus an allocation on a reasonable basis of shared items. Corporate
assets and liabilities are not included in business segments and are thus unallocated. At 31 December 2012 and 2011, these comprised cash and cash
equivalents, short- and long-term deposits, available-for-sale financial assets, loans and receivables, embedded derivatives, and the fair value of currency
exchange contracts. Current and deferred tax assets and liabilities and VAT are also not included in business segments and are thus unallocated.
Principles of consolidation
The consolidated financial statements incorporate the financial statements of the Company and all its subsidiaries. Intra-group transactions, including
sales, profits, receivables and payables, have been eliminated on consolidation. All subsidiaries use uniform accounting policies.
Business combinations
The results of subsidiaries acquired are included in the income statement from the date of acquisition. Assets and liabilities existing at the date of
acquisition are recorded at their fair values reflecting their condition at that date.
Earn-outs paid as part of an acquisition are assessed on an individual basis and treated as either part of the acquisition consideration or as employee
compensation depending on the nature of the agreement.
Subsidiaries
Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies
generally accompanying a shareholding of more than 50% of the voting rights. The existence and effect of potential voting rights that are currently
exercisable or convertible are considered when assessing whether the Group controls another entity.
Associates
Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and
50% of the voting rights. Investments in associates are accounted for using the equity method of accounting. Under the equity method, the investment is
initially recognised at cost, and the carrying amount is increased or decreased to recognise the Group’s share of the profit or loss of the investee after
the date of acquisition.
Joint ventures
Joint ventures are all entities in which the Group has joint control with one or more other parties, whereby each party has a right to a share of the net
assets of the entity. Investments in joint ventures are accounted for using the equity method of accounting. Under the equity method, the investment is
initially recognised at cost, and the carrying amount is increased or decreased to recognise the Group’s share of the profit or loss of the investee after
the date of acquisition.
100

Foreign currency translation
(a) Functional and presentation currency The functional currency of each Group entity is the currency of the primary economic environment in
which that entity operates. The consolidated financial statements are presented in sterling, which is the presentation currency of the Group.
(b) Transactions and balances Transactions denominated in foreign currencies have been translated into the functional currency of each Group entity
at actual rates of exchange at the date of transaction. Monetary assets and liabilities denominated in foreign currencies have been translated at closing
rates of exchange at the balance sheet date. Exchange differences have been included in general and administrative expenses.
(c) Group companies The results and financial positions of all Group entities (none of which has the currency of a hyper-inflationary economy) not
based in the UK are translated into sterling as follows:
(i) assets and liabilities for each balance sheet presented are translated at the closing rates of exchange at the balance sheet date;
(ii) income and expenses for each income statement presented are translated at the rates of exchange at the time of each transaction during the period;
and
(iii) all resulting exchange differences are recognised as a separate component of equity, being taken through other comprehensive income via the
cumulative translation adjustment.
When a foreign operation is partially disposed of or sold, exchange differences that were recognised through other comprehensive income are
recognised in the income statement as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at
the closing rates of exchange.
Revenue recognition
The Group follows the principles of IAS 18, “Revenue recognition”, in determining appropriate revenue recognition policies. In principle, therefore,
revenue associated with the sale of goods is recognised when all of the following conditions have been satisfied:
• the Group has transferred to the buyer the significant risks and rewards of ownership of the goods;
• the Group does not retain either continuing managerial involvement to the degree usually associated with ownership or effective control over the
goods sold;
• the amount of revenue can be measured reliably;
• it is probable that the economic benefits associated with the transaction will flow to the Group; and
• the costs incurred or to be incurred in respect of the sale can be measured reliably.
Revenue associated with the rendering of services is recognised when all of the following conditions have been satisfied:
• the amount of revenue can be measured reliably;
• it is probable that the economic benefits associated with the transaction will flow to the Group;
• the stage of completion of the transaction at the end of the reporting period can be measured reliably; and
• the costs incurred for the transaction and the costs to complete the transaction can be measured reliably.
Revenue is shown net of value added tax, returns, rebates and discounts, and after eliminating sales within the Group.
Revenue comprises the value of sales of licences to ARM technology, royalties arising from the resulting sale of licensees’ ARM technology-based
products, revenues from support, maintenance and training, consulting contracts and the sale of development boards and software toolkits.
Revenue from standard licence products which are not modified to meet the specific requirements of each customer is recognised when all of the
conditions relevant to revenue associated with the sale of goods have been satisfied:
• the significant risks and rewards of ownership are transferred when a licence arrangement has been agreed and the goods have been delivered to the
customer;
• continuing managerial involvement and effective control over goods sold is relinquished at the point at which goods are delivered to the customer;
• the amount of revenue can be measured reliably; any consideration due under the licensing arrangement that is not deemed to be reliably measurable
is deferred until it can be measured reliably; and
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ARM Holdings plc

Revenue recognition continued
• it is probable that the economic benefits associated with the transaction will flow to the Group; any economic benefits of the transaction that are
deemed unlikely to flow to the Group are deferred until it becomes probable that they will flow to the Group.
The majority of the Group’s revenues come from the licensing of intellectual property and subsequent receipt of royalty revenues and there are
therefore very few direct costs associated with the sale of goods; where there are direct costs of revenues, these are measured with reference to the
purchasing agreements in place with the Group’s suppliers.
Many licence agreements are for products which are designed to meet the specific requirements of each customer. Revenue from the sale of such
licences is recognised on a percentage-of-completion basis over the period from signing of the licence to customer acceptance. Under the percentage-
of-completion method, provisions for estimated losses on uncompleted contracts are recognised in the period in which the likelihood of such losses is
determined. The percentage-of-completion is measured by monitoring progress using records of actual time incurred to date in the project compared
with the total estimated project requirement, which approximates to the extent of performance.
Where invoicing milestones in licence arrangements are such that the receipts fall due significantly outside the period over which the customisation is
expected to be performed or significantly outside its normal payment terms for standard licence arrangements, the Group evaluates whether it is
probable that economic benefits associated with these milestones will flow to the Group and therefore whether these receipts should initially be
included in the arrangement consideration.
In particular, it considers:
• whether there is sufficient certainty that the invoice will be raised in the expected timeframe, particularly where the invoicing milestone is in some way
dependent on customer activity;
• whether it has sufficient evidence that the customer considers that the Group’s contractual obligations have been, or will be, fulfilled;
• whether there is sufficient certainty that only those costs expected to be incurred will indeed be incurred before the customer will accept that a future
invoice may be raised; and
• the extent to which previous experience with similar product groups and similar customers supports the conclusions reached.
Where the Group considers that there is insufficient evidence that it is probable that the economic benefits associated with such future milestones will
flow to the Group, taking into account these criteria, such milestones are excluded from the arrangement consideration until there is sufficient evidence
that it is probable that the economic benefits associated with the transaction will flow to the Group. The Group does not discount future invoicing
milestones, as the effect of so doing would be immaterial.
Where agreements involve several components, the entire fee from such arrangements is allocated to each of the individual components based on each
component’s fair value, where fair value is the price that is regularly charged for an item when sold separately. Where a component in a multiple-
component agreement has not previously been sold separately, the assessment of fair value for that component is based on other factors including, but
not limited to, the price charged when it was sold alongside other items and the book price of the component relative to the book prices of the other
components in the agreement. If fair value of one or more components in a multiple-component agreement is not determinable (where such
component is not considered incidental to the overall arrangement), the entire arrangement fee is deferred until such fair value is determinable, or the
component has been delivered to the licensee. Where, in substance, two or more elements of a contract are linked and fair values cannot be allocated
to the individual components, the revenue recognition criteria are applied to the elements as if they were a single element.
Agreements including rights to unspecified future products (as opposed to unspecified upgrades and enhancements) are accounted for using
subscription accounting, with revenue from the arrangement being recognised on a straight-line basis over the term of the arrangement, or an estimate
of the economic life of the products offered if no term is specified, beginning with the delivery of the first product.
In addition to licence fees, contracts generally contain an agreement to provide post-delivery service support, in the form of support, maintenance and
training which consists of the right to receive services and/or unspecified product upgrades or enhancements that are offered on a when-and-if-available
basis. Fees for post-delivery service support are generally specified in the contract. Revenue related to post-delivery service support is recognised based
on fair value, which is determined with reference to contractual renewal rates. If no renewal rates are specified, and fair value of the post-delivery
support service cannot be determined by other methods, the entire fee under the transaction is amortised and recognised on a straight-line basis over
the contractual post-delivery service support period. Where renewal rates are specified, revenue for post-delivery service support is recognised on a
straight-line basis over the period for which support and maintenance is contractually agreed by the Group with the licensee.
102

Revenue recognition continued
Sales of software, including development systems, which are not specifically designed for a given licence (such as off-the-shelf software) are recognised
upon delivery, when the significant risks and rewards of ownership have been transferred to the customer. At that time, the Group has no further
obligations except that, where necessary, the costs associated with providing post-delivery service support have been accrued. Services (such as training)
that the Group provides which are not essential to the functionality of the IP are separately stated and priced in the contract and, therefore, accounted
for separately. Revenue is recognised as services are performed and it is probable that the economic benefits associated with the transaction will flow to
the Group.
Royalty revenues are earned on sales by the Group’s customers of products containing ARM technology. Royalty revenues are recognised when it is
probable that the economic benefits associated with the transaction will flow to the Group and the amount of revenue can be reliably measured.
Revenues are recognised when the Group receives notification from the customer of product sales, or when the Group invoices any fixed royalties.
Notification is typically received in the quarter following shipment of the products by the customer.
If the amount of revenue recognised exceeds the amounts invoiced to customers, the excess amount is recorded as amounts recoverable on contracts
within accounts receivable. The excess of licence fees and post-delivery service support invoiced over revenue recognised is recorded as deferred
revenue.
As disclosed above, in accordance with IAS 8, “Accounting policies, changes in accounting estimates and errors”, the Group makes significant estimates
in applying its revenue recognition policies. In particular, as discussed in detail above, estimates are made in relation to the use of the percentage-of-
completion accounting method, which requires that the extent of progress toward completion of contracts may be anticipated with reasonable
certainty. The use of the percentage-of-completion method is itself based on the assumption that, at the outset of licence agreements, there is an
insignificant risk that customer acceptance is not obtained. The Group also makes assessments, based on prior experience, of the extent to which future
milestone receipts represent a probable future economic benefit to the Group. In addition, when allocating revenue to various components of
arrangements involving several components, it is assumed that the fair value of each element is reflected by its price when sold separately. The
complexity of the estimation process and issues related to the assumptions, risks and uncertainties inherent with the application of the revenue
recognition policies affect the amounts reported in the financial statements. If different assumptions were used, it is possible that different amounts would
be reported in the financial statements.
Research and development expenditure
All ongoing research expenditure is expensed in the period in which it is incurred. Where a product is technically feasible, production and sale are
intended, a market exists, expenditure can be measured reliably, and sufficient resources are available to complete the project, development costs are
capitalised and amortised on a straight-line basis over the estimated useful life of the respective product. The Group believes its current process for
developing products is essentially completed concurrently with the establishment of technological feasibility which is evidenced by a working model.
Accordingly, development costs incurred after the establishment of technological feasibility have not been significant and, therefore, no costs have been
capitalised to date.
Where no internally-generated intangible asset can be recognised, development expenditure is recognised as an expense in the period in which it is
incurred. Any collaborative agreement whereby a third party agrees to partially fund the Group’s research and development is recognised over the
period of the agreement as a credit within research and development expenses.
Retirement benefit costs
The Group contributes to defined contribution plans substantially covering all employees in Europe and the US and to government pension schemes for
employees in Japan, South Korea, Taiwan, PR China, Israel and India. The Group contributes to these plans based upon various fixed percentages of
employee compensation, and such contributions are expensed as incurred.
Operating leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Costs, net of any
lease incentives, in respect of operating leases are charged on a straight-line basis over the lease term even if payments are not made on such a basis.
Finance leases
Leases in which substantially all of the risks and rewards of ownership are transferred to the lessee are classified as finance leases. Assets held under
finance leases are recognised as assets of the Group at their fair value or, if lower, at the present value of the minimum lease payments, each determined
at the inception of the lease. The corresponding liability to the lessor is included in the balance sheet as a finance lease liability. Lease payments are
apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the
liability. Finance charges are charged directly to the income statement.
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Investment income, and interest payable and similar charges
Investment income, and interest payable and similar charges relate to interest income and expense, which is accrued on a time basis, by reference to the
principal outstanding and at the effective interest rate applicable.
Dividends
Distributions to owners of the Company are not recognised in the income statement under IFRS, but are disclosed as a component of the movement in
shareholders’ equity. A liability is recorded for a dividend when the dividend is approved by the Company’s shareholders. Interim dividends are
recognised as a distribution when paid.
Earnings per share
Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares in
issue during the period, excluding treasury shares, which are treated as cancelled. For diluted earnings per share, the weighted average number of
ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares.
Property, plant and equipment
Property, plant and equipment is stated at historic cost less accumulated depreciation. The cost of property, plant and equipment is their purchase cost,
together with any costs directly attributable to bringing the asset to its working condition for its intended use. External costs and internal costs are
capitalised to the extent they enhance the future economic benefit of the asset.
Assets in the course of construction are carried at cost less any recognised impairment loss. Depreciation of these assets commences when the assets
are ready for their intended use.
Depreciation is calculated so as to write off the cost of property, plant and equipment, less their estimated residual values, which are adjusted, if
appropriate, at each balance sheet date, on a straight-line basis over the expected useful economic lives of the assets concerned. The principal economic
lives used for this purpose are:
Freehold buildings 25 years
Leasehold improvements Five to ten years or term of lease, whichever is shorter
Computer equipment Three to five years
Fixtures and fittings, and motor vehicles Three to five years
Provision is made against the carrying value of property, plant and equipment where an impairment in value is deemed to have occurred. Asset lives and
residual values are reviewed on an annual basis.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within general and administrative
expenses in the income statement.
Intangible assets
(a) Goodwill Goodwill represents the excess of the fair value of the consideration paid on acquisition of a business over the fair value of the assets,
including any intangible assets identified, and liabilities acquired. Goodwill is not amortised but is measured at cost less impairment losses. In determining
the fair value of consideration, the fair value of equity issued is the market value of equity at the date of completion, the fair value of share options is
calculated using the Black-Scholes valuation model, and the fair value of contingent consideration is based upon whether the directors believe any
performance conditions will be met and thus whether any further consideration will be payable.
(b) Other intangible assets Computer software, purchased patents and licences to use technology are capitalised at cost and amortised on a straight-
line basis over an estimate of the time that the Group is expected to benefit from them. Costs that are directly attributable to the development of new
business application software and which are incurred during the period prior to the date that the software is placed into operational use, are capitalised.
External costs and internal costs are capitalised to the extent they enhance the future economic benefit of the asset.
Although an independent valuation is made of any intangible assets purchased as part of a business combination, the directors are primarily responsible
for determining the fair value of intangible assets.
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Intangible assets continued
In-process research and development projects purchased as part of a business combination may meet the criteria set out in IFRS 3 (revised), “Business
combinations”, for recognition as intangible assets other than goodwill. Management tracks the status of in-process research and development intangible
assets such that their amortisation commences when the assets are brought into use.
Amortisation is calculated so as to write off the cost of intangible assets, less their estimated residual values, which are adjusted, if appropriate, at each
balance sheet date, on a straight-line basis over the expected useful economic lives of the assets concerned. The principal economic lives used for this
purpose are:
Computer software Three to five years
Patents and licences Three to ten years
In-process research and development One to five years
Developed technology One to five years
Existing agreements and customer relationships One to six years
Core technology Five years
Trademarks and tradenames One to five years
Order backlog One year
Impairment of non-financial assets
Assets that have an indefinite useful life, for example goodwill, are not subject to amortisation but are tested annually for impairment.
Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable.
An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the
higher of an asset’s fair value less costs to sell and value in use. For purposes of assessing impairment, assets are grouped at the lowest levels for which
there are separately identifiable cash flows (each a cash generating unit, “CGU”). Where the recoverable amount of a CGU is measured based on a
value-in-use calculation, all cash inflows and outflows associated with the CGU are taken into account whether these are explicitly charged or not.
Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.
The annual impairment tests in 2012 and 2011 showed there was no impairment with respect to goodwill. Furthermore, no trigger events have been
identified that would suggest the impairment of any of the Group’s other intangible assets.
Financial assets
The Group classifies its financial assets in the following categories: at fair value through the income statement, loans and receivables, and available-for-
sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of financial assets
at initial recognition.
(a) Financial assets at fair value through the income statement Financial assets at fair value through the income statement are financial assets held
for trading – that is, assets that have been acquired principally for the purpose of selling in the short term. Assets in this category are classified as current
assets. They are initially recognised at fair value with transaction costs being expensed in the income statement. Specifically, the Group’s currency
exchange contracts and embedded derivatives fall within this category. Gains or losses arising from changes in the fair value of “financial assets at fair
value through the income statement” are presented in the income statement within general and administrative expenses in the period in which they
arise.
(b) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non-
current assets. “Accounts receivable”, “cash and cash equivalents”, and “short- and long-term deposits” are classified as “Loans and receivables” (see
note 19).
Loans and receivables are measured initially at fair value and then subsequently measured at amortised cost.
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(c) Available-for-sale financial assets Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified
in any of the other categories. They are included in non-current assets unless management intends to dispose of the assets within 12 months of the
balance sheet date.
Equity investments that are not publicly traded are also classified as available-for-sale and are initially recorded at fair value plus transaction costs. Given
that the markets for these assets are not active, the Group establishes fair value by using valuation techniques. The estimated fair value of these
investments approximated to cost less any permanent diminution in value (based on estimates determined by management), except where independent
valuation information is obtained. Unrealised holding gains or losses on such securities are recognised, net of related taxes, through other
comprehensive income via a revaluation reserve, except where there is evidence of permanent impairment (in which case the loss is recognised through
the income statement within general and administrative expenses).
Impairment of financial assets
The Group considers at each reporting date whether there is any indication that financial assets are impaired. If there is such an indication, the Group
carries out an impairment test by measuring the assets’ recoverable amounts, which are the higher of the assets’ fair values less costs to sell and their
values in use. If the recoverable amounts are less than the carrying amounts an impairment loss is recognised, and the assets are written down to their
recoverable amounts.
In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered
as an indicator that the securities are permanently impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss –
measured as the difference between the acquisition cost and the current fair value, less any permanent impairment loss on that financial asset previously
recognised in the income statement – is removed from equity and recognised in the income statement. Impairment losses recognised in the income
statement on equity instruments are not reversed through the income statement.
When securities classified as available-for-sale are sold or permanently impaired, the accumulated fair value adjustments recognised through other
comprehensive income are recycled through the income statement.
Impairment testing of trade receivables is described under “Accounts receivable” below.
Derivative financial instruments
The Group utilises currency exchange contracts to manage the exchange risk on actual transactions related to accounts receivable, denominated in a
currency other than the functional currency of the business. The Group’s currency exchange contracts do not subject the Group to risk from exchange
rate movements because the gains and losses on such contracts offset losses and gains, respectively, on the transactions being hedged. The currency
exchange contracts are recorded at fair value and the related foreign currency accounts receivable are revalued to spot rates at each period end. The
fair value of forward exchange contracts is determined using quoted forward exchange rates at the balance sheet date. The fair value of foreign currency
options is based upon valuations performed by management and the respective banks holding the currency instruments. All recognised gains and losses
resulting from the settlement of the contracts are recorded within general and administrative expenses in the income statement. The Group does not
enter into currency exchange contracts for the purpose of hedging anticipated transactions.
Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held with banks and other short-term highly liquid investments with original maturities of three
months or less.
Short- and long-term deposits
The Group considers all highly-liquid investments with original maturity dates of greater than three months and maturing in less than one year to be
short-term deposits. Deposits with a maturity date of greater than one year from the balance sheet date are classified as long-term.
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Accounts receivable
Accounts receivable are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision
for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect
all amounts due according to the original terms of the receivables.
Accounts receivable are first assessed individually for impairment. Significant financial difficulties of the debtor, probability that the debtor will enter
bankruptcy or financial reorganisation, and default or delinquency in payments (more than 90 days overdue) are considered indicators that the trade
receivable may be impaired. Where there is no objective evidence of impairment for an individual receivable, it is included in a group of receivables with
similar credit risk characteristics and these are collectively assessed for impairment.
In the case of impairment, the carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised
in the income statement within general and administrative expenses. When a trade receivable is uncollectible, it is written off against the allowance
account for trade receivables. Subsequent recoveries of amounts previously written off are credited against general and administrative expenses in the
income statement.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined on a first-in, first-out basis and includes transport and handling
costs. Where necessary, provision is made for obsolete, slow-moving and defective inventory.
Accounts payable
Accounts payable are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
Income taxes
The current income tax charge is calculated on the basis of tax laws enacted or substantively enacted at the balance sheet date in the countries where
the Group’s subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to
situations in which applicable tax regulation is subject to interpretation and establishes provisions where appropriate on the basis of amounts expected
to be paid to the tax authorities.
Deferred income taxes are computed using the liability method. Under this method, deferred tax assets and liabilities are determined based on
temporary differences between the financial reporting and tax bases of assets and liabilities and are measured using enacted rates and laws that will be in
effect when the differences are expected to reverse. The deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a
transaction, other than a business combination, that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax
assets are recognised to the extent that it is probable that future taxable profits will arise against which the temporary differences will be utilised.
Deferred tax is provided on temporary differences arising on investments in subsidiaries except where the timing of the reversal of the temporary
difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets and
liabilities arising in the same tax jurisdiction are offset.
In the UK and the US, the Group is entitled to a tax deduction for amounts treated as compensation on exercise of certain employee share options or
vest of share awards under each jurisdiction’s tax rules. As explained under “Share-based payments” below, a compensation expense is recorded in the
Group’s income statement over the period from the grant date to the vesting date of the relevant options and awards. As there is a temporary
difference between the accounting and tax bases, a deferred tax asset is recorded. The deferred tax asset arising is calculated by comparing the
estimated amount of tax deduction to be obtained in the future (based on the Company’s share price at the balance sheet date) with the cumulative
amount of the compensation expense recorded in the income statement. If the amount of estimated future tax deduction exceeds the cumulative
amount of the compensation expense at the statutory rate, the excess is recorded directly in equity, against retained earnings.
Provisions
Provisions for restructuring costs and legal claims are recognised when: the Group has a present legal or constructive obligation as a result of past
events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount of the outflow can be reliably
estimated.
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Embedded derivatives
In accordance with IAS 39, “Financial instruments: recognition and measurement”, the Group has reviewed all its contracts for embedded derivatives
that are required to be separately accounted for if they do not meet certain requirements set out in the standard. From time to time, the Group may
enter into contracts denominated in a currency (typically US dollars) that is neither the functional currency of the Group entity nor the functional
currency of the customer or the collaborative partner. Where there are uninvoiced amounts on such contracts, the Group carries such derivatives at
fair value. The resulting gain or loss is recognised in the income statement under general and administrative expenses.
Share-based payments
The Group issues equity-settled share-based payments to certain employees. In accordance with IFRS 2, “Share based payments”, equity-settled share-
based payments are measured at fair value at the date of grant. Fair value is measured by use of the Black-Scholes pricing model. The fair value
determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the
Group’s estimate of the number of shares that will eventually vest.
The Group operates Save As You Earn (SAYE) schemes in the UK and an Employee Share Purchase Plan (ESPP) in the US and India. Options under the
SAYE schemes are granted at a 20% discount to the market price of the underlying shares on the date of announcement of the scheme and at a 15%
discount to the lower of the market prices at the beginning and end of the scheme for the ESPP. The UK SAYE schemes are approved by the UK tax
authorities, which stipulates that the saving period must be at least 36 months. The Group has recognised a compensation charge in respect of the SAYE
plans and ESPPs. The charges for these are calculated as detailed above.
The Group also has a Long Term Incentive Plan (LTIP) on which it is also required to recognise a compensation charge under IFRS 2, calculated as
detailed above.
The share-based payments charge is allocated to cost of sales, research and development expenses, sales and marketing expenses and general and
administrative expenses on the basis of headcount.
Employer’s taxes on share options
Employer’s National Insurance in the UK and equivalent taxes in other jurisdictions are payable on the exercise of certain share options and vesting of
share awards. In accordance with IFRS 2, this is treated as a cash-settled transaction. A provision is made, calculated using the intrinsic value of the
relevant options and awards at the balance sheet date, and pro-rated over the vesting period of the options and awards.
Treasury shares
Where the Company purchases its own equity share capital (treasury shares), the consideration paid, including any directly attributable incremental
transaction costs is deducted from equity attributable to the owners of the Company until the shares are cancelled or reissued. Where such shares are
subsequently sold or reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax
effects, is included in equity attributable to owners of the Company.
Share capital
Ordinary shares issued by the Company are recorded at the proceeds received, net of direct issue costs.
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1c Financial risk management

The Group operates in the intensely competitive semiconductor industry which has been characterised by price erosion, rapid technological change,
short product life cycles, cyclical market patterns and heightened foreign and domestic competition. Significant technological changes in the industry
could affect operating results.
The Group’s operations expose it to a variety of financial risks that include currency risk, interest rate risk, securities price risk, credit risk and
liquidity risk.
Given the size of the Group, the directors have not delegated the responsibility for monitoring financial risk management to a sub-committee of the
Board. The policies set by the directors are implemented by the Group’s finance and treasury departments. The Group has a treasury policy that sets
out specific guidelines to manage currency risk, interest rate risk, credit risk and liquidity risk and also sets out circumstances where it would be
appropriate to use financial instruments to manage these.
Currency risk
The Group’s earnings and liquidity are affected by fluctuations in foreign currency exchange rates, principally in respect of the US dollar, reflecting the fact
that most of its revenues and cash receipts are denominated in US dollars, while a significant proportion of its costs are settled in sterling. The Group
seeks to use currency exchange contracts and currency options to manage the US dollar/sterling risk as appropriate, by monitoring the timing and value
of anticipated US dollar receipts (which tend to arise from low-volume, high-value licence deals and royalty receipts) in comparison with its requirement
to settle certain expenses in US dollars. The Group reviews the resulting exposure on a regular basis and hedges this exposure using currency exchange
contracts and currency options for the sale of US dollars as appropriate. Such contracts are entered into with the objective of matching their maturity
with projected US dollar cash receipts.
The Group is also exposed to currency risk in respect of the foreign currency denominated assets and liabilities of its overseas subsidiaries. At present,
the Group does not consider this to be a significant risk since the Group does not intend to move assets between group companies.
At 31 December 2012, the Group had outstanding currency exchange contracts to sell $71 million (2011: $54 million) for sterling. In addition, the
Group utilises option instruments which have various provisions that, depending on the spot rate at maturity, give either the Group or the counterparty
the option to exercise. At 31 December 2012, the Group had outstanding currency options under which the Group may, under certain circumstances,
be required to sell up to $90 million (2011: $207 million) for sterling. A common scenario with options of this type is that the spot price at expiry is such
that neither the Group nor the counterparty chooses to exercise the option. At 31 December 2012, the Group had $190 million (2011: $178 million)
of accounts receivable denominated in US dollars at that date, and US dollar cash and cash equivalents, and short-term deposits of $22 million (2011:
$13 million). Thus the Group’s US dollar assets exceeded its currency exchange contracts and currency options at the year end. Management assesses
the volume and timing of currency exchange contracts taking into consideration both the current and expected future level of US dollar assets. Based on
the predictable nature of the Group’s cash flows, the Group typically has a greater value of currency exchange contracts outstanding than US dollar
assets held. As such, after the balance sheet date, the Group has entered into additional currency exchange contracts, returning the Group to its usual
position in this regard, at the date of this report.
The Group has elected not to apply hedge accounting, and all movements in the fair value of derivative foreign exchange instruments are recorded in
the income statement, offsetting the foreign exchange movements on the accounts receivable, cash and cash equivalents, and short-term deposits
balances being hedged.
In addition, certain customers remit royalties and licence fees in other currencies, primarily the Euro and Japanese yen. The Group is also required to
settle certain expenses in these currencies, primarily in its French, German and Japanese subsidiaries, and as the net amounts involved are not
considered significant, the Group does not take out forward-settling currency exchange contracts in these currencies.
At 31 December 2012, if sterling had strengthened by 10% against foreign currencies with all other variables held constant, post-tax profit for the year
would have been £12.1 million lower (2011: £4.7 million lower), mainly as a result of the mix of financial instruments at respective year ends.
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1c Financial risk management continued

Interest rate risk
At 31 December 2012, the Group had £523.6 million (2011: £442.2 million) of interest-bearing assets. At 31 December 2012, 91% (2011: 92%) of
interest-bearing assets (comprising cash and cash equivalents, short- and long-term deposits, loans and receivables, and the Group’s convertible loan
notes) are at fixed rates and are therefore exposed to fair value interest rate risk. Floating rate cash earns interest based on relevant national LIBID
or base rate equivalents and is therefore exposed to cash flow interest rate risk. The proportion of funds held in fixed rather than floating rate deposits is
determined in accordance with the policy outlined under “Liquidity risk” below. Other financial assets, such as available-for-sale financial assets, are not
directly exposed to interest rate risk.
Had interest rates been 1% (100 basis points) lower throughout the year, interest receivable would have reduced by approximately £5.3 million (2011:
£3.4 million) and profit after tax by £4.0 million (2011: £2.6 million).
During 2012, the Group entered into a number of lease agreements for IT equipment which have been classified as finance leases. Furthermore, the
Group entered into a three-month fixed-rate debt facility for $160 million (£99.8 million) to facilitate the contribution to acquire rights to MIPS
Technologies, Inc’s portfolio of patents (see note 11). This facility was fully settled by 31 December 2012. The Group had no borrowings during 2011.
The Group had no derivative financial instruments to manage interest rate fluctuations in place at the year end since the level of financing was not
considered significant, and as such no hedge accounting is applied. The Group’s cash flow is carefully monitored on a daily basis. Excess cash, considering
expected future cash flows, is placed on either short-term or long-term deposits to maximise the interest income thereon. Daily surpluses are swept
into higher-interest earning accounts overnight.
Securities price risk
The Group is exposed to equity securities price risk on available-for-sale financial assets. As there can be no guarantee that there will be a future market
for securities (which are generally unlisted at the time of investment) or that the value of such investments will rise, the directors evaluate each
investment opportunity on its merits before committing the Group’s funds. The directors review holdings in such companies on a regular basis to
determine whether continued investment is in the best interests of the Group. Funds for such ventures are limited in order that the financial effect of any
potential decline of the value of investments will not be substantial in the context of the Group’s financial results.
(i) Listed investments At 31 December 2012 and 2011, the Group had no listed investments.
(ii) Unlisted investments The Group had unlisted investments (including convertible loan notes) with a carrying value as at 31 December 2012 of
£13.8 million (2011: £27.3 million). A permanent 10% fall in the underlying value of these companies as at 31 December 2012 would therefore have
reduced the Group’s post-tax profit by £1.0 million (2011: £1.9 million) and resulted in a £nil (2011: £0.1 million) reduction in other components
of equity.
Credit risk
Credit risk is managed on a Group basis. Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and
financial institutions, as well as credit exposures to customers, including outstanding receivables and committed transactions.
At 31 December 2012 and 2011, the Group had no significant concentrations of credit risk. The amount of exposure to any individual counterparty is
subject to a limit, which is reassessed periodically by the directors.
Financial instrument counterparties are subject to pre-approval by the directors and such approval is limited to financial institutions with a Moody’s rating
of at least A2/P-1, a Fitch rating of at least A/F1, or UK building societies with over £2 billion in assets, except in certain jurisdictions where the cash
holding concerned is immaterial. At 31 December 2012 and 2011, the majority of the Group’s cash and cash equivalents, and short- and long-term
deposits were deposited with major clearing banks and building societies in the UK and US in the form of money market deposits and corporate bonds
for varying periods of up to two years.
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Credit risk continued
At 31 December 2012, 93% of the Group’s cash and cash equivalents, and short- and long-term deposits were held with global financial institutions
fulfilling the criteria noted above (2011: 90%). The majority of the Group’s cash currently falling outside of the counterparty criteria is held with building
societies that were within criteria when the deposits were placed, with the Group having raised the criteria threshold for them during 2012.
The Group has implemented policies that require appropriate credit checks on potential customers before sales commence. The Group generally does
not require collateral on accounts receivable, as many of its customers are large, well-established companies. The Group has not experienced any
significant losses related to individual customers or groups of customers in any particular industry or geographic area.
The Group markets and sells to a relatively small number of customers with individually large value transactions. At 31 December 2012, one (2011:
two) customer accounted for over 10% of accounts receivable. This customer (for which some balances have been received since the year end and the
outstanding balances are not yet due) is one of the many large companies that account in total for approximately 90% of the year end accounts
receivable balance, where the risk of default on monies owed is deemed negligible. The Group performs credit checks on all customers (other than
those paying in advance) in order to assess their creditworthiness and ability to pay its invoices as they become due. As such, the balance of accounts
receivable not owed by large companies is still deemed by the directors to be of low risk of default due to the nature of the checks performed on them,
and accordingly a relatively small allowance against these receivables is in place to cover this low risk of default.
No credit limits were exceeded during the reporting period and the directors do not expect any significant losses from non-performance by these
counterparties.
Liquidity risk
The Group’s policy is to maintain balances of cash and cash equivalents, and short- and long-term deposits, such that highly liquid resources exceed the
Group’s projected cash outflows at all times. Surplus funds are placed on fixed- or floating-rate deposits depending on the prevailing economic climate at
the time (with reference to forward interest rates) and also on the required maturity of the deposit (as driven by the expected timing of the Group’s
cash receipts and payments over the short- to medium-term).
Management monitors rolling forecasts of the Group’s short- and medium-term expected cash flows. This is carried out at both a local and a Group
level, with the local subsidiaries being funded by the Group as required.
The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period from the balance sheet to the
contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their
carrying balances as the impact of discounting is not significant.
Between Between
Less than six months and one and Over
six months one year two years two years
£m £m £m £m
At 31 December 2012:
Accounts payable 5.9 – – –
Accrued and other liabilities 46.8 – – –
Finance lease liabilities 0.8 2.1 2.2 0.7
At 31 December 2011:
Accounts payable 8.7 – – –
Accrued and other liabilities 45.7 1.7 0.9 –
The table on the next page analyses the Group’s derivative financial instruments into relevant maturity groupings based on the remaining period from
the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Amounts due
within 12 months equal their carrying balances as the impact of discounting is not significant.
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Liquidity risk continued
Over three months Between
Less than three but less than six months and
months six months one year
m m m
Foreign exchange forward contracts – held-for-trading at 31 December 2012
Outflow $51.0 $8.0 $12.0
Inflow £31.9 £5.0 £7.5
Foreign exchange options – held-for-trading at 31 December 2012
Outflow (maximum) $38.9 $37.3 $13.5
Inflow (maximum) £25.3 £24.3 £8.6
Foreign exchange forward contracts – held-for-trading at 31 December 2011
Outflow $54.0 – –
Inflow £34.7 – –
Foreign exchange options – held-for-trading at 31 December 2011
Outflow (maximum) $76.5 $69.0 $61.5
Inflow (maximum) £49.2 £44.6 £40.3
Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for
shareholders and benefits for other stakeholders and to maintain an appropriate capital structure. The capital structure of the Group consists of cash
and cash equivalents, short- and long-term deposits and capital and reserves attributable to owners of the Company, as disclosed on the consolidated
balance sheet.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders,
issue new shares, sell assets to raise cash or take on debt.
The Group’s strategy is to have a capital structure that takes into account opportunities to invest in long-term profitable growth, prevailing trading
conditions and the desire to improve balance sheet efficiency over time. The Group introduced a dividend in 2004 which has grown each year since.
Between 2005 and 2008, an ongoing share buyback programme was in place whereby 16% of the issued share capital was bought back at an average
price of £1.22. In 2012, the interim dividend was increased by 20% and the directors are proposing a 35% increase in the final dividend, reflecting the
Board’s long-term confidence in the business. No share buybacks were made in the year, though the programme remains in place and will be used as
and when the Board believe it is appropriate to do so. The capital structure is continually monitored by the Group.
Fair value of currency exchange contracts
The fair value of currency exchange contracts is estimated using the settlement rates. The estimation of the fair value of the asset in respect of currency
exchange contracts was £1.4 million at 31 December 2012 (2011: liability of £1.5 million). The resulting gains and losses on the movement of the fair
value of currency exchange contracts is recognised in the income statement under general and administrative expenses, as shown below:
2012 2011
£m £m
Gain in income statement 8.3 2.7
112

Valuation hierarchy
The table below shows the financial instruments carried at fair value by valuation method:
Level 1* Level 2* Level 3* Total
At 31 December 2012 £m £m £m £m
Assets
Fair value through the income statement:
Currency exchange contracts – 1.4 – 1.4
– 1.4 – 1.4
Available-for-sale:
Other long-term financial assets – – 13.8 13.8
– – 13.8 13.8
Total assets – 1.4 13.8 15.2
Liabilities
Embedded derivatives – (2.5) – (2.5)
Total liabilities – (2.5) – (2.5)
* Level 1 valued using unadjusted quoted prices in active markets for identical instruments. Level 2 valued using techniques based significantly on observable market data. Level 3 valued using information other than
observable market data.
Level 1* Level 2* Level 3* Total

At 31 December 2011 £m £m £m £m
Assets
Fair value through the income statement:
Embedded derivatives – 1.2 – 1.2
– 1.2 – 1.2
Available-for-sale:
Other long-term financial assets – – 27.3 27.3
– – 27.3 27.3
Total assets – 1.2 27.3 28.5
Liabilities
Currency exchange contracts – (1.5) – (1.5)
Total liabilities – (1.5) – (1.5)
Level 3 financial assets

2012 2011
£m £m
At1 January 27.3 20.3
Additions 3.2 8.3
Revaluation recognised through other comprehensive income (0.4) 0.4
Disposals (14.9) (0.1)
Impairment recognised through income statement (1.4) (1.6)
At 31 December 13.8 27.3
113
ARM Holdings plc
1d Critical accounting estimates and judgments

The preparation of financial statements in accordance with International Financial Reporting Standards requires the directors to make critical accounting
estimates and judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates and judgments are
continually evaluated and are based on historical experiences and other factors, including expectations of future events that are believed to be
reasonable under the circumstances. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and
assumptions that have significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are
discussed below.
Impairment of goodwill
The Group tests goodwill for impairment at least annually. This requires an estimation of the value in use of the cash generating units (CGUs) to which
goodwill is allocated. As discussed in detail in note 15, estimating the value in use requires the Group to make an estimate of the expected future cash
flows from the CGUs and also to choose a suitable discount rate in order to calculate the present values of those cash flows. The discount rate is based
on an estimate of the Group’s weighted average cost of capital. The Group uses a post-tax discount rate of 10% (2011: 10%) (pre-tax discount rate of
approximately 11% (2011: 11%)).
Revenue recognition
Revenue from the sale of licence agreements which are designed to meet the specific requirements of each customer is recognised on a percentage-of-
completion basis. Use of this method requires the directors to estimate the total project resource requirement and also any losses on uncompleted
contracts. In addition, there are other areas of revenue recognition requiring estimates and judgments, the details of which can be found in the revenue
recognition accounting policy on page 103.
Provisions for income taxes
The Group is subject to income taxes in numerous jurisdictions. Significant judgment is required in determining the world-wide provision for income
taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The
Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of
these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the
period in which such determination is made.
Provision for impairment of trade receivables
The Group assesses trade receivables for impairment which requires the directors to estimate the likelihood of payment forfeiture by customers.
Legal settlements and other contingencies
Determining the amount to be accrued for legal settlement requires the directors to estimate the committed future legal and settlement fees the Group
is expecting to incur, either where suits are filed against the Group for infringement of patents, or where the Group may be required to indemnify a
licensee. The directors assess the extent of any potential infringement based on legal advice and written opinions received from external counsel and
then estimate the level of accrual required.
Contingent consideration for an acquisition is recognised as part of the purchase consideration if the contingent conditions are expected to be satisfied.
This requires the directors to estimate the acquiree’s future financial performance, typically more than one year post-acquisition.
114
2 Segmental reporting
At 31 December 2012 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,
system IP, embedded software and configurable digital signal processing (DSP) 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; acquisition-related charges; share-based payment costs including payroll taxes; disposal/impairment of
investments; share of results in joint venture; and Linaro-related charges are analysed below in addition to an analysis of revenues; operating costs;
investment income, net of 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
Processor Physical IP System Design
Division Division Division Unallocated Group
For the year ended 31 December 2012 £m £m £m £m £m
Revenues 473.9 68.3 34.7 – 576.9
Operating costs (243.3) (82.8) (40.1) (2.6) (368.8)
Investment income, net of interest payable and similar charges – – – 13.6 13.6
Share of results in joint venture – – – (0.7) (0.7)
Tax – – – (60.3) (60.3)
Profit/(loss) for the year 230.6 (14.5) (5.4) (50.0) 160.7
Reconciliation to normalised profit/(loss) before tax:
Acquisition-related charges 3.1 1.7 – 0.8 5.6
Profit on sale of investments, net of impairment 0.6 – – – 0.6
Share of results in joint venture – – – 0.7 0.7
Normalised profit/(loss) before tax 266.7 (3.4) 1.4 11.8 276.5
Segmental balance sheet
Total assets 284.6 409.2 32.5 740.5 1,466.8
Total liabilities (182.6) (43.9) (15.1) (19.1) (260.7)
Net assets 102.0 365.3 17.4 721.4 1,206.1
Other segmental items
Depreciation 6.7 2.5 1.6 – 10.8
Capital expenditure 22.4 6.3 4.5 – 33.2
Goodwill 138.0 367.0 14.4 – 519.4
Revenues (USD millions) 749.8 108.4 54.9 – 913.1
115
ARM Holdings plc
2 Segmental reporting continued

Division Division Division Unallocated Group
For the year ended 31 December 2011 £m £m £m £m £m
Revenues 397.6 61.3 32.9 – 491.8
Operating costs (223.8) (81.1) (41.2) 3.2 (342.9)
Investment income – – – 8.0 8.0
Tax – – – (44.3) (44.3)
Profit/(loss) for the year 173.8 (19.8) (8.3) (33.1) 112.6
Reconciliation to normalised profit/(loss) before tax:
Acquisition-related charges 2.4 0.6 0.2 – 3.2
Disposal/impairment of investments – 1.7 0.1 – 1.8
Linaro-related charges 6.9 – – – 6.9
Normalised profit/(loss) before tax 222.2 (4.4) 0.7 11.2 229.7
Segmental balance sheet
Total assets 274.6 419.9 30.9 574.4 1,299.8
Total liabilities (155.3) (40.1) (15.0) (28.2) (238.6)
Net assets 119.3 379.8 15.9 546.2 1,061.2
Other segmental items
Depreciation 4.2 2.6 0.7 – 7.5
Capital expenditure 7.7 4.1 1.2 – 13.0
Goodwill 143.7 383.9 14.9 – 542.5
Revenues (USD millions) 634.7 97.9 52.4 – 785.0
There are no inter-segment revenues. Unallocated operating costs consist of foreign exchange gains and losses. Unallocated assets and liabilities include:
cash and cash equivalents; short- and long-term deposits; available-for-sale financial assets; 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 computer software intangible assets.
During the year ended 31 December 2012 one customer (within all three business segments) accounted for 15% of the Group’s total revenues
amounting to £84.0 million (2011: one customer accounted for 11%).
The results of each segment have been prepared using accounting policies consistent with those of the Group as a whole.
116

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 company. The main operations are in the following principal territories:
• Europe
• United States
• Asia Pacific
Analysis of revenue by destination*:
2012 2011
£m £m
United States 215.9 187.7
South Korea 95.0 63.8
China 71.2 47.6
Taiwan 69.2 63.6
Japan 46.6 50.0
Netherlands 15.8 15.4
Germany 15.4 21.7
Switzerland 14.0 11.7
Rest of Europe 19.0 12.2
Rest of Asia Pacific 13.6 16.3
Rest of North America 1.2 1.8
576.9 491.8
* Destination is defined as the location of the Group’s customers’ operations.
The Group’s revenue within the home country of the parent company amounted to £5.5 million and £1.5 million for the years ended 31 December
2012 and 2011 respectively. The Group’s exports from the UK were £560.3 million and £480.1 million for the years ended 31 December 2012 and
2011 respectively.
Analysis of revenue by origin:
2012 2011
£m £m
Europe* 567.8 483.5
Asia Pacific – 0.1
576.9 491.8
* Includes the UK which had total revenues of £565.8 million in 2012 (2011: £481.6 million).
Analysis of revenue by revenue stream:

2012 2011
£m £m
Royalties 299.8 252.4
Licensing 214.0 180.5
Development systems 34.7 32.9
Services 28.4 26.0
576.9 491.8
117
ARM Holdings plc

Geographical information continued
Analysis of non-current assets (excluding deferred tax assets, goodwill and other intangible assets):
2012 2011
£m £m
Europe* 193.8 122.9
Asia Pacific 3.1 3.0
202.1 132.8
* Includes the UK which had non-current assets (excluding deferred tax assets, goodwill and other intangible assets) of £192.8 million in 2012 (2011: £122.4 million), of which long-term deposits accounted for
£141.3 million (2011: £83.1 million).
3 Key management compensation and directors’ emoluments

Key management compensation
The directors are of the opinion that the key management of the Group comprises the executive and non-executive directors of ARM Holdings plc
together with the Executive Committee (comprising all directors of ARM Limited and certain senior management). These persons have authority and
responsibility for planning, directing and controlling the activities of the entity, directly or indirectly. At 31 December 2012, key management comprised
19 people (2011: 22). On 1 January 2013 three new members of the Executive Committee were appointed bringing the total number to 22.
The aggregate amounts of key management compensation are set out below:
2012 2011
£m £m
Salaries and short-term employee benefits 8.9 9.9
Share-based payments 3.4 3.5
Post-employment benefits 0.2 0.4
12.5 13.8
Directors’ emoluments
The aggregate emoluments of the directors of the Company are set out below:
2012 2011
£m £m
Aggregate emoluments in respect of qualifying services 5.0 5.5
Aggregate Group pension contributions to money purchase schemes 0.1 0.2
Aggregate gains on exercise of share options 1.8 1.1
Aggregate amounts receivable under the Long Term Incentive Plan 21.2 24.2
28.1 31.0
Detailed disclosures of directors’ emoluments are shown on page 90. Details of directors’ interests in share options and awards are shown on pages 85
to 89 which form part of the financial statements.
118
4 Employee information
The average monthly number of persons, including executive directors, employed by the Group during the year was:
2012 2011
Number Number
By segment
Processor Division 1,398 1,225
Physical IP Division 557 488
System Design Division 306 283
2,261 1,996
2012 2011
Number Number
By activity
Research and development 1,581 1,366
Sales and marketing 367 349
General and administrative 313 281
2,261 1,996
2012 2011
£m £m
Staff costs (for the above persons)
Wages and salaries 161.5 142.2
Medical care costs 5.0 4.4
Share-based payments (note 23) 37.1 40.5
Social security costs 30.2 26.2
Provision for social security costs on share awards (6.1) 4.9
Other pension costs 8.0 6.8
235.7 225.0
119
ARM Holdings plc
5 Profit before tax: analysis of expenses by nature

The following items have been charged/(credited) to the income statement in arriving at profit before tax:
2012 2011
£m £m
Staff costs, including share-based payments (note 4) 235.7 225.0
Cost of inventories recognised as an expense 3.2 2.8
Depreciation of property, plant and equipment – owned assets (note 14) 9.5 7.5
Depreciation of property, plant and equipment – under finance leases (note 14) 1.3 –
Amortisation of other intangible assets (note 16)
– Cost of revenues 0.3 0.3
– Research and development expenses 2.3 2.4
– Sales and marketing expenses 0.9 0.8
– General and administrative expenses 3.1 2.2
Impairment of available-for-sale financial assets (note 13) 1.4 1.6
(Profit)/loss on disposal of available-for-sale financial assets (0.8) 0.1
Other operating lease rentals payable
– Plant and machinery 24.0 24.9
– Property 7.6 6.8
Accounts receivables impairment (including movement in provision) 0.4 –
Fair value movement on embedded derivatives 3.7 1.2
Other foreign exchange gains (1.9) (4.2)
Services provided by the Group’s auditor and its associates
During the year the Group (including its overseas subsidiaries) obtained the following services from the Group’s auditor and its associates:
2012 2011
£m £m
Fees payable to the Group’s auditor and its associates for the audit of the Company
and consolidated financial statements 0.3 0.3
Fees payable to the Group’s auditor and its associates for other services:
– The audit of the Group’s subsidiaries 0.2 0.2
– Audit-related assurance services (services pursuant to section 404 of the Sarbanes-Oxley Act) 0.3 0.2
– Other assurance services 0.1 0.1
Statutory audit, financial reporting and other related services 0.9 0.8
– Tax advisory services 0.2 0.1
– Tax compliance services 0.1 0.1
– All other non-audit services* 0.1 0.1
1.3 1.1
* All other non-audit services consist predominantly of fees for the performance of royalty audits.
120
6 Tax
Analysis of charge in the year:
2012 2011
£m £m
Current tax:
Current tax on profits for the year 47.5 45.7
Adjustments in respect of prior years (0.5) (0.1)
Total current tax 47.0 45.6
Deferred tax 13.3 (1.3)
Income tax expense 60.3 44.3
Analysis of tax on items charged to equity:
2012 2011
£m £m
Deferred tax charge/(credit) on outstanding share options and awards 9.7 (23.2)
Current tax benefit on share options and awards (27.4) (22.2)
Deferred tax (credit)/charge on available-for-sale financial assets (0.1) 0.1
The tax charge for the year was different from the standard rate of corporation tax in the UK, as explained below:
2012 2011
£m £m
Profit before tax 221.0 156.9
Profit before tax at the corporation tax rate of 24.5% (2011: 26.5%) 54.2 41.6
Effects of:
Adjustments in respect of prior years (0.5) (0.1)
Adjustments in respect of foreign tax rates 5.0 2.9
Research and development tax credits* (5.5) (10.2)
Permanent differences – other** 2.4 (1.1)
Permanent differences – derecognition of US deferred tax assets*** 3.4 –
Foreign withholding tax 1.0 10.4
Amortisation of other intangible assets – (0.1)
Impact of share-based payments 0.3 0.9
Total taxation 60.3 44.3
* The provisions extending the US federal R&D tax credits into 2012 were signed on 2 January 2013. However, since the provisions were not enacted until after the year end, the benefit of the 2012 R&D tax
credits will be accounted for in 2013.
** Includes expenditure disallowable for tax purposes and remeasurement of deferred tax assets due to reduction in UK and US tax rates.
*** On 6 November 2012, California enacted legislation which changed the way in which US based companies identify the amount of income and profit which is subject to California state tax. The impact of this
change has been to reduce the Group's expected future California tax and a partial valuation allowance has been made against the California R&D tax credits deferred tax asset, as they are now unlikely to be
fully utilised.
121
ARM Holdings plc
6 Tax continued
Deferred tax
Deferred tax is calculated in full on temporary differences under the liability method using the tax rate relevant to each tax jurisdiction.
The movement on the deferred tax account is shown below:
2012 2011
£m £m
At 1 January 105.9 78.3
Income statement (charge)/credit (13.3) 1.3
Adjustment in respect of share-based payments (9.7) 23.2
Prior year movement (to)/from current tax assets (11.6) 2.6
Exchange differences (1.3) 0.6
Revaluation of available-for-sale financial asset 0.1 (0.1)
Deferred tax assets have been partially recognised in respect of tax losses and other temporary differences giving rise to deferred tax assets because it is
not probable that the unrecognised portion of these assets will be recovered.
The amount of deferred tax assets unrecognised at 31 December 2012 was £4.4 million (2011: £1.2 million). The unrecognised deferred tax asset
relates to historic losses of an overseas subsidiary that may remain unutilised due to restrictions imposed by local tax legislation and California R&D tax
credits referred to above.
No deferred tax has been recognised in respect of a further £35.0 million (2011: £65.0 million) of unremitted earnings of overseas subsidiaries because
the Group is in a position to control the timing of the reversal of the differences and either it is probable that such differences will not reverse in the
foreseeable future or no tax is payable on the reversal.
The March 2012 Budget included changes to the main rates of tax for UK companies. The main rate of corporation tax decreased from 26% to 24%
from 1 April 2012. The Budget also announced the reduction in the main rate of corporation tax from 24% to 23% from 1 April 2013. This was
substantively enacted on 3 July 2012. These changes have not had a material impact on the deferred tax balances as at 31 December 2012.
The introduction of the new patent box regime is likely to have a significant impact on the Group from a UK tax perspective. The new regime looks to
tax all relevant profits attributable to patented technology at a reduced rate of 10%. The rules are to be phased in over 5 years from 1 April 2013 – a
company will be entitled to only 60% of the deduction in financial year 2013/14, rising to 100% by 2017/18. All deferred tax balances at 31 December
2012 are calculated using statutory corporation tax rates.
The movements in deferred tax assets and liabilities (prior to offsetting of balances within the same tax jurisdiction as permitted by IAS 12) during the
year are shown below. Deferred tax assets and liabilities are only offset where there is a legally enforceable right of offset and there is an intention to
settle the balances net.
122
6 Tax continued
Deferred tax assets
Amounts Temporary Tax losses
relating to differences and R&D tax
share-based relating to credits carried Non-deductible
payments fixed assets forward reserves Other Total
£m £m £m £m £m £m
At 1 January 2012 59.5 4.6 30.9 12.7 – 107.7
Prior year movement to current tax assets – – (11.6) – – (11.6)
Income statement (charge)/credit (0.1) (2.0) (9.1) (3.2) 0.6 (13.8)
Movement on deferred tax arising on outstanding share options and awards (15.9) – – – – (15.9)
Unutilised current year share option deductions – – 6.2 – – 6.2
Exchange differences – – (1.3) – – (1.3)
At 31 December 2012 (prior to offsetting) 43.5 2.6 15.1 9.5 0.6 71.3
Offsetting of deferred tax liabilities (1.2)
At 31 December 2012 (after offsetting) 70.1
At 1 January 2011 45.2 5.9 19.9 9.6 – 80.6
Prior year movement from current tax assets – – 2.6 – – 2.6
Income statement credit/(charge) 4.3 (1.0) (4.5) 1.9 – 0.7
Movement on deferred tax arising on outstanding share options and awards 9.1 – – – – 9.1
Unutilised current year share option deductions – – 14.1 – – 14.1
Reclassification 0.9 (0.3) (1.8) 1.2 – –
Exchange differences – – 0.6 – – 0.6
At 31 December 2011 (prior to offsetting) 59.5 4.6 30.9 12.7 – 107.7
Offsetting of deferred tax liabilities (1.8)
At 31 December 2011 (after offsetting) 105.9
Deferred tax liabilities

Amounts relating to Temporary difference
intangible assets on available-for-sale
arising on acquisition financial assets Other Total
£m £m £m £m
At 1 January 2012 1.3 0.1 0.4 1.8
Movement in respect of amortisation of intangible assets (0.2) – – (0.2)
Movement through reserves – (0.1) – (0.1)
Other short-term differences – – (0.3) (0.3)
At 31 December 2012 (prior to offsetting) 1.1 – 0.1 1.2
Offsetting of deferred tax assets (1.2)
At 31 December 2012 (after offsetting) –
At 1 January 2011 1.5 – 0.8 2.3
Movement in respect of amortisation of intangible assets (0.2) – – (0.2)
Movement through reserves – 0.1 – 0.1
Other short-term differences – – (0.4) (0.4)
At 31 December 2011 (prior to offsetting) 1.3 0.1 0.4 1.8
Offsetting of deferred tax assets (1.8)
At 31 December 2011 (after offsetting) –
The deferred tax liability due after more than one year prior to offsetting is £0.8 million (2011: £1.0 million).
123
ARM Holdings plc
7 Dividends
2012 2011
£m £m
Final 2010 paid at 1.74 pence per share – 23.4
Interim 2011 paid at 1.39 pence per share – 18.8
Final 2011 paid at 2.09 pence per share 28.8 –
Interim 2012 paid at 1.67 pence per share 23.0 –
51.8 42.2
In addition, the directors are proposing a final dividend in respect of the financial year ended 31 December 2012 of 2.83 pence per share which will
absorb an estimated £40 million of shareholders’ funds. Subject to approval at the 2013 AGM, it will be paid on 17 May 2013 to shareholders who are
on the register of members on 19 April 2013.
8 Earnings per share
Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares in
issue during the year, excluding those held as treasury stock which are treated as cancelled.
For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary
shares. The Company had two categories of dilutive potential ordinary shares during the year: those being share options granted to employees and
directors where the exercise price is less than the average market price of the Company’s ordinary shares during the year and the awards made under
the Company’s Restricted Stock Unit (RSU), Deferred Annual Bonus Plan (DAB) and Long Term Incentive Plan (LTIP) schemes. For 2012 and 2011, no
shares that were allocated for awards under the LTIP were included in the diluted EPS calculation as the performance criteria could not be measured
until the conclusion of the performance period.
Reconciliations of the earnings and weighted average number of shares used in the calculations are shown on the face of the consolidated income
statement.
9 Cash and cash equivalents
2012 2011
£m £m
Cash at bank and in hand 46.3 26.8
The carrying amount approximates to fair value because of the short-term maturity of these instruments, being no greater than three months.
10 Accounts receivable
2012 2011
£m £m
Trade debtors (including receivables from related parties – see note 27) 119.1 116.4
Less: Provision for impairment of trade debtors (2.4) (1.7)
Trade debtors, net 116.7 114.7
Amounts recoverable on contracts 7.8 4.9
Current accounts receivable 124.5 119.6
Movements in the Group’s provision for impairment of trade debtors are as follows:
2012 2011
£m £m
At 1 January (1.7) (2.1)
Charge to income statement (0.4) –
(Reclassification)/utilised (0.4) 0.4
Foreign exchange 0.1 –
At 31 December (2.4) (1.7)
See also note 19 for further disclosure regarding the credit quality of the Group’s gross trade debtors.
124
11 Prepaid expenses and other assets

2012 2011
£m £m
Other receivables 10.4 9.3
Prepayments and accrued income 125.2 21.4
Current prepaid expenses and other assets 135.6 30.7
Plus: non-current prepayments and accrued income 2.0 2.3
Total prepaid expenses and other assets 137.6 33.0
Included within prepayments and accrued income is a prepayment amounting to £103.7 million which is the Group’s contribution to a consortium to
acquire rights to MIPS Technologies, Inc’s portfolio of patents. This transaction received MIPS shareholder approval on 6 February 2013.
12 Inventories
2012 2011
£m £m
Finished goods 2.5 2.7
Less: Provision for obsolescence of inventories (0.2) (0.2)
2.3 2.5
13 Available-for-sale financial assets

2012 2011
Long-term investments £m £m
Net book value
At 1 January 27.3 20.3
Additions (including capitalised interest in 2012 of £0.2 million) 3.2 8.3
Revaluation recognised through other comprehensive income (0.4) 0.4
Disposals (14.9) (0.1)
Impairment recognised through income statement (general and administrative expenses) (1.4) (1.6)
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ARM Holdings plc
13 Available-for-sale financial assets continued

Long-term investments
Those unlisted companies in which the Group has invested are generally early-stage development enterprises, which are generating value for
shareholders through research and development activities, and most do not currently report profits. The fair value of these investments is considered to
approximate to cost or is determined using independent valuation information where available.
The Group’s investments include the following companies:
• Amantys Limited
• Ambiq Micro Inc.
• Arteris Holdings Inc.
• Calxeda Inc.
• Carbon Design Systems Inc.
• Cyclos Semiconductor Inc.
• eSol Co. Ltd
• Ideaworks 3D Limited
• Shanghai Walden Venture Capital Enterprise
• Thunder Software Technology Co. Ltd
• Triad Semiconductor Inc
During the year the Group disposed of its investments in Cognovo Limited and Nethra Imaging Inc.
Available-for-sale financial assets include the following:
2012 2011
£m £m
Unlisted equity securities – UK 3.7 1.7
Unlisted equity securities – China 2.0 2.0
Unlisted equity securities – Japan 0.9 0.9
Unlisted equity securities – US 5.9 8.6
Convertible loan notes – UK 1.3 13.3
Convertible loan notes – US – 0.8
Total non-current financial assets 13.8 27.3
Available-for-sale financial assets are denominated in the following currencies:
2012 2011
£m £m
Sterling 12.5 26.5
US dollars 1.3 0.8
Total financial assets 13.8 27.3
126
14 Property, plant and equipment

Fixtures, fittings Assets in the
Freehold Leasehold Computer and motor course of
buildings improvements equipment vehicles construction Total
£m £m £m £m £m £m
Cost
At 1 January 2012 0.2 18.0 32.5 5.7 0.9 57.3
Additions – 1.7 14.0 1.1 12.4 29.2
Transfers – 4.9 4.9 – (9.8) –
Disposals – (1.1) (1.8) (0.2) – (3.1)
Exchange differences – (0.4) (0.8) (0.2) – (1.4)
At 31 December 2012 0.2 23.1 48.8 6.4 3.5 82.0
Accumulated depreciation
At 1 January 2012 0.1 13.5 21.8 3.8 – 39.2
Charge for the year – 1.8 8.1 0.9 – 10.8
Disposals – (1.1) (1.8) (0.2) – (3.1)
At 31 December 2012 0.1 13.9 27.5 4.4 – 45.9
Net book value
At 31 December 2012 0.1 9.2 21.3 2.0 3.5 36.1
Fixtures, fittings Assets in the

Freehold Leasehold Computer and motor course of
buildings improvements equipment vehicles construction Total
£m £m £m £m £m £m
Cost
At 1 January 2011 0.2 17.7 25.9 5.3 – 49.1
Additions – 0.6 10.0 0.7 0.9 12.2
Disposals – (0.2) (2.7) (0.2) – (3.1)
At 31 December 2011 0.2 18.0 32.5 5.7 0.9 57.3
Accumulated depreciation
At 1 January 2011 0.1 12.2 19.7 3.3 – 35.3
Charge for the year – 1.5 5.2 0.8 – 7.5
Disposals – (0.1) (2.7) (0.2) – (3.0)
At 31 December 2011 0.1 13.5 21.8 3.8 – 39.2
Net book value
At 31 December 2011 0.1 4.5 10.7 1.9 0.9 18.1
Net book value at 1 January 2011 0.1 5.5 6.2 2.0 – 13.8
Included within computer equipment are assets with net book value of £7.7 million (2011: £nil) held under finance leases.
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ARM Holdings plc
15 Goodwill
£m
At 1 January 2011 532.3
Exchange differences 3.7
Acquisition - Obsidian 3.2
Acquisition - Prolific 3.3
At 31 December 2011 542.5
Exchange differences (23.1)
During the fourth quarter of 2012, the Group tested its balance of goodwill for impairment in accordance with IAS 36,“Impairment of assets”. No
impairment charge was recorded as a result of this annual impairment test.
Goodwill is allocated to the Group’s CGUs according to business segment. The carrying amounts of goodwill by CGU at 31 December 2012 are
summarised below:
Division Division Division Group
£m £m £m £m
Goodwill relating to Artisan 121.3 363.9 – 485.2
Goodwill relating to Falanx 9.4 – – 9.4
Goodwill relating to Axys – – 7.5 7.5
Goodwill relating to KEG and KSI – – 6.9 6.9
Goodwill relating to Prolific – 3.1 – 3.1
Goodwill relating to Obsidian 3.1 – – 3.1
Goodwill relating to Logipard 2.1 – – 2.1
Goodwill relating to other acquisitions 2.1 – – 2.1
Goodwill at 31 December 2012 138.0 367.0 14.4 519.4
Goodwill at 31 December 2011 143.7 383.9 14.9 542.5
The recoverable amount for each CGU has been measured based on a value-in-use calculation.
Allocation of goodwill relating to Artisan
The directors believed that, in addition to forming the basis of the Physical IP Division (PIPD), the Group’s acquisition of Artisan in 2004 would provide a
benefit to the Processor Division (PD) for the following reasons:
• The development of faster and more power-efficient microprocessors as a result of collaboration between PD and PIPD engineering teams. This is
expected to generate more PD licensing deals at higher values; and
• The potential for PD to win more microprocessor licensing business as a result of ARM being able to offer both processor and physical IP in-house.
The goodwill relating to Artisan was allocated between the two divisions accordingly.
Processor Division (PD)
The Processor Division encompasses those resources that are centred around microprocessor cores, including specific functions such as graphics IP,
system IP, embedded software IP and configurable DSP IP.
The key assumptions in the value-in-use calculations were:
Period of projected cash flows The directors have used a ten-year forecast period with an assumed terminal growth rate after 2022 of 3% per annum.
Given the long-term nature of the ARM licensing and royalty business model, it is considered appropriate to use a ten-year forecast period to assess the
expected future cash flows to be generated from the assets under review.
Revenue growth Revenue growth assumptions are based on financial budgets and forecasts approved by senior management, taking into account
typical semiconductor industry growth rates and ARM’s historical experience in the context of wider industry and economic conditions.
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15 Goodwill continued
Operating margins Operating margins have been assumed to grow steadily over the period of the calculation.
Discount rate Future cash flows are discounted at a rate of 10% per annum post tax.
The directors are confident that the amount of goodwill allocated to PD is appropriate and that the assumptions used in estimating its fair value are
appropriate. Whilst it is conceivable that a key assumption in the calculation could change, the directors believe that no reasonably foreseeable changes
to key assumptions would result in an impairment of goodwill, such is the margin by which the estimated fair value exceeds the carrying value.
Physical IP Division (PIPD)
The Physical IP Division is concerned with the building blocks necessary for translation of a circuit design into actual silicon.
Period of projected cash flows The directors have used a ten-year forecast period with an assumed terminal growth rate after 2022 of 3% per annum.
Given the long-term nature of the ARM licensing and royalty business model, it is considered appropriate to use a ten-year forecast period to assess the
expected future cash flows to be generated from the assets under review.
This timescale is consistent with ARM’s experience in developing the processor licensing and royalty model. ARM has signed around 960 processor
licences with more than 320 customers over the last 20 years with less than half of these paying royalties thus far. As royalty revenues are a function of
cumulative licensing, royalty growth gathers momentum as the licensing base grows – ARM processor royalties have increased from $38 million in 2002
to $418 million in 2012.
typical semiconductor industry growth rates and ARM’s historical experience in the context of wider industry and economic conditions. Since the
acquisition of Artisan at the end of 2004, PIPD has accelerated the development of leading-edge physical IP technology. As semiconductor process
geometries shrink, PIPD is expected to have more licensing opportunities across a broader range of foundries and other semiconductor companies.
US dollar licence revenues increased by 6% year-on-year in 2012 and royalty revenues increased by 15%. The increase in revenues was due mainly to
further success in signing licences for leading edge physical IP technology. As a result, backlog increased by 50% in 2012 compared with the beginning of
the year. This uplift in licensing activity is expected to translate into growth in royalty revenues in future years. The directors believe that the investment
in the physical IP technology portfolio in recent years will not only generate growth in physical IP revenue in future years, but also contribute significantly
to the success of PD due to the synergistic benefits of the combined technologies. An estimate of the increased benefits to PD arising as a result of the
combination with physical IP products is taken in to account in calculating the value-in-use for PIPD. Demand for Processor Optimisation Packs (POPs)
continued to be strong in 2012 with a number of partners taking licences alongside PD processors. POPs enable an enhanced and deterministic
outcome for licensees when implementing ARM processors.
Operating margins Operating margins are assumed to increase gradually over time to in excess of 20% by the end of the forecast period. In 2012,
PIPD continued to make progress and recorded a smaller loss on a normalised basis than for the previous year. This was mostly as a result of increased
revenues offset by continued investment in the development of leading-edge technology. Margins are expected to improve significantly in future years as
licence revenues from leading-edge products gather pace. Growth in high margin royalty revenues will further improve profitability. Costs are expected
to grow relatively slowly in real terms.
Discount rate Future cash flows are discounted at a rate of 10% per annum post tax. The directors are confident that the amount of goodwill allocated
to PIPD and the assumptions used in estimating its fair value are appropriate.
Whilst it is conceivable that a key assumption in the calculation could change, the directors believe that no reasonably foreseeable changes to key
assumptions would result in an impairment of goodwill, such is the margin by which the estimated fair value exceeds the carrying value. The overall
assessment is most sensitive to changes in the assumed revenues and benefits provided to the Processor Division. The directors have considered the
impact of a number of scenarios on the overall valuation of the PIPD business, including a considerable reduction in the benefits assumed to be provided
to the Processor Division. The results of this sensitivity analysis showed that applying a range of reasonable variations to the key assumptions would not
change the conclusion that no impairment in the carrying value of the goodwill is required at 31 December 2012.
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ARM Holdings plc
15 Goodwill continued
System Design Division (SDD)
The System Design Division develops and sells the tools and models used to create and debug software and system-on-chip (SoC) designs.
Period of projected cash flows The directors have used a five-year forecast period with an assumed terminal growth rate after 2017 of 3% per
annum. It is considered appropriate to use a five-year forecast period to properly reflect the weighted average period over which the benefits of the
acquisitions of Axys, KEG and KSI are expected to accrue.
typical semiconductor industry growth rates and ARM’s historical experience in the context of wider industry and economic conditions.
Operating margins Operating margins are assumed to grow gradually during the period.
Discount rate Future cash flows are discounted at a rate of 10% per annum post tax.
The directors are confident that the amount of goodwill allocated to SDD and the assumptions used in estimating its fair value are appropriate. Whilst it
is conceivable that a key assumption in the calculation could change, the directors believe that no reasonably foreseeable changes to key assumptions
would result in an impairment of goodwill, such is the margin by which the estimated fair value exceeds the carrying value.
16 Other intangible assets
Existing
In-process agreements
Computer Patents and research and Developed and customer Core Trademarks and Order
software licences development technology relationships technology tradenames backlog Total
£m £m £m £m £m £m £m £m £m
Cost
At 1 January 2012 10.4 25.4 6.2 41.0 55.5 17.6 4.7 2.1 162.9
Additions 4.0 1.4 – – – – – – 5.4
Disposals (0.2) – – – – – – – (0.2)
Exchange differences (0.1) – (0.3) (1.4) (2.2) (0.8) (0.2) (0.1) (5.1)
At 31 December 2012 14.1 26.8 5.9 39.6 53.3 16.8 4.5 2.0 163.0
Accumulated amortisation
At 1 January 2012 9.0 20.8 6.2 37.7 54.6 15.3 4.7 2.1 150.4
Charge for the year 1.6 2.3 – 1.4 0.4 0.9 – – 6.6
Disposals (0.2) – – – – – – – (0.2)
Exchange differences (0.1) – (0.3) (1.4) (2.2) (0.7) (0.2) (0.1) (5.0)
At 31 December 2012 10.3 23.1 5.9 37.7 52.8 15.5 4.5 2.0 151.8
Net book value
At 31 December 2012 3.8 3.7 – 1.9 0.5 1.3 – – 11.2
130
16 Other intangible assets continued

Existing
In-process agreements
Computer Patents and research and Developed and customer Core Trademarks and Order
software licences development technology relationships technology tradenames backlog Total
£m £m £m £m £m £m £m £m £m
Cost
At 1 January 2011 9.8 25.4 6.2 38.8 55.1 14.8 4.6 2.0 156.7
Additions 0.8 – – – – – – – 0.8
Acquisition of subsidiaries – – – 2.3 0.2 2.6 – – 5.1
Disposals (0.1) – – – – – – – (0.1)
Exchange differences (0.1) – – (0.1) 0.2 0.2 0.1 0.1 0.4
At 31 December 2011 10.4 25.4 6.2 41.0 55.5 17.6 4.7 2.1 162.9
Accumulated amortisation
At 1 January 2011 8.4 18.7 6.2 35.9 53.9 14.8 4.6 2.0 144.5
Charge for the year 0.8 2.1 – 1.9 0.5 0.4 – – 5.7
Disposals (0.1) – – – – – – – (0.1)
Exchange differences (0.1) – – (0.1) 0.2 0.1 0.1 0.1 0.3
At 31 December 2011 9.0 20.8 6.2 37.7 54.6 15.3 4.7 2.1 150.4
Net book value
At 31 December 2011 1.4 4.6 – 3.3 0.9 2.3 – – 12.5
Net book value at 1 January 2011 1.4 6.7 – 2.9 1.2 – – – 12.2
17 Accrued and other liabilities

2012 2011
£m £m
Accruals:
Provision for payroll taxes on share awards 16.5 22.6
Employee bonus and sales commissions 23.8 23.7
Other accruals 31.0 31.8
Total accruals 71.3 78.1
Other taxation and social security 3.4 2.8

Other payables 4.6 4.0
79.3 84.9
18 Finance lease liabilities

2012 2011
£m £m
Gross finance lease liabilities – minimum lease payments:
Within one year 3.1 –
In the second to fifth years inclusive 3.0 –
Less: future finance charges (0.3) –
Present value of lease obligations 5.8 –
Amounts due for settlement within 12 months 2.9 –

Amounts due for settlement after 12 months 2.9 –
Present value of lease obligations 5.8 –
The Group has entered into a three and a four year finance lease arrangement in respect of certain IT equipment.
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ARM Holdings plc
19 Financial instruments
(a) Financial instruments by category
The accounting policies for financial instruments have been applied to the line items below:
Financial assets
Assets at fair
value through
Loans and the income Available-
receivables statement for-sale Total
£m £m £m £m
At 31 December 2012
Cash and cash equivalents 46.3 – – 46.3
Short-term deposits 340.0 – – 340.0
Currency exchange contracts – 1.4 – 1.4
Accounts receivable (gross of impairment provision) 126.9 – – 126.9
Total current financial assets 513.2 1.4 – 514.6
Available-for-sale financial assets – unlisted – – 13.8 13.8
Long-term deposits 141.3 – – 141.3
Loans and receivables 2.1 – – 2.1
Total non-current financial assets 143.4 – 13.8 157.2
Total financial assets 656.6 1.4 13.8 671.8
At 31 December 2011
Cash and cash equivalents 26.8 – – 26.8
Short-term deposits 319.1 – – 319.1
Embedded derivatives – 1.2 – 1.2
Accounts receivable (gross of impairment provision) 121.3 – – 121.3
Total current financial assets 467.2 1.2 – 468.4
Available-for-sale financial assets – unlisted – – 27.3 27.3
Long-term deposits 83.1 – – 83.1
Loans and receivables 2.0 – – 2.0
Total non-current financial assets 85.1 – 27.3 112.4
Total financial assets 552.3 1.2 27.3 580.8
132
19 Financial instruments continued

(a) Financial instruments by category continued
Financial liabilities
2012 2011
£m £m
Liabilities at amortised cost at 31 December:
Accounts payable 5.9 8.7
Accrued and other liabilities * 46.8 48.3
Finance lease liabilities 5.8 –
58.5 57.0
Liabilities at fair value through the income statement at 31 December:
Embedded derivatives 2.5 –
Currency exchange contracts – 1.5
Total financial liabilities 61.0 58.5
* Non-financial liabilities are excluded from the accrued and other liabilities balance, as this analysis is required only for financial instruments.
Loans and receivables

During 2010 the Group invested £2.5 million in an interest-free charitable bond with Future Business. This was recognised in loans and receivables at its
initial fair value of £1.9 million, measured using the effective interest method, which resulted in a charge of £0.6 million being recognised as interest
payable and similar charges during 2010. The carrying value of this investment amounted to £2.1 million at 31 December 2012 (2011: £2.0 million), with
£0.1 million being recognised as interest receivable during 2012 (2011: £0.1 million).
Short-term deposits The effective interest rate on short-term deposits outstanding at the year end was 2.70% (2011: 2.44%) and these deposits have
an average maturity of 190 days (2011: 197 days).
Long-term deposits The effective interest rate on long-term deposits outstanding at the year end was 3.32% (2011: 3.18%) and these deposits have an
average maturity of 489 days (2011: 532 days).
(b) Credit quality of financial assets
Trade debtors
On a quarterly basis, all trade debtors more than three months overdue are considered for impairment on a line-by-line basis. Either a provision is made
or the lack thereof is justified, with review by senior members of the Group’s finance team.
2012 2011
£m £m
Trade debtors (gross of impairment provision):
Not yet due 80.1 89.5
Under 90 days overdue 27.3 21.1
Over 90 days overdue but not provided for 9.3 4.1
Fully provided for 2.4 1.7
Total 119.1 116.4
As shown above, at 31 December 2012 trade debtors less than 90 days overdue amounted to £27.3 million. Of those outstanding at 31 December
2012, £13.2 million had been collected by 25 February 2013 and £10.9 million were owed by large, established customers. Similarly, debtors more than
90 days overdue and not provided for amounted to £9.3 million of which £3.7 million had been collected by 25 February 2013 and £1.3 million was
owed by large, established customers. For the remainder, discussions regarding repayment are ongoing and repayment schedules have been agreed
with the customers concerned. These will be monitored on a quarterly basis in accordance with the control outlined above. No further analysis has
been provided here on the quality of these debts as they are not felt to pose a material threat to the Group’s future results.
As shown above, at 31 December 2012, trade debtors fully provided for amounted to £2.4 million (2011: £1.7 million). Of those provided for at
31 December 2012, £0.6 million relates to trade debtors that are up to six months overdue (2011: £0.3 million) and £1.8 million relates to trade
debtors that are over six months overdue (2011: £1.4 million).
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ARM Holdings plc
19 Financial instruments continued

(b) Credit quality of financial assets continued
Highly liquid financial assets
Financial instrument counterparties are subject to pre-approval by the directors and such approval is limited to financial institutions with a Moody’s rating
of at least A2/P-1, a Fitch rating of at least A/F1, or UK building societies with over £2 billion in assets, except in certain jurisdictions where the cash
holding concerned is immaterial. At 31 December 2012, 93% (2011: 90%) of the Group’s cash and cash equivalents, and short- and long-term deposits
were deposited with major clearing banks and building societies fulfilling these criteria. The majority of the Group’s cash currently falling outside of the
counterparty criteria is held with building societies that were within criteria when the deposits were placed, with the Group having raised the criteria
threshold for them during 2012.
20 Share capital
2012 2011
£m £m
Authorised
2,200,000,000 ordinary shares of 0.05 pence each (2011: 2,200,000,000) 1.1 1.1
2012 2011
Number of Number of
shares Value shares Value
m £m m £m
Issued and fully paid
At 1 January 1,351.3 0.7 1,344.1 0.7
Allotted under employee incentive schemes 29.5 – 7.2 –
At 31 December 1,380.8 0.7 1,351.3 0.7
During 2012, the aggregate consideration received on issue of new share capital allotted under employee incentive schemes was £5.6 million
(2011: £6.6 million).
21 Own shares held
Treasury stock
£m
At 1 January 2011 22.1
Issuance of shares (22.1)
At 31 December 2011 –
No shares were repurchased during 2012 and 2011. There were no shares held as treasury stock at 31 December 2012 or 31 December 2011.
22 Acquisitions
There were no acquisitions in 2012, but the following acquisitions were made in 2011:
Obsidian Software Inc
On 15 June 2011, the Group purchased the entire share capital of Obsidian Software Inc. for $5.6 million in cash, plus a further $9.5 million payable as
an earn-out to the shareholders subject to them remaining in employment with ARM for up to three years and meeting certain performance criteria.
The earn-out is being expensed in the income statement, within research and development expenses, as the services are provided. During 2012, the
Group made a payment of £2.2 million in respect of these time-based and performance bonuses due under the acquisition agreement. This purchase
has been accounted for as an acquisition.
Obsidian, a company based in Austin Texas, was a market leader in verification and validation products and services used in the design of increasingly
complex processors. The company’s RAVEN software has been used by many of the world’s leading semiconductor companies. As system-on-chip
(SoC) and processors grow in complexity there is an increasing need to develop more sophisticated verification strategies. This acquisition augments
ARM's drive in matching its verification strategies with the rate of change in its high performance, complex SoC IP components. For these reasons,
combined with the ability to hire the entire workforce of Obsidian including the founders and 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. All of the goodwill recognised is expected to be deductible for income tax purposes.
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22 Acquisitions continued
The following table summarises the consideration and fair values of the assets acquired and liabilities assumed as at 15 June 2011. There have been no
changes to fair values during 2012.
£m $m
Accounts receivable 0.5 0.8
Other current assets 0.1 0.1
Property, plant and equipment – 0.1
Intangible assets 2.7 4.4
Deferred revenue (0.4) (0.6)
Accrued and other liabilities (2.6) (4.3)
Net assets acquired 0.3 0.5
Goodwill 3.2 5.1
Consideration 3.5 5.6
The consideration was all paid in cash. All transaction expenses incurred by the Group have been charged to the income statement within general and
administrative expenses.
Prolific Inc
On 31 October 2011, the Group purchased the entire share capital of Prolific Inc. for $7.7 million in cash, plus a further $8.5 million payable as an earn-
out to the shareholders subject to them remaining in employment with ARM for up to five years and meeting certain performance criteria. The earn-out
is being expensed in the income statement, within research and development expenses, as the services are provided. During 2012, the Group made
payments of £0.8 million in respect of these time-based and performance bonuses due under the acquisition agreement. This purchase has been
accounted for as an acquisition.
Prolific, a company based in Newark California, develops leading-edge IC design optimisation software tools that significantly reduce development time
and improve the performance of cell-based designs. The increasing complexity of 20nm and below process technologies is driving the need for
automated layout optimisation solutions. This acquisition augments ARM's strategy to provide innovative physical IP products that will enable the ARM
partnership to continue to lead in the implementation of highly integrated, low-power SoC solutions.
For these reasons, combined with the ability to hire the entire engineering workforce of Prolific, 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. All of the goodwill recognised is expected to be deductible for income tax purposes.
The following table summarises the consideration and fair values of the assets acquired and liabilities assumed as at 31 October 2011. There have been
no changes to fair values during 2012.
£m $m
Intangible assets 2.4 3.7
Deferred revenue (0.2) (0.3)
Accrued and other liabilities (0.5) (0.8)
Net assets acquired 1.7 2.6
Goodwill 3.3 5.1
Consideration 5.0 7.7
The consideration was all paid in cash. All transaction expenses incurred by the Group have been charged to the income statement within general and
administrative expenses.
Other
During 2011, the Group made a payment of £0.5 million in respect of final consideration for the acquisition of Keil Elektronik GmbH. This payment was
in respect of a previously accrued liability and therefore had no impact on the income statement.
135
ARM Holdings plc
23 Share-based payments
The Group has several share schemes, whereby shares in the Company can be granted to employees and directors. The different schemes are
described below, but all options are granted with a fixed exercise price equal to the market price of the shares under option at the date of grant, except
for those options within the SAYE and ESPP schemes as detailed below. Furthermore, from 2006, the Company has issued Restricted Stock Units
(RSUs) to employees, which are actual share awards on vesting rather than options to buy shares at a fixed exercise price. Whilst the Company
reserves the right to award options to employees going forward, the majority of awards to employees will be in RSUs.
Under the UK Inland Revenue Executive Approved Share Option Plan (the “Executive Scheme”), the Company may grant options to employees
meeting certain eligibility requirements. Options under the Executive Scheme are exercisable between three and ten years after their issue, after which
time the options expire.
Under the Company’s Unapproved Scheme (the “Unapproved Scheme”), for which it has not sought approval from the UK tax authorities, options are
exercisable one to seven years after their issue, after which time the options expire.
There is a further scheme for our French employees (the “French Scheme”). In the French Scheme, options are exercisable between four and seven
years after their issue.
Upon the acquisition of Artisan in 2004, the Company assumed the share schemes of Artisan existing at acquisition. The schemes remained substantially
the same as prior to the acquisition, other than the options became options to purchase shares in ARM Holdings plc instead of Artisan Components Inc.
The number and value of options were amended in line with the conversion ratio as detailed in the merger agreement. The only remaining scheme from
those assumed is the “2003 Plan”.
Under each plan, there are multiple vesting templates and vesting periods. The majority of the options were already vested upon acquisition, and the
most common template was 25% vesting after one year, and then 6.25% vesting each quarter thereafter, until 100% vest after four years. Some options
vest on a monthly basis, and some vest over five years. All options lapse ten years from the date of grant.
The Company also offers savings-related share option schemes (SAYE) for employees and executive directors of the Group. The number of options
granted is related to the value of savings made by the employee. The period of savings is three or five years. The option price for grants is set at 80% of
the market share price prior to the announcement of the grant, and the right to exercise normally only arises for a six-month period once the savings
have been completed. The Company also operates a savings-related option scheme for employees in the US and India, namely the Employee Share
Purchase Plan (ESPP). The number of options granted is related to the value of savings made by the employee. The period of savings is six months, with
the option price being at 85% of the lower of the market share price at the beginning and end of the scheme.
The main RSU awards (to employees in all jurisdictions other than France) vest 25% on each anniversary over four years. RSU awards to our French
employees vest 50% after two years, and then a further 25% after three and four years.
Additionally, the Company operates a Deferred Annual Bonus plan (DAB). Under the DAB, which is for directors and selected senior management
within the Group, participants are required to defer 50% of any related annual bonus into shares on a compulsory basis. These shares will be deferred
for three years, and then a matching award will be made depending on the achievement of an EPS performance condition over that time. The Company
also operates the Long Term Incentive Plan (LTIP), also for directors and selected senior management, whereby share awards are made and vest
depending on the Company’s TSR performance compared to two comparator groups over the three year performance period.
As disclosed in note 4, staff expenses arising from these share-based compensation schemes of £37.1 million (2011: £40.5 million) were charged to the
income statement in the year. This is in line with the Group’s policies for recognition and measurement of the costs associated with these remuneration
schemes as outlined in note 1.
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23 Share-based payments continued

The fair value of options granted was estimated on the date of grant using the Black-Scholes option pricing model, except for the ESPP whose fair value
is the intrinsic value of the award at the date of vest. The following assumptions for each option grant during 2012 and 2011 were as follows:
Grant date 16 Feb 2012 23 Jun 2012 16 Aug 2012 16 Feb 2011 23 Jun 2011 16 Aug 2011
Scheme ESPP SAYE ESPP ESPP SAYE ESPP
Share price at grant date £5.905 £5.06 £5.74 £6.225 £5.68 £5.26
Exercise price £4.42 £3.9616 £4.876 £2.62 £4.464 £4.471
Number of employees 373 490 372 294 423 319
Shares under option 333,464 720,922 306,497 451,423 552,903 279,806
Vesting period (years) – 3-5 – – 3-5 –
Expected volatility – 38%-43% – – 42%-43% –
Expected life (years) – 3-5 – – 3-5 –
Risk free rate – 0.5% – – 0.5% –
Dividend yield – 0.69% – – 0.51% –
Fair value per option £1.485 £1.728-£2.175 £0.864 £3.605 £2.13-£2.423 £0.789
The fair value of RSUs, LTIP and DAB awards granted was estimated on the date of grant using the Black-Scholes option pricing model. As all are share
awards with no exercise price, all awards have been deemed to have an exercise price of £0.0000001 in the Black-Scholes model. The assumptions for
each grant during 2012 and 2011 were as follows:
Grant date 8 Feb 2012 8 Feb 2012 8 Feb 2012 8 Feb 2012 8 May 2012
Scheme DAB RSU French RSU LTIP RSU
Share price at grant date £5.68 £5.68 £5.68 £5.68 £5.07
Number of employees 50 1,918 91 54 108
Shares awarded 850,741 3,012,604 128,067 1,102,625 159,720
Vesting period (years) – 1-4 2-4 3 1-4
Expected volatility 39% 34%-45% 39%-45% 39% 37%-42%
Expected life (years) 3 1-4 2-4 3 1-4
Risk free rate 0.5% 0.5% 0.5% 0.5% 0.5%
Dividend yield 0.61% 0.61% 0.61% 0.61% 0.69%
Fair value per share £5.577 £5.542-£5.671 £5.542- £5.611 £5.577 £4.933-£5.035
Grant date 8 May 2012 13 Aug 2012 13 Aug 2012 12 Nov 2012 12 Nov 2012
Scheme French RSU RSU French RSU RSU French RSU
Number of employees 4 126 1 159 3
Shares awarded 4,230 213,201 960 275,270 2,490
Vesting period (years) 2-4 1-4 2-4 1-4 2-4
Expected volatility 38%-42% 35%-41% 38%-41% 31%-40% 38%-40%
Expected life (years) 2-4 1-4 2-4 1-4 2-4
Risk free rate 0.5% 0.5% 0.5% 0.5% 0.5%
Dividend yield 0.69% 0.66% 0.66% 0.53% 0.53%
Fair value per share £4.933-£5.001 £5.592-£5.703 £5.592-£5.665 £6.976-£7.087 £6.976-£7.05
137
ARM Holdings plc

Grant date 8 Feb 2011 8 Feb 2011 8 Feb 2011 8 Feb 2011 8 May 2011
Scheme DAB RSU French RSU LTIP RSU
Number of employees 43 1,675 92 46 58
Shares awarded 641,059 5,945,805 316,888 921,443 186,820
Vesting period (years) – 1-4 2-4 3 1-4
Expected volatility 46% 37%-46% 37%-46% 46% 39%-44%
Expected life (years) 3 1-4 2-4 3 1-4
Risk free rate 0.5% 0.5% 0.5% 0.5% 0.5%
Dividend yield 0.47% 0.47% 0.47% 0.47% 0.49%
£5.995-
Fair value per share £6.024 £5.995-£6.081 £6.052 £6.024 £5.835-£5.921
Grant date 8 May 2011 13 Aug 2011 13 Aug 2011 12 Nov 2011 12 Nov 2011
Scheme French RSU RSU French RSU RSU French RSU
Number of employees 2 87 4 80 1
Shares awarded 8,750 385,420 7,950 189,380 765
Vesting period (years) 2-4 1-4 2-4 1-4 2-4
Expected volatility 39%-44% 39%-45% 39%-45% 41%-46% 41%-46%
Expected life (years) 2-4 1-4 2-4 1-4 2-4
Risk free rate 0.5% 0.5% 0.5% 0.5% 0.5%
Dividend yield 0.49% 0.60% 0.60% 0.49% 0.49%
Fair value per share £5.835-£5.892 £5.136-£5.229 £5.136-£5.198 £6.221-£6.314 £6.221-£6.283
The expected volatility was primarily based upon historical volatility adjusted for past one-time events that are not expected to re-occur. The expected
life is the expected period to exercise.
A reconciliation of option and share award movements over the year to 31 December 2012 is shown below. Share awards do not have an exercise
price and therefore the reconciliation below shows only the number of awards, with no corresponding weighted average exercise prices.
2012 2011
Weighted average RSUs/LTIP/DAB Weighted average RSUs/LTIP/DAB
Options Number exercise price Number Options Number exercise price Number
Outstanding at 1 January 6,581,438 £1.221 35,215,062 13,452,860 £0.899 42,469,526
Granted 1,360,883 £4.280 14,448,979 1,284,132 £3.815 14,696,383
Forfeited (234,196) £3.570 (914,068) (171,095) £1.113 (831,400)
Lapsed (10,589) £0.910 – (219,847) £1.186 –
Exercised (3,958,614) £1.404 (25,494,139) (7,764,612) £1.096 (21,119,447)
Outstanding at 31 December 3,738,922 £1.994 23,255,834 6,581,438 £1.221 35,215,062
Exercisable at 31 December 985,557 £0.685 – 3,020,599 £0.681 –
138

The weighted average share price at the date of exercise or vest of the above share options and awards was £5.72 (2011: £5.90). The following options
over ordinary shares were in existence at 31 December:
2012
Weighted Weighted
Weighted average average
average remaining life remaining life
Number exercise price Expected Contractual
Exercise price (£) outstanding £ Years Years
Outstanding options:
0.47 – 0.854 1,514,873 0.72 0.87 1.37
1.005 – 1.055 46,114 1.04 1.03 2.05
1.25 32,813 1.25 0.54 1.08
1.325 – 4.464 2,145,122 2.93 1.77 1.97
Total 3,738,922 1.99 1.38 1.72
Outstanding RSU/LTIP/DAB awards:

0.00 (RSUs) 16,750,069 – 0.93 0.93
0.00 (LTIP) 4,189,314 – 0.82 0.82
0.00 (DAB) 2,316,451 – 1.06 1.06
Total 23,255,834 – 0.92 0.92
2011
Weighted Weighted
Weighted average average
average remaining life remaining life
Number exercise price Expected Contractual
Exercise price (£) outstanding £ Years Years
Outstanding options:
0.27 – 0.4375 129,632 0.35 0.44 0.88
0.47 – 0.854 4,020,157 0.69 1.16 1.89
1.005 – 1.055 561,523 1.05 0.27 0.53
1.104 – 1.25 84,308 1.18 1.12 1.49
1.325 – 4.464 1,785,818 2.52 1.87 2.23
Total 6,581,438 1.22 1.26 1.84
Outstanding RSU/LTIP/DAB awards:

0.00 (RSUs) 23,735,397 – 1.09 1.09
0.00 (LTIP) 8,327,095 – 0.62 0.62
0.00 (DAB) 3,152,570 – 0.83 0.83
Total 35,215,062 – 0.95 0.95
24 Capital and other financial commitments

2012 2011
£m £m
Capital expenditure commitments (expenditure on property, plant and equipment) 0.6 4.9
Other financial commitments (expenditure on investments) – 0.5
Total contracts placed for future capital and other financial expenditure not provided for
in the financial statements 0.6 5.4
139
ARM Holdings plc
25 Operating lease commitments – minimum lease payments

At 31 December 2012, the Group had commitments under non-cancellable operating leases as follows:
2012 2011
Land and Land and
buildings Other Total buildings Other Total
£m £m £m £m £m £m
The future aggregate minimum lease payments under non-cancellable
operating leases are as follows:
Within one year 6.8 20.4 27.2 6.1 19.7 25.8
Later than one year and less than five years 16.9 21.5 38.4 15.5 37.1 52.6
After five years 6.7 – 6.7 5.4 – 5.4
At 31 December 30.4 41.9 72.3 27.0 56.8 83.8
The Group leases office buildings and EDA tools software under non-cancellable operating lease agreements. The lease terms are between two and ten
years, and the majority of lease agreements are renewable at the end of the lease period at market rate.
26 Financial contingencies
It is common industry practice for licensors of technology to offer to indemnify their licensees for loss suffered by the licensee in the event that the
technology licensed is held to infringe the intellectual property of a third party. Consistent with such practice, the Group provides such indemnification to
its licensees but subject, in all cases, to a limitation of liability. The obligation for the Group to indemnify its licensees is subject to certain provisos and is
usually contingent upon a third party bringing an action against the licensee alleging that the technology licensed by the Group to the licensee infringes
such third party’s intellectual property rights. The indemnification obligations typically survive any termination of the licence and will continue in
perpetuity.
The Group does not provide for any such indemnities unless it has received notification from the other party that they are likely to invoke the indemnity.
A provision is made if both of the following conditions are met: (i) information available prior to the issuance of the financial statements indicates that it is
probable that a liability had been incurred at the date of the financial statements; and (ii) the amount of the liability can be reasonably estimated. Any
such provision is based upon the directors’ estimate of the fair value of expected costs of any such claim.
At present, the Group is not a party in any legal proceedings in which the directors believe that it is probable that the resolution of such proceedings will
result in a material liability for the Group. Currently, there are legal proceedings against some of the Group’s licensees in which it is asserted that certain
of the Group’s technology infringes third party patents, but in each of those proceedings the Group either presently has no obligation to indemnify,
because certain preconditions to indemnification have not been satisfied by such licensees, or to the extent that there is any present obligation to
indemnify, the Group does not believe that it is probable that the resolution of such proceedings will result in a material liability for the Group. If
preconditions to indemnification are satisfied then an indemnification obligation may arise which could result in a material liability for the Group. The
Group is presently in discussions with a licensee to re-negotiate the terms upon which the Group will indemnify that licensee. In the event that there is
agreement with that licensee on the terms presently expected, an obligation of up to US$20 million will arise on adoption of the new indemnity terms.
27 Related party transactions
During the year, the Group was invoiced £4.2 million (2011: £4.2 million) in subscription fees by its associated company, Linaro Limited (Linaro). At 31
December 2012, £1.0 million (2011: £1.1 million) was outstanding. In addition the Group provided consulting and other services to Linaro amounting to
£1.7 million (2011: £1.6 million). All fees have been charged in accordance with the terms of the agreement. At 31 December 2012, £1.0 million (2011:
£0.7 million) was owed to the Group. Further information relating to Linaro is disclosed in note 29.
There were no other related party transactions during 2012 which require disclosure.
Key management compensation is disclosed in note 3.
28 Post-balance sheet events
After the year end, the directors proposed payment of a final dividend in respect of 2012 of 2.83 pence per share. Subject to shareholder approval, the
final dividend will be paid on 17 May 2013 to shareholders on the register on 19 April 2013. The final dividend has not been recognised as a distribution
during the year ended 31 December 2012.
140
29 Principal subsidiaries, associates, and joint ventures

Subsidiaries
Details of principal subsidiary undertakings are shown below. Not all subsidiaries are included as the list would be excessive in length. A full list is filed in
the Group’s Annual Return. All investments are indirectly held unless otherwise shown.
Proportion of total
nominal value of
Name of undertaking Country of registration Principal activity issued shares held
ARM Limited England and Wales Marketing, and research and development of RISC-based 100*
microprocessors and physical IP
ARM Inc. US Marketing, and research and development of RISC-based 100
ARM KK Japan Marketing of RISC-based microprocessors and physical IP 100
ARM Korea Limited South Korea Marketing of RISC-based microprocessors and physical IP 100
ARM France SAS France Marketing and development of RISC-based microprocessors 100
and physical IP
ARM Norway AS Norway Development of graphics IP 100
ARM Sweden AB Sweden Development of graphics IP 100
ARM Germany GmbH Germany Marketing of RISC-based microprocessor IP. Marketing, 100
and research and development of microcontroller tools
ARM Embedded Technologies Pvt. Limited India Marketing, and research and development of RISC-based 100
ARM Taiwan Limited Taiwan Marketing, and research and development of RISC-based 100
ARM Consulting (Shanghai) Co. Limited PR China Marketing, and research and development of RISC-based 100
* The Company itself owns less than 1% of the share capital of ARM Limited, the remaining shares are held indirectly through ARM Finance UK Limited and ARM Finance UK Three Limited. Both ARM Finance
UK Limited and ARM Finance UK Three Limited are 100% owned within the Group.
Associate
During 2010, the Group became a founder member of Linaro, a not-for-profit engineering company created to foster innovation in the Linux
community. Linaro is a company limited by guarantee and as such has no shareholders. The Group controls only 25% of the board and therefore
considers Linaro to be an associate rather than a subsidiary. The Group has not recognised any associate profit or loss, or net assets on the basis that
the entity is not-for-profit.
Joint venture
On 4 December 2012 Trustonic Limited, a joint venture of which the Group holds a 40% share, commenced trading. The initial investment value
amounted to £7.5 million ($12.0 million).
2012 2011
Investment in joint venture £m £m
At 1 January – –
Initial investment 7.5 –
Share of results for the period (0.7) –
At 31 December 6.8 –
The Group’s share of the results of the joint venture, and its aggregated assets and liabilities, are as follows:
Non-current Current Expenses/
Current assets assets liabilities Loss for period
£m £m £m £m
At 31 December 2012
-Trustonic Limited 3.7 4.6 1.5 0.7
The Group’s share of joint venture capital commitments amount to £0.6 million at 31 December 2012.
141
ARM Holdings plc
Company balance sheet/UK GAAP
2012 2011
At 31 December Note £m £m
Fixed assets
Investments 4 616.1 593.4
Current assets
Debtors 5 0.8 32.8
Cash at bank and in hand 0.9 0.1
1.7 32.9
Creditors: amounts falling due within one year 6 (3.0) (0.5)
Net current (liabilities)/assets (1.3) 32.4
Total assets less current liabilities 614.8 625.8
Net assets 614.8 625.8
Capital and reserves
Called-up share capital 7 0.7 0.7
Share premium account 8 12.2 6.6
Share option reserve 8 61.4 61.4
Profit and loss reserve 8 540.5 557.1
Total shareholders’ funds 9 614.8 625.8
The financial statements on pages 142 to 148 were approved by the Board of directors on 27 February 2013 and were signed on its behalf by:
Sir John Buchanan,

Chairman
142
Notes to the financial statements/UK GAAP
1 Principal accounting policies

The financial statements have been prepared in accordance with the Companies Act 2006 and applicable Accounting Standards in the UK. A summary
of the more important accounting policies, which have been consistently applied and reviewed by the board of directors in accordance with Financial
Reporting Standard (FRS) 18, “Accounting policies”, is set out below:
Basis of accounting The financial statements are prepared in accordance with the historical cost convention.
Investments in subsidiaries Investments in subsidiaries are initially recorded at cost. Where an acquisition satisfies the provisions of section 612 of the
Companies Act 2006 for merger relief, the investment is stated at the nominal value of shares issued plus the fair value of any other consideration.
Cash flow statement The Company has taken advantage of the exemption in FRS 1 Revised 1996 “Cash flow statements” which provides that where
a company is a member of a group and a consolidated cash flow statement is published, the company does not have to prepare a cash flow statement.
Foreign currency Transactions denominated in foreign currencies have been translated into sterling at actual rates of exchange at the date of the
transaction. Monetary assets and liabilities denominated in foreign currencies have been translated at the closing rates of exchange at the balance sheet
date. Exchange differences have been included in operating profit.
Taxation Current tax is provided at amounts expected to be paid using the tax rates and laws that have been enacted or substantively enacted by the
balance sheet date.
Financial instruments The Company does not have any financial instruments, other than intercompany payables and receivables, and cash. Due to the
short-term nature of these balances, the Company considers the fair value of these items to equal the carrying value. Because the Company is included
in the consolidated financial statements of the ARM Holdings plc Group which are publicly available, and the financial disclosures required by FRS 29 are
in those financial statements, no disclosure has been presented in these financial statements.
Share schemes The Company issues equity-settled share-based payments, including an LTIP, to certain employees of subsidiary undertakings.
In accordance with FRS 20, equity-settled share-based payments are measured at fair value at the date of grant. Fair value is measured by use of the
Black-Scholes pricing model. The fair value determined at the grant date of the equity-settled share-based payments is expensed in the accounts of the
subsidiary companies on a straight-line basis over the vesting period, based on the Company’s estimate of the number of shares that will eventually vest.
The Company operates Save As You Earn (SAYE) schemes in the UK and an Employee Share Purchase Plan (ESPP) in the US and India. Options under
the SAYE scheme were at a 20% discount to market price of the underlying shares on the date of announcement of the scheme. The UK SAYE
schemes are approved by the Inland Revenue, which stipulates that the saving period must be at least 36 months.
The Company has taken advantage of the exemption available, and has applied the provisions of FRS 20 only to those options granted after
7 November 2002 and which were outstanding at 31 December 2004. The Company does not have any employees and as such, in accordance
with UITF 44, all share-based payments have been recorded as capital contributions to all subsidiaries. The Company recharges the relevant amount
of the share-based payments to its US subsidiary. Consequently, the amount recharged is offset against the carrying value of its investments.
Treasury shares The Company has a share buyback programme under which the Company is able to purchase its own shares and hold them as
treasury shares. There were no treasury shares in place at 31 December 2012 or 2011. In accordance with FRS 25, the Company recognises these
shares at cost as a deduction in arriving at shareholders’ funds.
143
ARM Holdings plc
Notes to the financial statements/UK GAAP continued
2 Profit for the financial year

As permitted by Section 408 of the Companies Act 2006, the parent company’s profit and loss account has not been included in these financial
statements. The parent company’s loss after taxation, including dividends receivable and before dividends payable was £1.9 million (2011: £1.1 million).
The Company has no employees; all five executive directors (as at 31 December 2012) have contracts of service with ARM Limited, a subsidiary of the
Company. The emoluments of four of these directors are paid by ARM Limited, and one of the directors is paid by ARM Inc, the details of which are
disclosed in the remuneration report within these financial statements. Audit fees are disclosed in note 5 to the consolidated financial statements on
page 120.
3 Dividends paid and proposed
2012 2011
£m £m
Final dividend paid of 2.09 pence per ordinary share in respect of 2011 (2011: 1.74 pence in respect of 2010) 28.8 23.4
Interim dividend paid of 1.67 pence (2011: 1.39 pence) per ordinary share 23.0 18.8
51.8 42.2
In addition, the directors are proposing a final dividend in respect of the financial year ended 31 December 2012 of 2.83 pence per share which will
absorb an estimated £40 million of shareholders’ funds. It will be paid on 17 May 2013 to shareholders who are on the register of members on 19 April
2013, subject to approval by the shareholders at the 2013 AGM.
4 Investments
The cost and net book value of interests in Group undertakings held by the Company was £616.1 million at 31 December 2012 and £593.4 million at
31 December 2011. The Company took advantage of merger relief in 2004 and did not record the premium on the issue of shares for the acquisition of
Artisan Components Inc. (now ARM Inc.) and thus did not record the premium within the value of the investment in the Company balance sheet at that
time.
Investments in
subsidiary
undertakings
£m
Cost and net book value
At 1 January 2012 593.4
Capital contributions arising from share-based payments 37.1
Refund of costs related to share issue * (2.7)
Recharge to subsidiary of share-based payments (11.7)
* 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 or clearance system outside the EU was in
breach of EU law. ARM has therefore been 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 2004.
Where options and awards over the Company’s shares have been issued to the employees of subsidiary undertakings, the fair value of employee
services performed (equal to the share-based payments) has been recorded as a capital contribution. The Company recharges the relevant amount of
the share-based payments to its US subsidiary. Consequently, the amount recharged is offset against the carrying value of its investments.
Interests in Group undertakings
Details of subsidiary undertakings are as follows:
Proportion of
nominal value
Country Description of issued
Name of undertaking of registration of shares held shares held
ARM Limited England and Wales Ordinary £1 shares less than 0.01%
ARM Finance UK Limited England and Wales Ordinary $1 shares 100%
The principal activity of ARM Limited is the marketing, research and development of RISC-based microprocessors and physical IP. The remaining shares
in ARM Limited were held at the balance sheet date by ARM Finance UK Limited (AFL) and ARM Finance UK Three Limited (AFL3) (with AFL3 itself
being an indirect wholly owned subsidiary of AFL). The principal activities of both AFL and AFL3 are as intermediate holding companies.
144
5 Debtors
2012 2011
£m £m
Amounts owed by Group undertakings – 32.4
Prepayments and accrued income 0.5 0.1
Deferred tax assets * 0.3 0.3
0.8 32.8
* A deferred tax asset in respect of timing differences arising on losses has been recognised, and it is expected that profits will be available in the future to offset these losses.
6 Creditors: amounts falling due within one year

2012 2011
£m £m
Amounts owed to Group undertakings 2.7 –
Accruals 0.3 0.5
3.0 0.5
7 Called-up share capital
2012 2011
£m £m
Authorised
Allotted, called-up and fully paid
29,452,753 ordinary shares of 0.05 pence each were issued in the year for cash consideration of £5.6 million as a result of the exercise of share options
at various times during the year.
Share options and awards
The Company had the following options and awards outstanding over ordinary shares of 0.05 pence at 31 December 2012:
Weighted
Range of average exercise
Number exercise prices price Latest date
Year of grant of options £ £ of exercise
Executive Scheme 2004 32,813 1.25 1.25 29 January 2014
2005 35,255 1.055 1.055 3 February 2015
68,068 1.1490
Unapproved Performance Scheme 2006 488,573 1.325 1.325 6 February 2013
Unapproved Scheme 2006 6,375 1.36 1.36 3 May 2013
2003 Plan 2003 218,630 0.47–0.58 0.4996 22 October 2013
2004 692,484 0.55–1.01 0.6919 29 November 2014
911,114 0.6457
SAYE 2008 414,697 0.81 0.81 31 January 2014
2009 199,921 0.854 0.854 31 January 2015
2010 548,440 1.948 1.948 31 January 2016
2011 385,126 4.464 4.464 31 January 2017
2012 716,608 3.9616 3.9616 31 January 2018
2,264,792 2.7080
Total options 3,738,922 0.47–4.464 1.9941
145
ARM Holdings plc
7 Called-up share capital continued

Number
Year of grant of share awards Latest vest date
RSU 2009 2,807,731 12 November 2013
2010 5,119,095 12 November 2014
2011 4,517,249 12 November 2015
2012 3,419,684 12 November 2016
15,863,759
French RSU 2009 180,979 12 November 2013
2010 263,036 12 November 2014
2011 310,388 12 November 2015
2012 131,907 12 November 2016
886,310
LTIP 2010 2,261,100 8 February 2013
2011 868,124 8 February 2014
2012 1,060,090 8 February 2015
4,189,314
DAB 2010 914,409 8 February 2013
2011 599,801 8 February 2014
2012 802,241 8 February 2015
2,316,451
Total awards 23,255,834
Total options and awards 26,994,756
For further disclosures relating to share-based payments, refer to note 23 to the consolidated financial statements on page 136.
Under the UK Inland Revenue Executive Approved Share Option Plan (the “Executive Scheme”), the Company may grant options to employees
meeting certain eligibility requirements. Options under the Executive Scheme are exercisable between three and ten years after their issue, after which
time the options expire.
Under the Company’s Unapproved Scheme (the “Unapproved Scheme”), for which it has not sought approval from the UK tax authorities, options are
exercisable one to seven years after their issue, after which time the options expire.
There is a further scheme for our French employees (the “French Scheme”). In the French Scheme, options are exercisable between four and seven
years after their issue.
Upon the acquisition of Artisan in 2004, the Company assumed the share schemes of Artisan existing at acquisition. The schemes remained substantially
the same as prior to the acquisition, other than the options became options to purchase shares in ARM Holdings plc instead of Artisan Components Inc.
The number and value of options were amended in line with the conversion ratio as detailed in the merger agreement. The only remaining scheme from
those assumed is the “2003 Plan”.
Under each plan, there are multiple vesting templates and vesting periods. The majority of the options were already vested upon acquisition, and the
most common template was 25% vesting after one year, and then 6.25% vesting each quarter thereafter, until 100% vest after four years. Some options
vest on a monthly basis, and some vest over five years. All options lapse ten years from date of grant.
The Company also offers savings-related share option schemes (SAYE) for employees and executive directors of the Group. The number of options
granted is related to the value of savings made by the employee. The period of savings is three or five years. The option price for grants is set at 80% of
the market share price prior to the announcement of the grant, and the right to exercise normally only arises for a six-month period once the savings
have been completed. The Company also operates a savings-related option scheme for employees in the US and India, namely the Employee Share
Purchase Plan (ESPP). The number of options granted is related to the value of savings made by the employee. The period of savings is six months, with
the option price being at 85% of the lower of the market share price at the beginning and end of the scheme.
146
7 Called-up share capital continued

The Company also issues restricted stock units (RSUs) to employees which are actual share awards on vesting rather than options to buy shares at a
fixed exercise price. The main RSU awards (to employees in all jurisdictions other than France) vest 25% on each anniversary over four years.
RSU awards to our French employees vest 50% after two years, and then a further 25% after three and four years. Whilst the Company reserves the
right to award options to employees going forward, the majority of awards to employees will be in RSUs.
Additionally, the Company operates a Deferred Annual Bonus plan (DAB). Under the DAB, which is for directors and selected senior management
within the Group, participants are required to defer 50% of any related annual bonus into shares on a compulsory basis. These shares will be deferred
for three years, and then a further matching award will be made depending on the achievement of an EPS performance condition over that time. The
Company also operates the Long Term Incentive Plan (LTIP), also for directors and selected senior management, whereby share awards are made and
vest depending on the Company’s TSR performance compared to two comparator groups over the three year performance period.
For disclosures relating to the grants in the year and fair value assumptions, reconciliations of opening to closing option balances and related items, please
refer to note 23 in the consolidated financial statements.
8 Reserves
Share premium Share option Profit and
account reserve loss reserve
£m £m £m
At 1 January 2012 6.6 61.4 557.1
Premium on issue of share options 5.6 – –
Credit in respect of capital contributions arising from share-based payments – – 37.1
Loss attributable to shareholders – – (1.9)
Equity dividends payable – – (51.8)
At 31 December 2012 12.2 61.4 540.5
The share option reserve represents the fair value of options granted on the acquisition of Artisan Components Inc. in 2004.
The Company considers the share option reserve and share premium account as non-distributable. Within the profit and loss reserve are credits in
respect of FRS 20 employee share-based payments in respect of services performed by employees of subsidiary undertakings and recorded as a capital
contribution. The Company also considers these credits as non-distributable. As such, approximately £380 million of the profit and loss reserve is
deemed distributable.
The Company did not undertake any share buy-backs during 2012. The quantum and frequency of share repurchases is not predetermined and will take
into account prevailing market conditions, the short- to medium-term cash needs of the business and the level of employee share-based remuneration
going forward. At 31 December 2012, there were nil (2011: nil) shares in the Company still held from purchases made in prior years.
147
ARM Holdings plc
9 Reconciliation of movements in shareholders’ funds

2012 2011
£m £m
Loss attributable to shareholders (1.9) (1.1)
Equity dividends payable (51.8) (42.2)
(53.7) (43.3)
Proceeds on issue of treasury shares on exercise of share options – 1.9
New share capital issued 5.6 6.6
Credit in respect of capital contributions arising from share-based payments 37.1 40.5
Net (reduction)/addition to shareholders’ funds (11.0) 5.7
Opening shareholders’ funds 625.8 620.1
Closing shareholders’ funds 614.8 625.8
10 Capital commitments
The Company had no capital commitments at 31 December 2012 and 2011.
11 Financial commitments and contingencies
At 31 December 2012 and 2011 the Company had no annual commitments under non-cancellable operating leases.
12 Related party transactions
The Company has taken advantage of the exemption from disclosure available to parent companies under FRS 8, “Related party disclosures”, where
transactions and balances between wholly owned Group entities have been eliminated on consolidation.
148
Independent auditors’ report to the members of ARM Holdings plc
We have audited the parent company financial statements of ARM Holdings plc for the year ended 31 December 2012 which comprise the Company
balance sheet and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom
Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
Respective responsibilities of directors and auditors
As explained more fully in the Statement of directors’ responsibilities included in the Directors’ report, the directors are responsible for the preparation
of the parent company financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion
on the parent company financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland).
Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.
This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with Chapter 3 of Part 16 of
the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, 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 the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the
financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting
policies are appropriate to the parent company’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of
significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and
non-financial information in the Annual Report and Accounts to identify material inconsistencies with the audited financial statements. If we become
aware of any apparent material misstatements or inconsistencies we consider the implications for our report.
Opinion on financial statements
In our opinion the parent company financial statements:
• give a true and fair view of the state of the Company’s affairs as at 31 December 2012;
• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
• have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion:
• the part of the Remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006; and
• the information given in the Directors’ report for the financial year for which the parent company financial statements are prepared is consistent with
the parent company financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches
not visited by us; or
• the parent company financial statements and the part of the Remuneration report to be audited are not in agreement with the accounting records
and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Other matter
We have reported separately on the Group financial statements of ARM Holdings plc for the year ended 31 December 2012.
Charles Bowman (Senior Statutory Auditor)

for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
27 February 2013
149
ARM Holdings plc
Glossary
Apps Application software that runs within the chip.

ARM7/9/11 ARM7 processor was one of ARM’s first commercial products. ARM9 and ARM11 processors
followed later.
Cortex ARM’s latest family of processors.
DTV Digital TV.
Ecosystem Community of companies that work with ARM, including semiconductor companies, foundries, OEMs
and software providers.
Fabless semiconductor company A fabless semiconductor company designs computer chips. These chips are typically manufactured
by a foundry. For example Mediatek, NVIDIA and Qualcomm.
Foundry A foundry is a specialist company that manufacturers computer chips on behalf of fabless semiconductor
companies. For example TSMC and UMC.
Intellectual Property (IP) ARM designs technology for use in computer chips. The general term for the products that are designs
only, or are creations of the mind, is intellectual property.
Licence Partners licence ARM’s designs. They pay an upfront free, which is reported as “licence revenue”.
LTE Long Term Evolution (or 4G) is the next generation wireless standard for mobile phones. It is optimised
for data streaming allowing internet connections at speeds similar to broadband in the home.
Mali ARM’s family of 3D graphics processors.
Microcontroller (MCU) A microcontroller is a general-purpose computer chip which has/can be used in many applications.
Most ARM processors are used in either an SoC or MCU.
Original Equipment Manufacturer (OEM) An OEM manufactures consumer products such as TVs or mobile phones. For example Apple, HTC
and LG.
Partner One of the companies within the ARM ecosystem.
Physical IP Design of the building blocks used in the implementation a SoC design.
Processor Design of the brain of the computer chip.
Processor Optimisation Pack (POP) Physical IP components that have been selected and optimised to implement a processor on a specific
foundry’s manufacturing process.
Royalty ARM receives a royalty on every chip that contains ARM technology. The royalty is usually a percentage
of the selling price of the chip and is reported as “royalty revenue”.
STB Set-top box.
System-on-Chip (SoC) A SoC is a computer chip where multiple functions have been integrated into a single chip. Most ARM
processors are used in either an SoC or MCU.
150
Group directory
ARM Holdings plc ARM Germany GmbH 4965 Preston Park Blvd
110 Fulbourn Road Bretonischer Ring 16 Suite 650
Cambridge CB1 9NJ D-85630 Grasbrunn Plano, TX 75093
United Kingdom Germany United States
Tel: +44 (0) 1223 400400 Tel: +49 89 456 040-0 Tel: +1 972 312 1107
Fax: +44 (0) 1223 400410 Fax: +49 89 456 040-19 Fax: +1 972 312 1159
ARM Limited ARM Israel 2002 Canton Way SW
Liberty House 3 Hagavish Street Olympia
Moorbridge Road 44424 Kfar Saba WA 98502-1119
Maidenhead Israel United States
Berkshire SL6 8LT Tel: +972.9.7644888 Tel: +1 408 576 1500
United Kingdom Fax: +972.9.7644884
5375 Mira Sorrento Place
Tel: +44 (0) 1628 427700
ARM Norway AS Suite 290
Fax: +44 (0) 1628 427701
Olav Tryggvassons gt. 39-41 San Diego, CA 92121
Rockingham Court 7011 Trondheim United States
152 Rockingham Street Norway Tel: +1 858 453 1900
Sheffield S1 4EB Tel: +47 4000 5757
2320 130th Avenue NE
United Kingdom Fax: +47 7351 3181
Building E, Suite 220
Tel: +44 (0) 114 282 8000
ARM Sweden AB Bellevue
Fax: +44 (0) 114 282 8001
Lilla Fiskaregatan 12 WA 98005
Blackburn Design Centre SE-222 22 Lund United States
Belthorn House Sweden Tel: +1 408 576 1500
Walker Road Tel: +46 46 540 11 04
ARM KK
Blackburn BB1 2QE Fax: +46 46 14 48 08
Shinyokohama Square Bldg. 17F
United Kingdom
ARM Inc. 2-3-12 Shin-Yokohama
Tel: +44 (0) 1254 893900
150 Rose Orchard Way Kohoku-Ku, Yokohama-Shi
Fax: +44 (0) 1254 893901
San Jose, CA 95134-1358 Kanagawa 222-0033
ARM France SAS United States Japan
12 Avenue des Prés Tel: +1 408 576 1500 Tel: +81 45 477 5260
BL204 Montigny le Fax: +1 408 576 1501 Fax: +81 45 477 5261
Bretonneux
The Park on Barton Creek ARM Korea Limited
78059 Saint Quentin en
3711 S. Mopac Expressway 8th Floor Kyungdong Building
Yvelines, Cedex
Building 1, Suite 400 4-4 Sunae-Dong
France
Austin, TX 78746 Bundang-Gu, Seongnam-si
Tel: +33 1 39 30 47 89
United States Gyeonggi-do 463-020
Fax: +33 1 39 30 47 88
Tel: +1 512 327 9249 Korea
25 Allée Pierre Ziller Fax: +1 512 314 1078 Tel: +82 31 712 8234
Le Paros Fax: +82 31 713 8225
5 East Street
BP 70124
Franklin, MA 02038
06903 Sophia Antipolis Cedex
United States
France
Tel: +1 970 532 0767
Tel: +33 4 97 23 51 00
Fax: +1 508 520 1907
Fax: +33 4 97 23 51 99
2 Venture Suite 470
Miniparc Polytec
Irvine, CA 92618
60 Rue des Berges
United States
38000 Grenoble
Tel: +1 408 576 1500
France
Fax: +1 949 623 8305
Tel: +33 4 56 38 47 00
Fax: +33 4 56 38 47 01
151
ARM Holdings plc
Group directory continued
ARM Taiwan Limited ARM Consulting Unit 13B01, Anlian Plaza

8F, No. 36, Ruihu Street (Shanghai) Co. Ltd No.4018, Jin Tian Road
Nei-Hu District 35F, Building B, Futian District
Taipei City New CHJ International Business Centre Shenzhen 518006
11494 No. 391 Guiping Road PR China
Taiwan (R.O.C) Shanghai 200233 Tel: +86 755 8280 4836
Tel: +886 2 2627 1681 PR China Fax: +86 755 8280 4839
Fax: +886 2 2627 1682 Tel: +86 21 6154 9000
ARM Embedded
Fax: +86 21 6154 9100
7F, No. 2, Li-Hsin Technologies Pvt. Limited
6th Road Hsinchu Science Park Room 602, Ideal Plaza Level III, Salarpuria
Hsinchu City 58 West Road Touchstone Marthahalli-
30078 North 4th Ring Road Sarajapur Outer Ring Road,
Taiwan (R.O.C.) Haidian District Varthur Hobli,
Tel: +886 3 565 7100 Beijing 100080 Bangalore 560 103
Fax: +886 3 567 7128 PR China Tel: +91 80 2518 5000
Tel: +86 10 8260 3570 Fax: +91 80 2844 0914
Fax: +86 10 8260 3573
Key shareholder information
ARM Holdings plc is the parent Registrars US Law

company of the Group Equiniti Davis Polk & Wardwell
Company Number: 2548782 Aspect House 99 Gresham Street
Incorporated in England & Wales Spencer Road London EC2V 7NG
Domiciled in the UK Lancing United Kingdom
Public company limited by shares West Sussex
BN99 6DA
Secretary and registered office
United Kingdom
Patricia Alsop
110 Fulbourn Road Shareholder Helpline
Cambridge CB1 9NJ 0871 384 2139
United Kingdom
Depositary
Independent auditors The Bank of New York Mellon
PricewaterhouseCoopers LLP 101 Barclays Street
1 Embankment Place New York For more shareholder information please
London WC2N 6RH New York 10286 contact Ian Thornton at
United Kingdom United States of America investor.relations@arm.com
Stockbrokers Legal advisers Our website contains information
UBS Limited UK Law for shareholders, including regular strategic,
2 Finsbury Avenue Slaughter and May business and financial updates.
London EC2M 2PP One Bunhill Row
United Kingdom London EC1Y 8YY www.arm.com/ir
United Kingdom
Goldman Sachs
Peterborough Court Linklaters
133 Fleet Street One Silk Street
London EC4A 2BB London EC2Y 8HQ
United Kingdom United Kingdom
152
Overview 01 Financials and risk 45
– Chairman’s overview 02 – Financial review 46
– Operational highlights 04 – Risk management 52
– Financial highlights 05
– Our business model 06
Governance 55
– Chairman’s introduction 56
Our marketplace 08 – Board of directors 59
– Corporate governance 62
– Where the market is now 09
– Directors’ report 73
– Where the market is heading 10
– Remuneration report 78
Strategy and performance 11 Financial statements 92

– Our strategy for long-term growth 12 – Independent auditors’ report to the members
of ARM Holdings plc 92
– Consolidated income statement 94
Our partnership approach 21 – Consolidated statement of
comprehensive income 94
– Warren East, Chief Executive Officer – Consolidated balance sheet 95
Ecosystem strategy 22 – Consolidated cash flow statement 96
– Mobile computing 24 – Consolidated statement of changes
– Machine-to-machine 28 in shareholders’ equity 97
– Network infrastructure 32 – Notes to the financial statements 98
– An external perspective 36 – Company balance sheet/UK GAAP 142
– Notes to the financial statements /UK GAAP 143
– Independent auditors’ report to the members
Our commitment 40 of ARM Holdings plc 149
– Corporate responsibility and sustainability within ARM 41
– ARM’s wider role 42 Glossary and Group directory 150
– Glossary 150
– Group directory 151
– Key shareholder information 152
This report has been printed on Cocoon

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ARM, ARM Powered and Artisan are
registered trademarks of ARM Limited.
ARM7, ARM9, ARM11, Cortex, Cortex-A7,
Cortex-A9, Cortex-A15, POP, Mali and
Connected Community are trademarks
of ARM Limited.
ARM Holdings plc
110 Fulbourn Road
Cambridge CB1 9NJ ARM Holdings plc
United Kingdom Annual Report & Accounts 2012
Telephone +44 (0)1223 400400
Facsimile +44 (0)1223 400410
www.arm.com

ARM Holdings plc
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ARM Annual Report 2012

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ARM Holdings plc

110 Fulbourn Road

Annual Report & Accounts 2012

More information available online at:

Strategy and performance 11 Financial statements 92

This report has been printed on Cocoon

We develop and deploy

Creating shareholder value

ARM processor‑based Profit before tax Normalised profit

8.7bn £577m £221m £277m

2012 Financial summary Success in a challenging environment

+ 19% • 8.7 billion ARM processor-based chips

+ 7% • ARM’s Cortex-A class processors were

We are living in an increasingly

opens up new markets such as computing, enterprise networking

tablets, with shipments of its most advanced Cortex‑A family

Shipments of ARM‑based processors in non‑mobile devices grew Read more on page 15

25% in the year, driven by increasing penetration in digital TVs,

which now includes support for ARM processor-based chips.

ARM’s Mali 3D graphics processor shipments increased Read more on page 18

three‑fold year-on-year with important design wins in

ARM announced advanced physical IP to accelerate the Read more on page 18

implementation of ARM’s processors and graphics processors on

Earnings per share pence

Our global markets ARM revenue by location of customer

1%10% 38% 51%

Europe 20% 28% 25% 22%

ARM employees by location

Where the market is now Read more on page 9

Where the market is heading Read more on page 10

100s of chip 1,000s 1,000,000,000s

<10 IP <10 Tools <10 <10 1,000s of

Mobile computing in 2017

Where the market

* Cisco Visual Networking Index Feb 2012.

Increase value per smart

Generate additional royalties

Our strategy for

Our three growth drivers:

2 Increase value per smart

3 Generate additional royalties

More ARM technology-based

As consumer products become smarter • Increasing the value that ARM receives

ARM has introduced complementary • Developing and licensing

Mobile 29% ARM7/9/11 4%

More than half of the licences signed in 2012

In 2012, ARM’s customers reported 8.7 billion The future opportunity

Shipments of ARM processor-based chips bn

ARM processor-based chips

* Nearly all Mali graphics processors were in chips

ARM has increased market penetration into Digital TVs 45%

Mobile phones Microcontrollers Enterprise networking

2 Increase value per smart

During 2012, the total number of smartphones

ARM value per mobile phone (indexed to 2008)

ARM royalty per mobile phone has continued to increase.

Smartphones Cortex-A family processors

A typical smartphone can contain multiple chips

Physical IP revenues ($m)

Read more about our data centre on page 42

Number of employees at year-end

Approximately two thirds of ARM’s employees

Operating margin % Earnings per share pence

09 15.0 31.2 09 3.11 5.45

Ecosystem strategy Read more on page 22

Mobile computing Read more on page 24

Machine-to-machine Read more on page 28

Network infrastructure Read more on page 32

An external perspective Read more on page 36

* L ucian Armasu, June 2012

ARM’s wider role Read more on page 42

Chairman’s introduction Read more on page 56

Board of directors Read more on page 59

Corporate governance Read more on page 62

Directors’ report Read more on page 73

Remuneration report Read more on page 78