Investors in Arm (ARM) may be too busy celebrating the recently agreed £24bn takeover of the microchip giant to pay much attention to these results. Japanese conglomerate SoftBank (jp:9984) won't be feeling buyer's remorse: healthy trading propelled Arm's adjusted pre-tax profits up 9 per cent to £268m in the reported period.
Arm designs microchips, licenses the blueprints out to customers such as Apple (US:AAPL) and Samsung (Kor:A005930) then collects a royalty each time they ship a device powered by its technology. Management inked 64 processor licences with a range of microchip vendors, component suppliers and major technology companies as its latest designs gained traction. The upshot was a 16 per cent rise in licensing sales to £213m. Shipments of Arm-based chips also increased by a tenth to 7.7bn as the group snatched market share, driving royalty revenues up 23 per cent to £288m.
The group recently acquired Apical, a visual computing specialist, in a bid to strengthen its foothold in robotics, smart cities, connected cars and other cutting-edge markets. But management warned the Brexit vote had raised questions over recruitment, as around a fifth of Arm's UK workers are from other EU countries. Broker Credit Suisse expects adjusted pre-tax profits of £580m for the year to December, giving EPS of 34.6p (from £512m and 30.2p in 2015).
ARM (ARM) | ||||
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ORD PRICE: | 1,675p | MARKET VALUE: | £23.6bn | |
TOUCH: | 1,675-1,676p | 12-MONTH HIGH: | 1,752p | LOW: 812p |
DIVIDEND YIELD: | 0.6% | PE RATIO: | 66 | |
NET ASSET VALUE: | 143p* | NET CASH: | £805m |
Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
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2015 | 456 | 198 | 11.5 | 3.15 |
2016 | 544 | 208 | 12.9 | 3.78 |
% change | +19 | +5 | +12 | +20 |
Ex-div: 07 Sep Payment: 10 Oct *Includes intangible assets of £1.06bn, or 75p a share |