Notes to the company financial statements
37. Significant accounting policies
The separate financial statements of the Company are presented as required by the Companies Act 2006. As permitted by that Act, the separate financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the IASB and as adopted by the EU.
The financial statements have been prepared on the historical cost basis. The principal accounting policies adopted are the same as those set out in note 3 to the consolidated financial statements.
38. Loss attributable to CSR plc
The loss for the financial year dealt with in the financial statements of the parent Company, CSR plc, was $13,745,000 (2008: $51,671,000; 2007: $7,637,000). As permitted by s408 of the Companies Act 2006, no separate income statement is presented in respect of the parent Company.
Loss is stated after charging (crediting):
Table contents: Net foreign exchange losses (gains), Auditors’ remuneration for audit services.
The Company had 5 employees during 2009 (2008: 3) who were the Directors of CSR plc.
The Directors’ remuneration in both years was borne by Cambridge Silicon Radio Limited and was not attributable to the Company.
39. Investment income
Table contents: Income from bank deposits.
40. Finance costs
Table contents: Interest payable on acquisition loan notes, Unwinding of discount on deferred consideration, Interest on intercompany balance, Foreign exchange gains.
Table contents: Total tax charge.
Corporation tax is calculated at 28% (2008: 28.5%; 2007: 30%) of the estimated assessable profit for the year.
Table contents: Loss before tax, Tax at the UK corporation tax rate of 28.0%, Impairment of investment, Non-deductible expenses, Acquisition related legal and professional costs, Group relief surrendered to other Group companies for nil consideration, Tax expense and effective tax rate for the period.
In March 2007, the UK Government announced that they would introduce legislation that reduced the corporation tax rate to 28% from 1 April 2008. This legislation is fully enacted. The deferred tax and liabilities, previously stated at 30% of the temporary differences were remeasured to 28% of those amounts. In addition, the blended current tax rate for 2008 reduced to 28.5%.
Details of the Company’s subsidiaries at 1 January 2010 are as follows:
Table contents: Direct ownership, Cambridge Silicon Radio Limited, UbiNetics VPT Limited, Cambridge Positioning Systems Limited, NordNav Technologies Aktiebolag, SiRF Technology Holdings Inc., Indirect ownership, Cambridge Silicon Radio Inc., CSR China (Shanghai) Co., Limited, CSR KK, CSR Korea Limited, CSR Sweden AB, Cambridge Silicon Radio Sarl, Cambridge Silicon Radio (UK) Limited, Cambridge Silicon Radio Holdings Inc., Clarity Technologies, Inc., CSR (India) Private Limited, UbiNetics Wireless, Technologies (Shenzen) Company Limited, UbiNetics (Cayman Islands) Ltd, UbiNetics (Hong Kong) Limited, UbiNetics, (North America) Inc., UbiNetics (IP) Limited, UbiNetics 3G Limited, UbiNetics Module Limited, UbiNetics Technology, Limited, UbiNetics Designs Limited, Coverge Limited, C.P.S. Ltd, SiRF Technology Inc, Enuvis Inc, Truespan Inc, SiRF Technology Holdings China LLC, Shanghai SiRF Technology Co Ltd, SiRF Technology Cayman Limited, SiRF Technology, Singapore Pte Ltd, SiRF Technology GK, SiRF International LLC, SiRF Technology GmbH, SiRF Technology India Pvt Ltd, Centrality Limited, SiRF Technology Korea.
Investments in subsidiary undertakings
Table contents: Cost and net book value, At the beginning of the period, Acquisition of subsidiaries, Capital contributions arising from IFRIC 11 charges, Impairment of investment in UbiNetics VPT Limited, Adjustment investment in NordNav Technologies (see note 22), At the end of the period.
During 2008, the investment in UbiNetics VPT Limited was written down to $nil. This resulted from the decision to discontinue investment in the UbiNetics protocol software development programme following the recommendations of the Operational Assessment carried out to determine future strategy. The impairment is charged to Administrative Expenses in the company only income statement.
43. Financial assets
Table contents: Prepayments and accrued income, Amounts receivable from other Group undertakings.
The directors consider that the carrying amount of other receivables approximates their fair value.
Amounts receivable from other Group undertakings are neither past due nor impaired as management considers that the CSR Employee Benefit Trust has sufficient assets to fulfil its future obligations.
Cash and cash equivalents
Bank balances and cash comprise cash held by the Company and short term bank deposits with an original maturity of three months or less. The carrying amount of these assets approximates their fair value.
Treasury deposits represent bank deposits with an original maturity of over three months.
44. Financial liabilities
Trade and other payables
Table contents: Amounts owed to subsidiary undertakings, Accruals and deferred income, Other payables.
The directors consider that the carrying amount of trade and other payables approximates their fair value.
45. Contingent consideration
Table contents: Amounts included within current liabilities, Amounts included within non-current liabilities.
The contingent consideration relates to milestone payments for the acquisition of NordNav Technologies AB. The consideration is due to be settled in instalments once certain performance criteria have been achieved. In 2009, it was determined that these performance criteria would not be met and the liability was derecognised.
Table contents: Balance at 28 December 2007, Net loss for the period, Balance 2 January 2009, Net loss for the period, Balance at 1 January 2010 .
The movements on the other reserves are disclosed in note 25 to the consolidated financial statements.
47. Notes to the cash flow statement
Table contents: Net loss, Adjustments for:, Investment income, Finance costs, Income tax expense, Operating loss, Impairment of, investment in subsidiary, Operating cash flows before movements in working capital, Increase in receivables, Increase in payables, Cash generated by operations being net cash from operating activities.
Cash and cash equivalents (which are presented as a single class of asset on the face of the balance sheet) comprise cash at bank and other short term highly liquid investments with an original maturity of three months or less.
48. Financial instruments
Capital risk management
The Company manages its capital to ensure that a strong capital base is maintained to sustain the future growth and development of the Group.
The capital structure of the Company consists of debt in the form of contingent consideration disclosed in note 45, cash and cash equivalents, treasury deposits and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings as disclosed in note 46.
There are no externally imposed capital requirements on the Company.
Categories of financial instruments
Table contents: Financial assets, Loans and receivables (including cash and cash equivalents and treasury deposits), Financial liabilities, Amortised cost.
At the reporting date there are no loans and receivables designated at fair value through profit and loss. The carrying amount reflected above represents the Company’s maximum exposure to credit risk for such loans and receivables.
Financial risk management objectives
The Group Treasury function provides services to the Company, co-ordinates access to domestic and international financial markets and monitors and manages the financial risks relating to the operations of the Company.
The main risks the Company is exposed to are the currency risk component of market risk, credit risk, and liquidity risk.
Foreign currency risk management
The Company does not seek to manage the currency risk component of market risk as these risks are managed on a Group level. The Company does not enter into any financial derivative contracts. The Company does not enter into, or trade financial instruments, including derivative financial instruments, for speculative purposes.
Foreign currency sensitivity analysis
The sensitivity analysis below has been determined based on the exposure of the Company to foreign currency movements for its non-derivative financial instruments at the balance sheet date.
If the US dollar had strengthened by 10 percent against GBP sterling, the Company’s:
- Loss for the 52 week period ended 1 January 2010 would have decreased by $946,000. Loss for the 53 week period ended 2 January 2009 would have decreased by $1,017,000. In both periods, this is mainly attributable to the Company’s exposure to foreign exchange movements on Sterling denominated monetary assets and liabilities;
- there is no impact on other equity reserves (2008: $nil).
A 10 percent weakening of the US dollar against GBP sterling would have had the equal but opposite effect, on the basis that all the other variables remain constant.
In management’s opinion, this is a reasonably possible change in currency rates given current market conditions. This analysis assumes all other variables, in particular interest rates and other foreign currencies, remain constant. The analysis is performed on the same basis for 2008.
Interest rate risk management
The company has no significant direct exposures to fluctuations in interest rates other than those on interest bearing cash balances. The majority of cash balances are held at fixed rates of interest and the effective rate of interest on those balances in the period was 0.54% (2008: 4.67%).
Credit risk management
Credit risk refers to the risk that counterparties will default on their contractual obligations resulting in financial loss to the Company. For cash and cash equivalents and treasury deposits, the Company only transacts with entities that are equivalent to investment grade and above and Group treasury policy dictates that less than 20% of the total balance on cash and equivalents and treasury deposits will be placed on term deposit with counterparties who have a Moody’s credit rating of less than Aa1. Other financial assets consist of amounts receivable from related parties. The Company’s exposure to significant concentration of credit risk on receivables from related parties is detailed in note 49.
Liquidity risk management
Ultimate responsibility for the liquidity risk management of the Company rests with the Board of Directors which manages the liquidity requirements of the Company in terms of short, medium and long-term funding requirements. The Company manages liquidity risk via the Group’s Treasury function using sources of financing from other Group entities and investing excess liquidity. The Company manages excess reserves by continuously monitoring forecast and actual cash flows and matching maturity profiles of financial assets and liabilities.
The following tables detail the Company’s remaining contractual maturity for its non-derivative financial liabilities. The tables have been drawn up based on the earliest date on which the Company can be required to pay. The table includes both interest and principal cash flows.
Table contents: 1 January 2010, Amounts owed to subsidiary undertakings, 2 January 2009, Contingent consideration (undiscounted), Amounts owed to subsidiary undertakings, 28 December 2007, Contingent consideration (undiscounted), Unsecured loan notes on acquisition, Amounts owed to subsidiary undertakings.
Management do not expect amounts owed to subsidiary undertakings to be repaid in the next operating cycle.
Fair value of financial instruments
The carrying amounts of financial assets and liabilities recorded at amortised cost in the financial statements which approximates their fair values in the opinion of the Directors.
49. Related party transactions
Transactions between the Company and its subsidiaries, which are related parties, are disclosed below:
Table contents: Cambridge Silicon Radio Limited, Funding received from Cambridge Silicon Radio Limited, Services received from, Cambridge Silicon Radio Limited, Interest charged on intercompany balance, CSR Employee Benefit Trust, Funding provided , Exchange gains and loss, SiRF Technology Inc., Funding provided.
Balances between the Company and its subsidiaries, which are related parties, are disclosed below:
Table contents: Cambridge Silicon Radio Limited, CSR Employee Benefit Trust, SiRF Technology Inc.