Symbian Limited announces selected financial and operational figures for H1 2003

Worldwide shipments of Symbian OS™ phones reach 2.68m in first half

LONDON, UK, 21st August 2003 - Symbian Ltd today released the following unaudited financial and operational figures for the second quarter and the six months ended 30th June 2003:

Highlights

• Symbian OS unit shipments grew in H1 2003 to 2.68m (H1 2002: 0.23m units) as network operators worldwide introduce Nokia 7650, 3650 and Sony Ericsson’s P800
• Symbian royalty revenues grew to £10.2m in H1 2003 (H1 2002: £1.5m)
• Total Symbian revenues grew to £21.1m in H1 2003 (H1 2002: £9.5m)
• Second Symbian OS-based 3G phone – the F2102V made by Fujitsu for NTT DoCoMo’s W-CDMA network – becomes available in Japan
• At the end of H1 2003, 26 phones and variants based on Symbian OS were under development by nine licensees (see Notes to Editors for definitions)
• Phones under development include the BenQ P30, Samsung SGH-D700, Siemens SX-1, Nokia N-Gage and Nokia 6600
  

David Levin, Chief Executive Officer, Symbian Ltd said:
"Symbian made good progress in the first half of 2003 with 2.68m phones based on Symbian OS shipping to network operators worldwide. This growth in sales of Symbian OS-based smartphones is encouraging although these sales are modest in relation to all overall phone sales.

At the end of the first half of 2003, 10 Symbian OS-based phones and variants developed by 3 licensees were shipping in markets around the world. In addition, 26 phones and variants based on Symbian OS were under development by 9 licensees. Symbian anticipates that most, but not all of these products, will come to market over the next eighteen months. Products which have been made public include the BenQ P30, Samsung SGH-D700, Siemens SX-1, Nokia N-Gage and Nokia 6600, with NTT DoCoMo’s F2102V made by Fujitsu becoming available in Japan in July.

In the second half of the year, Symbian looks forward to the launch of further phones based on Symbian OS. Symbian’s second half financial performance depends significantly upon sales of phones due to be launched during the latter part of the year.”

Notes to Editors

1. Definitions and additional information

Royalty revenue – Symbian receives a royalty on each phone based on Symbian OS shipped by licensees. From Symbian OS v7.0 onwards, the royalty has been set at $7.25 per unit for the first 2 million units shipped by a licensee and $5 per unit thereafter. Symbian also receives additional royalty revenue for devices shipping with the UIQ user interface supplied by Symbian’s subsidiary, UIQ Technology AB. Symbian outsources certain technologies when either i) there is already an industry standard developed by another party (e.g. Java from Sun); or ii) the technology is more efficiently provided by an outside supplier (e.g. WAP / web browsers; personal computer connectivity).

Consulting revenue - Symbian undertakes consultancy activities to assist its licensees implement Symbian OS in new handsets. Symbian receives revenue to cover costs and provide a commercial gross profit. The level of consulting revenue will fluctuate depending upon the volume of new engagements with licensees and the ability of licensees to develop new devices without the assistance of Symbian.

Partnering & Other revenue – Symbian derives a further revenue stream from training activities, partner activities (including the Symbian Platinum Partner Program) and trade shows (including the annual Symbian Exposium). These activities are designed to promote Symbian OS and are therefore priced to cover costs rather than to be profitable.

Products in development – Symbian defines a product in development on the basis of the criteria below:

• Symbian OS licensee has a significant development team engaged on the project
• there is a clearly defined plan to take the product through development to shipping
• the product is anticipated to ship in commercial volumes

2. About Symbian

Symbian is a software licensing company which develops and licenses Symbian OS, the global open industry standard operating system for advanced, data-enabled mobile phones.

Symbian has licensed Symbian OS to the world's leading mobile phone manufacturers including Motorola, Nokia, Samsung, Siemens and Sony Ericsson. Publicly announced products based on Symbian OS include the BenQ P30, Samsung SGH-D700, Siemens SX-1, NTT DoCoMo FOMA F2102V and F2051 built by Fujitsu, Sony Ericsson P800 Smartphone, Nokia 9200 Communicator range as well as the Nokia 7650, 6600, 3650 and N-Gage.

Symbian has its global headquarters in London, United Kingdom with development sites in Europe and Asia.

Symbian
press@symbian.com

Unaudited Financial and Operational Highlights

	H1 2003	H1 2002	Q2 2003	Q2 2002
Symbian OS Units	2.68m	0.23m	1.49m	0.09M
Average Royalty / Unit *	US$6.2	US$9.5	US$6.3	US$13.5
Royalty GP % *	83%	77%	83%	76%
Turnover (£m)	£'m	£'m	£'m	£'m
Royalties *	10.2	1.5	5.8	0.9
Consulting services	9.1	6.9	4.9	3.5
Partnering & Other	1.7	1.1	1.2	1.0
Total	21.1	9.5	11.9	5.4
Gross operating expenses	£35.5m	£30.2m	£18.0m	£15.7m
Average permanent headcount	721	625	731	626
	End H1 2003	End H1 2002
Cash at hand & in bank	£29.7m	£24.4m
	End H1 2003	End H1 2002	End Q1 2003	End Q1 2002
No. of products in development	26	16	20	17
No. of licensees with products in development	9	8	9	6

* Royalties include Symbian OS & UIQ
 

These results do not constitute statutory accounts. They were prepared under the same accounting policies stated in the lasted audited accounts of the company, which will be filed with Companies House in due course and may be obtained from -

Company Secretary,
Symbian Limited,
2-6 Boundary Row,
Southwark,
London SE1 8HP
United Kingdom

Financial and Operational Commentary for H1 2003

David Levin, Chief Executive Officer, Symbian Ltd

Overview

Symbian made good progress in the first half of 2003 and continues to establish Symbian OS as the industry standard technology platform for smartphones. Shipments of Symbian OS licensee phones rose to 2.68m units (H1 2002: 0.23m units) in the half year, resulting in Symbian’s total H1 2003 revenues growing to £21.1m (H1 2002: £9.5m).

In February 2003, Samsung took a 5% stake in Symbian for £17.0m, enabling Samsung to contribute its experience and expertise to the continued development of Symbian OS. In January, Sendo became a full Symbian OS licensee. BenQ and Mitsubishi became Symbian OS development licensees in H1 2003.

At the end of H1 2003, 10 Symbian OS-based phones and variants developed by 3 licensees were shipping in markets around the world. In addition, 26 phones and variants based on Symbian OS are under development by 9 licensees (H1 2002: 16 phones and variants, 8 licensees).

During the first half of 2003, Symbian continued to deepen its engagements with key partners throughout the mobile telecommunications and IT industries. The Symbian Platinum Partner program now has more than 100 companies and two new programs were launched in April, the Companion Technology Partner program and the Symbian Enterprise Advisory Council.

Market

In April, Symbian hosted its annual Exposium03 event. Delegate numbers were 1,350 and 83 companies exhibited at the event, reflecting the continued expansion of the Symbian OS ecosystem and Symbian’s widening engagement with the wireless industry. This is exemplified by the growing number and variety of semiconductor reference designs from companies such as Motorola SPS and Texas Instruments, software development tools, third party technologies, solutions and applications designed for Symbian OS. Symbian’s Partner programs continued to grow with more than 100 member companies in the Symbian Platinum Partner program. Symbian’s Companion Technology Partner program was launched at Exposium03. This program delivers partners’ key software component technologies to licensees pre-integrated and validated for Symbian OS. Making these important technologies available in this way shortens licensee product development time and reduces development risk.

At Exposium03, Symbian launched Symbian OS v7.0s, the latest version of Symbian OS. In June, Nokia announced the first product based on Symbian OS v7.0s, the Nokia 6600, which is expected to ship in H2 2003. A total of four companies have now signed licences to develop products based on Symbian OS v7.0s.

At Exposium03, Symbian also announced the formation of the Symbian Enterprise Advisory Council or SEAC. SEAC brings Symbian and Symbian OS licensees together with a selected group of the world’s leading IT vendors to collaborate on Symbian OS development and business strategy, and to ensure development of the best end-to-end solutions for the enterprise market. SEAC members include Accenture, Adobe, Borland, Cap Gemini Ernst & Young, Certicom, Extended Systems, iAnywhere Solutions, Metrowerks, Oracle, SAP, Synchrologic, and XcelleNet.

Licensees & products

In January, Sendo, the UK-based phone manufacturer, licensed Symbian OS for its development of smartphones. In February, Taiwanese phone manufacturer BenQ announced it had signed development licences for Symbian OS and the UIQ user interface for its P30 phone.

In February, the first 3G phone based on Symbian OS and the first Japanese Symbian OS phone was launched. Manufactured by Fujitsu, the F2051 was commissioned for NTT DoCoMo’s 3G FOMA network. Reflecting the rapid product portfolio turnover in the Japanese market, the F2051’s successor, the F2102V, also based on Symbian OS, became available in stores in July 2003.

At the end of H1 2003, 10 Symbian OS-based products were available in the market including the Sony Ericsson P800 and P802, the Nokia 9210i, 9290, 7650 and 3650 (as well as 3 Chinese language variants) and the NTT DoCoMo F2051 made by Fujitsu. Symbian OS phones were supported by network operators worldwide including in Japan, across Europe, China, the USA and other GSM territories. Also during the first half of 2003, BenQ, Samsung, Siemens and Nokia all announced forthcoming phones based on Symbian OS.

Financial review

In the first half of 2003, Symbian’s revenues were £21.1m, compared with £9.5m in the first half of 2002. This was principally as a result of shipments of Symbian OS licensee phones growing to 2.68m units (H1 2002: 0.23m units). As a result, Symbian’s royalty revenues grew to £10.2m (H1 2002: £1.5m). Including revenues derived from Symbian’s subsidiary UIQ Technology AB (supplier of the UIQ user interface), Symbian’s royalty gross profit rate was 83% (H1 2002: 77%) although average royalty per unit was US$6.2 (H1 2002: US$9.5), as a decreasing proportion of licensee units shipped are using a user interface licensed from Symbian.

During the period, Consultancy revenues rose to £9.1m (H1 2002: £6.9m), reflecting the expanding licensee demand for Symbian’s technical consultancy services to assist in developing products based on Symbian OS. Consultancy services are primarily offered by Symbian to licensees to facilitate the implementation of Symbian OS in smartphones although such services are provided at cost plus allocated overhead and gross margin.

Revenues from partnering and other activities (e.g. training courses, trade shows) contributed revenues of £1.7m (H1 2002: £1.1m). These activities are designed to promote Symbian OS and are priced to cover costs rather than to be profitable.

With an average headcount of 721 during the period (H1 2002: 625), Symbian’s gross operating expenses were £35.5m (H1 2002: £30.2m), reflecting the growth in headcount, the reduction in the use of external consultants and cost efficiency.

Symbian recorded a loss before tax for the period of £15.0m (H1 2002: £21.8m).
Symbian has substantial tax losses carried forward. The tax charge for the period is the group relief recoverable solely from one shareholder net of overseas tax payable.

As at 30 June 2003, Symbian had net cash of £29.7m (end H1 2002: £24.4m). Further funding requirements will depend upon unit shipments.

Management

Two senior executives were appointed during the first half of the year, Charles Davies as Chief Technology Officer and Marit Doving as Executive Vice President of Marketing. Both appointees have first class experience and expertise and will make significant contributions to Symbian’s future success.

Outlook

The growth in sales of Symbian OS-based smartphones is encouraging although sales in relation to the overall market are currently at modest levels. The market for smartphones is developing at different speeds, with distinctive characteristics in different territories. As a result, forecasting the speed of development of a mass market for smartphones is very uncertain. In the most advanced territories, notably Korea and Japan, the market for handsets for 3G networks is increasingly well established.

At the end of the first half of 2003, 10 Symbian OS-based phones and variants developed by 3 licensees were shipping in markets around the world. In addition, 26 phones and variants based on Symbian OS were under development by 9 licensees. Symbian anticipates that most, but not all of these products, will come to market over the next eighteen months. The majority of these development projects are confidential. However, some licensees have publicised their products, including the BenQ P30, NTT DoCoMo’s F2102V made by Fujitsu, Samsung SGH-D700, Siemens SX-1, Nokia N-Gage and Nokia 6600.

In the second half of the year, Symbian looks forward to the launch of further phones based on Symbian OS. Symbian’s second half financial performance depends significantly upon sales of phones due to be launched during the latter part of the year.

David Levin
CEO, Symbian Ltd
19 August 2003

Media Enquiries

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