Imagination Technologies - Half Yearly Report

Strong demand for our IP and increasing SoC design-win momentum

December 16, 2014 - Imagination Technologies Group plc (LSE: IMG, “Imagination”, “the Group”), a leading multimedia, processor and communications technology company, today announces results for the six months to 31 October 2014.

Read the full statement here
View the presentation here

Overview

• Financial performance for H1 in line with expectations, with strong progress in licensing and design-wins
• Current financial year represents a transitional year from heavy investment in strategic product lines to a position where the core products are all either generating or moving towards generating revenues
• Complete product line now enables increased leverage of full capabilities in many existing or developing and emerging markets
• Group anticipates a much stronger H2 financial performance

Financial highlights

• Technology revenues increased 3% to £72.8m (2013: £70.8m)
  • Licensing revenues up 11% to £16.0m (2013: £14.4m)
  • Royalty revenues robust at £56.3m (2013: £56.2m)
• Group half-year revenues of £82.2m (2013: £85.2m)
• Adjusted operating profit* of £5.0m (2013: £12.4m); Reported operating loss of £9.0m (2013: profit £1.4m)
• Adjusted earnings per share* 1.3p (2013: 3.8p); Reported loss per share 3.9p (2013: loss 0.4p)

Business highlights

• Growing customer engagement with significant agreements signed with over 20 partners during the period
  • Strong licensing progress – 49 licenses signed (2013: 43)
  • Agreements signed with partners including Ali, Avago, Broadcom, Celeno, Fujitsu, Intel, Lantiq, Loongson, MediaTek, Siklu, Texas Instruments, Toshiba and Toumaz
• Significant increase in new committed SoCs with over 35 SoC design-wins added which will contribute to future royalties
• Royalty revenues on track, with both MIPS shipments and average royalty rate above expectations
• Operating costs continue to be tightly managed now that the heavy investment is over and actions taken have led to refocus of Pure business. Rate of operating cost growth reduced dramatically from previous years

Outlook

• Based on active pipeline of prospects, continue to target 10% growth in licensing revenue in FY2015%
• On track to meet market expectations for royalty revenue, with strong performance in average royalty rate and MIPS volumes offsetting flat non-MIPS royalty units
• In line with previous guidance, FY2015 underlying operating costs around 10% higher than FY2014%
• Expansion of operating margins in medium-term with longer-term target of 30%-40%

Hossein Yassaie, Chief Executive, commented:

“I am pleased with our progress in the first half. During this transitional year for the Group we have seen continued progress in licensing, robust royalty revenues and disciplined cost control. As a result we remain confident of achieving our targets for the year.

“Now that our product lines are complete and the heavy investment phase is over, we expect to see lower rates of operating cost growth going forward and increased focus on financial returns. Our market relevant and complementary technologies combined with our increased scale enable us to take advantage of the natural leverage to improve the financial performance of our business. As a result we now expect to see significant expansion in operating margins in the medium-term.”

* Adjusted results exclude non-recurring items, non-cash based share incentive charges and amortisation of intangible assets from acquisitions. The reconciliation from reported results to adjusted results is set out in the notes.

Read the full statement here
View the presentation here