Imagination Technologies Group plc - Full Year Results Statement June 2012

Momentum maintained as profit* jumps 53% to £36.8m; driven by notable increases in both royalty and licensing revenues

June 19, 2012 --Imagination Technologies Group plc (LSE: IMG, “Imagination”, “the Group”), a leading multimedia, communications and embedded processor technology company, today announces results for the year to 30 April 2012.

Financial highlights

• Group revenue up 30% to £127.5m (2011: £98.0m)
  • Technology revenues increased 41% to £98.2m (2011: £69.8m)
    • Royalty revenue up 55% to £63.8m (2011: £41.3m)
    • Licensing revenues up 21% to £34.4m (2011: £28.5m)
  • Pure revenues of £29.3m (2011: £28.3m)
    • Strong overseas growth (36% of revenues now international) offsetting tough UK retail environment
• Adjusted pre-tax profit* up 53% to £36.8m (2011: £24.0m)
• Reported pre-tax profit up 74% to £28.5m (2011: £16.4m)
• Adjusted earnings per share* up 39% to 11.0p (2011: 7.9p**)
• Reported earnings per share 7.9p (2011: 7.7p)
• Cash balance increased to £66.3m (2011: £49.4m)

* The reconciliation from reported results to adjusted results is set out in Note 3.
** Using normalised tax rate of 26%

Business highlights

Technology business

Royalties and design wins

• Partner chips shipped up 33% to 325m units (2011: 245m), substantial acceleration in H2 to 202m units (H2 2011: 138m)
• Significant volume shipments in mobile phone, tablets/mobile computing, PMP (personal media players), game consoles, TV/STB (Set-Top Box), digital radio and automotive markets
• Strong growth in chip design wins with 136 active partner chips (2011: 115); 60 in production (2011: 48)
• Average royalty rate maintained due to enhancing mix of IP, despite significant volume ramp-up and strong lower-end handset growth

Licensing

• Maintained strong licensing activities across all of our IP
  • Several new partners added including Actions Semiconductor, Allwinner, Compound Photonics, HiSilicon, Huawei, Ingenic, MStar, Qualcomm, Ricoh, Rockchip, ZTE
  • Many new and extended agreements with existing partners including CSR, Frontier Silicon, Intel, MediaTek, Realtek, Renesas, Samsung, Sigma, Sony, ST, ST-Ericsson, Sunplus, Toumaz
  • Significant new partner engagements and license closure in China
• 30 important customers involving 49 silicon IP core licenses - almost 50% up over the last year
  • Addressing all markets - mobile phone, tablets/mobile computing, TV/STB, PMP/Camera, in-car navigation/dashboard and industrial/enterprise equipment
  • Including graphics, video, display, broadcast/connectivity and processor silicon IP cores, as well as V.VoIP technologies
• Continued active pipeline of prospects across all IP families

Pure business

• Continued softness in UK revenues offset by momentum in overseas growth
  • Ongoing DAB adoption worldwide and growing demand for Pure's connected audio
• Continued strategic development and pathfinding role
  • Focus on development of technologies for digital broadcast, connected devices and Cloud solutions
• Key recent new products launched
• New Pure wireless streaming products including new flagship Sensia and first Airplay enabled product
• Second generation Highway in-car digital radio and audio adapter launched with Halfords & OEM agreement with Alpine
• Cloud-based on-demand music service launched in the UK with other services and regions adding soon

Hossein Yassaie, Chief Executive, commented:

“We have maintained our momentum and seen another strong year of financial and strategic progress which has fundamentally strengthened our overall position. The excellent growth in licensing partnerships, which expanded across all our IP families, and significant volume ramp-up resulted in a material jump in full-year revenues and profits.

“Our ‘smart’ technologies are being adopted more widely across new and existing partners, creating a solid base for continued momentum in future volume growth making our stated goal of around 1bn annual unit shipment by 2016 a realistic objective.

“Despite the current slow-down in consumer spending, Pure continues to effectively showcase and help to drive key strategic connectivity technologies. We expect to also see a financial improvement in this division over the medium term, driven by international markets and new product opportunities.

“Despite the global economic environment, over 1 million devices are now being shipped with our IP daily. We remain very confident of our continued good progress, given the growing demand across our IP families, the growth in design wins across a widening range of end user markets and the momentum in our partners’ chip volume.”

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