Imagination Technologies Group plc: Robust licensing and solid progress across all three IP families

Significant high volume license agreements for both PowerVR graphics and MIPS processors

June 30, 2015 -- Imagination Technologies Group plc (LSE: IMG, “Imagination”, “the Group”), a leading multimedia, processor and communications technology company, today announces results for the year ended 30 April 2015.

Overview

• Robust year of licensing activity across all IP families and diverse markets with significant growth in engagements for solution-centric IP platforms
• New strategically important multi-year licensing deals with high volume/tier-one mobile players for both PowerVR graphics and MIPS processors
• Encouraging year-on-year growth in MIPS processor unit shipments
• Operating costs tightly managed resulting in lower rate of cost growth than previously guided
• Business well positioned for future growth

Financial highlights

• Group revenues of £177.0m (2014: £170.8m)
• Technology revenues increased 7% to £158.6m (2014: £147.6m)
  • Licensing revenues up 2% to £39.0m (2014: £38.3m)
  • Royalty revenues up 9% to £118.9m (2014: £109.0m)
• Adjusted operating profit* of £21.1m (2014: £24.0m); Reported operating loss of £8.5m (2014: £0.1m)
• Adjusted earnings per share* 6.3p (2014: 8.1p); Reported loss per share 4.9p (2014: earnings 0.3p)

Business highlighs

• Strong licensing across all IP families, delivering highest ever licensing revenue and record backlog
  • 121 licenses signed (2014: 115) with over 40 existing and new partners
  • Agreements signed with partners including Ali, Atomos, Avago, Broadcom, Celeno, Elvees, Fujitsu, HiSilicon, Ineda, InfoTM, Intel, JCI, Lantiq, Loongson, MediaTek, Pioneer, Renesas, Sigma, Spreadtrum, Texas Instruments, Toshiba, Toumaz and Yokogawa
• Significant increase in new committed SoCs with over 60 additional SoC design-wins which will contribute to future royalties
• MIPS unit shipments increased 9% year on year to record level of 797m (2014: 729m); non-MIPS shipments stable at 530m (2014: 530m)
• Pure loss reduced following the actions taken last year

Outlook

• Based on the increased backlog and the active pipeline of prospects, target of 10% growth in licensing revenue in FY16
• Expect growth in unit shipments and royalty revenue
• Underlying operating cost growth expected to be 5% - 10%
• Expansion of operating margins in medium-term with longer-term target of 30% - 40%, with a rise in profitability in FY16

Hossein Yassaie, Chief Executive, commented:

“We have seen robust licensing and royalty revenues across all three IP families whilst continuing to tightly control our costs.

“Significantly we have secured major design wins for our graphics and processor IP with new high volume mobile players - these multi-year agreements will further drive unit shipments in the medium term. Our connectivity IP continues to gain momentum.

“The established strengths and comprehensive nature of our three key IP families have enabled our unique platform capability which has significantly contributed to licensing revenues this year.

“As our revenues grow, the natural operational gearing of the business means that the financial performance is expected to significantly benefit from a slower growth in operating costs. We therefore expect to see significant expansion in operating margins in the medium-term.”

* Adjusted profit is used by management to measure the performance of the business year on year by excluding non-recurring items (items which typically do not occur every year), items relating to acquisitions and investments, non-cash based share incentive charges and amortization of intangible assets acquired from acquisitions. The reconciliation from reported results to adjusted results is set out in note 2.

Read the full statement here

About Imagination Technologies
Imagination is a global technology leader whose products touch the lives of billions of people across the globe. The company’s broad range of silicon IP (intellectual property) includes the key processing blocks needed to create the SoCs (Systems on Chips) that power all mobile, consumer and embedded electronics. Its unique software IP, infrastructure technologies and system solutions enable its customers to get to market quickly with complete and highly differentiated SoC platforms. Imagination’s licensees include many of the world’s leading semiconductor manufacturers, network operators and OEMs / ODMs who are creating some of the world’s most iconic products. See: www.imgtec.com.