Imagination Technologies Group plc - Interim Results for the six months to 31 October 2011

Adjusted pre-tax profit* jumps 52% to £15.3m; driven by strong licensing and continued royalty revenue growth

December 13, 2011 -- Imagination Technologies Group plc (LSE: IMG, "Imagination", "the Group"), a leading multimedia, communications and embedded processor technology company, today announces results for the six months to 31 October 2011.

Financial highlights

• Group half-year revenue up 28% to £56.3m (2010: £44.1m)
  
  • Technology revenues increased 41% to £42.6m (2010: £30.3m)
    
    • Licensing revenues up 65%; high levels of activity across IP portfolio
    • Royalty revenue up 26%; 29% on a US dollar basis
• PURE £13.7m (2010: £13.8m)
  
  • Tough retail environment in UK offset by strong overseas growth
• Adjusted pre-tax profit* up 52% to £15.3m (2010: £10.1m)
• Reported pre-tax profit up 35% to £10.4m (2010: £7.7m)
• Adjusted earnings per share* up 48% to 4.9p (2010: 3.3p**)
• Reported earnings per share 3.0p (2010: 4.8p)
  
  • Reduction due to a £3.9m tax credit in 2010 compared to a £2.7m tax charge in current year
  • No UK tax payable, £18.3m deferred tax asset as at 31 October 2011
• Cash balance increased to £56.1m at 31 Oct 2011 (30 April 2011: £49.4m)

* The reconciliation from reported results to adjusted results is set out in Note 6.

** Using normalised tax rate of 26%

Business highlights

Technology business

Royalties and design wins

• Partner chips shipped in the period increased to 123m units (2010: 107m) and substantial acceleration expected in the second half, post October product launches
• Significant volume shipments in mobile phone, tablets/personal computing, personal media players, TV/STB, digital radio and automotive markets
• Significant growth in chip design wins with 125 active partner chips (2010: 98); 54 in production (2010: 42)
• Average royalty rate strengthened due to enhancing mix of IP in each chip

Licensing

• Strong licensing activities
  
  • Addition of several new key partners including MStar, Ricoh, Qualcomm, Rockchip
  • Many new and extended agreements with existing partners including Sony, Intel, Mediatek, Renesas, Samsung, Sigma, Realtek
• 15+ important agreements involving 22+ silicon IP cores – almost doubling over the same period last year
  
  • Across all markets - mobile phone, digital TV/STB (set top boxes), Personal Media Player (PMP), mobile computing/tablets/netbooks, in-car navigation/dashboard and industrial/enterprise equipment
  • Included graphics, video, display, broadcast/connectivity and processor silicon IP cores and HelloSoft VoIP technologies
• Significantly increased and active pipeline of prospects across all IP families

Acquisitions

• Integration of HelloSoft and Caustic Graphics progressing to plan. Positive initial commercial developments for both businesses

PURE business

• Continued softness in UK revenues offset by momentum in overseas growth
  
  • On-going tight economic environment and cautious retailers in the UK
  • Continued DAB adoption worldwide and growing demand for PURE’s connected radios
• Continued strategic development and path-finding role
  
  • Focus on development of technologies for digital broadcast, connected devices and Cloud solutions
• Key recent new products launched
  
  • PURE Music cloud-based on-demand music service announced and very well received
  • Highway in-car digital radio and audio adapter with Halfords as the initial exclusive retailer

Hossein Yassaie , Chief Executive, commented:

"The continued strong demand for our technologies has again resulted in a material jump in our half-year revenues and profits.

"As demonstrated by very strong licensing revenue growth, our technologies, due to technical and ecosystem advantages, are in demand and are being adopted more widely across new and existing partners, creating a solid base for continued momentum in future volume growth.

"Most of these markets are still at early stages of transition and/or development and have large growth potential, making our stated goal of 1bn annual unit shipment within five years a realistic objective.

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

"Whilst acknowledging the on-going challenges to the global economy, we remain confident of our continued good progress in the current financial year and beyond, given the fundamental strengthening of our business on the back of a very active and growing pipeline of licensing prospects, the growth in design wins and the momentum in our chip volume."

Click here to view the full financial results

About Imagination Technologies

Imagination Technologies Group plc (LSE:IMG) – a global leader in multimedia and communication technologies – creates and licenses market-leading multimedia IP cores for graphics, video, and display processing, multi-threaded embedded processing/DSP cores and multi-standard communications and connectivity processors. These silicon intellectual property (IP) solutions for systems-on-chip (SoC) are complemented by platform level IP and services, a strong array of software tools and drivers and extensive developer and middleware ecosystems. Target markets include mobile phone, handheld multimedia, home consumer entertainment, mobile and low-power computing, and in-car electronics. Its licensees include many of the leading semiconductor and consumer electronics companies. Imagination has corporate headquarters in the United Kingdom, with sales and R&D offices worldwide. See: www.imgtec.com.