Imagination Technologies: Full Year Results Statement FY2015-16

July 5, 2016 -- 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 2016.

FY16 financial performance

• Results in line with trading update published 26 May 2016
• Group revenue from continuing operations £120.0m (2015: £156.8m)
• Licensing revenue from continuing operations £17.1m (2015: £37.8m) – includes one-off £5.7m revenue reversal for SoC Design contract
• Royalty revenue from continuing operations £102.7m (2015: £118.4m)
• Adjusted operating loss* for continuing operations £16.5m (2015: profit £29.8m)
• Reported operating loss from continuing operations £61.5m (2015: profit £5.7m)
• Adjusted loss per share was 9.2p (2015: earnings 6.3p); reported loss per share was 29.8p (2015: loss 4.9p).
• Cash generated by operations was £16.7m (2015: out flow £4.0m)
• Net debt at the year-end was £33.0m (30 April 2015: £27.2m and 31 October 2015: £35.4m)

Restructuring initiative launched in February 2016

• Focus on three core businesses; graphics and multimedia (PowerVR), processing (MIPS) and connectivity (Ensigma)
• Sale of Pure and other non-core cash consuming activities on course – Pure attracting considerable interest
• Substantial reduction in cost base – £27.5m of cost reduction in FY17

Operational review – identified where to focus resources to exploit leading positions

• PowerVR – R&D prioritised on retaining technology leadership and consolidating position in mobile, automotive and DTVs/STBs
• Good opportunities in emerging markets: AR/VR, vision systems and ray tracing
• MIPS – focused on embedded processor market segments where we have strong positions and can exploit capabilities to build long-term, defendable positions
• Ensigma – longer-term play, significant opportunity is emerging to license its connectivity IP, especially with the growth of IoT
• MIPS and Ensigma – look to improve the prospects through partnerships, aimed at building necessary ecosystems and reaching scale more quickly
• Group continues to see strong demand for licences for its core technologies and expects revenues to improve in FY17

Andrew Heath, Chief Executive, said:

“As previously indicated in our trading update in May, the last year has been particularly challenging for Imagination. The results reflect a combination of difficult trading conditions and a significant restructuring of the business.

“However, we have now taken the necessary action to put Imagination back onto a sound financial footing.

“We have also conducted a comprehensive operational review. Going forwards Imagination will be an IP licencing business. We will increase investment in PowerVR, which reported significant profits, building on our leading position and exploiting new markets. We will focus MIPS and Ensigma where we have, or can build, differentiated, defendable positions. We will also look to improve the prospects for both business units through partnership arrangements aimed at building the necessary ecosystems and reaching scale more quickly.

“Despite recent trading challenges, I see a bright future for Imagination. The market for our IP remains large. We now have a sound financial position and have maintained our strong positions with leading customers.

“Overall we are well positioned to take advantage of a number of attractive end markets and deliver profitable growth.”

Read the full statement here

* 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.