16 December 2014
Imagination Technologies Group plc Strong demand for our IP and increasing SoC design-win momentum 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. 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 w ith our progress in the first half. During this transitional year for the Group w e 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, w e expect to see low er rates of operating cost grow th going forward and increased focus on financial returns. Our market relevant and complementary technologies combined w ith our increased scale enable us to take advantage of the natural leverage to improve the financial performance of our business. As a result w e 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. ENQUIRIES: Imagination Technologies Group plc Tel: 01923 260 511 Sir Hossein Yassaie, CEO Richard Smith, CFO Instinctif Partners Tel: 020 7457 2020 Adrian Duffield / Kay Larsen About Imagination Technologies Imagination Technologies - a global leader in multimedia, processor, communication and cloud technologies - creates and licenses market-leading processor solutions including graphics, video, vision, CPU and embedded processing, multi-standard communications, cross-platform V.VoIP and VoLTE, and cloud connectivity. These silicon and software intellectual property (IP) solutions for systems-on-chip (SoC) are complemented by an extensive portfolio of software, tools and ecosystems. Target markets include mobile phone, connected home consumer, mobile and tablet computing, in-car electronics, networking, telecoms, health, smart energy and connected sensors. Imaginations licensees include many of the worlds leading semiconductor manufacturers, network operators and OEM/ODMs. Corporate headquarters are located in the United Kingdom, with sales and R&D offices worldwide. See: www.imgtec.com.
http://www.imgtec.com/
Overview In the first half of the year Imagination has made good progress in its strategic developments to build real scale across our three fundamental silicon IP families, PowerVR multimedia, MIPS processors, and Ensigma communications. Our long-term strategy to develop and exploit three main areas of IP multimedia, processors and communications and the platforms they enable - has continued to make good progress. These three carefully developed IP families are central to the Groups overall strategy and they: offer a strong and comprehensive range of IP-level products that address each specific area very
well and together enable solution-centric platforms that can efficiently address all key existing and new
markets. Overall licensing is at a healthy and growing level with deal closure and pipeline activity increased across all IP families. 49 licences were signed in the period compared to 43 for the same period last year. We have built on the success of PowerVR Series6 with the recent launch of Series7 GPU XT and XE families. The Series7 cores have already been licensed by several partners including multiple tier one players. Together these products cover all markets from entry level smartphone through performance mobile, HD and UHD TVs and STBs to very high-end solutions requiring in excess of 1TeraFlop (TFLOP) processing capabilities. Development of the MIPS processor family continues, ahead of our initial expectations, with the launch of 64-bit members of the Warrior family and the addition of several new partners in the period. Building on the significant licensing activity seen for our Ensigma communications IP during the last financial year, we have seen further licensing of this enabling technology as well as supporting a number of our partners as they bring products featuring this technology to market. Following the actions taken to refocus the Pure business at the end of the last financial year, Pure has launched a fresh range of new DAB products as well as continued the important development in the wireless speaker product range. The Groups operating cost base continues to be tightly managed, while targeted investment is made in areas that will drive significant future growth. The Groups capital investment programme is now in its final phase with the third of the Kings Langley buildings now under construction. Overall, although the first half of the years financial performance was expected, the Group anticipates a much stronger H2 with the full year financial performance in line with the Boards expectations. Financial Review Revenue Group revenues for the six months to 31 October 2014 were 82.2m (2013: 85.2m). The robust royalty revenue and the improving licensing performance increased Technology revenues by 3% to 72.8m (2013: 70.8m).
