Imagination Technologies -- Full Year Results 2017

Strong set of results following successful restructuring - formal sale process continues

July 4, 2017 -- 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 2017.

FY17 financial performance

• Group revenue from continuing operations up 19% to £145.2m (2016: £121.6m)
  • Licensing revenue up by 82% to £33.9m (2016: £18.6m)
  • Royalty revenue up 8% to £111.1m (2016: £102.7m)
• Adjusted operating profit* for continuing operations up by approximately three times to £29.2m (2016: £10.5m)
• Reported operating profit from continuing operations £7.8m (2016: loss £26.8m)
• Adjusted loss per share 0.9p (2016: loss 9.2p); reported loss per share was 10.1p (2016: loss 29.8p)
• Cash generated by operations was £11.0m – despite £13.7m outflow from loss making discontinued businesses
• Net debt at year-end was £28.4m (30 April 2016: £33.0m and 31 October 2016: £40.8m)

Operational highlights

• Restructuring completed as planned
• Refreshed strategy – focus on IP solutions with potential for real scale – being successfully implemented
• Continue to see good demand for licenses in all three businesses – PowerVR, MIPS and Ensigma
• Substantial improvement in trading performance in all three units
• Compelling products in FY18 roadmap – bodes well for competitiveness for each business unit
• Number of successful launches by PowerVR

Apple and current situation

• Apple Inc.’s (“Apple”) unsubstantiated assertions that it had designed Imagination out and that royalties would cease in 2018 or early 2019, announced by the Group on 3 April 2017
• Dispute with Apple continues – no progress made. Options being reviewed
• MIPS and Ensigma marketed for sale (4 May 2017) to concentrate resources on PowerVR and strengthen the balance sheet; the sale process is progressing well

Formal Sale Process

• Following interest in the entire Group, decided to initiate a formal sale process on 22 June 2017
• Preliminary discussions continue with potential bidders

Peter Hill, Chairman, commented:

“The management team have done a tremendous job over the last year, turning the business around, returning it to profitability and with a clear strategy for growth. It is therefore highly regrettable that this progress has been so severely impacted by the stance taken by Apple.”

Andrew Heath, Chief Executive, said:

“Last year was exceptionally challenging but operationally we delivered a strong set of results. Our restructuring programme was implemented as planned and our focus on our core IP businesses resulted in notable progress across all three of our businesses.

“We improved our financial performance across the business. We returned the business to profitability and saw good cash generation despite the outflow from the now discontinued businesses.

“However, Apple’s unsubstantiated assertions and the resultant dispute have forced us to change our course, despite the clear progress we have been making.

“Initially we elected to sell the now much stronger MIPS and Ensigma businesses in order to strengthen our balance sheet and concentrate our resources on PowerVR. Additionally, we have received interest from a number of parties for the whole Group – reflecting the real quality and strategic value of our businesses and the associated IP. We therefore initiated a Formal Sale Process, which is on-going.”

Download the full results 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.