Interim Management Statement - Imagination Technologies

September 17, 2013 -- Imagination Technologies Group plc ('Imagination', LSE: IMG), a leading multimedia, communications and processor technology company, is today issuing its Interim Management Statement for the period from 1 May 2013 to 16 September 2013.

Trading update

The momentum in the business has continued and there have been a number of strategically important developments during the period.

Royalty revenue growth for the latest quarter has continued to be strong, in line with our expectations. The unit volume growth has been significant, driven by volume ramp-up and new product launches from a number of our customers. The average royalty rate achieved is in line with our expectations.

Licensing activity remains steady with significant engagements in progress with a number of important partners.

The Pure business is gaining traction, with promising initial interest in and orders of the Jongo range of wireless speakers.

Technology

Multimedia

Our PowerVR Series6 technology has seen further deployment in the market and is now shipping for use in automotive, DTV and mobile devices, delivering the latest features (e.g. OGLES 3.0) and demonstrating the performance and power consumption advantages of this class-leading technology.

We see continued interest in and licensing of the existing Series6 cores, and initial licensing of the new PowerVR Series6XT technology which will be delivered to customers in FY14H2.

The level of interest in our ray tracing IP is significant with a number of major partners evaluating this ground breaking technology.

CPU and processor cores

Following the complete integration of MIPS, the organisation is performing well and a very successful event held at Stanford University recently was very well attended with high levels of customer interest in the products and the progress we have made.

Development of the MIPS ‘Warrior’ family of processor cores and the drive to strengthen and build on the MIPS ecosystem continue as planned.

Existing customers are increasingly comfortable with the support and direction the MIPS architecture is taking, and we are seeing positive engagements across the MIPS product range.

Of particular note is the wearable device market which is an exciting opportunity for MIPS processor cores given its efficient architecture and we have seen important progress in this area.

Whilst the progress on MIPS is very encouraging we re-iterate that this is a long-term strategy to offer real choice in the CPU and processor IP market.

Communications

The traction we have seen with our communication IP has increased further, with the recently announced license agreement with Toshiba a good example of this.

There is considerable interest in these technologies from potential customers, some of which we expect to convert to licensing in this financial year.

We expect to see some of our existing partners introducing new products using our Ensigma communication technologies to the market during this financial year.

Our announcement of the new Caskeid multi-room wireless audio technology, which also powers Pure Jongo wireless speakers, at the recent IFA show has been strongly received, with several prospects in progress.

Cloud technologies

The cloud technology which we have developed is highly relevant to the key established and emerging markets including audio and video content delivery, home automation, security and the general Internet of Things (IoT). We recently launched FlowAudio (www.flowlive.com) as a licensable service and the Pure Connect online audio service is a compelling example of applications running on this platform. We expect both the underlying platform and services based on it to be of significant interest to our customers.

Pure

We have continued the development and launch of a number of strategic products and technologies that will help to transform home multimedia, which includes the entire range of Jongo multiroom speakers. Important relationships with key retailers have been developed in the UK and US, including BestBuy and Walmart, to establish and drive our presence in this exciting product category.

Outlook

The progress on licensing to date and the current sales pipeline support the existing guidance of £30m-£35m of licensing revenue (excluding MIPS), which equates to a range including MIPS of £38m - £43m.

Based on our view of existing partner shipments and new products which are starting to ship, we maintain our guidance of unit shipments (excluding MIPS) in excess of 650m for FY14 (1.35bn including MIPS).

We expect to see a financial improvement in the Pure division over the medium term, driven by the launch of the new Jongo product range.

The financial position of Imagination remains robust and the Board is confident that the Group’s progress will continue.

Hossein Yassaie, Imagination’s Chief Executive said:

“We continue to focus on building sustainable and long-term value in our business, despite the transient events and short term variations that are inevitable in the dynamic markets in which we operate.

“Our important strategic engagements continue with further partnerships developing and new opportunities arising which will continue to drive our market penetration and growth.

“Our strong technology base, partner engagements, design wins achieved, and growing opportunities, give me confidence that we will continue our planned progress.”