Final Results

19 June 2012

Imagination Technologies Group plc

Momentum maintained as profit* jumps 53% to £36.8m; driven by notable increases in both royalty and licensing revenues

Imagination Technologies Group plc (LSE: IMG, "Imagination", "the Group"), a leading multimedia, communications and embedded processor technology company, today announces results for the year to 30 April 2012.

Financial highlights

·; Group revenue up 30% to £127.5m (2011: £98.0m)

o Technology revenues increased 41% to £98.2m (2011: £69.8m)

§ Royalty revenue up 55% to £63.8m (2011: £41.3m)

§ Licensing revenues up 21% to £34.4m (2011: £28.5m)

o Pure revenues of £29.3m (2011: £28.3m)

§ Strong overseas growth (36% of revenues now international) offsetting tough UK retail environment

·; Adjusted pre-tax profit* up 53% to £36.8m (2011: £24.0m)

·; Reported pre-tax profit up 74% to £28.5m (2011: £16.4m)

·; Adjusted earnings per share* up 39% to 11.0p (2011: 7.9p**)

·; Reported earnings per share 7.9p (2011: 7.7p)

·; Cash balance increased to £66.3m (2011: £49.4m)

* The reconciliation from reported results to adjusted results is set out in Note 3.

** Using normalised tax rate of 26%

Business highlights

Technology business

Royalties and design wins

·; Partner chips shipped up 33% to 325m units (2011: 245m), substantial acceleration in H2 to 202m units (H2 2011: 138m)

·; Significant volume shipments in mobile phone, tablets/mobile computing, PMP (personal media players), game consoles, TV/STB (Set-Top Box), digital radio and automotive markets

·; Strong growth in chip design wins with 136 active partner chips (2011: 115); 60 in production (2011: 48)

·; Average royalty rate maintained due to enhancing mix of IP, despite significant volume ramp-up and strong lower-end handset growth

Licensing

·; Maintained strong licensing activities across all of our IP

o Several new partners added including Actions Semiconductor, Allwinner, Compound Photonics, HiSilicon, Huawei, Ingenic, MStar, Qualcomm, Ricoh, Rockchip, ZTE

o Many new and extended agreements with existing partners including CSR, Frontier Silicon, Intel, MediaTek, Realtek, Renesas, Samsung, Sigma, Sony, ST, ST-Ericsson, Sunplus, Toumaz

o Significant new partner engagements and license closure in China

·; 30 important customers involving 49 silicon IP core licenses - almost 50% up over the last year

o Addressing all markets - mobile phone, tablets/mobile computing, TV/STB, PMP/Camera, in-car navigation/dashboard and industrial/enterprise equipment

o Including graphics, video, display, broadcast/connectivity and processor silicon IP cores, as well as V.VoIP technologies

·; Continued active pipeline of prospects across all IP families

Pure business

·; Continued softness in UK revenues offset by momentum in overseas growth

o Ongoing DAB adoption worldwide and growing demand for Pure's connected audio

·; Continued strategic development and pathfinding role

o Focus on development of technologies for digital broadcast, connected devices and Cloud solutions

·; Key recent new products launched

o New Pure wireless streaming products including new flagship Sensia and first Airplay enabled product

o Second generation Highway in-car digital radio and audio adapter launched with Halfords & OEM agreement with Alpine

o Cloud-based on-demand music service launched in the UK with other services and regions adding soon

Hossein Yassaie, Chief Executive, commented:

"We have maintained our momentum and seen another strong year of financial and strategic progress which has fundamentally strengthened our overall position. The excellent growth in licensing partnerships, which expanded across all our IP families, and significant volume ramp-up resulted in a material jump in full-year revenues and profits.

"Our 'smart' technologies are being adopted more widely across new and existing partners, creating a solid base for continued momentum in future volume growth making our stated goal of around 1bn annual unit shipment by 2016 a realistic objective.

"Despite the current slow-down in consumer spending, Pure continues to effectively showcase and help to drive key strategic connectivity technologies. We expect to also see a financial improvement in this division over the medium term, driven by international markets and new product opportunities."Despite the global economic environment, over 1 million devices are now being shipped with our IP daily. We remain very confident of our continued good progress, given the growing demand across our IP families, the growth in design wins across a widening range of end user markets and the momentum in our partners' chip volume."

About Imagination Technologies

Imagination Technologies - a global leader in multimedia and communication technologies - creates and licenses market-leading processor solutions for graphics, video, display, embedded processing, multi-standard communications and connectivity, and cross-platform V.VoIP & VoLTE. These silicon and software intellectual property (IP) solutions for systems-on-chip (SoC) are complemented by an extensive portfolio of software drivers, developer tools and extensive market and technology-focused ecosystems. Target markets include mobile phone, handheld multimedia devices, connected home consumer, tablets/mobile computing, in-car electronics, telecoms, health, smart energy and connected sensors and controllers. Imagination's licensees include many of the world's leading semiconductor, network operator and electronics OEM/ODM companies. Corporate headquarters are located in the United Kingdom, with sales and R&D offices worldwide. See: www.imgtec.com

Financial and Business Review

Overall the Group has maintained its momentum and performed very well during the year and is now in a fundamentally stronger position.

The full year saw excellent financial and strategic progress for the Technology business, with a very active period of licensing and strong royalty revenue growth. The Group successfully closed a number of important licensing deals and secured many new partners.

The unit volume shipment was at the higher end of expectations demonstrating the strength and growing diversity of the SoC design wins. These resulted in a significant jump in operating profit for the Technology business. Our technologies continue to be in demand with an active pipeline of prospects. The extensive design wins achieved are a clear indication of generally broader and deeper engagements both across customers and the Group's IP families.

As expected, the Pure business continued to be held back during the period by the general economic pressure on consumer spending particularly in the UK. However, this was offset by strong momentum and growth in its international business, which showed more than 50% year-on-year growth resulting in the division showing marginal revenue growth in a difficult economic environment.

Financial Review

Group revenues for the period ending 30 April 2012 increased by 30% to £127.5m (2011: £98.0m).

The strong growth from both royalties and licensing increased Technology revenues by 41% to £98.2m (2011: £69.8m).

Royalty revenue increased by 55% to £63.8m (2011: £41.3m). Partners' chip shipments increased by 33% to 325m units as more of our customers started shipping devices (2011: 245m).

The average royalty rate strengthened in the period due to phasing out of legacy royalty share agreements, shipment of devices incorporating more of our IP in each chip and chips with newer generation IP starting to ship.

Strong demand for our technologies resulted in a 21% increase in licensing revenue to £34.4m (2011: £28.5m). The licensing activity was strong as we built deeper relationships with existing customers and established relationships with significant new and diverse range of customers, across the full range of IP developed by Imagination.

For Pure, the strong growth in overseas markets helped offset the impact of the tough UK market and resulted in growth in revenue to £29.3m (2011: £28.3m). 36% of Pure's revenue came from the strongly growing international markets.

Driven by the strong progress in the very high margin Technology business, Group gross profit was up 38% to £106.5m (2011: £77.3m), with overall gross margin up to 84% (2011: 79%).

Underlying Group operating expenses increased to £69.8m (2011: £53.4m). Underlying expenses excluded non-cash share-based incentives charge of £10.3m (2011: £5.9m), amortisation of intangibles £2.7m (2011: £0.9m), a credit on the revaluation of deferred consideration of £4.0m (2011: £nil), and a gain on investments of £0.7m (2011: £nil). The operating expenses included £7.9m of HelloSoft and Caustic expenses (2011: £2.2m). The remaining year on year increase of 21% represents the investments made in the underlying business in customer support / infrastructure reflecting the rapid growth in the licensee base.

Adjusted operating profit* for the Technology business increased 48% to £39.6m (2011: £26.7m) driven by the very strong increase in royalty revenues. The adjusted net operating margin for the Technology business increased to 40% (2011: 38%).

The difficult trading conditions have resulted in Pure recording an adjusted operating loss* of £2.9m (2011: loss £2.8m).

The Group's adjusted pre-tax profit* increased by 53% to £36.8m (2011: £24.0m). The reported pre-tax profit was up 74% to £28.5m (2011: £16.4m).

The net tax charge was £8.1m (2011: credit £2.9m) although due to the deferred tax asset there were no UK corporation tax payments in the period. Due to the profits made in the year, the deferred tax asset on the Group balance sheet to be utilized against future UK profits has reduced to £18.8m (2011: £24.9m). UK corporation tax payments will only commence once the deferred tax assets have been utilized.

The Group's adjusted earnings per share* was 11.0p (2011: 7.9p assuming a normalised tax rate of 26%). The Group's reported earnings per share increased to 7.9p (2011: 7.7p).

Capital expenditure was £12.3m (2011: £13.5m) with the primary element being the re-development of the Group's property facilities in Kings Langley.

There was a substantial increase in operating cash in-flow in the year to £29.1m (2011: £19.2m) generated from the strong increase in Group operating profit. This has led to net cash resources increasing to £66.3m (2011: £49.4m).

* The reconciliation from reported results to adjusted results is set out in Note 3.

Technology Business

During the year the Technology business continued to make significant progress in its three key metrics:-

·; New licensing deals, which generate short-term revenue and represent a key measure for general technology adoption

·; Partner chip volume ramp-up, which drives royalty revenues

·; Growth of SoC design wins, which are indicative of technology deployment and the underlying drivers behind future royalty generation

Licensing

The active and strengthening pipeline of opportunities led to a number of strategically and financially significant licensing agreements or deal extensions involving around 30 customers and just under 50 major IP licenses as well as a number of smaller deals and upgrades.

Among the important agreements, there were new partner deals with Actions Semiconductor, Allwinner, Compound Photonics, HiSilicon, Huawei, Ingenic, MStar, Qualcomm, Ricoh, Rockchip and ZTE as well as significant new licenses or extensions with existing partners including CSR, Frontier Silicon, Intel, MediaTek, Realtek, Renesas, Samsung, Sigma, Sony, ST, ST-Ericsson, Sunplus, Toumaz and others.

The target markets for these include mobile phone, TV/STB, PMP, tablets/mobile computing, in-car navigation/dashboard and industrial/enterprise equipment.

·; Graphics - The Group has continued to see accelerating momentum in design-wins for its PowerVR graphics technology, which has so far achieved over 120 licenses, including many partners that are working on designs using the multi-processing (MP) core variants of the Series5XT family. Over 100 devices, in development or in production use PowerVR Series5 and Series5XT. The Group's new generation technology, codenamed 'Rogue', has been acknowledged by many key partners as the market leader and has already secured around ten licensees with the number of committed SoCs with this family now approaching 20. This technology was delivered to our lead partners earlier this year and we have now seen first silicon based on this IP from some of our partners.PowerVR graphics technology now has a very strong and/or growing footprint across the three major mobile platforms namely iOS, Android and the emerging Windows Phone 8. Semiconductor partners using PowerVR graphics for the Android platform now exceed 14 with eight top tier companies. This is ensuring strong market share in this platform particularly as new partners launch their products. With respect to the new Windows 8 and Windows Phone 8 platforms we have multiple tier one partner engagements and expect a strong play in these areas as they launch in 2012 and beyond.The TV and STB market areas were among the most active during FY 2011-12 with a record number of licenses closed and as a result SoC commitments in this segment have grown significantly.PowerVR technology has a very strong and comprehensive roadmap to ensure its market-leading position. The complementary ray tracing technology, obtained through the Caustic acquisition, is on track and will, in due course, further strengthen our offering and add to our competitive position.

·; Video - PowerVR video decode and encode families support the latest and emerging video decode and encode formats. We are seeing growing adoption of these technologies among our partners with a number of new licenses added during the year. An increasing number of our graphics licensees are also selecting our video IP to be integrated alongside our graphics cores. Around 50% of the devices with our IP shipped annually include our video cores.

The growing demand for video technology is driven by content delivery and, increasingly, user content creation (e.g. YouTube) and two-way delivery of video. The trend is towards the widespread use of the internet for video content delivery including both mobile video delivery and the internet-protocol (IP) TV capability needed in video-on-demand and catch-up TV.In keeping with our strategy of providing leading-edge and market-driving technologies to our customers, we have recently launched the new Series4 video processors offering increased performance and precision and supporting the emerging ultra HD resolution displays of 4Kx2K pixels. This enables very high quality and/or displaying full HD at the same time as related information such as social network interactive pages. These technologies are needed with respect to future generations of smart TV products.

·; Display - PowerVR I2P and FRC deliver image processing enhancements for TVs, STBs and other consumer devices. The convergence trends are increasingly requiring features reserved for the TV market to migrate into other categories including mobile phones, tablets/mobile computing and in car multimedia. Our offerings are particularly strong in low-power and size efficiency as well as delivering the required quality. We have secured multiple design wins across this IP family involving both tier one and smaller companies.

·; Connectivity/broadcast - The interest and engagement in the Ensigma UCC family of IP cores continues to grow. We secured five new or repeat licenses this year with the total number of active partners now standing at seven. We also have a strong and growing pipeline of engagements and evaluations on-going for this technology. Ensigma UCC programmable radio processing units (RPU) support worldwide TV and radio reception as well as important connectivity standards such as Wi-Fi, all running on the same silicon engine in software. This technology is increasingly essential for delivery of Cloud and broadcast content to home and also within the enterprise. Already we have partner devices in volume shipment using this technology for digital radio and Wi-Fi connectivity and we expect several new partner devices targeting multi-standard/global TV markets to begin shipment during the current financial year.

·; Embedded processor cores - the Meta family of processors offers state-of-the-art general-processing combined with multi-threading, demanding real-time and signal-processing capabilities. These capabilities are ideal for highly integrated, feature-rich and cost effective systems. With its extensive capabilities, Meta technology is also ideal as an application processor for running the operating system whilst also offering the built-in multi-threading, real-time and signal processing capabilities to carry out other key tasks, eliminating external hardware.

These features combined with our Ensigma technology offer a highly efficient 'connected processor' which we believe is well positioned for many connected devices and the emerging Machine-to-Machine (M2M) applications. We have introduced the new MetaFlow family to address these market segments and are supporting this offering with new and innovative Cloud-connected client and portal technologies marketed under Flow Technology.

Many of our IP cores integrate Meta processing cores already. Over 50%, i.e. more than 160m, of the annual volumes of our IP shipments deploy Meta technology and we expect this trend to continue upwards.The growth of open source operating systems such as Android and other Linux implementations, the trend towards heterogeneous systems/standards and the inevitable growth of internet connectivity across the majority of devices, will further drive deployment of higher-end Meta processors in application processors in a variety of markets.

·; V.VoIP - Since the acquisition of HelloSoft, we have established strong V.VoIP product lines, including platform agnostic SDKs. As a result, we have seen a number of important engagements with respect to our VoIP (Voice-over-IP) and V.VoiP (Video and Voice-over-IP) technologies. This is in part driven by the arrival of 4G/Long Term Evolution (LTE) networks which require VoIP on LTE (VoLTE) an area where HelloSoft product lines can have a strong play. HelloSoft V.VoIP technology has now been adopted by a number of key network operators for both enterprise and consumer segments with a number of handset design-wins also secured.

Partner chip shipments and royalties

Partner chip unit shipments grew to 325m units (2011: 245m units). Growth was driven by increasing sales in mobile phone, PMP, tablet/mobile computing devices, TV/STB, digital radio and car navigation/dashboard. As expected the shipment volume substantially accelerated during the second half to over 200m units (2011:138m). This was due to the timing of new handset launches for both Android and iOS in October 2011, the migration of our newer licensees from development phase to volume ramp of their application processors and the usual holiday period demand surge. The ramp-up was also enhanced further by the growth in volume in other categories including tablets and mobile computing devices as well as growing volume in gaming devices and STBs/TVs.

SoC design wins and pipeline

SoC design wins are the driver for future partner chip shipments and royalty revenue growth. Strong continuing momentum saw new partner SoC design wins increase to 136 (net of obsolescence) (2011: 115). Of these, 60 are shipping or beginning to ship, with the balance of 76 still in design. The latter will be the driver for significant further royalty revenue growth.

These committed devices are continuing to diversify across Imagination's partners and key market segments:

·; 43 for mobile phone application processors

·; Eight for handheld multimedia (PMPs, hand-held gaming/entertainment, camera, mobile TV)

·; 37 for Home Consumer Entertainment (TVs, STBs, DVDs, digital radio and audio, connected audio, and home entertainment devices)

·; 17 in mobile computing (tablet/mobile computing)

·; 18 for In-car (navigation, dashboard, personal navigation devices)

·; 13 for other markets covering green energy, networking, healthcare, enterprise, industrial, amusement and toys

Pure business

Despite the economic environment in the UK, Pure was able to grow its revenues whilst also carrying its strategic tasks in support of the overall Group objectives. This was driven by strong export business as digital radio deployment spreads across EU and elsewhere and the growth of the market for connected radio and audio devices.

Pure product lines have been and continue to be based on using Imagination's underlying IP in processing, connectivity/broadcast and multimedia and are planned and developed to create supportive technologies and solutions to drive selected markets and the adoption of Imagination's technologies in those markets. To provide some clarity on Pure's activities and its strategic goals it should be noted that chronologically Pure has focussed on the following three areas:

i- Digital radio. Pure's product line drove the market from the early days and set the much needed agenda to help develop this new market. This continues today in the form of supporting and driving the adoption of digital radio internationally. These include key markets such as Germany, Australia and Switzerland where Pure's activities have been instrumental in the excellent progress made. Pure has executed these strategic tasks very effectively and has directly influenced the development of the market and helped in securing a significant market share for Imagination. Over 70% of digital radios shipped today including those by many leading brands other than Pure are based on Imagination's Ensigma UCC and Meta technologies.

ii- As a first step in helping to drive home connectivity and automation, Pure has been focussed on wireless audio streaming across three key application areas; hybrid internet and broadcast radio enabling access to global radio stations and audio content; advanced interactive internet connected services especially Cloud music delivery which deploys Imagination's Cloud enabling technologies; and audio streaming of content from popular mobile devices to home audio systems and speakers. These developments and product offerings are part of a careful plan to both pathfind and refine Imagination's key IP for the home environment, help in the development of complementary strategic technologies (e.g. Imagination's Connected Processor and Flow technology) and very importantly develop selected markets.

iii- A key goal is to ultimately contribute to the emergence and development of the home automation opportunities through use of Imagination's processing, connectivity and Cloud technologies. This is the latest area of strategic focus for Pure with technologies and products yet to be announced.

Several key products were launched during the last financial year in line with the above strategic objectives. The most recent products include the new flagship Sensia 200D Connect, the Contour 200i Air and the Contour 100Di. The Sensia 200D Connect combines digital radio, internet radio, extensive services from Pure Lounge and Wi-Fi streaming from phones and tablets through Pure Apps. Contour 200i Air is Pure's first Airplay product and Contour 100Di comes with a dock for iPad, iPhone and iPod as well as the free companion internet radio and music streaming app from Pure.

The second generation Highway in-car digital radio and audio adapter, Highway 300Di launched with Halfords and more recently under an OEM arrangement via Alpine. Pure Music, a Cloud-based on-demand music service, was launched in the UK with other services and regions coming soon. Other products launched included Move 2500, a new pocket digital and FM radio and successor to the best-selling and award-winning PocketDAB 1500. The new EVOKE Mio by Orla Kiely (Abacus Flower Edition) achieved strong coverage in this year's Christmas gift guides and was in fact one of Pure's best-selling radios over the peak season. Pure's One family of radios has also been refreshed and the One Classic and One Elite Series 2 have been updated with innovative new features.

The One Classic Series 2 has already received a highly prestigious What Hi-Fi? Sound and Vision five star award and a Gold Medal in the Mail on Sunday's Live Awards. Other key awards include Contour 100Di achieving 5 stars from TechRadar and What Hi-Fi? Sound and Vision magazine, One Flow being awarded 5 stars in BBC Music magazine and winning both 'Best internet radio under £150' in the 2011 What Hi-Fi? Sound and Vision Awards and 'Best Digital Radio Product of the Year' in Australia's Sound and Image Awards. The new Highway 300Di also won the coveted Auto Express 2012 'Product of the Year award'.

The Group's investment in developing the Flow connectivity and FlowWorld Cloud portal technologies, which form the basis of Pure's 'www.thelounge.com' portal and, in collaboration with ecosystem partners, enable services such as Pure Music, is a key and strategic activity that Pure is helping to drive. This platform will be part of Imagination's licensable technologies and will help to enable the next generation of Cloud-based products and services across home automation, assisted-living/healthcare, security and other emerging internet-connected devices. Over time we will be offering our Cloud enabling technology, Flow, in its own right, bringing our portal technology, connectivity and processor IPs together to address the many emerging connected applications beyond the radio market.

Outlook

Our business has made significant progress to date but the full exploitation of many of our key technologies is still at a relatively early stage in many markets. For example, the smart phone market alone is forecast by industry analysts to grow over three times by 2015 reaching an annual volume around 1.5bn units. Given our strong existing and growing partnerships across both of the important established platforms, iOS and Android, where we have strong presence, and also our serious involvement in the emerging Windows Phone 8 platform with multiple tier one partners, we believe a market share goal of over half of the total smart phone market by 2015 and beyond, is a reasonable and realistic goal.

Additionally our strong presence in the fast-growing tablet market, where the vast majority of the leading platforms are using devices with our technology, with industry analysts suggesting this market will reach over 300m units by 2015 means this segment will make a notable contribution to the Group's progress.

The favourable transitions in TV/STB markets towards 'smart' functionality where we have many active partners and have seen significant design-win growth this year is set to increasingly contribute to our volume ramp-up.

We believe that these facts as well as our growing partnerships with respect to our other key complementary technologies including PowerVR video, Ensigma connectivity, Meta/MetaFlow connected processor, HelloSoft V.VoiP, across several diverse markets, will create the demand for the Group to achieve the target of around 1bn per annum unit shipments by 2016.

We also continue to see good demand in all of our IP offerings which is manifesting itself in an on-going active pipeline of licensing prospects. There are extensive on-going evaluations and engagements across all of our IP lines.Despite the current economic environment, Pure continues to showcase effectively and drive some of our key technologies. This business is expected to see improvements as the international revenues continue to grow and as the economic environment improves in the medium term. Pure is an integral part of the Group's strategy and focuses on targeting emerging consumer markets that can benefit from a driver and pathfinder approach. This has been successfully executed in digital radio in the UK with the focus now moving to international development. Our strategy will ultimately also lead to complementary areas involving home connectivity and the provision of useful remote Cloud services.The Board is confident that Imagination remains very well placed for further solid growth based on the strong momentum in and strengthening of its business with the active licensing pipeline, the secured and growing extensive SoC design wins, expected chip volume ramp and royalty growth, as well as the potential for Pure to exploit its strong product line-up, including its Cloud-connected solutions, internationally.

Hossein Yassaie

19 June 2012

Condensed Consolidated Income Statement

During this year and the previous year all results arise from continuing operations

Condensed Consolidated Statement of Comprehensive Income

Condensed Consolidated Statement of Financial Position

Condensed Consolidated Statement of Changes in Equity

Condensed Consolidated Statement of Cash Flows

Notes to the condensed consolidated financial statements

1. The financial information set out above does not constitute the company's statutory accounts for the years ended 30 April 2012 or 2011 but is derived from those accounts. Statutory accounts for 2011 have been delivered to the registrar of companies, and those for 2012 will be delivered in due course. The auditors have reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

2. Segment Reporting 

The group determines and presents operating segments based on the information that is provided internally to the board of directors, which is the Group's chief operating decision maker. The Group is organised into two operating divisions which offer different services to different industries and are managed separately: the Technology business and the Pure business. The costs of the corporate head office and other costs which are not controlled by the operating divisions are allocated to these divisions. These divisions are the operating segments that are reported to the chief operating decision maker and are the group's reportable segments. There is no inter-segment trading. There is no significant seasonality in the Group's operations although there is an increase in trading in the period leading up to Christmas.

Principal activities are as follows:

Technology business - the development of embedded graphics, video, display, multi-threaded processor and multi-standard broadcast receiver and connectivity technologies for licensing to semiconductor companies for incorporation into silicon devices.

Pure business - the development and marketing of consumer products to showcase the technologies of the Technology business and to develop new and emerging markets for such technologies.

Information regarding the operations of each reportable segment is included below. Performance is measured based on operating profit.

Revenue is reported by geographical area of sales as follows:

All revenue originated materially from the United Kingdom and Europe.

The operating profit, net assets and capital expenditure of the Group materially relate to the United Kingdom and Europe.

3. Adjusted profit

Adjusted profit is used by management to measure the performance of the business year on year by excluding non-recurring items, non-cash based share incentive charges and amortisation of intangible assets acquired from acquisitions.

4. The Directors do not propose the payment of a dividend (2011: Nil).

5. Taxation

There was a net tax charge in the period of £8,083,000 (2011: tax credit £2,918,000).

The tax charge comprises:

·; UK corporation tax charge of £4,540,000 (2011: £Nil) on profits for the period. This charge is offset by excess taxable deductions on the exercise of shares, the credit for which has been taken to reserves

·; a tax charge on overseas earnings not recoverable in the year of £1,416,000 (2011: £1,356,000)

·; a deferred tax charge of £3,061,000 relating to the utilisation of a deferred tax asset previously recognised in respect of historical tax losses, and the effect of changes in tax rates (2011: A deferred tax credit of £2,667,000 relating to the recognition of a deferred tax asset)

·; a deferred tax credit of £934,000 relating to the release of the deferred tax liability created when acquiring HelloSoft Inc and Caustic Graphics Inc in 2010 (2011: £312,000)

·; £nil received in cash in the period respect of an R & D tax credit (2011: £1,295,000)

6. Earnings per share

The basic earnings per share for the financial periods reported have been calculated on the weighted average number of shares in issue as shown in the table below. The diluted earnings per share have been calculated on the weighted average number of shares potentially in issue.

The normalised tax rate for 2011 replaces the tax credit of £2,918,000 with a tax charge of £4,253,000 based on an effective tax rate for 2011 of 26%.

7. The Group's full Report & Financial Statements will be made available to shareholders by 23rd August 2012. Additional copies will be available from the Company's registered office, Imagination House, Home Park Estate, Kings Langley, Hertfordshire WD4 8LZ.

8. The Annual General Meeting of Imagination Technologies Group plc will be held at Imagination House, Home Park Estate, Kings Langley, Hertfordshire WD4 8LZ at 11.00am on 14th September 2012.