27th Nov 2007 07:01
Imagination Technologies Group PLC27 November 2007 27 November 2007 Imagination Technologies Group plc Interim profits and strong strategic progress Imagination Technologies Group plc (LSE: IMG), leading provider ofSystem-on-Chip (SoC) Intellectual Property (IP), today announces results for thesix months to 30 September 2007. Business Highlights • Licensing• Strong performance in securing new licenses - sequential increase over last four half year periods• Concluded six major new license agreements including: o Strategically important agreements with major international OEM (Original Equipment Manufacturer), Texas Instruments for future OMAP and NEC Electronics for digital AV o New deals with SigmaTel and SI Electronics and numerous extensions with existing partners• Key areas of mobile phone, PMP (Personal Media Players), digital TV, and amusement• Strong pipeline of prospects • Royalties and Design Wins• Partner chips shipped increased to 19.1m units (H1 2006: 13.3m units)• Over 70 mobile phone handsets launched/shipping from Nokia, Sony Ericsson, Motorola, Sharp, NEC, Fujitsu, Mitsubishi and other key players o Many further models in the pipeline• Maintained 70% DAB market share with products from all key brands• Leading supplier of 3D graphics technology for in-car navigation - many design wins in Japan• 58 partner chip design wins (H1 2006: 45) with 23 in production• Ultra Mobile PC (UMPC)/Mobile Internet Devices (MID), new TV and mobile TV chips approaching production • PURE Digital• Maintains number one overall radio supplier position in UK• Increased market share• Strong and diversifying roadmap underpins the growth o New range of products launched for Christmas period o Major products with Internet connectivity and portal support to be launched Financials • Group revenue up 23% at £25.6m (2006: £20.8m)• Technology revenues increased 52% on a $ basis to £14.1m• Royalty revenue up 23% on a $ basis to £5.2m• Licensing revenue up 77% on a $ basis to £8.9m• PURE Digital revenues increased by 8% to £11.5m (2006: £10.6m)• Very strong order book in place for Christmas period• Gross Profit up 44% to £17.0m (2006: £11.8m), gross margin up to 66% (2006: 57%)• Continued investment with underlying R & D spend up 13% to £12.7m• Profit before tax of £1.3m (2006: Loss £2.1m)• Earnings per share of 0.6p per share (2006: loss 1.1p)• Cash balance of £8.0m as at 30 September 2007 Hossein Yassaie, CEO, commented: "We have continued to make significant progress in realising both our financialand strategic goals and have now achieved profitability in both our Technologyand PURE businesses. We have also made excellent strategic progress with key newand existing partners. The full benefit and significance of these will becomeclear in the coming years. "Our technologies continue to be valued and increasingly deployed by the leadingplayers in important consumer markets. So far we have made inroads in some ofour target markets, with further progress in these and other new markets yet tocome. We are more confident than ever about the future prospects and are able tosee our way, within approximately three years, to multiple hundred millionannual unit shipments by our partners. "Based on the active pipeline of licensing opportunities, the expected volumeramp-up in partner chip shipments and the strong position of PURE Digital, weare confident of further significant progress in the current financial year andbeyond." Geoff Shingles, Chairman, commented: "This is a tremendous achievement for Hossein and his team to report continuedstrong progress and profitability across the Group. They have really shownperseverance and commitment over the last few years. Imagination is now wellpositioned to provide its key technologies to a wide variety of global consumermarkets as well as continuing to develop its leading position with PURE Digital." Enquiries: Imagination Technologies Group plc Tel (today): 020 7457 2020Geoff Shingles, Chairman Tel (thereafter): 01923 260 511Hossein Yassaie, CEOTrevor Selby, CFO College Hill Tel: 020 7457 2020Adrian Duffield/Ben Way Imagination Technologies Imagination Technologies Group plc is an international leader in the creationand licensing of semiconductor System-on-Chip Intellectual Property (SoC IP) andin the development and manufacture of DAB digital radios. The Group isheadquartered in the United Kingdom, with sales and R&D offices worldwide. Imagination's Technology Division (www.imgtec.com) creates market-leadingembedded graphics, video and display acceleration, multi-threaded processing andmulti-standard receiver technologies, complemented by dynamic and extensivedeveloper support programmes. These SoC IP products are licensed to a wide rangeof semiconductor and consumer electronics companies around the world and isbeing used in the following markets: digital radio and audio; mobile phonemultimedia; car navigation & driver information; personal navigation; ultramobile PC (UMPC) and mobile internet device (MID); digital TV & set top box; andmobile TV. Imagination's PURE Digital Division (www.pure.com) was established to developconsumer products to showcase the capabilities of Imagination's SoC IP. As afully integrated part of the Group, Pure has become the creator and manufacturerof the world's most popular DAB digital radios and is the number one supplier ofradios in the UK. Operational and Financial Review Imagination Technologies' business has seen significant progress this half yearin both financial and strategic terms. Both the Technology business and the PUREDigital business achieved growth and profitability. Financial Review Group revenues for the six months to 30 September 2007 were up 23% to £25.6m(2006: £20.8m), predominantly driven by strong growth in the Technologybusiness. Technology revenues, comprising licensing and royalties, increased by 39% to£14.1m (2006: £10.2m). Revenues for the Technology business are mainly US dollarbased and the weaker dollar has impacted revenues; on a like for like dollarbasis they increased by 52%. Licensing revenues were strongly ahead, up 60%, at£8.9m (2006: £5.6m); 77% on a US dollar basis. Historically, the timing oflicensing business, which is a key factor in generating future royalty earnings,has been uneven. However, there has now been a sequential increase in licensingrevenue over the last four successive half year periods. Royalty revenues were £5.2m, a 14% increase (2006: £4.6m); 23% on a US dollarbasis. The volume of partner chips shipping incorporating Imagination IP, whichgenerate the royalty revenue stream, increased from the actual figure of 13.3mfor the first half of last year to 19.1m this year, an increase of 44%. The 8% increase in PURE Digital business revenues to £11.5m (2006: £10.6m) wasin line with the Group's expectation. This business is seasonal with asignificant dependence on the Christmas period. Gross profit increased 44% to £17.0m (2006: £11.8m) with the overall grossmargin improving to 66% (2006: 57%). This results from both the revenue mixmoving towards the higher margin Technology business, which was 55% (2006: 49%)of Group revenues, and a general improvement in the underlying margins in boththe Technology and the PURE Digital businesses. Whilst the weaker dollar has impacted Technology revenues as indicated above,the effect on the Group's reported profitability has largely been offset bypurchasing components for the PURE Digital business in dollars. The weakerdollar has resulted in improved margins in that business. Overall expenses have increased by 14% to £16.0m (2006: £14.0m). The increase inunderlying expenses excluding the cost of share based incentives was 12%. R&Dspend increased by 15% to £12.7m (2006: £11.0m); 13% excluding share basedincentive costs. Investment has continued in the Group's overseas engineeringoperations in India and China in which the Group will continue to grow itsengineering capability on a cost effective basis. On-going R&D investment is crucial to ensure the business maintains its positionat the forefront of developing technology for its target markets. Whilst thevast majority of R&D expenditure remains focussed on developing leading edgetechnologies, an increasing element is being spent on ensuring that Imaginationsupports its partners in using the Group's technologies and in completingprojects with those partners. PURE Digital has also continued to invest in R&D. In addition to refreshing itsDAB digital radio product range with improved functionality and eco-friendlycharacteristics, significant development effort has been focussed on a newcategory of Internet radio products and an associated Internet portal, both ofwhich will be launched in the first half of 2008. Sales and administrative expenses increased by 10% to £3.3m (2006: £3.0m); 8%excluding share-based incentive costs. As the Group grows, it has continued toinvest in business infrastructure. The build up of the business developmentresources in Japan, US, Europe, Taiwan and Korea for the technology business hasfed through into the increased licensing business, the Group has seen over thelast two years. Similarly, Imagination has continued to build sales, support andlogistics resources to enable PURE Digital to grow in a controlled manner aswell as investing in the PURE brand. As a result of the strong gross profit growth, the Group has moved intoprofitability with an operating profit of £1.1m (2006: loss £2.2m). With thesignificant increase in revenues in this half, the Technology business is nowprofitable achieving an operating profit of £0.6m (2006: loss £2.6m). PUREDigital continues to be profitable with an operating profit of £0.5m (2006:£0.4m), although the bulk of PURE's profitability comes through in the secondhalf with the Christmas season. The pre tax profit was £1.3m (2006: loss £2.1m). After a small tax charge,earnings per share for the period were 0.6p per share (2006: loss 1.1p). Capital expenditure in the first half was £0.9m (2006: £0.8m) which was forcapital equipment for engineers, infrastructure and patents. Working capital hasincreased by £3.6m from March as a result of an increase in debtors; thecashflow from these will come through in the second half. This build up ofworking capital resulted in a net cash outflow from operating activities of£1.0m (2006: £0.5m outflow). The cash balance at the end of September was £8.0m,compared to £9.6m at 31 March 2007. As previously advised, the current financial year is being extended to a 13month period and therefore the second half of this financial year will be aseven month period finishing on 30 April 2008. Business Review Technology Business Update During the half year, the active pipeline of opportunities has led to thecompletion of both strategically important and financially significant licensingagreements. Imagination concluded six major new licensing agreements as well asa number of smaller extensions or upgrades from existing customers. Theagreements concluded were across key markets including mobile phone, personalmedia player (PMP) devices, TV/Digital audio/visual (AV) and amusement. Thiscontinues to demonstrate both the competitive advantages across the range ofImagination's technologies and their relevance for key market opportunities. Specifically, Imagination secured a strategically important partnership with amajor OEM who is deploying its new generation graphics and video cores in anumber of key products. The Company also signed a further agreement with TexasInstruments (TI) for a second member of its POWERVR SGX family which will bedeployed in a future OMAP platform. As a result, Imagination now has apartnership with TI across multiple generations of graphics technology whichwill see Imagination's technologies being deployed in an even more significantand strategic manner at TI. TI's leadership position in the wireless space makesthis extensive partnership very significant. Imagination's latest licence withNEC for key display technologies for the Digital AV market segment extends thisimportant partnership into an additional new market area. This demonstrates thestrength and relevance of the Company's technologies for this segment and willaccelerate its market position in this space. Other important agreements during the half included those with SigmaTel and SIElectronics. Additionally existing partners, including Renesas, Intel, NEC, whohave been very active in further deployment of Imagination's technologies,signed a number of smaller extension and upgrade options. In addition a numberof other key OEMs who buy chips incorporating IP from Imagination's licensingpartners have obtained software licenses directly from the Company to bettersupport their design processes. Partner chip unit shipments continued to grow and reached 19.1m units (2006:13.3m units) for the half-year period. The volume growth has been primarilydriven by the production ramp-up across the mobile phone, digital radio and3D-based car navigation systems with some initial contributions from PMP, TV andmobile TV segments. Imagination's products form a critical component in the vastmajority of high-end mobile phones utilising advanced graphics technology. Theincreasing number of new licences which Imagination has signed demonstrates thecompetitive advantage that its technology brings and reinforces the Company'sview of the eventual size of this market. The Company remains totallycomfortable with its forecasts for 2010 and beyond although as can often happenin the early stage of a market development the speed of the ramp-up inproduction can be variable and has been a little slower than anticipated.However, Imagination expects this growth to accelerate in the second half andbeyond as existing product volumes ramp-up, more products come to market and asImagination's target markets develop and expand. Imagination has visibility of very significant devices (currently at prototypeor pre-production silicon stage) at key partners which will enter productionlater in this financial year and early into 2007/08. These include devicesincorporating Imagination's first generation product offerings as well as itsmost advanced technologies including POWERVR SGX, multi-standard mobile TVreceiver solution using ENSIGMA UCC and META cores and multi-standard HD videodecoder solutions. Among the target markets for these forthcoming devices arethe mobile phone, UMPC/MID, PMP, mobile TV, car navigation/information and TVsegments. The volume ramp for shipping chips incorporating Imagination's technologies,while significant and growing, is still at an early stage. For any given periodthis rate will depend on the rate of market adoption of new technologies and thetiming and volume build up of OEM products targeting these markets.Imagination's technologies, as integrated in its partner's silicon chips, arecontinuously being designed into many end products. Given the mainstream existing and/or developing markets that Imagination istargeting and the increasing relevance of its technologies to these markets itis clear that across mobile phone, PMP, digital radio, car navigation/information, TV, UMPC/MID, and mobile TV segments the total available market(TAM) will grow to over 2 billion units. The proportion of this total marketsize that is relevant to technologies offered by Imagination, i.e. serviceableavailable market (SAM) to the Company, in terms of units, is increasingdramatically and is set to exceed 800 million units by 2010. Imagination believes it is well positioned to capture a significant portion ofthis available market based on the requirements of these markets, the ability ofits technology offerings to provide highly competitive solutions to addressthese requirements and its strong partnerships with world leading semiconductorcompanies. Imagination's strategy is aimed to achieve 200 million+ chip volume per annumwithin three years with the prospect of significant further growth beyond. Thisview is further supported by its partners' increasing commitment to theCompany's technology, both across multiple generations of each technology aswell as across Imagination's broadening technology offerings. The momentum behind new partner SoC design wins has continued with thecumulative number of committed partner SoCs increasing to 58 at September 2007,compared with 45 a year ago. These design wins represent active devices whichare either shipping or in design and are the drivers for future partner SoCshipments and therefore further royalty revenue growth. These committed devicesare diversified across Imagination's partners and key market segments: 21 formobile phone; two in digital radio; three for PMP, 10 for car & personalnavigation; four in UMPC/MID; seven in mobile TV; six for digital TV; and fivefor amusement and toys A review of Imagination's market segments is as follows:- In the mobile phone market segment, over 70 handsets shipping today are based onImagination's technologies; many of which are market-leading models with newcapabilities from the key OEMs. These now include handsets from Nokia, SonyEricsson, Motorola, NEC, Fujitsu, Mitsubishi, Panasonic and Sharp. Imaginationis seeing continued and accelerated demand for multimedia technologies in thismarket and expects to see strong continued progress and a healthy market sharegiven the calibre of its partners. Imagination estimates that during 2007 itsgraphics is being deployed in over 70% of handsets that are equipped withhardware acceleration. As expected the deployment of hardware acceleration israpidly increasing to a larger proportion of mobile phones as the demandincreases providing us with a fast growing serviceable available market (SAM) asalready highlighted. Imagination's strong partnerships should enable us tocontinue to effectively exploit this opportunity as it grows. In the DAB digital radio market Imagination's digital radio/audio IP platformtechnology has maintained its position with around 70% share. This market is nowexpected to start making faster progress outside UK with the advent of theenhanced DAB standard known as DAB+ that is beginning to be adopted in otherregions. Both from a technology licensing perspective as well as through PUREDigital, Imagination is well placed to continue to lead in this market. This year Imagination has also seen its technology deployed in the PMP market asthese products require improved interactivity and user interface capabilitiesand as a result require advanced graphics and video capabilities. Imaginationhas also secured a number of new partner SoCs that it expects will enable theCompany to obtain a significant market share in this segment. In the car navigation market, the vast majority of the new 3D-based navigationsystems in Japan continue to use partner chips which deploy Imagination'sPOWERVR technology. In addition to the long-standing relationship with Renesaswhich is progressing well, the new relationships Imagination has secured withother key players in this market such as NEC, Freescale and Centrality are setto result in significant market share in both traditional in-car navigationsystems and in the next generation of Personal Navigation Devices (PNDs), whichhave become very popular in recent years. Imagination's partnership with Intel in the personal computing/UMPC and MIDsegment has progressed well, with further significant additional projectscommitted during the year. Imagination still expects to see initial productshipments in this segment towards the latter part of its 07/08 financial year. With Imagination's current generation technology already shipping in some of theearly Far-Eastern T-DMB mobile TV markets, the shipment of devices featuring itsnew multi-standard mobile TV technology should see Imagination's technologydeployed in a widening range of geographic markets as these develop.Imagination's partners deploying this multi-standard mobile TV technologysupporting DVB-H and T-DMB are now at a stage that they are able to demonstrateleadership performance and extremely small footprint solutions to the key OEM'sworldwide. As a result Imagination expect that this will ultimately result insecuring a sizable market share in this segment as this market emerges andachieves volume. Imagination's continued commitment to the TV segment is starting to bear fruitand will make a contribution to overall volume and royalty ramp-up in thecurrent year. Given the further designs win the Company has secured during thefirst half, Imagination expects to be able to build volume in this market nextyear and beyond. PURE Digital Update PURE Digital maintained its leadership of the DAB market and has continued toimplement its effective strategy for this market to: o take advantage of the digital nature of DAB in order to deliverproducts which provide advanced and novel features, o diversify its product range within the digital radio to all thekey market segments, and o deliver quality low-cost products to both secure its growingshelf space and also to drive the DAB market forward. As part of the above, PURE Digital has launched a range of new products inpreparation for the Christmas period including its eco-friendly range,EcoPlusTM, that reduce both stand-by and operational power consumption anddeploy environmentally friendly components and packaging. This initiative hasbeen extremely well received by all the key retailers. PURE Digital also launched its new Evoke-1S range which incorporates manyadvanced features such as IntellitextTM for better data access. This modelraises the bar in the market by utilising advanced OLED (Organic Light EmittingDiode) graphical display technology in order to provide a crystal clear displayfor reading from any angle. Products are now available with PURE Digital'sChargePAKTM technology which now offers effective battery operation for up to 24hours. Additionally PURE Digital has just announced Highway, its first in-carDAB solution. This is self install, easily integrating into existing car audiosystems without the need for audio wiring, and also supports iPod connectivityallowing both digital radio and digital music playback in the car. Amonginitiatives to broaden into new market segments, PURE Digital has launched itssuccessful Chronos product equipped with iPod docking and the new £49 Siestaclock radio as the entry level product to its successful clock radio range. Other countries are also beginning to embrace digital radio. Ireland has adoptedthe DAB standard and this market is now developing. The advent of the enhancedDAB standard, DAB+, is also accelerating this process with many other countriesincluding Australia and Germany now adopting this enhanced DAB standard. PUREDigital already has advanced developments in support of DAB+ and is wellpositioned to take advantage of this deployment in due course. France appears tobe leaning toward T-DMB which is a technology Imagination already supports andcan be supported by PURE Digital when required. PURE Digital is actively developing products for emerging markets whichcomplement its existing activities. These developments are strongly linked inwith Imagination's overall technology strategy and are targeted to both supportand enhance its technology offerings in these areas. A key area is internetconnectivity which is a main focus for both Imagination as a whole as well asPURE Digital. The Company is developing the necessary internet portaltechnologies to enable future PURE Digital devices to receive new user friendlyservices including Internet radio, music download and access to interactive andon-demand services such as Podcast and 'Listen Again'. As a result of its continuing strong product line up and extensive ranging withretailers, PURE Digital looks set for a very strong Christmas quarter withexisting shipments and backlog for this period already ahead of the first halfrevenue figure. As a result PURE Digital looks well placed for another recordfinancial year. Outlook Following consecutive growth over the last four half year periods, thefirst-half of 2007/08 again saw a significant licensing revenue growth. This isclear indication of the market relevance and competitive advantage ofImagination's technologies. The new significant partnerships in the halfcombined with the expansion of the existing ones are not only strong testimoniesto the strength of the Company's offerings but they also underpin future chipvolume ramp-up and royalty revenue growth. The ongoing requirements of Imagination's existing partners, combined withgrowing interest from new customers gives the Company considerable confidencethat its technologies will continue to be adopted in the future. Whilst thetiming and level of licensing revenues may be difficult to forecast accurately,Imagination expects to see an active second-half for licensing opportunities andfurther progress. The Company expects significant chip volume growth for the next few years as itstechnology deployment continues across key market segments, given the increasingnumber of end-user products coming to market and the expected rapid growth inthe emerging markets which its technologies are targeting. This is driven by thefact that the markets Imagination targets will shortly have addressable marketopportunities in the 10's or 100's of million of units each, with this growthset to continue. The total available market (TAM) size across the segments Imagination istargeting is set to exceed 2 billion by 2010. The serviceable available market(SAM) across all the segments all the markets available to Imagination throughthe word-class partnerships that it has established and the relevance of itstechnologies, is very significant indeed and is estimated to exceed 800 millionunits. These facts justify Imagination's aim of reaching 200 million+ annualvolume by 2010. With digital radio technology becoming a de facto feature in most home audio andmusic systems in the UK, and in due course in other geographic markets,Imagination is confident that PURE Digital will be able to maintain its strongprogress through innovative and leading products. For the second half, theproduct and retailer ranging plans are firmly in place and PURE Digital has avery strong order book that it is fulfilling at this time. Imagination alsoexpects PURE to continue to launch new innovative and market-changing productsduring this year which will further drive its growth plans as well as deploymentof Imagination's key technologies. The first half saw significant progress in financial performance with bothImagination's Technology and PURE Digital businesses delivering growth andprofitability. Overall the Company expects these trends to continue as itslicensing pipeline remains active, volume ramp and royalty growth continues andPURE Digital takes advantage of its strong order book and product ranging forChristmas. Hossein YassaieChief Executive27 November 2007 Interim Results for the six months to 30 September 2007 CONSOLIDATED INCOME STATEMENT Half year to Half year to Year to 30 September 30 September 31 March 2007 2006 2007 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 Revenue 25,645 20,787 48,062 Cost of sales (8,626) (8,963) (20,913) Gross profit 17,019 11,824 27,149 Research and development expenses (12,698) (11,029) (23,419)Sales and administrative expenses (3,263) (2,959) (6,250)Total operating expenses (15,961) (13,988) (29,669) Operating profit 1,058 (2,164) (2,520) Financial income 218 121 259Financial expenses (23) (19) (40)Net financing income 195 102 219 Profit before taxation 1,253 (2,062) (2,301) Taxation (26) (237) (244) Profit after taxation attributable to 1,227 (2,299) (2,545)equity holders of the parent Earnings per share - Basic 0.6p (1.1p) (1.2p) - Diluted 0.5p (1.1p) (1.2p) CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE Half year to Half year to Year to 30 September 30 September 31 March 2007 2006 2007 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 Exchange differences on translation of foreign (2) (1) (16)operationsChange in fair value of available for sale - - 872investmentTotal income and expense recognised directly in (2) (1) 856equityProfit for the period 1,227 (2,299) (2,545) Total recognised income and expense for the period 1,225 (2,300) (1,689)attributable to equity holders of the parent CONSOLIDATED BALANCE SHEET At 30 September At 30 September At 31 March 2007 2006 2007 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 Non-current assetsIntangible assets 4,813 4,754 4,872Property, plant and equipment 3,998 3,572 3,791Investments 7,027 6,155 7,027 15,838 14,481 15,690Current assetsInventories 3,194 4,392 3,636Trade and other receivables 16,823 9,228 11,260Cash and cash equivalents 8,003 5,514 10,818 28,020 19,134 25,714Current liabilitiesBank overdraft - - (1,259)Current portion of long term (24) (29)borrowingsTrade and other payables (9,046) (8,675) (7,495) Net current assets 18,950 10,459 16,931 Non-current liabilitiesOther interest bearing loans and (520) (543) (529)borrowings Net assets 34,268 24,397 32,092 Equity Called up share capital 21,843 20,788 21,748Share premium account 50,609 44,686 50,321Other capital reserve 593 394 593Warrant reserve 830 1,029 830Merger reserve 2,402 2,402 2,402Revaluation reserve 6,414 5,542 6,414Translation reserve (14) 3 (12)Retained earnings (48,409) (50,447) (50,204)Total equity 34,268 24,397 32,092 CONSOLIDATED CASH FLOW STATEMENT Half Year to Half Year to Year to 30 September 2007 30 September 2006 31 March 2007 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000Cash flows from operating activities Profit before taxation 1,253 (2,062) (2,301) Adjustments for:Depreciation and amortisation 775 813 1,622Net financing income (195) (102) (219)Loss on sale of property, plant & equipment - - 15Share-based remuneration 568 229 718Operating cash flows before movements in working 2,401 (1,122) (165)capitalDecrease/(increase) in inventories 442 (947) (191)(Increase)/decrease in receivables (5,525) 162 (1,794)Increase/(decrease) in payables 1,723 1,770 619 Cash generated by operations (959) (137) (1,531) Interest paid (23) (19) (40)Taxes paid (22) (366) (447) Net cash flows from operating activities (1,004) (522) (2,018) Cash flows from investing activitiesInterest received 176 114 250Acquisition of intangible assets (155) (158) (683)Acquisition of property, plant and equipment (829) (443) (990)Proceeds on disposal of property, plant and - - -equipmentNet cash used in investing activities (808) (487) (1,423) Cash flows from financing activitiesProceeds from the issue of share capital 383 296 6,891Repayment of borrowings (9) (14) (28)Net cash from financing activities 374 282 6,863 Net (decrease)/increase in cash and cash (1,438) (727) 3,422equivalents Effect of exchange rate fluctuation (118) (143) (247) Cash and cash equivalents at the start of the 9,559 6,384 6,384period Cash and cash equivalents at the end of the 8,003 5,514 9,559period NOTES: 1. The same accounting policies and methods of computation havebeen applied in preparing this interim financial information as used in the mostrecent set of annual financial statements. 2. The summarised profit and loss account for the half year to30 September 2007 comprises the consolidated results of Imagination TechnologiesGroup plc, Imagination Technologies Ltd and its subsidiaries. 3. This half-yearly financial information has been prepared inaccordance with IAS 34 "Interim Financial Reporting" as adopted by the EU. 4. Segmented Reporting The Group operates as two business segments: the Technology business, comprisinglicensing and royalty revenues, and the PURE Digital business. The segmentinformation in respect of these businesses is presented below. Primary reporting format - business segments At 30 September 2007 At 30 September 2006 At 31 March 2007 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000RevenueTechnology business 14,150 10,178 21,749PURE Digital business 11,495 10,609 26,313 25,645 20,787 48,062Operating profit/(loss)Technology business 593 (2,582) (4,369)PURE Digital business 465 418 1,849 1,058 (2,164) (2,520)Total assetsTechnology business 25,982 19,068 22,694PURE Digital business 9,873 9,033 7,892Unallocated assets 8,003 5,514 10,818 43,858 33,615 41,404Total liabilitiesTechnology business 3,087 4,767 4,259PURE Digital business 5,983 3,908 3,265Unallocated assets 520 543 1,788 9,590 9,218 9,312 Net assets analysisTechnology business 22,895 14,301 18,435PURE Digital business 3,890 5,125 4,627Unallocated assets 7,483 4,971 9,030 34,268 24,397 32,092 Secondary reporting format - geographical segments Revenue is segmented by geographical area of sales as follows: At 30 September 2007 At 30 September 2006 At 31 March 2007 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 United Kingdom & Europe 12,969 12,453 30,267Asia 4,217 3,162 7,551North America 7,836 4,652 8,719Rest of the world 623 520 1,525 25,645 20,787 48,062 All revenue originated from United Kingdom and Europe. The operating profit and net assets of the Group materially relate to the UnitedKingdom and Europe. 5. The tax charge in the period represents tax deducted atsource on overseas earnings not recoverable in the period. No corporation taxcharge has arisen due to accumulated tax losses being in excess of the profitearned during the period. 6. The basic earnings per share for the financial periodsreported have been calculated on the weighted average number of shares in issueas shown in the table below. The diluted earnings per share has been calculatedon the weighted average number of shares potentially in issue. There were nopotentially dilutive ordinary shares in issue at 30 September 2006. Half Year to Half Year to Year to 30 September 2007 30 September 2006 31 March 2007 (Unaudited) (Unaudited) (Audited) Profit/(loss) attributable to shareholders £1,227,000 (£2,299,000) (£2,545,000) Basic weighted average number of shares in issue 217.9m 207.3m 211.1mEffect of dilutive securities:Employee incentive schemes 13.1m - -Diluted weighted average number of shares potentiallyin issue 231.0m 207.3m 211.1m 7. Reconciliation of Movements in Shareholders' Funds Half year to Half year to Year to 30 September 2007 30 September 2006 31 March 2007 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 Equity shareholders' funds at the start of the period 32,092 26,172 26,172Total recognised income and expense 1,225 (2,300) (1,689)Share-based remuneration 568 229 718Issue of new shares 383 296 6,891Equity shareholders' funds at the end of theperiod 34,268 24,397 32,092 8. Related Parties The nature of related parties as disclosed in the consolidated financialstatements for the Group as at and for the year ended 31 March 2007 has notchanged. Further there have been no significant related party transactions inthe six month period ended 30 September 2007. 9. Risks and Uncertainties Other than as highlighted within this interim management report, there has beenno change to the principal risks for the Group during the six month period ended30 September 2007. These risks are outlined in the Annual Report for the Groupfor the year ended 31 March 2007. 10. The financial information contained in this interim report doesnot constitute statutory accounts within the meaning of Section 240 of theCompanies Act 1985. The figures for the half year to 30 September 2007 and halfyear to 30 September 2006 are unaudited. The consolidated statutory accounts ofImagination Technologies Group plc for the year ended 31 March 2007 prepared inaccordance with IFRS have been filed with the Registrar of Companies. Theauditors' report on those accounts was unqualified and did not contain anystatement under Section 237 (2) or (3) of the Companies Act 1985. Responsibility statement of the directors in respect of the half-yearlyfinancial report This Interim Management report is the responsibility of, and has been approvedby the directors of Imagination Technologies Group plc. Accordingly, thedirectors confirm that to the best of their knowledge: • the condensed set of financial statements has been prepared in accordance withIAS 34 Interim Financial Reporting as adopted by the EU; • the interim management report includes a fair review of the informationrequired by: (a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication ofimportant events that have occurred during the first six months of the financialyear and their impact on the condensed set of financial statements; and adescription of the principal risks and uncertainties for the remaining sixmonths of the year; and (b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related partytransactions that have taken place in the first six months of the currentfinancial year and that have materially affected the financial position orperformance of the entity during that period; and any changes in the relatedparty transactions described in the last annual report that could do so. By order of the Board Geoff Shingles Chairman 27 November 2007 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Imagination Technologies Group