24th Nov 2005 07:01
Imagination Technologies Group PLC24 November 2005 Imagination Technologies Group plc Interim Results for the six months to 30 September 2005 Imagination Technologies Group plc, leading provider of System-on-ChipIntellectual Property (IP), today announces results for the six months to 30September 2005 Business Update • Royalties - significant progress as revenues start to come through • 37 partner chips in development/production, up 50% in a year • 11 devices in production, 10 in prototype, 16 in pre-silicon development • 3.2 million partners' chips shipped in H1, up 500% - first 3 handsets shipping - 70% market share in DAB - 100+ end-user products shipping • Further significant volume growth to come - Additional handsets, including DoCoMo models, from - NEC, Fujitsu, Mitsubishi, Panasonic, Sony-Ericsson, Sharp, Motorola - Car navigation to move to factory fit - Continuing growth in digital radio - Sharp LCD TVs using our technology to ship in the near future • Licensing - good progress in business development although limited number deals completed in the period • Imagination's IP is increasingly central to partners' roadmaps • 5 new agreements concluded: - Intel, Sharp, Renesas, Philips, Frontier Silicon - Strong pipeline of prospects - although timing of closure still difficult to predict accurately • PURE Digital - maintains leadership position in the DAB market • In H1 maintained market share with increased volume • Strong Christmas quarter • Expect significant revenue growth in H2 compared to last year Financials • Group revenue £12.8m (2004: £13.1m) • Royalty revenue up 200%+ to £1.5m (2004: £0.5m) • Licensing revenue at £4.0m (2004: £5.9m) down 31% • PURE Digital revenue up 8% at £7.3m (2004: £6.7m) • Continued investment with R & D spend up 10% to £10.0m • Loss before tax of £4.8m (2004: £2.9m) • Cash reserves of £8.5m (2004: £7.5m) Geoff Shingles, Chairman, commented: "During the first half, we have seen the beginning of a significant volumeramp-up in partner chip shipments and acceleration of royalty revenue growth. Itis now very evident that this momentum will continue as more end-user products,in particular mobile phone handsets in the short-term come to the market inJapan, Korea and later in western markets. "This will be complemented by continued growth in digital radio and carnavigation markets and, in the near future, by LCD TV shipments using ourtechnology. The upward trend for new partner chip design wins will continue,further building the base for medium term royalty revenues. "The active pipeline of licensing opportunities is giving us confidence that ourtechnologies will continue to be needed and adopted by existing and newpartners, but the timing of closure of new agreements is as usual difficult todetermine accurately." 24 November 2005 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 2020Nick Elwes/Adrian Duffield Operational and Financial Review Overview The first half has seen a significant increase in System on Chip ('SoC') volumeshipments from our partners compared to the same period last year. The volumegrowth of over 500% to 3.2 million SoCs in the first half has been primarilydriven by the production ramp-up of the first few chips in the mobile segment aswell as the DAB market and 3D-based car navigation systems. Specifically themobile volume growth has been driven by only three initial handsets in Japan andKorea. We expect this rapid progress to continue as volume from both existingchips and new chips builds in several market segments, in particular in themobile phone market where we expect to see major handset shipments begin in theEU and US alongside Japan. Shipments in the TV market are also set to begin toramp-up during the second half as our partner Sharp begins LCD TV shipment basedon our TV platform technology. The momentum behind new partner SoC design wins has continued, in all key marketsegments, with growth of over 50% in the number of committed partner SoCs whichnow totals 37. These design wins are the drivers for future partner SoCshipments and therefore further royalty growth. We have concluded further licensing and customisation agreements with Intel,Sharp, Renesas, Philips, and Frontier Silicon, across a variety of marketsegments. Although the overall level of licensing business concluded in thefirst half of the year has been lower than expected the size and breadth of ourprospect pipeline is very encouraging. The complex decision making process, thefocus on existing projects, market timing and caution in the semiconductormarket have all meant that many deals are still taking longer to close. Thestrong and growing pipeline of discussions and activities with key players forboth existing and new technologies continues to demonstrate the serious interestin our offerings and the real relevance of our IP to important markets. PURE Digital remains the number one supplier in the digital radio market with anincreasingly comprehensive product range. It continues to make significantprogress in developing the digital radio market whilst maintaining a significantmarket share. We expect a very strong Christmas period to contribute tosignificant growth in the second half compared to last year. Financial Review In the six months ended 30 September 2005, revenue was £12.8m which was slightlydown on the £13.1m for the same period last year. This total comprisedtechnology revenues of £5.5m (2004: £6.4m) and systems revenues of £7.3m (2004:£6.7m). In the technology business, there has been strong growth in royalty revenue. Thenumber of chips shipping incorporating our technology has increasedsignificantly from 0.6 million for the first half last year to 3.2 million inthe current first-half year leading to royalty revenues in the period increasingby over 200% to £1.5m. Based on the quality of our partners, the increasingnumber of chips our partners are designing using our IP and the large size ofthe target markets, we expect this momentum in royalty growth to continue forthe foreseeable future. Technology licensing revenues were £4.0m which was 31% down on the first half oflast year. First half licensing revenue has historically tended to be lowerthan in second half and we do expect to see increased technology revenues comingthrough in the second half based on the number of discussions in progress. Our systems business under the PURE brand remains the leading DAB radio companyin the world. Revenues for the first half were 8% up on last year which wassatisfactory considering the difficult retail climate in the first half. Gross profit for the first half was £7.7m (2004: £8.3m). The gross marginpercentage in both the technology business and the systems business was similarto the same period in the previous year with the lower overall margin of 60%(2004: 63%) reflecting the higher proportion of systems revenue. The spend in R & D of £10.0m was 10% up on last year. The vast majority of thisspend is in developing leading edge technologies often in conjunction with alead partner, completing existing projects with partners, and ensuring wesupport our partners in using our technologies. This spend is vital to ensurethat our partners, a significant proportion of which are top 10 semiconductorcompanies, are able to fully exploit our IP and maximise our future royaltyflows. On the business development front, we have invested in a new US salesactivity for our technology business. The loss before taxation of £4.8m (2004: £2.9m) reflects mainly the increasedinvestment in R & D and sales activities. The tax charge of £0.1m waswithholding tax on overseas earnings; an R & D tax credit no longer beingavailable to be reclaimed as a cash refund. The balance sheet has been strengthened by a placing of 15.0 million shares inJuly which raised £9.1m for additional working capital. Whilst royalties arebuilding up, this was seen as a sensible measure to ensure that we can continuewith the necessary investment in technology and partner support and providesufficient working capital for PURE to exploit the profitable Christmas period.The cash balance at the end of September was £8.5m which compares with £7.7m atMarch 2005. With effect of 1 April 2005, Imagination's shareholding in Frontier Silicon has,under the transition to IFRS, been restated with the investment increasing froma cost of £0.6m to a fair value of £6.2m. Business Update Overview Technology Business Update The key elements and drivers for our technology business are:- i- Partner SoC volume shipments which drive today's royaltiesii- New SoC design wins which result in deployment of our IP in silicon products and drive royalties in 1.5 to 2 yearsiii- Licensing our IP to existing or new partners which drives market penetration of our IP through new partner SoCs The progress during the first half and outlook for each of these elements is asfollows:- Partner SoC Volume Shipment and Target Markets We started the first half with seven partner SoCs in production or shippingacross four key markets; one in digital radio (Frontier), three in mobilemultimedia (Renesas and Intel), two in car navigation (Renesas) and one in STB/TV (Frontier) segments. It is these devices that enabled a dramatic increase inthe volume of SoCs shipped to over 3.2m units during the first half.Approximately 60% of the volume was in mobile multimedia (phone and PDA) segmentand the rest were mainly in digital radio and car navigation. Currently the number of partner devices in production or shipping has risen to11 which includes two new devices in mobile phone segment (Texas Instrument andRenesas), one T-DMB mobile TV device (Frontier) and the first Sharp TV SoC forLCD TV's. These devices target major markets and we expect to see significantcontinued growth in volume during the second half of 2005/6 and beyond. In the mobile phone segment only three handsets based on our PowerVR graphics(two in Japan and one in Korea) were shipping during the first half. The numberof announced handsets using our PowerVR technology has now risen to over 10.These include six new DoCoMo FOMA 902 handsets from NEC, Fujitsu, Mitsubishi,Panasonic, Sony-Ericsson, and Sharp that have started/are starting shipment thisquarter using OMAP2 or SH-Mobile application processors as well as the newMotorola MS550, based on SH-Mobile and now shipping in Korea. We expect further handset launches over the next few months including those frommajor European and US OEMs targeting western markets. The mobile phone marketis fast approaching 1 billion units per year and we believe that over time40-50% of this market is a very relevant target for our multimedia technologies.Given that our existing semiconductor partners include six of the top 10, wehave the potential to benefit from a significant portion of this market. In the digital radio market we continue to have over a 70% market share via ourpartnership with Frontier Silicon whose Chorus device has been selected by manymanufacturers including top brands such as Sony, Philips, Sharp and PUREdigital. Currently over 100 shipping end-user products are using our technology.We expect the UK DAB market to exceed two million units in 2005 and reach closeto six million by 2008. In the car navigation market the vast majority of the new 3D-based navigationsystems in Japan use the Renesas NaviCore family of chips which deploy ourPowerVR technology. In Japan this market is now transitioning from an "aftermarket" to "factory-fit" which is helping the ramp-up of volume. The forecastfor the car navigation market in 2005 is for around 4 million units in theJapanese market, which tends to demand advanced technologies first. As a resulthalf of the Japanese markets is now 3D-based. The 2005 forecast for the rest ofworld car navigation market is six million which generally follows Japanesetrends. Over time the car navigation system is expected to become a standardfeature of every car leading to significant volume. In the set-top and TV market our TV technologies were originally deployed byFrontier Silicon targeting the set-top market with their Logie device whichshipped in a number of Freeview boxes. We also have a partnership with Sharpwhich has licensed our TV platform for use in its LCD TV products. Sharp is theleader in LCD TV market with a market share of around 50% in Japan and 30%worldwide in this segment. We can now report that the first SoC developedthrough this partnership has just entered production and we expect LCD TVs usingour technology to start shipment in the very near future. The worldwide marketfor LCD TV in 2005 is expected to reach 17 million. Key players includingSamsung and Sharp have forecast that the LCD TV market will exceed 100 millionunits by 2010. New SoC Design Wins Across the mobile phone, TV, mobile TV, digital radio/audio, car navigation, andamusement market segments, we now have a total of 37 partner SoCs committed bypartners, up from 24 at the same time last year. Eleven of these are now inproduction and shipping, although with four starting production very recentlythere was little or no contribution to first half. The target markets for the 37 committed partner SoCs are: 20 in mobile phone/PDA, seven in STB and TV, two in digital radio, three for car navigation, two inamusement and three for mobile TV segments. These devices constitute a verystrong basis for both our participation in the relevant markets and continuedfuture growth of royalty revenue as volume ramps up and more devices enter intoproduction. We expect the number of shipping devices to increase from 11 toaround 14 by end of 2005/6 with particular increase in mobile and TV focusseddevices. Given our partners' activities in deploying the IP that they have alreadylicensed from us and also the ongoing active and strong pipeline of newlicensing discussion, we expect the number of partner SoC design wins tocontinue its steady growth in the second half and beyond. Licensing and Customisation Progress Update For the half-year to 30 September 2005, we concluded five new licensing/customisation agreements across the mobile, TV, Digital radio and car navigationsegments. Intel was the first lead partner to license PowerVR SGX, our new generation ofprogrammable multimedia technology. This technology sets the benchmark for theprogrammable graphics and video solutions and provides scalability acrossmobile, consumer, and computing segments. We are seeing very strong interestfrom existing and new partners for this technology and expect it to securestrong market penetration. The half year also saw extension of our relationshipwith Sharp which is focussed on the TV segments. Additionally Renesas andPhilips licensed further technologies for car navigation and mobile segmentsrespectively. Our extended license agreement with Frontier Silicon was in thedigital radio area. A number of factors impacted the level of progress in new license closure duringthe first half, which is historically weaker than second half for industryseasonal and holiday reasons. Among the key influencing factors were the factthat a number of existing partners were focussed on ramp-up of the firstgeneration devices or further SoC designs using already licensed IMG IP,certain new partners' internal complex decision making processes appeared toneed more time for conclusions, and finally market timing in new areas. Howevera healthy pipeline of engagements and discussions, with increased level ofactivities and seriousness since September, with respect to both our existingand new technologies is helping to drive future licensing business. Additionallyas we said at the end of last financial year, we have now completed theestablishment of a small but effective marketing and sales team in US which isbeginning to bear fruit with new opportunities. The key areas that we are seeing strong and active engagements are mobilemultimedia (graphics/video), TV, mobile TV, car navigation, and digital radio/audio markets. PURE Digital Update During the first half, PURE Digital has maintained its leadership of the DABmarket through a strategy that has aimed to address three key goals. Firstly ithas continued to deliver products which provide advanced and novel featurestaking advantage of the digital nature of DAB and the emergence of digitalaudio. In this regard it has launched new or enhanced products with featuressuch as pause/rewind/record, digital storage (SD Card), MP3 integration, USBupgradeability and an EPG (Electronic Programme Guide). EVOKE-3 for examplebrings together all such advanced features in an elegant and iconic design withindustry-leading sound quality. Secondly, it has diversified the product rangebeyond portable/kitchen radios enabling other traditional consumer audiosegments with DAB while increasing usability and other advanced features.Specifically PURE's new micro system product, DMX-50, integrates many advancedfeatures as well as CD, MP3 and digital storage making it an industry leadingstep in this segment. Thirdly PURE has also ensured it enables quality low-costproducts for mainstream markets so that its brand can secure maximum shelf spaceand reach most consumers. As a result of these PURE Digital now has over 25% market share in UK and hasbeen able to increase its volume shipment accordingly as the digital radiomarket becomes mainstream. European shipments have been steadily increasing andnow account for around 10% of PURE Digital's business and we expect these togrow further as the digital radio markets in these regions develop. In the UK,all major stores and retailer including John Lewis, Argos, Dixons, Comet, andTesco now sell PURE Digital products. Additionally PURE Digital's range wasselected by M&S as it enters the consumer electronics markets with qualityproducts. The Christmas orders have been and continue to be at record levels andinitial sell-through figures from the channel are very encouraging. We thereforeexpect a strong Charismas quarter well ahead of previous years. Outlook and the Future It is now clear that our strategy is beginning to show the first signs of itstrue potential to deliver very significant royalty revenues. The first half SoCvolume growth, while dramatic in comparison to previous periods, is just thebeginning of a trend. This trend will continue as in the short-term moreend-user products, based on announced partner chips, come to the market and alsoas in the medium term more SoCs from our partners enter production drivingfurther OEM design wins. We expect to see continued SoC volume growth in mobilephone, digital radio, car navigation and TV markets. The shipments in the mobile segment are expected to grow very significantlyduring the second half and beyond as many handsets already announced in Japanand Korea ramp up in volume. In due course these will be further enhanced byproduct shipments from major OEM's for the western markets. For the TV segmentour partnership with Sharp Corporation has seen the first SoC enter productionwhich will in the near future lead to LCD TV shipments using our TVtechnologies. With respect to securing new licensing business, we have an active and growingpipeline of potential partners with many serious discussions at an advancedstage. We are therefore confident that our technologies for mobile multimedia,TV, mobile TV, digital radio/audio and car navigation are in demand by many keyindustry players. However whilst we are starting to get better visibility of thetiming of royalty volumes as more SOCs enter production, it remains difficult topredict the timing of licensing deals accurately. The directors anticipate a much improved second half performance compared to thefirst half with significant growth in licensing, royalty and PURE revenuestreams. Hossein Yassaie Chief Executive 24 November 2005 Interim Results for the six months to 30 September 2005SUMMARISED CONSOLIDATED INCOME STATEMENT Half year to Half year to Year to 30 September 30 September 31 March 2005 2004 2005 (Unaudited) (Unaudited) (Unaudited) £'000 £'000 £'000 Revenue 12,758 13,076 30,583 Cost of sales (5,104) (4,798) (12,947) Gross profit 7,654 8,278 17,636 Research and development expenses (9,999) (9,099) (19,381)Sales and administrative expenses (2,626) (2,190) (4,953)Total operating expenses (12,625) (11,289) (24,334) Operating loss (4,971) (3,011) (6,698) Financial income 195 151 299Financial expenses (41) (15) (39)Net financing income 154 136 260 Loss before taxation (4,817) (2,875) (6,438) Income Tax (127) 301 805 Loss after taxation (4,944) (2,574) (5,633) Loss per share - basic (2.5p) (1.4p) (3.0p) - diluted (2.5p) (1.3p) (3.0p) CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENDITURE Half year to Half year to Year to 30 September 30 September 31 March 2005 2004 2005 (Unaudited) (Unaudited) (Unaudited) £'000 £'000 £'000Loss for the period (4,944) (2,574) (5,633)Exchange differences on translation of foreign - 3 2operationsTotal recognised income and expense for the (4,944) (2,571) (5,631)period SUMMARISED CONSOLIDATED BALANCE SHEET At 30 September 2005 At 30 September 2004 At 31 March 2005 (Unaudited) (Unaudited) (Unaudited) £'000 £'000 £'000Assets Non-current assetsIntangible assets 4,792 5,273 4,949Property, plant and equipment 3,573 3,547 3,747Investment 6,155 613 613 14,520 9,433 9,309Current assetsInventories 2,958 1,864 2,332Trade and other receivables 7,305 7,518 7,192Cash and cash equivalents 8,527 7,463 7,670 18,790 16,845 17,194Current liabilitiesTrade and other payables (5,054) (5,065) (8,111) Net current assets 13,736 11,780 9,083 Non-current liabilitiesLong-term borrowings (576) (601) (588) Net assets 27,680 20,612 17,804 Equity Called up share capital 20,447 18,870 18,905Share premium account 44,001 36,285 36,415Other capital reserve 313 297 313Warrant reserve 1,111 1,126 1,111Merger reserve 2,402 2,402 2,402Revaluation reserve 5,542 0 0Translation reserve 2 3 2Retained earnings (46,138) (38,371) (41,344)Total equity 27,680 20,612 17,804 SUMMARISED CONSOLIDATED CASH FLOW STATEMENT Half Year to Half Year to Year to 30 September 2005 30 September 2004 31 March 2005 (Unaudited) (Unaudited) (Unaudited) £'000 £'000 £'000Cash flows from operating activities Loss before tax (4,817) (2,875) (6,438) Adjustments for: Depreciation and amortisation 1,029 935 1,885 Interest income (154) (136) (260) Loss/(gain) on sale of property, plant & 1 - (104)equipment Share-based remuneration 150 86 172Operating cash flows before movements in (3,791) (1,990) (4,745)working capital (Increase)/decrease in inventories (626) 139 (329) (Increase) in receivables (68) (2,963) (2,609) (Decrease)/increase in payables (2,912) (1,269) 2,228 Cash generated by operations (7,397) (6,083) (5,455) Interest paid (41) (15) (39)Taxes (paid)/ received (133) 849 805 Net cash flows from operating activities (7,571) (5,249) (4,689) Cash flows from investing activitiesInterest received 150 96 216Acquisition of intangible assets (166) (205) (371)Acquisition of property, plant and equipment (672) (1,303) (1,770)Net cash used in investing activities (688) (1,412) (1,925) Cash flows from financing activitiesProceeds from the issue of share capital 9,128 7,006 7,172(Repayment of)/ proceeds from borrowings (12) 620 614Net cash from financing activities 9,116 7,626 7,786 Net increase in cash and cash equivalents 857 965 1,172 Cash and cash equivalents at the start of the 7,670 6,498 6,498period Cash and cash equivalents at the end of the 8,527 7,463 7,670period NOTES: 1. The summarised profit and loss account for the half year to 30 September2005 comprises the consolidated results of Imagination Technologies Group plc,Imagination Technologies Ltd and its subsidiaries. 2. E U law (IAS Regulation EC 1606/2002) requires that the next annualconsolidated financial statements of the company, for the year ending 31 March2006, be prepared in accordance with International Financial Reporting Standards(IFRSs) adopted for use in the EU ("adopted IFRSs"). This interim financial information has been prepared on the basis of therecognition and measurement requirements of IFRSs in issue that either areendorsed by the EU and effective (or available for early adoption) at 31 March2006 or are expected to be endorsed and effective (or available for earlyadoption) at 31 March 2006, the Group's first annual reporting date at which itis required to use adopted IFRSs. Based on these adopted and unadopted IFRSs,the directors have made assumptions about the accounting policies expected to beapplied when the first annual IFRS financial statements are prepared for theyear ending 31 March 2006. In addition, the adopted IFRSs that will be effective (or available for earlyadoption) in the annual financial statements for the year ending 31 March 2006are still subject to change and to additional interpretations and thereforecannot be determined with certainty. Accordingly, the accounting policies forthat annual period will be determined finally only when the annual financialstatements are prepared for the year ending 31 March 2006. The comparative information presented in these accounts has been restated andrepresented under IFRS. In respect of financial instruments, the Group's policy,as permitted under IFRS1, has been to adopt IAS32 (Financial Instruments:Disclosure and Presentation) and IAS39 (Financial Instruments: Recognition andMeasurement) from 1 April 2005. Comparatives have therefore not been restated toreflect the requirements for IAS 32 and IAS 39 and continue to be prepared inaccordance with UK GAAP for the comparative period. The impact of this is thatwith effect from 1 April 2005, the investment has been revalued from a cost of£613,000 to a fair value of £6,155,000. 3. Segmental analysis With effect from 1 April 2005, the Group has reported its results on a segmentalbasis. Half Year to 30 September 2005 (Unaudited) £'000Revenue Technology business 5,518 Systems business 7,240 12,758 Operating profit Technology business (5,273) Systems business 302 (4,971) 4. The tax charge in the period represents tax deducted at source onoverseas earnings not recoverable in the period. No corporation tax charge hasarisen due to accumulated tax losses being in excess of the profit earned duringthe period. For the comparative period to 30 September 2004, the credit fortaxation includes £548,000 of research & development tax credit offset by taxdeducted at source on overseas earnings not recoverable in the period. 5. The basic earnings per share for the financial periods reported havebeen calculated on the weighted average number of shares in issue as shown inthe table below. The diluted earnings per share has been calculated on theweighted average number of shares potentially in issue. There were nopotentially dilutive ordinary shares in issue at 30 September 2005. Half Year to Half Year to Year to 30 September 2005 30 September 2004 31 March 2005 (Unaudited) (Unaudited) (Unaudited) Loss attributable to shareholders (£4,944,000) (£2,574,000) (£5,633,000) Weighted average number of shares in issue 196.0m 184.8m 186.8m 6. Reconciliation of movements in shareholders' funds Half year to Half year to Year to 30 September 2005 30 September 2004 31 March 2005 (Unaudited) (Unaudited) (Unaudited) £'000 £'000 £'000 Equity shareholders' funds at the start of the 17,804 16,091 16,091periodTotal recognised income and expense for the period (4,944) (2,571) (5,631)attributable to equity shareholdersShare-based remuneration 150 86 172Movement in revaluation reserve 5,542 - -Issue of share capital 9,128 7,006 7,172Equity shareholders' funds at the end of theperiod 27,680 20,612 17,804 7. Reconciliation of UK GAAP to IFRS Consolidated Income Statement for thehalf year to 30 September 2004 Half year ended 30 September 2004 (Unaudited) UK GAAP Effect of transition to IFRS IFRS Goodwill Share-based amortisation remuneration £'000 £'000 £'000 £'000Revenue 13,076 - - 13,076Cost of sales (4,798) - - (4,798)Gross profit 8,278 - - 8,278 Research and development expenses (9,030) - (69) (9,099)Sales and administrative expenses (2,682) 509 (17) (2,190)Total operating expenses (11,712) 509 (86) (11,289) Operating loss (3,434) 509 (86) (3,011) Financial income 151 - - 151Financial expenses (15) - - (15)Net financing income 136 - - 136 Loss before taxation (3,298) 509 (86) (2,875) Income Tax 301 - - 301 Loss after taxation (2,997) 509 (86) (2,574) Loss per share - basic (1.6p) (1.4p) - diluted (1.5p) (1.3p) 8. Reconciliation of Equity from UK GAAP to IFRS Consolidated Balance Sheetas at 30 September 2004 At 30 September 2004 (Unaudited) UK GAAP Goodwill Reclassification IFRS amortisation £'000 £'000 £'000 £'000Assets Non-current assetsIntangible assets 3,720 509 1,044 5,273Property, plant and equipment 4,591 - (1,044) 3,547Investment 613 - - 613 8,924 509 - 9,433Current assetsInventories 1,864 - - 1,864Trade and other receivables 7,518 - - 7,518Cash and cash equivalents 7,463 - - 7,463 16,845 - - 16,845Current liabilitiesTrade and other payables (5,065) - - (5,065) Net current assets 11,780 - - 11,780 Non-current liabilitiesLong-term borrowings (601) - - (601) Total assets 20,103 509 - 20,612 EquityCalled up share capital 18,870 - - 18,870Share premium account 36,285 - - 36,285Other capital reserve 297 - - 297Warrant reserve 1,126 - - 1,126Merger reserve 2,402 - - 2,402Translation Reserve - - 3 3Retained earnings (38,877) 509 (3) (38,371) Total equity 20,103 509 - 20,612 9. The financial information contained in this interim report does notconstitute statutory accounts within the meaning of Section 240 of the CompaniesAct 1985. The figures for the half year to 30 September 2005 and half year to 30September 2004 are unaudited. The consolidated statutory accounts of ImaginationTechnologies Group plc for the year ended 31 March 2005 prepared under UK GAAPhave been filed with the Registrar of Companies. The auditors' report on thoseaccounts was unqualified and did not contain any statement under Section 237 (2)or (3) of the Companies Act 1985. The conversion of the results for the year to31 March 2005 under UK GAAP to an IFRS basis was explained in an announcementmade on 16 November 2005. A copy of this Interim Report will be sent to all shareholders. Copies of thisReport and the Annual Reportfor 2005 can be obtained from ImaginationTechnologies Group plc, Imagination House, Home Park Estate, Kings Langley,Hertfordshire WD4 8LZ. Telephone 01923 260511. 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