12th Apr 2006 07:01
Imagination Technologies Group PLC12 April 2006 Imagination Technologies Group plc Trading Update Imagination Technologies Group plc ("Imagination"), the leading provider ofSystem-on-Chip (SoC) Intellectual Property (IP), today announces its tradingupdate for the year ended 31 March 2006. The Company plans to announce itspreliminary results on Wednesday 24 May 2006. 1- Volume Shipment, Royalty & Partner SoC Progress Update During the second half we have seen significant growth in unit shipment volumeas more partner chips ramped up in volume or entered production. While we do notyet have final confirmed reports from our partners for the last quarter, we nowestimate a volume of around 8m units for the second half of the financial yearjust completed compared to 3.2m units in the first half. The total volume forthe full year is expected to be around 11m units compared to 2.5m units for theprevious year. As a result we expect the royalty revenue during the second halfto be around 2.5 times that of the first half (an increase of around 150%). We started the year with seven partner SoCs in production or shipping. This hasnow grown to 13 shipping across mobile multimedia, digital radio, carnavigation, TV and mobile TV markets. The number of announced mobile phonehandsets using our PowerVR technology has now risen to over 15, includingmodels from NEC, Fujitsu, Mitsubishi, Panasonic, Sharp, Sony Ericsson, andMotorola. We expect further handset launches over the next few months includingmodels from other major European and US OEMs. In the growing DAB digital radiomarket our digital radio/audio IP platform technology has maintained itsposition with around 70% market share and over 130 end-user products with manyfrom top brands. This market has so far been mostly UK centric but is nowbeginning to make progress elsewhere particularly with the advent of T-DMBmobile TV which is based on the DAB standard. 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 and volume is increasing in this market with the transitionto standard factory-fit. In the TV market, our partnership with Sharp has nowresulted in the first LCD TV shipments in Japan utilizing our technology. Inthe mobile TV market our technology, shipping in Samsung handsets, is leadingthe way in the first commercial mobile TV deployment in Korea and China wherethe T-DMB standard has been adopted. 2- Licensing Progress Update During the second half, we concluded a number of new licensing and supportagreements worth over $10m. Whilst a proportion of this business has beenrecognized as revenue in the financial year to 31 March 2006, a significant partis carried forward. Among these deals four were significant including the twopartnerships already announced with Renesas and Centrality. The two other dealswere concluded in March, one with a new partner and the second as an extensionto an existing relationship. Further details on these will be announced in duecourse. These deals follow on from agreements closed in the first half withIntel, Renesas, Sharp and Philips. Importantly we now have three top-tensemiconductor companies as lead partners for our next generation graphics/videotechnology, PowerVR SGX. We made significant strategic progress during the second half with our licensingpartnerships and we continue to have a strong pipeline of prospects. However,the nature of the industry does mean that the timing of the closure of licensingbusiness will continue to be difficult to predict. Delays in the closure ofsome of the deals has meant that the overall value of the licensing business inthe second half has been lower than expected. However, with the strong prospect list we do see real opportunities for ourrange of technologies including; PowerVR SGX, the new family of next generationgraphics/video technology where we have already secured a number of top-tensemiconductor companies as lead partners; our mobile TV technology with its lowpower and unique multi-standard capability supporting key standards includingT-DMB, DVB-H and ISDB-Tss; PowerVR MBX mobile graphics where we are seeinglicense extension demands from existing partners as well as interest from secondtier semiconductor customers; and our TV technologies where our newmulti-standard video decoding IP core (PowerVR MSVDX) is strongly positionedalong side our demodulation and audio processing. 3- PURE Digital Update In the second half of the year, PURE Digital has maintained its leadership ofthe growing DAB radio market with around 30% of the UK market share. Itcontinues to bring to market a wide range of technically advanced and qualityproducts, such as the feature rich EVOKE-3 radio, and has broadened its range inkey categories including micro systems, clock radios, and life style products.Volume growth has been achieved by wide product ranging amongst the keyretailers, including Marks & Spencer, a strong Christmas period and throughoverseas growth notably in Scandinavia. We expect PURE Digital to continue its solid progress and its leadership in theDAB market as this segment continues to grow in the UK. It is also starting toprogress in the rest of Europe. For the current financial year, PURE Digitalhas secured strong product ranging among the key retailers and is poised wellfor Christmas 2006. 4- Financial Overall group revenues in the second half are expected to be up around 70%compared to the first half, and 25% up on the corresponding period last year,resulting in a much reduced loss in the second half compared to the first half. Although we are seeing significant growth in royalty revenues, we expect overalltechnology revenues for the year to be similar to last year due to the timing ofthe closure of licensing business noted above. The estimated 150% increase inroyalty revenues for the second half over the first half, means that there willhave been a three fold increase for the year relative to last year. We expectstrong royalty growth to continue as an increasing number of chips come tomarket. The pipeline of active licensing prospects for our key technologiesincluding graphics, mobile TV and TV is continuing to provide us with strongopportunities going forward. Second half revenues for PURE Digital were up around 35% on the same period lastyear, based on the strong Christmas period and the launch of a broader range ofproducts. Overall PURE revenues for the year are expected to be up by around24% on the previous year with the gross margin percentage only marginally lower. Cash resources were £6.4m as at 31 March 2006. 12 April 2006 Imagination Technologies Group plc 01923 260511Hossein Yassaie, CEOTrevor Selby, CFO College Hill Associates 020 7457 2020Adrian Duffield/Nick Elwes This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Imagination Technologies Group