Solid set of results from IMG this morning with some nice surprises.
Overall PTP were a bit above most estimates, with licensing the standout performer (as suspected), royalties volume was lower than expected but there will be 'substantial acceleration' in H2 - it is due to the timing of releases of the key devices (Android 4.0 and iOS5 and Kindle Fire etc) - the actual royalty revenue was within range though due to a higher ASP average (31c per chip vs. 27c at FY).
The big surprise was the naming of QUALCOMM as a licensee of the display IP - a major agreement and for IMG surely a 'foot in the door' . The license extension with ST/E (a Rogue licensee) was also intriguing (one of the presentation slides confirms ST/E has also licensed PowerVR 5 now)
The Tier 1 UCC licensee was not named but most are now agreed it is Broadcom.
Plenty of mentions for Android and Windows 8 (where IMG will be very strong via TI/Intel etc). Committed SoCs are up by 10 from the FY results and shipping SoCs by 6, further evidence of IMG still being in the rapid phase of expansion/development 'early days' as HY puts it.
Analyst meeting this morning followed by the IMG Roadshow this week.
Slides:
http://www.imgtec.com/corporate/presentations/Interim11/index.asp
Great stuff IMG!
Full rns (long):
http://www.imgtec.com/corporate/presentations/interim11/Interims-final-13-12-11.pdf
Summary
Adjusted pre-tax profit* jumps 52% to £15.3m; driven by strong licensing and
continued royalty revenue growth
Imagination Technologies Group plc (LSE: IMG, “Imagination”, “the Group”), a leading multimedia,
communications and embedded processor technology company, today announces results for the six months to 31
October 2011.
Financial highlights
Group half-year revenue up 28% to £56.3m (2010: £44.1m)
o Technology revenues increased 41% to £42.6m (2010: £30.3m)
Licensing revenues up 65%; high levels of activity across IP portfolio
Royalty revenue up 26%; 29% on a US dollar basis
o PURE £13.7m (2010: £13.8m)
Tough retail environment in UK offset by strong overseas growth
Adjusted pre-tax profit* up 52% to £15.3m (2010: £10.1m)
Reported pre-tax profit up 35% to £10.4m (2010: £7.7m)
Adjusted earnings per share* up 48% to 4.9p (2010: 3.3p**)
Reported earnings per share 3.0p (2010: 4.8p)
o Reduction due to a £3.9m tax credit in 2010 compared to a £2.7m tax charge in current year
o No UK tax payable, £18.3m deferred tax asset as at 31 October 2011
Cash balance increased to £56.1m at 31 Oct 2011 (30 April 2011: £49.4m)
* The reconciliation from reported results to adjusted results is set out in Note 6.
** Using normalised tax rate of 26%
Business highlights
Technology business
Royalties and design wins
Partner chips shipped in the period increased to 123m units (2010: 107m) and substantial acceleration
expected in the second half, post October product launches
Significant volume shipments in mobile phone, tablets/personal computing, personal media players, TV/STB,
digital radio and automotive markets
Significant growth in chip design wins with 125 active partner chips (2010: 98); 54 in production (2010: 42)
Average royalty rate strengthened due to enhancing mix of IP in each chip
Licensing
Strong licensing activities
o Addition of several new key partners including MStar, Ricoh, Qualcomm, Rockchipo Many new and extended agreements with existing partners including Sony, Intel, Mediatek, Renesas,
Samsung, Sigma, Realtek
15+ important agreements involving 22+ silicon IP cores – almost doubling over the same period last year
o Across all markets - mobile phone, digital TV/STB (set top boxes), Personal Media Player (PMP), mobile
computing/tablets/netbooks, in-car navigation/dashboard and industrial/enterprise equipment
o Included graphics, video, display, broadcast/connectivity and processor silicon IP cores and HelloSoft VoIP
technologies
Significantly increased and active pipeline of prospects across all IP families
Acquisitions
Integration of HelloSoft and Caustic Graphics progressing to plan. Positive initial commercial developments for
both businesses
PURE business
Continued softness in UK revenues offset by momentum in overseas growth
o On-going tight economic environment and cautious retailers in the UK
o Continued DAB adoption worldwide and growing demand for PURE‟s connected radios
Continued strategic development and path-finding role
o Focus on development of technologies for digital broadcast, connected devices and Cloud solutions
Key recent new products launched
o PURE Music cloud-based on-demand music service announced and very well received
o Highway in-car digital radio and audio adapter with Halfords as the initial exclusive retailer
Hossein Yassaie, Chief Executive, commented:
“The continued strong demand for our technologies has again resulted in a material jump in our
half-year revenues and profits.
“As demonstrated by very strong licensing revenue growth, our technologies, due to technical and
ecosystem advantages, are in demand and are being adopted more widely across new and existing
partners, creating a solid base for continued momentum in future volume growth.
“Most of these markets are still at early stages of transition and/or development and have large
growth potential, making our stated goal of 1bn annual unit shipment within five years a realistic
objective.
“Despite the current slow-down in consumer spending, PURE continues to effectively showcase and
help to drive key strategic technologies. We expect to see an improvement in this division over the
medium term, driven by international markets and new product opportunities.
“Whilst acknowledging the on-going challenges to the global economy, we remain confident of our
continued good progress in the current financial year and beyond, given the fundamental
strengthening of our business on the back of a very active and growing pipeline of licensing
prospects, the growth in design wins and the momentum in our chip volume.”
END
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