Full statement is here:
http://www.imgtec.com/corporate/presentations/interim12/Half_Year_Results_Statement_12Dec2012.pdf
The overall tone was bullish, and I am sure this will be reflected in the analysts CC later this morning.
A number of things were striking about these results:
1. The royalty volume, at 237m was well ahead of most estimates and showed the strength/breadth of contribution outside of the big 2 (Apple and Mediatek) customers.
2. The asp worked out at 26cents/chip (blended) , due to the large Mediatek ramp, and the outlook for this is stable for the rest of the FY (due to increased contribution from higher asp chips). Some years ago, most would have expected much lower asp by the time IMG reached 500m chips/year.
3. Licensing was a concern for many but it worked out higher than many predicted. For the first time, IMG refer to 'subscription licenses' in the statement. Obviously that relates to the biggies such as Apple , Sony etc.
So lack of license rns is no longer an indicator of reduced licensing.
4. Opex was higher than predicted but this is a short-term effect of IMG sucessfully recruiting the required engineers for the scaling-up of the business. Opex growth will slow substantially in H2.
5. IMG chose to specifically address the Intel and TI issues (obviously with permission from those two companies) - the strength and depth of the relationships was emphasised. There is a difference between press perception and what actually happens behind the scenes.
6. Further high profile product launches are expected this FY from key OEMs in the mobile, tablet and STB/TV areas. ( I would expect news from LG and ST in regard to TV/STB areas in early 2013.)
7. Design wins in the Chinese tablet market (white-box) was emphasised .
8. The all important figure of SoCs: now have 146 design wins, 69 of which are shipping/about to ship and 77 in-design (future royalties).
Well done IMG.
Financial highlights
- Group half-year revenue up 27% to £71.4m (2011: £56.3m)
- Strong Technology performance maintained with revenues increased 34% to £57.3m (2011: £42.6m)
- Royalty revenue jumps 66% to £39.1m (2011: £23.6m)
- Another strong level of 1H licensing revenues of £17.8m (2011: £19.0m, 2010: £11.6m)
- Pure revenue improved to £14.1m (2011: £13.7m)
- Slightly improved UK retail but mixed international markets
- Strong Technology performance maintained with revenues increased 34% to £57.3m (2011: £42.6m)
- Adjusted pre-tax profit* up 10% to £16.8m (2011: £15.3m)
- Reported pre-tax profit of £10.5m (2011: £10.4m)
- Adjusted earnings per share* 5.4p (2011: 4.9p)
- Reported earnings per share 3.0p (2011: 3.0p)
- Cash balance of £54.5m (30 April 2012: £66.3m)
- £12m investment in new building and £5m of strategic investments
* Adjusted results exclude non-recurring items, non-cash based share incentive charges and amortisation of intangible assets acquired from acquisitions. The reconciliation from reported results to adjusted results is set out in note 6.
Business highlights
Technology business
Royalties and chip/end-product design wins
- Partner chips shipped up more than 90% to 237m units (2011: 123m)
- Significant volume shipments and momentum in all mobile segments, tablet/personal computing, gaming, TV/STB & automotive
- Including very strong share in lower-end handset and emerging markets growth
- Average royalty rate reduced as expected with overall revenue effect very positive
- Strong growth in chip design wins with 146 active partner chips (2011: 125); 69 in production (2011: 54)
- Growing number of end-products across key OEMs in all regions including China
- Other high profile products from several key OEMs in the pipeline with a number close to launch
- First ray tracing solution targeting professional market launched and receiving very positive feedback from developers
Licensing
- Maintained good licensing activities across all of our IP including
- Many new and extended agreements with existing partners including Allwinner, Greenplug, MediaTek, Realtek, Renesas, TI, Toumaz
- Also a number of on-going long-term subscription licenses with certain key partners
- Several new partners added including Entropic, Ineda and Socle
- 12 important agreements involving around 20 silicon IP core licenses
- Addressing all our markets - mobile phone and tablets/mobile computing with both segments across high, mid and low-end categories, TV/STB, PMP/Camera, in-car navigation/dashboard, home connectivity and automation, digital radio and industrial/enterprise equipment
- Including graphics, video, broadcast/connectivity and processor silicon IP cores, as well as V.VoIP technologies
- Continued active pipeline of prospects across all IP families
Pure business
- UK revenues marginally up and international revenues variable reflecting local markets
- On-going DAB adoption worldwide and growing demand for connected audio
- Continued strategic development and pathfinding role
- Focus on development of technologies for digital broadcast, connected devices and home cloud solutions
- Key recent new products launched to drive and complement Imagination key IP
Hossein Yassaie, Chief Executive, commented:
"An increasingly diverse range of product shipments, across our many partners and in all regions, have resulted in more than 90% growth in unit shipments to 237m for the first half – ahead of our target. On average around 1.5 million devices are now being shipped with our IP daily, despite the global economic environment.
"The Group is continuing to build on this momentum and with further significant chip and end-product level design wins anticipated we now expect the full year unit shipments to be close to the 500m unit mark.
"Our 'smart' technologies continue to be adopted 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 depressed consumer spending, Pure continues to showcase effectively and help to drive strategic connectivity technologies as part of our overall plans. Whilst the tight economic environment is as expected impacting Pure's performance in the short-term, we anticipate seeing a financial improvement in this division over the medium term, driven by new product opportunities and international markets.
"We remain 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"
"The Group is continuing to build on this momentum and with further significant chip and end-product level design wins anticipated we now expect the full year unit shipments to be close to the 500m unit mark.
"Our 'smart' technologies continue to be adopted 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 depressed consumer spending, Pure continues to showcase effectively and help to drive strategic connectivity technologies as part of our overall plans. Whilst the tight economic environment is as expected impacting Pure's performance in the short-term, we anticipate seeing a financial improvement in this division over the medium term, driven by new product opportunities and international markets.
"We remain 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"
