Imagination 14/15 interims

IMG posted interims yesterday, which were well received by the market (judging by the 16% SP rise on the day)
The headliners on the day were future prediction of 30-40% EBIT margin ie. where it should be for an IP company (currently around 12-15%), strong emphasis on reduced cost-base growth (aiming for 5-10%) , better than expected MIPS numbers. Non-MIPS ASP was 28c (vs.26c last year), due to the mix , and MIPS 5.1c .
Other interesting bits were the mention of Loongson, and the fact that 2 companies now each contribute >10% of total revenue: Apple around 30% as usual and another US company (?BCOM) 16%.
In some ways it feels like ground zero again, but this time IMG has done the heavy spending in the '3 legs' and is 'good to go' for the next 5 years. Here's hoping...

CC (good performance from HY and even RS, no laryngitis this time!)
http://www.imgtec.com/Investors/audio/index.asp

Presentation:
http://imgtec.com/investors/presentations/161214/IMG-Half-yearly-Presentation-2014.pdf

Results:

http://imgtec.com/investors/presentations/161214/IMG-Half-yearly-Report-2014.pdf

Summary:

Imagination Technologies Group plc (LSE: IMG, “Imagination”, “the Group”), a leading multimedia, processor and communications technology company, today announces results for the six months to 31 October 2014.

Overview
• Financial performance for H1 in line with expectations, with strong progress in licensing and design-wins
• Current financial year represents a transitional year from heavy investment in strategic product lines to a position where the core products are all either generating or moving towards generating revenues
• Complete product line now enables increased leverage of full capabilities in many existing or developing and emerging markets
• Group anticipates a much stronger H2 financial performance

Financial highlights
• Technology revenues increased 3% to £72.8m (2013: £70.8m)
- Licensing revenues up 11% to £16.0m (2013: £14.4m)
- Royalty revenues robust at £56.3m (2013: £56.2m)
• Group half-year revenues of £82.2m (2013: £85.2m)
• Adjusted operating profit* of £5.0m (2013: £12.4m); Reported operating loss of £9.0m (2013: profit £1.4m)
• Adjusted earnings per share* 1.3p (2013: 3.8p); Reported loss per share 3.9p (2013: loss 0.4p)

Business highlights
• Growing customer engagement with significant agreements signed with over 20 partners during the period
 Strong licensing progress – 49 licenses signed (2013: 43)
 Agreements signed with partners including Ali, Avago, Broadcom, Celeno, Fujitsu, Intel, Lantiq, Loongson, MediaTek, Siklu, Texas Instruments, Toshiba and Toumaz
• Significant increase in new committed SoCs with over 35 SoC design-wins added which will contribute to future royalties
• Royalty revenues on track, with both MIPS shipments and average royalty rate above expectations
• Operating costs continue to be tightly managed now that the heavy investment is over and actions taken have led to refocus of Pure business. Rate of operating cost growth reduced dramatically from previous years

Outlook
• Based on active pipeline of prospects, continue to target 10% growth in licensing revenue in FY2015
• On track to meet market expectations for royalty revenue, with strong performance in average royalty rate and MIPS volumes offsetting flat non-MIPS royalty units
• In line with previous guidance, FY2015 underlying operating costs around 10% higher than FY2014
• Expansion of operating margins in medium-term with longer-term target of 30%-40%

Hossein Yassaie, Chief Executive, commented:

“I am pleased with our progress in the first half. During this transitional year for the Group we have seen continued progress in licensing, robust royalty revenues and disciplined cost control. As a result we remain confident of achieving our targets for the year.

“Now that our product lines are complete and the heavy investment phase is over, we expect to see lower rates of operating cost growth going forward and increased focus on financial returns. Our market relevant and complementary technologies combined with our increased scale enable us to take advantage of the natural leverage to improve the financial performance of our business. As a result we now expect to see significant expansion in operating margins in the medium-term.”

END

IMG announces Power VR Series 7

HY mentioned at the AGM that Series 7 would be announced soon, here we are:

London, UK – 10^th November, 2014 – Imagination Technologies (IMG.L) introduces PowerVR Series7, the latest generation of the PowerVR Rogue GPU architecture and an entire line-up of GPUs which scale from 16 to 512 arithmetic logic unit (ALU) cores, providing unprecedented scalability, efficiency and performance.

PowerVR Series7 is architected for the broadest range of next-generation products from wearables and IoT through automotive, mobile and consumer electronics devices, up to high-performance GPU compute. Highly configurable, scalable GPUs address market requirements across these segments, with new features such as full hardware virtualization and Android Extension Pack (AEP) support with hardware tessellation, as well as proven features such as geometry shaders, PVR3C™ triple compression technology for bandwidth/power savings, and full ASTC (adaptive scalable texture compression) support. Series7 also includes Imagination’s advanced PowerGearing™ technology for dynamic core and cluster level power management.

Tony King-Smith, EVP marketing, Imagination, says: “With graphics-enabled devices entering all aspects of everyday life, it is no longer possible to offer just point solutions. Each new generation requires a wavefront of GPUs from low to high end, to address the broad spectrum of applications. With PowerVR Series7, we have not only honed our architecture but also our IP support with tools such as our Design Optimization Kits for rapid physical and performance optimization. These allow our partners to choose right-sized solutions based on the optimum balance of power, performance and area for every segment.”

Says Jon Peddie, president, Jon Peddie Research: “With PowerVR Series7, Imagination is offering advanced new features such as hardware tessellation that will enable the company to make aggressive inroads into a broad range of new markets. With virtualization in the new cores, Imagination is looking beyond providing powerful graphics and compute performance toward providing even more value in helping to secure their customers’ SoCs.”

Superior multi-cluster scalability

The PowerVR Rogue architecture is scalable via threads, cores and clusters. Rogue uses clusters of up to 32 multi-threaded ALU cores, working in close cooperation with dedicated texture units on the same region of the screen. This approach ensures that all accesses to memory are correlated and efficient, unlike older multi-core approaches where many cores all work in an uncoordinated way on different regions of the screen which results in many distributed accesses to memory and inefficient DRAM usage. With their highly scalable and efficient architecture, PowerVR Series7 GPUs provide unrivalled performance and efficiency.

Significant architectural performance improvements

Series7XT and Series7XE GPUs achieve up to a 60% architectural performance increase on the latest industry standard benchmarks compared to equivalent configurations of previous generation PowerVR Series6XT/6XE GPUs, maintaining and extending PowerVR’s reputation as the most efficient, highest performance, lowest power GPU. Application developers can take advantage of the significant parallel processing power in Series7 for both graphics and GPU compute tasks. Series7 architectural enhancements include:

·         Instruction set enhancements including added co-issue capability, resulting in improved application performance and increased GPU efficiency

·         New hierarchical layout structure that enables scalable polygon throughput and pixel fillrate improvements in addition to increased clock frequencies

·         GPU compute setup and cache throughput improvements resulting in up to 300% better parallel processing performance

Series7XT: dramatically scalable performance from 100 GFLOPS to 1.5 TFLOPS 

The PowerVR Series7XT family of GPUs is designed to provide the best possible performance and user experience for next-generation user interfaces, 3D gaming and GPU compute. Series7XT targets mid-range to high-end applications including smartphones and tablets, UltraHD TVs and set-top boxes, gaming consoles and high-performance server compute. Featuring AEP and 10-bit YUV support as standard, Series7XT GPUs are based on two to sixteen clusters, each containing 32 multi-threaded multi-tasking ALU cores, with high-end configurations capable of achieving teraflop level performance. GPUs include the two cluster GT7200, four cluster GT7400, six cluster GT7600, eight cluster GT7800, and 16 cluster GT7900, with other configurations available.

Series7XE: optimized for area, efficiency and feature configurability

Series7XE GPUs are based on a single scalable cluster of up to 32 multi-threaded multi-tasking ALU cores, enabling the latest games and apps on power and cost constrained devices such as entry-level to mid-range mobile devices, TVs, set-top boxes and wearables, as well as a broadening range of products such as photocopiers, printers, consumer and other enterprise devices which increasingly require high-quality UIs at competitive price points. Series7XE are the smallest GPUs that are AEP compatible, yet like the high-performance Series7XT family can be configured with options such as 10-bit YUV support for HEVC, making them ideal for applications like entry level UltraHD TVs. GPUs include the GE7400 with 16 cores and the GE7800 with 32 cores.

Hardware virtualization and multi-domain security

In an increasingly connected world, security is a growing concern, with any system only as secure as its weakest link. This is true at the macro level, device level and SoC level. Within the SoC, especially as the industry moves to heterogeneous processing architectures, each processing unit must have built-in security. Imagination’s forthcoming heterogeneous security architecture is designed to address the privacy and security needs of evolving and emerging connected applications. As part of this, PowerVR Series7 joins the MIPS Warrior CPUs in supporting full hardware virtualization, and is optimized to support multiple independent security contexts and execution domains.

CPU-agnostic hardware virtualization in the GPU enables customers in segments such as automotive to build systems where the dashboard and infotainment system can run independently and reliably on the same platform. For Android phones and tablets, hardware virtualization can keep a user’s personal banking data separate from other data such as health information collected by a wearable device.

Feature scalability for optimized designs

With Series7, users can select the specific features they need for their design, and avoid the cost of including features they don’t need:

·         Android Extension Pack (AEP): customers targeting Android applications can leverage the AEP with full hardware tessellation and native OpenGL® ES 3.1 support* in the new GPUs. The new pack ensures maximum content compatibility with the Android 5.0 ‘Lollipop’ release.

·         DirectX 11 Feature Pack: for customers targeting Microsoft operating systems, this pack for Series7XT GPUs provides a full DirectX 11.2 feature set, building on Imagination’s many years of market-proven support for DirectX.

·         OpenCL™ FP64 Feature Pack: for customers leveraging Series7XT for high-performance server compute, this pack provides a scalable 64-bit floating point co-processor per cluster.

Software and tools support

Imagination provides developers with free access to the cross-platform PowerVR SDK, designed to support all aspects of 3D graphics application development; as well as tools and utilities that ease development of 3D graphics and GPU compute applications. Developers can join the PowerVR Insider community, download the SDK for free and interact with the community of 50,000+ members through developer forums athttp://community.imgtec.com/developers/powervr/.

Hypervisors for any SoC using PowerVR Series7 GPUs will be able to utilize the virtualization in the GPUs to implement true heterogeneous security.

Availability

PowerVR Series7XE and Series7XT GPUs are available for licensing now. Imagination is already engaged with multiple PowerVR Series7 licensing partners including two tier-ones. Physical Design Optimization Kits (DOKs) for Imagination’s PowerVR Series7XT and Series7XE GPUs will also be available, offering customers the flexibility to optimize for power, performance and area (PPA). Imagination DOKs are comprised of optimized reference design flows, tuned libraries from partners, characterization data and documentation. Contactinfo@imgtec.com for more information.

About PowerVR GPUs

Imagination’s PowerVR graphics processors (GPUs) are the de facto standard for mobile and embedded graphics and GPU compute. The PowerVR GPU family leads the market in technological capability, roadmap breadth and ecosystem, and is by far the most adopted and shipped technology of its kind. PowerVR graphics IP comprises a comprehensive portfolio of the industry’s leading GPUs, supporting a broad range of applications. See: http://www.imgtec.com/powervr/graphics.asp.

Apple Q4

Apple posted yet more record figures last night. iPhone figures beat expectations at 39.3m sold (with 2w contribution from the new iPhone 6/plus) whilst iPad met expectations at 12.3m sold. iPod Touch numbers will be rolled into a new category (from Q1, the December quarter) called 'other products' and this will include Apple TV and Apple Watch.
So another 50m+ volume contribution to IMG's H1. Apple Q1 15 is obviously going to be huge.

Transcript:
http://seekingalpha.com/article/2576865-apples-aapl-ceo-tim-cook-on-q4-2014-results-earnings-call-transcript?part=single

Royalty numbers for IMG look to be fairly static for IMG this FY, despite Apple's best efforts. Mediatek is starting to ship the MT6595 (and MT8135 for tablets) in decent volumes but pretty much all their other high volume smartphone chips are Mali, and this trend continues into 2015 with the recently announced MT6735 (LTE). We await evidence of IMG recovering market share at MTK, and given the timescales indicated by HY, I would be expecting announcements at MWC in February. So we are looking at FY 15/16 before royalty volume growth begins again. I would also be hoping to see solid evidence of Ensigma volume growth in 15/16. As far as MIPS goes, we need some big wins before anyone actually believes the talk (not just ecosystem initiatives).

Post AGM Thoughts

Back at Padders en route home with the inevitable delays on FGW. Some things never change.

Despite my desire to give everyone a right royal kicking today for failing to provide what we want when we want it in terms of PR, unit delivery, license creation, etc once you get in front of the Pied Piper of Kings Langley it's hard not to fall under his spell. Some things never change.

Even when you still feel from his answers that he is a little oversensitive to suggestions that things seemed to have been presented in a less than straight bat way you can still be swayed. Some things never change.

When you hear that there are great things coming over the hill in a couple of years you can't help but think you've heard something similar a few times before. Some things never change.

You enjoy the demo room, some parts of which are now like dear, dusty old friends, you meet the usual suspects, who by now you see more often than many of our oldest friends, you enjoy the hospitality. Some things never change.

But some things change. Some things make you feel there is a difference in the air. Sometimes you sense that this time, yes THIS time, the shiny thing you see over there just beyond your clear sight is actually the light at the end of the tunnel and not the jackdaw's bauble that's been intermittently catching your eye.

Is this one of those things ? Who knows, these things are so fraught with obstacles that it's hard to see the finishing line for them.

Not this year, that's for sure, be in no doubt that H1 is going to be an absolute disaster in terms of financial performance. But H2 will see a substantial improvement (over an admittedly woeful H1) and next year will see some level of improvement from already signed older licenses in many fields (yes! we will finally see some Ensigma units).

But if you're hoping that next year will be Shangri La then you may also be disappointed.

The huge number of licenses signed last year are almost worthless per deal (£38m for 100+ licenses) there is huge hope for results from more of these than normal.

Teams are in the East repairing relationships, things are positive in terms of tech news from the west, we have repelled some patent trolling mo-fo's apparently and we have enough cash to pay for the last building and any further work we need to do in terms of cash flow

We are, I believe, truly 2 years from majorly improved results. Some things never change.

Initial thoughts

While they still vote on stuff. Seems GS is staying on the board ??? I thought he was off and wished him happy retirement earlier, do I feel silly now.

I've been boiling in the run up to this AGM to the point where I was mouthing off  on the train while we were sat opposite one of the board members !

I don't think I've entirely had many/any of my serious concerns satisfied properly really as I really don't think SHY gets what we are all concerned about. I am sure he feels we are just continually wanting to see the SP going up and are only ever cheesed off when it doesn't, and that is a basic misunderstanding of what so many of us feel about this company we have invested so much time and money in. I still think he exhibits a very odd sense of naïveté with his belief that the best will always win out (check out MALI boss) and that customers will always be rational (check out Samsung, Intel, Mediatek, etc boss) but his enthusiasm remains undimmed and infectious.

You've got to love him. I just wish he'd be a bit more of a bastard when it comes to the business end of thing or at least hire a few more people around him who are not "so nice".

We need more bad to the bone folks.

hammerd2 questions

As SHY is always totally swamped afterwards I tried to make my in meeting questions specific to him in the expectation that the other concerns can be referred to less busy people during the informal part of the process.

And so to lunch. When they've finished voting on stuff.

Resolutions

I am sure will all be passed.

PF

SHY also mentioned that if we needed to show good numbers or get cash we could just go get a mortgage for the property we own pretty much outright or the data centre. 

Other guy also asked where margins would go and was told that we were probably at the low point. 

Pete Frost question

We've got less cash now than we've had for years, should we be worried about a need to have a rights issue situation ?

No. We've got £23m buffer facility which we haven't touched, nor do we see the need to touch it. We see few millions positive cash in next year or so, then 10m's and increasing thereafter.

Richard Woolaston question

We've had times of profits and now we're in a loss situation while investing heavily, when are we going to be actually monetising the investments or are we going to be eternally re-investing.

Answer is basically we got unlucky in timing where we got shafted by conditions when we were heavily investing in the future businesses. Expectations 2-4 years for return to increasing profit levels better than the old days.

HY said he wouldn't be invested in IMG if we were only graphics "because ARM would have pressured us in the low end - which they did..."

"I only invest in business directions where I see profits at the end of it. I hate blue sky thinking without money at the end"

Hammerd2 question

It went on a bit, expressed disappointment with the level of communication of the downside stuff over the past 18 months and the lack of successful forecasting. SHY said its easy to underestimate from the outside how serious the waves were through the exits of the big semis.

Doesn't accept they could have done any different.

Asked where the old SoC table went - claims they can't do it any longer as they simply don't know. I don't 100% buy this as they must have some idea but he says they can't just knock out a table when they can't give real numbers, so he has a point I guess.

Asked how it is that there is now 100+ licensees only generating £38m. Answer is that whereas previously there were only a small number of licensees paying more there are now far more licensees paying less but making it easier for many more people to be able to make SoCs - thus hopefully evening out the peaks and troughs a little if some end up sinking without trace or leaving the market entirely.

I asked if they felt the business model (developing major IP categories with a view to high value licensing to an initial limited number of customers) was now out of date as most of them have now disappeared. Was basically referred to the previous answer as eg RT is expected to be able to go to many more smaller companies.

Again reiterated that he saw the first implementations in a "console or console type product" for which I can only read an Apple TV type of product as the mainstream consoles are now largely PC type product based with add in cards, yet RT seems only now to be designed for a mobile chip type of deployment.

Financial Yawn

Numbers time.

For some reason taking 3x as many deals to make the same money is "a good thing". Not sure I see how, apart from losing 1 or 2 isn't likely to kill us dead, unless it were to be Apple of course. There's barely anyone else big enough now to really make a huge difference if they walked.

Despite admitting that competition has cut into sales of radios, it seems our response has been simply to be to concentrate on the higher price range.

How this means we still need to fill almost the whole of the new building with PURE people I have no idea. I'd have thought offing the operation would be better but the boss re-iterated we weren't getting rid of it so we're still lumbered.

Non-MIPS now t hit 1bn in 3 years. Hmm... That sounds familiar.

Takeaway Slide #2

Is slide 41. I knew he wouldn't forget...ahem.

Finally admitted (sort of) that they made a mistake ignoring the low end.

Still talks about us as though we're #1 for GPU.

MIPS only 8%, still aiming for 25%. Can't get through to ask 25% of what though !

Expects us to be #1 or 2 in each market.

What are we about ?

Scalable IP, configurable platforms is what we are about.

Then starts talking about PURE !!! Same line about "if you knew what's coming" has been wheeled out. Still only talking about DAB and multi-room though. Is there really anything else ?

Slide 36

There is yet another new type of xPU - Ensigma NPU - network processing unit. Specific to data centre processor applications - high speed routing. Top end Explorer cores as far as I can tell.

MIPS

"Like a very talented child in a family that doesn't care"

Very good.

But still convinced that the market is that bothered about having an alternative to ARM. Your correspondent remains to be convinced the market wanted much more than a bargaining chip. So far this has been an expensive experiment. Let's hope we start reaching some conclusions soon.

More slides

Not sure if we're going to be told the 2nd takeaway slide, but we're on to the usual power per mm etc slides and the performance envelope stuff.

SHY still seems to see us as being way ahead of everyone else on performance.

Same stuff again from last year about camera stuff and integration of GPU compute functions, etc. good to see we're keeping on top of our recycling targets.

Takeaway slides

If you go away with only 2 slides, take this  (slide 21) as one of them. It's a version of the old adoption graph.

Unfortunately we're not really in the 90% of the CPU business that is IP. Or to be honest the GPU business any longer, but we remain hopeful.

Future is about getting our 200+ Ensigma engineers to bring the RPU tab along the curve.

Strategic Progress

Unlike competitors, we do not demand our customers take x,y,z we make things to be interoperable with other technologies.

OK, but competitors are more successful than us at selling IP so who really wins here ?

Very interesting new slide 11 - where on earth these licensees are coming from or who they are I have no idea and I'm sure we're not going to get told.

Blah blah blah

I don't intend to comment on individual slides this year unless there's something that leaps out at me as SHY goes through the usual slides. They're on the website soon so you can look yourselves.

He's started off talking about how our business is about predicting and forecasting future markets. Ahem.......given our last 18 months or so you have to wonder how we're still in business but at least we're aiming for something.

In reference to wireless technologies and our place in it he reckons PURE will reveal all sometime early next year. Sound familiar ?

AGM 2014

Good morning and welcome to this year's AGM coverage.

A smaller gathering of the clans, maybe a lot of disgruntled Yes voters from north of the border have decided that last night's results were too disappointing to get out of bed.

Can't imagine this is going to be pretty.

Imagination IMS

IMG today announced the Interim Management Statement:

Imagination Technologies Group plc ('Imagination', LSE: IMG, ‘the Group’), a leading multimedia, communications and processor technology company, is today issuing its Interim Management Statement for the period from 1 May 2014 to 16 September 2014.

Trading update

Licensing activity in the period has been good with encouraging levels of activity across all three main IP product areas and across the broad customer base.

Royalty revenue for the quarter ended 30 June 2014 has been in line with our expectations, reflecting both growth from a number of partners as well as the short term impact from known product transitions with other partners this year. We are pleased that the average royalty rate for the quarter remained strong and marginally higher than last year, which we expected given the change in product mix.

The active licensing pipeline across our IP and customer base is building the foundation for significant future unit growth.

Both licensing and royalty revenue have been affected by the strength of sterling in the period, leading to adverse comparisons with the prior year. Given the recent volatility of sterling, it is difficult to predict the likely impact of this factor for the financial year to April 2015. However, we continue to be active in hedging some of our exposure to currency movements.

The Pure business is trading in line with expectations following the renewed focus and organisational changes implemented at the end of FY14. We are expecting further progress with the latest product releases.

Despite the Group continuing to invest in a number of key areas, tight operational control has been maintained and underlying operating costs are growing at a lower rate and in line with expectations.

Technology business

Multimedia

Our PowerVR Series6 technology has seen further deployment with active licensing across all areas of the Series6 family including 6XE and 6XT.

PowerVR Series6/6XT continues to drive leading edge devices delivering best industry performance, feature set and lowest power consumption.

We were pleased to announce the industry’s smallest Android compatible GPU solution with the new PowerVR Series5XE GX5300 graphics core. With this our partners can create compelling GUIs and user experiences with longer battery life for a range of low-cost, area constrained applications.

CPU and processor cores

We recently announced our most significant new MIPS CPU IP core to date, the 64-bit I6400, the first core using the latest r6 architecture. This highly configurable I-class MIPS core targets a broad range of high volume market applications.

Licences have already been signed with multiple lead partners who value the unique features of this core, such as multi-threading and advanced security, as well as its area and power efficiency.

The Group now provides a comprehensive range of MIPS IP cores for everything from microcontrollers and Internet of Things (IoT) devices to 64-bit application processors and servers, delivering choice across the full range.

We recently revealed the first of a series of MIPS-based development boards targeted at the open source community, hobbyists, cross platform developers and partners looking to create applications using our IP portfolio. We have seen an exceptional response which bodes well for the continued ecosystem development.

Communications

Interest in the Ensigma product range remains strong with additional licenses signed during the period.

The Ensigma ‘Whisper’ RPU is designed to drive a new generation of wearables, IoT and other connected devices where ultra-low power consumption and low cost points are key.

Lead customers who have licensed the high performance ‘Explorer’ RPU IP are making good progress towards their first mass production devices.

Ecosystem

Progress and support of the prpl open source foundation continues with the founders and other partners strongly driving activities in this area.

Imagination’s partners gathered to discover and discuss the latest in our strategy and products at a series of Summit and Executive events worldwide which, over the period, attracted well over 1,000 engineers, developers and executives.

Pure business

Following the renewed focus and organisational adjustment, Pure is applying itself to driving markets and technologies that are of strategic significance to the Group’s overall business.

A new family of products has recently been launched which combines DAB with wireless streaming capability and which we believe will help to drive the emerging consumer trends. This should create more demand for the refreshed Evoke range of products.

The Jongo X family, that takes multi-room streaming to a new level both in feature set and sound quality, has just been launched at the IFA consumer electronics show with a positive reception.

We are seeing strong interest in licensing of the underlying technologies that power these showcase products.

Outlook

The progress on licensing in the period supports our target of 10% growth in licensing revenue for the year.

Non-MIPS shipments are expected to increase in the financial year, with a strong weighting towards the second half, predominantly driven by new product launches. MIPS shipments are expected to be broadly flat year on year with significant growth expected in future years, arising from the ongoing strong licensing activity.

New products and the impact of the business refocus and organisational changes made in FY14 are on course to deliver an improvement in Pure’s financial performance in the year to April 2015.

Underlying operating cost growth is expected to be reduced to around 10% this year, in line with previous guidance.

The seasonality of royalty revenues and the normal weighting of licensing revenues typically results in a stronger financial performance in the second half of the financial year. Given the anticipated contribution of new product shipments later in the year, we expect this effect to be more pronounced this year.

The overall financial position of Imagination remains robust and the Board is confident that the Group’s progress will continue in line with its expectations.

Sir Hossein Yassaie , Chief Executive, commented:

"We continue to see good progress being made across our three main IP product families, multimedia, processors and communications.

"The launch of MIPS 64-bit cores, which can be used in a broad range of high volume applications, is a significant milestone in our development and is seen as an industry changing step by many.

"The three IP families and the platforms they enable are increasingly seen as a strong and relevant proposition for the existing and emerging opportunities by many of our customers."

END

No great surprises then. IMG seem to have learned a lesson from this time last year, when the royalty volume estimate (with only 6w of the financial half to go) turned out to be nonsense. Licensing on track, reduced volumes in H1 due to lower Mediatek (as they mainly ship MT65x2 Mali series at present) but no doubt the effect of people waiting to buy iPhone 6 (as mentioned by Apple last quarter) rather than iPhone 5c/s in recent months.  Costs seem under control and Pure not doing as bad (should still be sold off imo). The now-weaker Sterling could turn out well for H2 as volumes ramp.

I will be joining Hammerd at AGM in 2 days and will feedback then.

Wee Timor-IMS Beastie

An IMS is an odd wee critter, not unlike the Highland Haggis in that it's one leg (the bit before the IMS since the last results) is significantly longer than the other (the bit between the IMS and the end of the current period). And, of course, they can either be delicious or make you gag.

Unfortunately you rarely know the day before whether you'll be enjoying the reporting version of soft  organic barley oats melting in the mouth in a savoury jus of delicate lites or chewing hard on a piece of unimaginably unpleasant gristle.

Today, however, we know that tomorrow morning we're in for a decidedly middle of the road, mass produced piece of mush that will please no-one and make many wonder how on earth this once proud producer of fine, meaty comestibles has been laid so low, how these pallid ingredients could have cost this much and where the sheep will be coming from to stuff these beauties full of hot goodness in years to come.

So, we know that licensing (stomach lining) will be lower than H2 last year, we know that royalty units (barley oats) will be probably down also, that MIPS (lungs) will 'be contributing financially to the Group', that there is increased interest in our other families of IP (meaty goodness) and that PURE is incredibly important to the future of our IP being adopted throughout industry as a whole (it isn't).

So will anyone be happy ? No. Will anybody be surprised ? No. Will we really know any more tomorrow at 7am than we've known for months ? No.

Will the SP drop yet further when it's flagged (again) that any (note any, not the) possible growth this year will be most decidedly in H2.

This long term investor is expecting higher losses in H1 than we had in last year's figures with the hope of some H2 recovery, so anything better than that will be a huge bonus. I'm actually expecting much higher FY reported losses this year given the current level of sales so far predicted and the fact that you can't just stop expenses dead when they're mostly in R&D and no-one's been sacked. The only reductions possible would be the absence of redundancy payments to MIPS sales teams.

Ho him, tomorrow's another day, and Friday's another day too.

Let's just hope we can take delivery of one more succulent, juicy, spicey organic Haggis before the maurauding Northmen sever their ties with Westminster. Unfortunately that's it likely either.

Upcoming AGM

It's been quite a year for us Imagineers with the company managing to blow off much of the goodwill built up over the past 15+ years with the ease and speed of a Dutchman blowing the froth off his beer.

In just over a year of tall tales and missed targets and opportunities we have gone from a company on the up, aiming for that far away, glistening FTSE100 target so beloved of our CEO to a nearly ran company who have seen soaring profits plummet to losses with more expected this year too, hockey stick increases in royalty levels drop and many of our long term and important partners either drop off the map altogether or severely curtail their output.

We've heard much of the future promise, but these statements ring hollower than a Scotsman's legs on Burns' night now they've been rolled out more times than a Cockney's barrel on sing song night.

But we are Imagineers - not for us the easy path, the path well trodden on simple trajectories from loss to ever increasing profits, the path of least resistance. No, we must have more than our share of pain and suffering on our journey to the fabled Land of Jam Tomorrow.

And so it is with a heavy heart (and a much lighter wallet thanks to the ever decreasing SP and ever increasing rail fares) that a smaller than normal band of merry and intrepid warriors (no pun intended) head once more to Kings Langley to hold some feet to some fires and try to get to the bottom of what has gone so disastrously wrong with our company and what is being done to actually turn things around.

WiFi - and First Great Western - willing there will once more be a live blog for you all to digest. Let's hope the words don't stick in anyone's throats.

Will this be the last IMG AGM ? I'm convinced it will be, so maybe the sweepstake this year will be moot.

A bientot mes braves !!

MIPS 64-Bit Warrior Core announced

The much awaited announcement today from IMG:

http://www.imgtec.com/news/detail.asp?ID=923

Imagination Technologies Group plc (LSE: IMG, “Imagination”, “the Group”), a leading multimedia, communications and processor technology company, has launched the highly-efficient MIPS I-class I6400 CPU family.

This is a key strategic development for the Group as this 64-bit MIPS Warrior core is the first IP core to combine a 64-bit architecture and hardware virtualization with scalable performance through multi-threading, multi-core and multi-cluster coherent processing.

MIPS Warrior I-class processor cores set a new standard for mainstream 64-bit processing in applications including embedded, mobile, digital consumer, advanced communications, networking and storage - the broadest set of applications ever addressed by a single MIPS core family.

Its extraordinary feature set and performance/power/area leadership will enable customers to implement a smaller core at the same performance, or a faster core, in the same area.

Sir Hossein Yassaie, Chief Executive, commented:

"This is the MIPS Warrior core that the industry has been waiting for. Customers can now choose a CPU based on its technical superiority.

"This new product is more efficient, flexible and scalable than the competition and its feature set clearly lends itself to the needs of a wide range of next-generation applications including smartphones and tablets.

"We know that unique features like multi-threading provide significant advantages for many applications. We have already secured licensees for this new product across multiple markets.

"The Group is now able to provide MIPS IP cores for everything from microcontrollers to 64-bit servers, delivering choice across the range and changing the competitive dynamic in the industry."

Says Tony King-Smith, EVP marketing, Imagination: “This is the MIPS Warrior core that many have been waiting for. As the industry moves toward instruction set neutrality, customers can now choose a CPU based on its technical superiority. The I6400 is more efficient, flexible and scalable than the competition, and its feature set clearly lends itself to the needs of a wide range of next-generation applications including smartphones and tablets. We know that unique features like multi-threading provide significant advantages for many applications, and customers already using this technology agree. Unsurprisingly, we’ve already secured licensees for the I6400 across multiple markets.”

Says Jim McGregor, founder and principal analyst, Tirias Research: “To address the ongoing evolution in applications from IoT to mobile to networking and storage, companies need to select scalable platforms that can future-proof their designs. With 64-bit, multi-threading, and multicore/multi-cluster support, the I6400 is designed to be a phenomenally flexible, low-power processor architecture capable of scaling across a wide range of applications. Imagination now has MIPS IP cores for everything from microcontrollers to 64-bit servers, delivering choice across the range and changing the competitive dynamic in the industry.”

Apple Q3

A record Q3 from Apple yesterday, broadly in-line with expectations:

Transcript of CC:

http://seekingalpha.com/article/2331715-apples-aapl-ceo-tim-cook-on-q3-2014-results-earnings-call-transcript

iPhones: 35.2m
iPad: 13.3m
(So about 50m shipments for IMG)

Apple implied customers in western countries were putting off iPhone purchase due to rumours about release of the iPhone 6 (but this is obviously an annual and utterly predictable thing) whilst iPad demand is strong in BRIC regions but softening in the West (not the kind of gadget you need to upgrade really).
As usual there was the promise of 'exciting products' to come - we've only been waiting for about 5 years now for the next big thing.

Imagination Full Year Results 2013/14

IMG delivered broadly in-line results today (on reduced expectations following a disastrous previous 18 months), which were perhaps more about a message of medium-term recovery and trying to restore confidence in the management and HY in particular. Good to see the 1 billion (ex-MIPS) target re-stated though of course pushed out by a year;( I was expecting them to quietly drop it.). Royalties should be back on track in H2 2014/15 and ARR is being well maintained. 64-Bit warriors should be with us later this year it seems, though big names are required (not just ecosystem announcements) to establish credibility and momentum in the CPU game.Look forward to listening to the CC today.

Financial highlights

• Group revenues up 13% to £170.8m (2013: £151.5m)
• Good performance in Technology Business with revenues increased 17% to £147.5m (2013: £125.7m)
• Licensing revenues up 32% to £38.3m (2013: £29.1m)
• Royalty revenues up 15% to £109.0m (2013: £95.1m)
• Pure revenues of £23.2m (2013: £25.8m)

• Adjusted operating profit* of £24.1m (2013: £33.5m)
• Reported operating profit of £0.02m (2013: profit £11.3m)
• Adjusted earnings per share* 8.1p (2013: 9.4p)
• Reported earnings per share 0.3p (2013: 2.4p)
• Cash generated from operations before working capital of £28.3m (2013: £34.0m)
• Net debt of £5.0m (30 April 2013: Excluding MIPS tax liabilities £10.7m)
• Cash of £19.2m. Bank facilities renewed to 2018

* Adjusted profit excludes non-recurring items, items relating to acquisitions and investments, non-cash based share incentive charges and amortization of intangible assets acquired from acquisitions. The reconciliation from reported results to adjusted results is set out in note 2.

Business highlights

Technology business

Licensing & design wins

• Strong and growing licensing activities across all IP families involving many existing and new customers
• 115 licenses including 51 for PowerVR (37 GPU, 11 video and 3 camera vision IP), 48 for MIPS CPU, 11 for Ensigma RPU (3x last year), two for Ensigma VoIP and three for FlowCloud
• Accelerating growth in customer base with new licences involving over 50 partners:
• Existing customers included:- Actions, Allwinner, CSR, Freescale, HiSilicon, Intel, LG, MediaTek, Microchip, Mobileye, Realtek, Renesas, ST and others
• New customers included Atomos, Avago, Ineda, I&C Micro Systems, Lenovo, Toshiba and others
• Increasing number of customers signing licenses for IP from multiple families
• Licensing activity has resulted in around 60 new SoC design-wins which will contribute to future royalties
• Continued active and growing pipeline of prospects across all IP families

Partner chip shipments & royalties

• Total partner chip shipments of 1,259m
• Significant volume shipments in: all mobile segments (performance, mainstream and entry smartphones); tablet/personal computing; networking & enterprise; industrial; TV/STB & automotive
• Smartphone market continued to grow albeit with lower growth rates
• Average royalty rate maintained at prior year’s level due to the mix
• PowerVR Series6 graphics shipping in volume across all key segments including mobile, TV and automotive
• Growing MIPS volume in developing 32-bit microcontroller and Internet of Things (IoT) markets, with MIPS 64-bit architecture well established in multiple markets
• Strong PowerVR video processing IP unit shipments

Pure business

• Continues to drive key markets
• Launch of Jongo wireless speaker products in key UK and US markets
• Continued refresh of DAB product line-up
• Strategic interest from key players in our wireless and multi-room speaker technologies resulted in a number of licenses signed
• Organisational changes to reduce costs and better align with our IP business

Hossein Yassaie, Chief Executive, commented:

“The significant growth in the licensing deal closure and the growing customer base confirm the strong alignment of our technologies to the existing and emerging markets as well as our partners’ needs.

“The strong and growing demand across all IP areas, including PowerVR graphics & video, MIPS processors and Ensigma communications coupled with growing trends of customers opting for multiple IP families or IP platforms, validate the strength of our strategy and the relevance of our roadmaps.

“All the indications from existing and new customers are that the alternative that MIPS processors offer is credible, respected and welcome, both for the technological benefits and the much needed industry balance they can help to bring about. The active licensing trends and the strong support from the industry leaders for the recently launched prpl foundation, focused on MIPS ecosystem, are clear indications of our real and continued progress.

“As the licensing deal closures show, the demand for Ensigma communications technology is accelerating. This is driven by the emerging trends in the Internet of Things and home connectivity.

“Whilst there will continue to be fluctuations and changes in the markets in which we operate, we are confident that our comprehensive and complementary IP families, and the solution-centric IP platforms they are enabling, will allow us to take advantage of the numerous growth opportunities ahead.”

Results presentation slides are here:

http://www.imgtec.com/investors/presentations/24062014/Imagination_Full_Year_Results_2014.pdf

Apple Q2

Some excellent numbers from Apple last night, followed by a commanding performance at the CC from Tim Cook and Co :
CC transcript:  http://seekingalpha.com/article/2159213-apples-ceo-discusses-f2q2014-results-earnings-call-transcript?part=single

The IMG-relevant figures:

iPhone 43.7m
iPad 16.35m
iPod 2.75m
Apple TV: not disclosed

So about 60m royalty volume for IMG's H2

Some graphs courtesy of ZDNet   http://www.zdnet.com/apple-q2-2014-hardware-sales-by-the-numbers-7000028713/

Wizards!

Exciting stuff today from IMG. According to HY this is when 'the magic happens':

http://www.imgtec.com/News/Release/index.asp?NewsID=853

Disruptive technology enables interactive cinematic realism for mainstream devices

Game Developers Conference, San Francisco, CA – 18 March, 2014 –

 Imagination Technologies (IMG.L) delivers a revolutionary new family of graphics IP cores that raises the bar for ray traced graphics to a dramatic new level, delivering astonishing realism and performance at mobile power budgets.

Wizard cores enable more immersive games and apps with real-life dynamic lighting models that enable advanced lighting effects, dynamic soft shadows, and life-like reflections and transparencies, previously unachievable in a mobile form factor. PowerVR Wizard Ray Tracing IP is highly scalable, making it disruptive to many other markets beyond mobile.

The new PowerVR Wizard graphics architecture is a significant addition to the lineup of market-leading PowerVR graphics processors (GPUs), which are already present in over half of the world’s smartphones and tablets.

The Wizard architecture is a ray tracing-enabled version of the PowerVR Series6XT Rogue architecture which adds significant new features to the pipeline, enabling accurate real time modelling of fully dynamic lights and shadows. Everything developers know and love about the PowerVR Rogue architecture is present in Wizard GPUs, enabling them to start to use ray tracing without extensive new learning.

PowerVR GR6500 is the first member of the new Wizard family of cores designed to bring real-time, interactive ray traced graphics to a broad range of consumer and mobile platforms, as well as gaming consoles and mainstream gaming PCs, workstations and servers.

Hossein Yassaie, president and CEO of Imagination, says: “Imagination’s highly-efficient PowerVR GPUs have played a key role in driving the creation of entirely new categories of mobile devices. Now we are changing the game again by bringing the next level of realism to mobile and consumer devices. Our ray tracing IP is here, and it’s ready for our licensees and developers to begin creating a new wave of immersive and exciting PowerVR-based consumer experiences.”

Highly anticipated IP poised to transform the state-of-the-art in graphics

Enabling ray tracing capability in consumer devices required a fundamental breakthrough in the algorithms used within ray tracing, as well as the careful addition of optimized fixed function blocks in the GPU to allow ray tracing operations to be performed within the power consumption and bandwidth budgets available in today’s mainstream consumer devices.

With Imagination’s Wizard Ray Tracing family, patented custom hardware engines ensure the GPU’s processor clusters are kept free to run sophisticated shaders, producing stunning results with minimal developer effort. The unique hardware ray tracing processors, including coherence gathering engines, fixed function intersection testing array and accelerated scene hierarchy generator, receive rays from the shaders, determines their intersection and initiates more shaders. All of this is made possible with entirely dynamic scenes through the addition of a novel hardware pipeline to build scene hierarchies required for ray tracing in parallel with other operations, all while remaining compatible with existing programmable vertex operations.

With all of these additions, Wizard cores address the real-world use cases of ray tracing with fully interactive dynamic content and photorealistic lighting. The net effect is an architecture that can perform ray tracing operations around 100 times as efficiently as performing the same operation using GPGPU functionality.

PowerVR GR6500 delivers:

• Ray tracing: 300 MRPS (million rays per second) and 100 MDTPS (million dynamic triangles per second) at 600 MHz
• Shading: Four Unified Shading Clusters (USCs), with 128 ALU cores delivering in excess of 150 GFLOPS (FP32) or 300 GFLOPS (FP16) at 600 MHz
• PowerGearing G6XT for advanced power management and dynamic resource allocation
• PVR3C™ triple compression technologies (PVRTC and ASTC for texture compression, PVRIC for frame buffer compression, PVRGC for geometry compression)
• Deep Color support for very high image quality at Ultra HD resolutions and beyond

Through the advanced architecture of PowerVR Wizard, multiple ray tracing engines and shaders operate concurrently to ensure real world sustained performance for both ray tracing and shading.

Further cores will follow that offer smaller power and area footprints for more constrained environments, along with scaled up cores to deliver fully ray traced content for the ultimate in cinema quality graphics. All Wizard cores are designed to provide leading support for a range of APIs such as OpenGL ES 3.x, OpenGL 3.x, Direct3D 11 Level 10_0, OpenCL 1.x, and OpenRL 1.x.

PowerVR Ray tracing: creating new opportunities for developers

In addition to the clear benefits for traditional game engines through the easy addition of many high quality and dynamic shadows, reflections, transparencies, global-lighting, ambient occlusion and more, PowerVR Wizard GPUs can enable a broad range of other capabilities that would either be impossible, low quality or too inefficient using standard techniques. Examples include lens distortion correction, lenticular display rendering, multi-perspective rendering, targeted rendering to points of interest, line-of-sight calculations, collision detection and more.

The combination of efficient shading clusters and low-bandwidth ray tracing will enable a giant step forward for developers, who can bring a new level of quality and enhanced realism to their apps and games. For example, ray tracing can add a superior shadowing or lighting solution to existing games while allowing game developers to preserve the vast majority of the investment that they have already made in their game engines and tools. In addition, dynamic generation of assets in-game will streamline the content creation workflow and save distribution costs by reducing the size of the game files.

David Helgason, CEO of Unity Technologies says: “Unity integrated Imagination’s ray tracing software into the Unity 5 editor due to its high performance on the broadest range of consumer laptops, ease of integration and unique future hardware roadmap. We will continue to work with Imagination to fully utilize the PowerVR Ray Tracing GPU IP within the Unity game engine to further enhance the in-game experience and simplify content creation for our developers.”

James McCombe, director of research for PowerVR Ray Tracing at Imagination, says: “While PowerVR Wizard ray tracing GPUs are a disruptive technology, they remain as familiar and easy to use as the PowerVR GPUs that developers are already using. With PowerVR Wizard IP, the ray tracing capabilities are exposed directly through the existing programmable shading hardware, so that software developers can take advantage of the ultra-fast ray tracing for some effects, while continuing to leverage the substantial investment in software designed to run on GPUs already available in the market today.”

Matt Pharr, co-author of ‘Physically Based Rendering, from Theory to Implementation’ and Academy Award Honoree, says: “The PowerVR Wizard architecture from Imagination is a remarkable advance: it promises to deliver both high-performance and energy-efficient ray tracing to developers, in the context of a regular GPU that can rasterize efficiently and still has high-performance shader cores. By making ray tracing available to all developers that use this platform, the Wizard architecture offers the possibility of a quantum leap forward in image quality in mobile interactive graphics applications.”

While power-efficient enough for mobile applications, the PowerVR Wizard architecture is able to scale up to configurations capable of rendering interactive cinema for high-end gaming machines and consumer devices.

Says Yasuhiro Kondo, general manager, Arcade Machine Development, SEGA Co Ltd.: “SEGA welcomes the announcement of PowerVR Ray Tracing IP from Imagination Technologies. We expect that the Wizard cores will create a great revolution in the graphics experience of the gaming market.”

Availability

The PowerVR Wizard GR6500 core is available for licensing now. Contact info@imgtec.com for more information.

Imagination IMS

Imagination put out the H2 IMS today. As predicted by most ,the licensing will miss the £38-43m forecast, even though it is very strong at present. The royalty volume forecast is further reduced due mainly to Mediatek using Mali for its current generation (will turn around in FY15).On the plus side costs are being better managed and there is a Tier 1 win for MIPS new cores - that is clearly deserving of a separate rns and may come later on in the year. Most are now focussed on FYs 15,16 when we should see a return to growth across multiple fronts.

Imagination Technologies Group plc ('Imagination', LSE: IMG), a leading multimedia, processor and communications technology company, is today issuing its Interim Management Statement for the period from 1 November 2013 to 5 March 2014.

Trading update

The Group has continued to develop and make good progress in its strategy of providing the key processor IP cores needed for the broadest range of System-on-Chips (SoC) and the markets they target.

Unit shipments have been behind expectations due to a slower rate of smartphone market growth and lower market share in the entry level segment of that market. However, based on recent design wins and partner product launches, we expect this share to recover in the latter part of FY15. The revenue impact of share loss in the entry level segment has been lessened due to the lower royalties on these units. Indeed the average royalty rate achieved is ahead of our expectations.

Licensing activity remains high with a large number of opportunities being progressed across all of the IP product groups. Progress so far in H2 has been encouraging including development and extensions of some strategic and long-term relationships. One of the characteristics of the sales pipeline this year compared with previous years is the number and breadth of opportunities. They cover a far wider range of customers and a broader mix across all of our IP products. While this helps to reduce the dependency on specific customers / products, there is still the usual uncertainty in precise timing of deal closure.

The Pure business performance has been steady with revenues from the Jongo range of wireless speakers offsetting weaker performance in the DAB market.

We have continued to manage the operating cost base with increased rigour. In particular, synergies from acquisitions and across our geographical resources have been greater than previously expected and this has resulted in significant additional efficiencies and cost savings against our plan.

Technology

Multimedia
Our PowerVR Series6 technology has seen significant further deployment in the market with multiple partners now shipping devices using this technology in all key segments. This was increasingly visible at the recent major industry event, Mobile World Congress (MWC) 2014. Recent benchmarks measuring performance, power and area show significant benefits, delivered by this market leading technology, compared with all competition.

We recently announced further GPU cores based on the Series6 technology for both Series6XT and also Series6XE. These cores bring the benefits of Series6 to a broader range of customer requirements from entry level to market leading high-end. Series6XE in particular delivers strong performance per square millimetre and feature set, providing exceptional products targeting the entry level smartphone / tablet and wearables markets. Series6XT is demonstrably leading the market in mainstream and high-end segments. We have seen and continue to see strong interest in and licensing of this technology.

We have recently launched our first IP core, PowerVR V2500, in the Raptor imaging processor family which works closely with our PowerVR video and graphics cores to provide enhanced camera functionality and tighter integration. The vision capability is increasingly becoming a very important aspect of many categories of devices in many market segments from smartphones to the Internet of Things (IoT).

We will make further product announcements involving our ray tracing technology later this month.

CPU and processor cores
Progress with development of the Warrior range of cores, which was initiated following the MIPS acquisition, has been strong with the launch, in February 2014, of the new MIPS Warrior M-class cores. These are the world's first MCU-class CPU IP cores with hardware virtualization and next generation security capabilities. We have now launched two performance/feature categories, P-class and M-class cores, from the new MIPS Warrior family. Significantly we have already secured licenses for these new cores.  Development of further cores, including 64-bit processors, within the Warrior family is progressing rapidly.

Customer engagements regarding MIPS processors continue very positively, with a number of new agreements signed including with a Tier 1 customer using latest generation MIPS for the first time.

The emerging market segment of wearable devices is set to be a very active one for MIPS with several partners already engaged and others in the pipeline. We are also seeing genuine interest and early traction for the MIPS Warrior family for the mobile market.

The progress on MIPS is very encouraging and has made a positive contribution to the business. We re-iterate that this is a long-term strategy to offer real choice in the CPU and processor IP market.

Communications
The relevance and interest of our communications IP has increased further, with a significant number of licensing opportunities in the sales pipeline. Of particular note is the number of customers interested in combining this with our other technologies, such as MIPS processors, or our PowerVR graphics and video solutions, as evidenced by the recent product announcement from Toshiba.

We have signed licenses with a number of partners for our Caskeid multi-room wireless audio technology, which also powers Pure Jongo wireless speakers, and have a number of further prospects in progress. This offering combines our Ensigma connectivity, MIPS processors and our market leading wireless synchronisation technology.

Cloud technologies
FlowCloud is a key software technology for enabling IoT opportunities. Its availability to our customers can enable faster time to volume product shipments. There is growing customer recognition of the market opportunity and relevance of this technology to many key established and emerging markets including audio and video content delivery, home automation, healthcare, security and the many other IoT opportunities seen widely at the recent CES and MWC international trade shows.

Pure
We have continued the development and launch of a number of strategic products and technologies that showcase the technology and capabilities of the Group and help to secure new business opportunities. There are a number of ongoing discussions with partners looking to utilise these technologies as demonstrated by the recent announcement with Onkyo.

Outlook
With the encouraging high level of licensing opportunities in the pipeline and deals closed so far we expect licensing revenue for the current year to be significantly stronger than last year and gaining momentum. When we consider the timing of deal closure in this final quarter however, we expect licensing revenue to be in the range of £35m - £40m.

Based on our view of existing partner shipments and new products which are starting to ship, we expect total unit shipments to be in excess of 1.2bn units in the financial year to 30 April 2014. Excluding MIPS, we now expect 520m - 550m units. There are a number of new partners that have just started or will start shipment over the coming months and new design wins with existing partners which will contribute to unit volume growth in FY15.

We expect to see a financial improvement in the Pure division over the medium term, driven by the new Jongo product range.

Based on the higher levels of synergies and rigorous cost management, we now expect the underlying operating costs for FY14 to be significantly lower than previous guidance (£135m - £137m) and within the range £127m - £131m. The investments we have made in the operating cost base over the last few years have strengthened the R&D capabilities significantly and have equipped us to deliver to our plans. As a result, our expectations for underlying operating costs for FY15 are for a much lower rate of growth.

The financial position of Imagination remains robust and the Board is confident that the Group's progress will continue.

Hossein Yassaie, Imagination's Chief Executive said:

"We continue to focus on building sustainable and long-term value in our business, despite the transient events that are inevitable in the dynamic markets in which we operate.

"Our strategy to develop and exploit disruptive technologies in our three main areas of IP – multimedia, processors and communications – has made good progress. Significantly this strategy has now reached a stage that it is enabling us to start offering our customers solution-centric platforms that they value.

"Our strong technology base and the platforms they are enabling, the expanding partner engagements and the growing design wins across a broader range of markets give us confidence that we have significant opportunities and growth potential ahead."

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