Imagination 16/17 interims + CC notes

Interims + new chairman today:

https://imagination-technologies-cloudfront-assets.s3.amazonaws.com/presentations/interim16/Interim-Results-2016.pdf

https://imagination-technologies-cloudfront-assets.s3.amazonaws.com/presentations/interim16/IMG-half-year-report-2016.pdf

Highlights
 • Total partner shipments in line with expectation, with revenues from continuing operations up 6% to £64.4m (H1 FY16: £60.8m), as a consequence of the strong US dollar
 o Royalty revenue up 6% to £52.5m (H1 FY16: £49.6m) − Total partner unit shipments 584m (H1 FY16: 584m)
o Licensing revenue up 7% £11.8m (H1 FY16: £11.0m) − PowerVR licencing slow with deals moving to H2 − Ensigma revenue up 144% to £4.4m (H1 FY16: £1.8m) - significant deals signed with large customers
• Group returned to profitability
o Continuing operations adjusted EBIT* up 65% to £12.2m (H1 FY16: £7.4m) o Continuing operations operating profit of £2.9m (H1 FY16: loss £5.5m) o £27.5m annual cost savings delivered
 • Restructuring nears completion - Pure and most of IMGsystems sold, IMGworks near disposal
 • Net debt of £40.8m (April 2016: £33.0m, October 2015: £35.4m), H1 outflows reflecting one-off restructuring costs and £5.2m exchange loss on dollar denominated debt. Continuing operations generated £9.5m cash from operating activities
• Peter Hill will take over as non-executive Chairman on 1 February 2017 - see separate press announcement

Andrew Heath, Chief Executive, said: “We have successfully executed the restructuring programme, initiated last February, on time and in line with our expectations. The £27.5m of cost savings, identified earlier in the year, have been delivered – this has enabled the business to return to profitability. Our Ensigma unit achieved strong licence sales as we have made good progress in agreeing deals with a number of major customers. The underlying trading performance of the Group for H1 is in line with our expectations and we additionally benefitted from the strong dollar. “We are now in a much better position to exploit our leading technologies, across a range of increasing opportunities and execute our refreshed strategy. “For our continuing operations, we remain on course to deliver an underlying trading performance for the year in line with our expectations and anticipate that we will continue to see an additional benefit from the strong US dollar.”


END

Initial market reaction is positive. Good to see Ensigma starting to get wins as predicted (and good to see new team actually closing deals,including a Tier 1)  by the IoT markets getting off the ground - the new management are right to continue investment in this important area imo. Looks like the Mediatek/Spreadtrum PowerVR deals concluded by HY in his final few months will start to deliver next year and resume royalty growth in our most important division, whilst Apple revenues are actually fairly stable (taking into account dollar rate and also reduced iPhone/iPad volumes vs. 1 year ago) despite ill-informed 'expert' predictions of a fall due to increasing Apple in-house technology usage .
MIPS aiming to be profitable in FY18 -  seems to have been stabilised by the well-respected Jim Nicholas. Ensigma aiming for profit in FY20.

EDIT:

CC notes:

A confident (but cautious)  performance from Heath and Millward at the CC, you really get the impression that the new CEO has given IMG his full attention in the recent months, started to make important customer relationships, done some studying to improve his tech knowledge and believes in his plan.

http://seekingalpha.com/article/4028679-imagination-technology-group-plc-ignmf-ceo-andrew-heath-q2-2017-results-earnings-call?part=single

Excerpts:

for mobile, our focus is certainly there in terms of graphics and multimedia with PowerVR certainly growing market share in mobile, particularly in the mid-tier markets, where the Series8XE has being seen to getting a lot of design wins and proven to be very successful. It's been the most successful product launch that we've had as a business so far.

In the consumer, we maintain a very strong presence in digital TV and set top boxes both with MIPS which typically have 40%, 50% market share in that area. But also with PowerVR and the Series8XE that we launched for mid-tier phones has been successful in mid-tier phones is also proving to be a great fit for digital TVs, 

As I said, the 8XE has been a very successful product launch. It's been actively designed in by number of licensees. And as a consequence we expect royalties and unit shipments to increase as we go into calendar year 2017. And we are seeing that being licensing in mobile, in digital TVs and in automotive. So it's getting a very broad pickup from a number of customers.

We've also seen that Mediatek have announced that our GPU architecture is in there Helio X30 product, and as we look forward we fully expect a number of the developments there to continue to grow

And finally, we've been very clear, Guy mentioned this that we fully anticipate PowerVR to be at least a minimum 40% margin business, so certainly trading in a 40% range margin. That's very much our intention and to get back to those levels we have been there in the past to get back those levels as quickly as possible.

And our differentiated technology certainly in terms of multi-threading, and that's the reason we got into mobile, baseband, modems, it's the reasons we won Mobileye and their EyeQ5 products, so that differentiated technology again is another touch point and why we believe MIPS can be successful in those markets spaces we've selected.

In terms of notable deals, what caused that uptick in licensing in the first half, where we had made deals with a mobile computing with some large industry players, also unmanned systems and also in IoT and one of the deals was with a significant Tier1 provider as well. So I think that's all are important validation of the strength of Ensigma's offering

So, one thing that I would like to be clear about is that, there has been quite a bit of speculation in some of the sort of industrial press around sort of how embedded is our technology in one of our leading customers. I just like to reaffirm our view is highly embedded. Their ecosystem has been built over many years off the back of a lot of our IP, and I'll just say the ecosystem they have established is high reliant on a number of the architectural aspects of our IP, which I am sure therefore will endure going forward

Imagination and Actions Semi strengthen MIPS partnership

No RNS, but good announcement for MIPS division: 

London, UK and ZHUHAI, China – October 17th, 2016 – Imagination Technologies (IMG.L) and Actions Semiconductor Co., Ltd. (Nasdaq: ACTS) announce they are strengthening their long-term partnership around the MIPS architecture. Actions, one of China’s leading fabless semiconductor companies that provides comprehensive portable multimedia and mobile internet system-on-a-chip (SoC) solutions for portable consumer electronics, recently renewed its license for a range of MIPS CPUs from entry-level to high-performance. With these IP cores, Actions is creating SoCs targeting smart living room, Wi-Fi/Bluetooth audio, multimedia audio and video products.

Dr. Zhenyu Zhou, CEO of Actions Semiconductor: “Working with MIPS CPUs and the strong ecosystem supporting them, Actions has achieved numerous generations of successful chipsets based on this highly flexible and efficient architecture. We are continuing to create new generations of MIPS-based SoCs, and we are seeing these devices successfully expanding into a range of new segments. We are delighted to extend our relationship with Imagination for future generations of MIPS-based chips.”

Actions recently introduced the new MIPS-based V100 high-performance chipset for personal 3D cinema headsets which allows users to enjoy a high definition 3D big screen experience at anytime from anywhere. In addition, Actions’ MIPS-based, highly integrated, high-performance, low-power ATS3603 SoC is being used in a new robot, which is entering mass production this month.

Says Jim Nicholas, EVP MIPS Processor IP, Imagination: “Actions has long been an important partner of Imagination, working closely with us around products incorporating MIPS CPUs and PowerVR GPUs. With its world-class IC design capability and focus on innovation, Actions is taking these products into emerging segments such as VR and robotics. We look forward to working closely with Actions as it brings new generations of differentiated SoCs to market.”

Imagination offers a wide range of 32- and 64-bit MIPS CPUs: https://imgtec.com/mips/.

About Actions Semiconductor

Actions Semiconductor is one of China’s leading fabless semiconductor companies that provides comprehensive portable multimedia and mobile internet system-on-a-chip (SoC) solutions for portable consumer electronics. Actions Semiconductor products include SoCs, firmware, software, solution development kits, as well as detailed specifications of other required components. Actions Semiconductor also provides total product and technology solutions that allow customers to quickly introduce new portable consumer electronics to the mass market in a cost effective way. The Company is headquartered in Zhuhai, China, with offices in Shanghai, Shenzhen, Hong Kong and Taipei. For more information, please visit the Actions Semiconductor website at
http://www.actions-semi.com.

New MIPS I6500 adopted by MobilEye EyeQ5

Jim Nicholas clearly doing a great job at MIPS:

https://imgtec.com/news/press-release/imagination-rolls-new-heterogeneous-inside-mips-cpu/

London, UK – October 12th, 2016 – Imagination Technologies (IMG.L) announces the new MIPS Warrior I-class I6500 CPU, a multi-threaded, multi-core, multi-cluster design that delivers new levels of system efficiency and scalable computing for many-core heterogeneous designs. Target applications include advanced driver assistance systems (ADAS) and autonomous vehicles, networking, drones, industrial automation, security, video analytics, machine learning, and others which increasingly rely on heterogeneous computing.

Today’s heterogeneous SoC designs require a mix of high-performance CPU clusters and GPU or accelerator clusters all processing common datasets. The I6500 provides a highly scalable solution which can coherently implement optimized configurations of CPU cores within a cluster (‘Heterogeneous Inside’) as well as a variety of configurations of CPU clusters and GPU or accelerator clusters on a chip depending on the requirements of the system (‘Heterogeneous Outside’).

Says Jim Nicholas, EVP MIPS Processor IP, Imagination: “With the I6500 we are setting a new standard for scalable, heterogeneous many-core designs – and providing a highly differentiated solution for visionary companies that want to transform markets. One of these visionary companies is Mobileye, which is leading the way in ADAS and autonomous driving technologies with advanced, proven technology that continually pushes the envelope of innovation.”

The I6500 CPU will be at the heart of heterogeneous coherent processing clusters in Mobileye’s next-generation EyeQ®5 SoC, which is designed to act as the central computer performing sensor fusion for Fully Autonomous Driving (FAD) vehicles starting in 2020. The EyeQ5® will feature eight multi-threaded MIPS CPU cores coherently coupled with eighteen cores of Mobileye’s Vision Processors (VPs). The VPs provide exceptional computing power within extremely low power budgets by combining Mobileye’s broad range of algorithms for mono/multi-camera driver assistance/ autonomous systems, supported by its special vision accelerators and Imagination’s MIPS CPUs for ultra-efficient, real-time processing and control.

Elchanan Rushinek, SVP engineering, Mobileye, says: “Imagination’s multi-threaded MIPS CPUs have helped us achieve performance increases of more than 6x with each successive generation of EyeQ® SoCs. Now with the EyeQ5® we are looking at an 8x increase. The combination of Mobileye’s VPs and MIPS CPUs enables us to provide unrivalled computing power on a single processor while maintaining a very low power budget, and the hardware virtualization capability in the I6500 CPUs provides a solid foundation for an open software platform with multiple operating systems.”

Inside the MIPS I6500 CPU

The MIPS I6500 CPU is a 64-bit, multi-threaded, multi-core, multi-cluster CPU that is scalable from embedded to cloud. Key features include:

• Heterogeneous Inside: In a single cluster, designers can optimize power consumption with the ability to configure each CPU with different combinations of threads, different cache sizes, different frequencies, and even different voltage levels.
• Heterogeneous Outside: The latest MIPS Coherence Manager with an AMBA® ACE interface to popular ACE coherent fabric solutions such as those from Arteris and Netspeed lets designers mix on a chip configurations of processing clusters – including PowerVR GPUs or other accelerators – for high system efficiency.
• Simultaneous Multi-threading (SMT): Based on a superscalar dual issue design implemented across generations of MIPS CPUs, this proven feature enables execution of multiple instructions from multiple threads every clock cycle, providing higher utilization and CPU efficiency.
• Hardware virtualization (VZ): I6500 builds on the real time hardware virtualization capability pioneered in the MIPS I6400 core. Designers can save costs by safely and securely consolidating multiple CPU cores with a single core, save power where multiple cores are required, and dynamically and deterministically allocate CPU bandwidth per application.
• SMT + VZ: The combination of SMT with VZ in the I6500 offers “zero context switching” for applications requiring real-time response. This feature, alongside the provision of scratchpad memory, makes the I6500 ideal for applications which require deterministic code execution.
• Ideal for compute intensive, data processing and networking applications: The I6500 is designed for high-performance/high-efficiency data transfers to localized compute resources with data scratchpad memories per CPU, and features for fast path message/data passing between threads and cores.
• OmniShield-ready™: Imagination’s multi-domain security technology used across its processing families enables isolation of applications in trusted environments, providing a foundation for security by separation.
• Straightforward software development: The I6500 is based on the mature MIPS ISA which is broadly supported in the development ecosystem by multiple vendors. Customers adopting the I6500 can enjoy a wide choice of compilers, debuggers, operating systems, hypervisors and application software all optimized for the MIPS ISA.

Imagination offers a wide range of 32- and 64-bit MIPS CPUs: https://imgtec.com/mips/.

Availability

The I6500 CPU is available for licensing now, with general availability expected in the first quarter of 2017. 

Pure sold off, finally

Sold for peanuts, but a serial loss maker and not IP. Holding on to Pure was the single biggest reason for HY's (and IMG's) fall from grace - if only he'd listened to us PI's 5 years ago. 

Imagination Technologies Group plc (LSE: IMG, “Imagination”, “the Group”), a leading multimedia, processor and communications technology company, announces the sale of its Pure digital radio business and a trading update for the first quarter of Imagination’s financial year.

The Pure business, with its assets and liabilities, is being sold on a cash and debt free basis to AVenture AT GmbH, an Austrian company, for £2.6 million in cash. The buyer has also been granted an option to acquire one of the Group’s properties in Kings Langley, Hertfordshire for £4.5 million. The cash will be used to reduce the Group’s debts.

In the year to 30 April 2016, Pure’s loss before tax was £7.9m and it had gross assets of £5.2m. The deal is expected to complete on 30 September 2016.

The performance of the Group’s continuing operations in the first quarter of the financial year to 30 April 2017 continues to be in line with the Board’s expectations.

The sale of other non-core cash consuming activities is progressing with on-going discussions with several interested parties. A small part of IMG Systems was sold earlier in September for minimal consideration.

Andrew Heath, Chief Executive, said:

“With the difficulties of last year behind us, continuing operations have traded in line with expectations in the first quarter.

“I would like to thank the staff of Pure for their contribution to Imagination over the years and wish them, and Pure’s new owners, well for the future. The sale underlines the Group’s focus on its core IP licensing activities.”

END

2016 AGM

Many thanks to Roninja for this AGM report:

Location and timing - both wrong!! Surreal to see such a poor turnout. Clearly management wanted it this way but it cannot be allowed to continue.

Jeffries offices by the River Thames are pretty ordinary. The receptionist asked if I was here for the board meeting - should have said I was!!

Being first to turn up I was glad to see David Harold arriving and we had a quick chat mostly about Susie and HY.

A 9am start for an IMG AGM - who would have ever thought, given the lavish days of past! 11am would be more appropriate. If there needs to be a board meeting same day just hold it before.

The room wasn't completely empty as we had what look like reps from the auditors and some other firms.

As for PIs fortunately I wasn't the only one in the room, at the start there were 4 and fortunately joined by 2-3 latecomers. 
There was also a fund-manager who said he had 1-2million in IMG and was very happy with the change of management.

Onto proceedings, Bert went through the AGM formalities in fast forward mode. Very disappointing there was no presentation from either CEO or CFO. 

So onto Q&A: this would have been limited to a meagre 10mins if it hadn't been for one late-comer who had a list of questions for the board.

Post Q&A both Andrew and Guy made themselves available for further conversations.

Key takeaways in no particular order:

- licensing : market is still slow and therefore deals are slow to materialise. No pick up in FY17.

- royalties : forecast flat. Dollar strength though implies some positives.

- cost base and profitability. Eliminating the £27m was a straightforward exercise given previous management had attempted to over diversify. Taking this cost out it is expected to deliver a profitable FY17.
Investment is now channelled towards PowerVR, MIPS and Ensigma. Staff are 75%,of costbase.

Ensigma is still embryonic and management will give it sometime to either establish or make a strategic decision. 

MIPS is strategic and will be invested in. They will not go after all markets as ARM is too dominant. MIPS will thrive were embedded multithreaded competitive advantages are key.

- Ray tracing : there are no licences yet. The tech is in silicon and hugely disruptive. Licenses are still 12-18months away as the solution is further enhanced. It is already 50x more efficient and better looking than a comparable high end Nvidia solution. Ray Tracing will come through to workstations, AR/VR and consoles first. Andrew doesn't believe it will extend to mobile or fully to tablets. One throwaway remark (HY style) was in workstations there is AMD and Nvidia. IMG will not be in completion with both!?!

- Intel : Andrew Heath still pushing to get them back onboard. He is visiting in 2 weeks.

- Mediatek : will dual source but have selected IMG for a range of SoCs across high and mid-range. They've licensed MIPS for baseband which should start shipping this FY.

- Spreadtrum / RDA both licenses will ship 8XE starting FY17, expectation is this will drive volume but too early to say how much.

- HiSilicon : looking to gain a larger share of business with 8XE

8XE has led to strong take up. IMG see being able to design software (Vulkan) across mid to high end as essential and are better positioned than previous years.

8XT is being actively licensed - though it hasn't been formally launched.

- Apple : no change in a strong relationship. 

- Mobile-eye - IMG remain key players in the roadmap despite ARM presence. 

- Pure - on track for 2016 sale. Down to a short list of serious parties. Likely they will want the building as well.

- Investor recordings will have the Q&A included going forward.

- an IMS will come out late September although IMG will not move to quarterly reporting.

END

I guess whilst HY and his team had serious issues with costs/business focus, they were pretty good at making licence deals with large semis/OEMs ie. they had credibility and relationships . Any royalty growth in the short/medium term is dependant on the big deals made by HY with Spreadtrum and Mediatek in his last few months as CEO. It still looks to me as though Heath & Co. are intent on selling IMG, hence the continued support from Institutional Investors.

Imagination Full-Year Results

The first results post-HY:

https://imagination-technologies-cloudfront-assets.s3.amazonaws.com/presentations/Full-Year-Results-Statement-FY2015-16.pdf

Presentation:
https://imagination-technologies-cloudfront-assets.s3.amazonaws.com/presentations/FY16-Results-Presentation.pdf


So, Heath & Millward are trying to make the 'best of a bad job' it's fair to say. The cost-cutting (Pure, Hellosoft, IMG Works) and streamlining  (IP business: PowerVR, MIPS, Ensigma = simples)  continues in earnest, licensing has fallen off a cliff, royalties are impacted by Apple slowdown. The proof of the pudding will be if the new team can get licensing going again, no easy task imo. Great to see the financial transparency in the results and slides of course.

Imagination Technologies Group plc (LSE: IMG, "Imagination", "the Group"), a leading multimedia, processor and communications technology company, today announces results for the year ended 30 April 2016.

FY16 financial performance

·      Results in line with trading update published 26 May 2016

·      Group revenue from continuing operations £120.0m (2015: £156.8m)

§ Licensing revenue from continuing operations £17.1m (2015: £37.8m) - includes one-off £5.7m revenue reversal for SoC Design contract

§ Royalty revenue from continuing operations £102.7m (2015: £118.4m)

·      Adjusted operating loss* for continuing operations £16.5m (2015: profit £29.8m)

·      Reported operating loss from continuing operations £61.5m (2015: profit £5.7m)

·      Adjusted loss per share was 9.2p (2015: earnings 6.3p); reported loss per share was 29.8p (2015: loss 4.9p).

·      Cash generated by operations was £16.7m (2015: out flow £4.0m)

·      Net debt at the year-end was £33.0m (30 April 2015: £27.2m and 31 October 2015:  £35.4m)

Restructuring initiative launched in February 2016

·      Focus on three core businesses; graphics and multimedia (PowerVR), processing (MIPS) and connectivity (Ensigma)

·      Sale of Pure and other non-core cash consuming activities on course - Pure attracting considerable interest

·      Substantial reduction in cost base - £27.5m of cost reduction in FY17

Operational review - identified where to focus resources to exploit leading positions

·      PowerVR - R&D prioritised on retaining technology leadership and consolidating position in mobile, automotive and DTVs/STBs

§ Good opportunities in emerging markets: AR/VR, vision systems and ray tracing

·      MIPS - focused on embedded processor market segments where we have strong positions and can exploit capabilities to build long-term, defendable positions

·      Ensigma - longer-term play, significant opportunity is emerging to license its connectivity IP, especially with the growth of IoT

·      MIPS and Ensigma - look to improve the prospects through partnerships, aimed at building necessary ecosystems and reaching scale more quickly

·      Group continues to see strong demand for licences for its core technologies and expects revenues to improve in FY17

Andrew Heath, Chief Executive, said:

"As previously indicated in our trading update in May, the last year has been particularly challenging for Imagination. The results reflect a combination of difficult trading conditions and a significant restructuring of the business.

"However, we have now taken the necessary action to put Imagination back onto a sound financial footing.

"We have also conducted a comprehensive operational review.  Going forwards Imagination will be an IP licencing business.  We will increase investment in PowerVR, which reported significant profits, building on our leading position and exploiting new markets.  We will focus MIPS and Ensigma where we have, or can build, differentiated, defendable positions.  We will also look to improve the prospects for both business units through partnership arrangements aimed at building the necessary ecosystems and reaching scale more quickly.

"Despite recent trading challenges, I see a bright future for Imagination. The market for our IP remains large.  We now have a sound financial position and have maintained our strong positions with leading customers.

"Overall we are well positioned to take advantage of a number of attractive end markets and deliver profitable growth."

Year end trading update

IMG announced a restructuring and trading update today. Andrew Heath, was also confirmed as permanent CEO.

Imagination Technologies Group plc (LSE: IMG, “Imagination”, “the Group”), a leading multimedia, processor and communications technology company, publishes a trading update for the year to 30 April 2016 and an update on its restructuring initiatives.

The Group’s underlying performance, before one-off items, has continued to be broadly in line with expectations, as stated in the announcement published on 17 March 2016. Royalty revenue was slightly ahead with licensing revenue behind.

The Group now expects revenues and adjusted loss before interest and tax from continuing operations to be materially below market expectations, as a result of one-off System-on-Chip (SoC) design services revenue contract adjustments and bad debt write-offs on two specific customers, neither of which can be treated as exceptional items. The one-off contract adjustments and bad debts have no negative impact on FY17 and the contract re-negotiations are expected to be incremental to FY17 revenues and profits.

We have been very focussed on cash and are pleased to report that year-end net debt was £33.0m (2015: £27.3m), better than expectations.

The restructuring initiatives announced in February and March, which include the sale of Pure and other non-core cash consuming activities, are on course, with Pure attracting considerable interest from potential buyers. The benefits of £27.5m will be delivered in full in the 2017 financial year.

The restructuring currently being undertaken is also likely to result in an exceptional charge in excess of £50.0m, to be expensed in full in FY16, which is in addition to the one-off items above. The cash cost of the restructuring will be less than £7.0m, around a quarter of the savings made. Further details are below.

The operational review, initiated on 8 February 2016, is progressing well. It will identify where Imagination needs to focus its resources in order to exploit its leading positions and ensure attractive returns. The Group expects to announce the initial results of this review along with its year end results on 5 July 2016.

The Group continues to see strong demand for licences for its core technologies and expects revenues to improve in FY17. Some of this improvement is already contracted through re-negotiated licensing and services contracts, which are part of the Group’s SoC design services activities.

Andrew Heath, who took over as Interim Chief Executive on 8 February 2016, has been appointed as permanent Chief Executive with immediate effect – see separate announcement.

Andrew Heath, Chief Executive, said:

“I am delighted to have been asked to lead Imagination on a permanent basis – the business has great technology, a very capable team around the world and strong prospects.

“Last year was notably difficult for the business. The restructuring initiated in February is progressing to plan. We will see the benefits from it in FY17. Our expectations for the new financial year remain unchanged.

“The operational review is also advancing well. I am increasingly confident that by re-focusing on our core IP licensing activities with disciplined capital allocation, we will deliver profitable growth and shareholder value.”

Financial impact of restructuring programme

Revenue

As previously announced, the Group has refocused and rescaled its SoC design service activities. As part of this work, the Group has re-negotiated certain loss-making agreements in order for those contracts to trade profitably going forward. This resulted in a significant revenue adjustment in FY16, part of which had previously been recognised in FY15.

The Group has also classified a further £2.2m of revenues as discontinued operations as part of its ongoing programme to sell or close certain activities.

The strengthening US dollar in FY16 has resulted in currency gains in revenue of around 6%.

Cost base

Operating costs are in line with expectations except for provisions for long standing debts with two specific customers. The operating cost reductions announced on 17 March 2016 are proceeding as planned and a full year saving of £27.5 million will be achieved in FY17, by divesting or shutting non-core and/or cash consuming units as well as reducing overheads.

Exceptional charges

As part of the restructuring currently being undertaken, the Group has made asset write-downs, incurred redundancy and onerous lease costs as well as recording a number of contract and tax provisions. In total, this is likely to result in an exceptional charge in excess of £50.0m.

Cash

The cash cost from the restructuring will be less than £7.0 million. It is restricted to redundancy payments and future property lease payments, where new tenants have not yet been found, and will be funded from existing resources.

Pure and other discontinued activities

The sale of Pure is progressing according to plan with the Group seeing considerable interest. Imagination is aiming to sell the business by the end of 2016. Pure has continued to trade in line with expectations during the sale process.

The Group also plans, as previously announced, to sell or close down other non-core, cash consuming businesses.

Tsinghua Unigroup takes stake in IMG

http://www.investegate.co.uk/imagination-tech-plc--img-/rns/holding-s--in-company/201605090700075791X/

Interesting development with Tsinghua (owners of Spreadtrum) taking a 3% stake in IMG. This feels like a defensive move, similar to the Apple and Intel strategic investments of yesteryear. In his final few months at the helm, SHY concluded two big deals important for re-establishing growth at PowerVR: one with Mediatek and the other with Spreadtrum, hence the relevance of this small investment.
Tsinghua and the importance of China as a future semiconductor powerhouse received special attention from SHY in the interims slide presentation.
I'm guessing the sight of Heath & Co scuttling across to Cupertino within 2 weeks of SHY's resignation , in order to try and sell off IMG didn't fill Tsinghua with confidence, so a statement of intent was perhaps required.

Restructuring update

IMG today gave a much needed update on the restructuring. We'd normally get an IMS at around this time.

I guess this answers the question of whether Heath & Co were going for a break-up/sale or slimmed down & focussed high margin IP company:

17 March 2016 Imagination Technologies Group plc Restructuring update Imagination Technologies Group plc (LSE: IMG, “Imagination”, “the Group”), a leading multimedia, processor and communications technology company, announces an update on its restructuring initiatives.

On 8 February 2016, the Group announced that it will reduce total operating costs of its ongoing businesses by £15 million in the next financial year, ending April 2017. These cost reductions will be implemented by the end of the current financial year, ending April 2016. The Group has seen considerable interest in Pure, its consumer electronics business, which it is planning to sell by the end of 2016.

Today the Group announced an acceleration of its restructuring programme and will divest or shut down non-core and/or cash consuming units as well as further reduce overheads. This will reduce its cost base by an additional £12.5 million on a net annualised basis. The savings will be delivered in full in the financial year ending April 2017.

These reductions will enable the Group to reinforce and build on the current strengths in its core three businesses; graphics and multimedia (PowerVR), processing (MIPS) and connectivity (Ensigma). There are no planned reductions in these areas.

Imagination expects to reduce the Group’s headcount around the world by 200 people as part of these cost-cutting measures. This is in addition to the 150 headcount reduction resulting from the first restructuring announcement on 8 February 2016. However, Imagination is actively seeking to fill over 50 roles in its PowerVR business as part of its programme to further strengthen this business.

As part of the further restructuring announced today, the Group will undertake asset write-downs as well as record a number of contract and tax provisions. The cash cost of the total reduction will be less than £5 million, restricted to redundancy payments, and will be funded from existing resources. The Group continues to have sufficient cash resources to meet its obligations going forward.

In aggregate, the Group will deliver £27.5 million of cost savings in full by the end of April 2017.

The operational review, initiated on 8 February 2016, will identify where Imagination needs to focus its resources in order to exploit its leading positions and ensure attractive returns.

The Group has a strong position in the graphics and multimedia markets with PowerVR. Its MIPS business is strong in networking, set top boxes and embedded processing and Ensigma, the connectivity business, has leading technologies in low energy Wi-Fi and Bluetooth.

The Group sees plenty of opportunities to provide combinations of these three areas to customers and to apply its technologies across a number of markets.

The non-core businesses that are being divested include activities that primarily aligned with the consumer radio business in the past. The System on a Chip (SoC) design business will be refocused and rescaled. There will also be further reductions in overheads, which are not focussed on the Group’s core activities.

In the current financial year, both royalty and licensing revenues continue to be in line with the Board’s expectations.

Andrew Heath, Interim Chief Executive, said:

“This swift and decisive action will put us back on a sound financial footing and will enable us to have the necessary resources to further strengthen our three core businesses. They are unaffected by these cuts."

“The ongoing operational review will identify clearly where we need to focus, building on our current strengths and allocating the right capital to ensure growth and attractive returns.”

Power VR Series 8XE

A cracking PR today from IMG at the start of Mobile World Congress.

Of course huge credit goes to ex-CEO SHY for putting this together (there's the rub).

Usually with a new PVR series, the high-end part comes out first (via Apple) but this time it looks as though there has been a deliberate change of strategy , acknowledging the importance of winning back GPU volume from competitors.

https://imgtec.com/news/press-release/latest-imagination-powervr-series8xe-gpus-set-new-standard-for-performance-power-and-area-in-cost-sensitive-markets/

22nd February, 2016 – Imagination Technologies (IMG.L) announces a new family of mass market PowerVR GPUs that set a new standard for performance, power and area in cost-sensitive markets. PowerVR Series8XE GPUs deliver the best performance/mm2 for the smallest silicon footprint and power profile, while also incorporating advanced features such as hardware virtualization, multi-domain security, and support for the latest APIs including OpenGL® ES 3.2 and Vulkan™ 1.0*. Series8XE demonstrates Imagination’s continuing leadership in cost-sensitive GPUs.

Today’s consumers want the latest features and technologies in their devices, and they want those devices at the lowest possible prices. To keep costs down, many of these devices are currently shipping with older APIs such as OpenGL ES 2.0. Imagination’s Series8XE GPUs support the latest APIs to enable the best user experience at the industry’s lowest cost.

Peter McGuinness, director of multimedia technology marketing, Imagination, says: “Because of the differentiation they provide, PowerVR GPUs are at the heart of the best-selling phones, tablets, and automotive infotainment units. With the new Series8XE, we’re enabling chip companies and OEMs targeting cost-sensitive applications to provide the best possible user experience at the lowest power and area budgets. We believe it is the best entry-level GPU core ever designed.”

The new Series8XE GPUs have already been licensed by multiple lead customers for mobile/tablets, 4K TVs, OTT set-top boxes, automotive and wearables. They are now being released for general licensing, enabling an even wider range of companies to leverage PowerVR to gain competitive edge and build enduring success. This builds on the momentum of the XE family where there are licensees across all key market segments, double digit licensee growth and a strong pipeline of opportunities.

Joe Chen, executive vice president and co-chief operating officer at MediaTek, says: “Imagination’s PowerVR XE families of entry-level GPUs are designed to deliver the right feature set at the right price point for the next generation of connected devices. MediaTek is delighted to be working with Imagination to bring the benefits of Series8XE GPUs to manufacturers and consumers worldwide.”

A perfect match for cost-sensitive applications

PowerVR Series8XE GPUs are designed to deliver the best possible real world user experience for cost-efficient products including low-cost phones and tablets, industrial displays, IoT, 4K set-top boxes and TVs, and low- to mid-range automotive infotainment and cluster electronics. The GPUs are designed to provide the best experience on GUI, HMI (human machine interface), browser and email applications, as well as casual games. By the numbers:

• Up to 25% smaller versus Series7XE GPUs for the same fillrate, providing the same compelling user experience at lower cost
• 60% to 100% better performance per mm2 over a range of industry benchmarks, and 30 – 45% area reduction versus competitors’ GPU IP cores with the same fillrate

Selected PowerVR Series8XE GPUs also include support for PVRIC3, the latest PowerVR lossless image compression technology, and 10-bit YUV for video streaming in hardware as options – key for optimal integration with H.265 10-bit profiles in set-top boxes and TVs. The new GPUs support Khronos APIs including OpenGL ES 3.2, and Vulkan 1.0 to deliver exceptional performance with reduced CPU requirements.

Security is at the heart of everything

With support for hardware virtualization and Imagination’s OmniShield™ multi-domain security, PowerVR GPUs uniquely enable customers to build systems in which applications and operating systems can run independently and reliably on the same platform in segments such as automotive, set-top boxes and TVs. This is becoming increasingly important as use models and services evolve across a wide range of connected products – demanding that devices be designed to support numerous unique applications, various content sources, and in-the-field software updates from service providers and operators, all while ensuring privacy and protection from security attacks.

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 through developer forums at http://community.imgtec.com/developers/powervr/.

Physical Design Optimization Kits (DOKs) for Imagination’s PowerVR Series8XE 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.

Availability

PowerVR Series8XE GPUs are available for licensing now in scalable configurations starting at 2 pixels per clock (GE8200) and 4 pixels per clock (GE8300) IP cores. Contact info@imgtec.com for more information.

To access Imagination’s press kits for Mobile World Congress 2016 and Embedded World 2016, please visit: https://imgtec.com/press-kit/. Email tradeshows@imgtec.com to arrange a personal meeting with Imagination in Barcelona or Nuremburg.

Sir HY steps down and Pure to be sold

IMG today announced that Sir HY has stepped down and restructuring is on the way. Pure is finally to be sold off and the company will focus on its core activites ie. profitable IP. 

Sir HY's vision and leadership  transformed Videologic to a world-leading tech IP company Imagination Technologies, important to big players like Apple. Unfortunately, things started to get out of control around 5-6 years ago but the Board failed to do their jobs properly and force HY to make the necessary changes. The voices of long-term loyal supporters of IMG fell on deaf ears and the investors, including the brilliant engineers who form the backbone of IMG, suffered big financial losses.

PURE maybe first to go, but I'm sure it won't be the last. Today's announcement signals IMG are serious about turning our company around imo, and whilst the loss of Sir HY as CEO is highly regrettable, it was inevitable. A CTO role would have suited him better but can't see that happening. Best wishes to Sir HY.
Oh yes, and there was another profit warning...

The statement:

Imagination Technologies Group plc (LSE: IMG, “Imagination”, “the Group”), a leading multimedia,
processor and communications technology company, announces that Sir Hossein Yassaie has
stepped down as Chief Executive with immediate effect. Andrew Heath, one of the non-executive
directors, has been appointed Interim Chief Executive.
The Group also publishes a trading update as the Board now expects to report an EBIT loss for the
financial year to 30 April 2016.
Imagination is also announcing details on restructuring initiatives. These include the sale of Pure, its
consumer electronics business, and the expectation at this stage that Imagination will reduce total
operating costs of its on-going businesses by £15 million in the next financial year, ending April
2017.

Board change

Andrew, who has been appointed Interim Chief Executive, joined the Group’s Board in August 2012
as a non-executive director. He has a wealth of international business experience gained through
executive roles at Rolls-Royce and more recently as Chief Executive Officer of Alent plc. The Group
will start the search for a new Chief Executive immediately, assessing both internal and external
candidates in the process.
As a result of his appointment, Andrew will step down from the Remuneration and Audit committees.

Trading update

Since the Group published its half year results in December 2015, market conditions have not
improved and the slow-down in the overall semiconductor sector has continued, reinforced by global
uncertainty about future trading prospects with China.
Royalty returns from some key customers have fallen short of previous expectations for the last
calendar quarter of 2015 with lower forecasts for the first calendar quarter of 2016. While the
licence pipeline remains strong, and licences and related revenues already secured this year amount
to £24 million, the pace of deal closure is falling short of prior expectations.
The royalty reduction coupled with continuing uncertainty over licence revenue timing is likely to
result in a material reduction in expected FY16 revenues and resulting profitability. The Group now
expects to report an EBIT loss for the financial year to 30 April 2016.
The Group continues to have sufficient cash resources to meet its obligations going forward.

Restructuring initiatives

Following a detailed analysis of overhead expenses and a preliminary review of research and
development expenditure, the Group will implement a number of restructuring and cost cutting
initiatives and plans to sell Pure.
At this stage, the Group expects to reduce total operating costs of its on-going businesses by £15
million in the next financial year ending April 2017, with a modest impact in the current financial

year. Of this, £2 million will be re-invested in Power VR, further strengthening the Group’s flagship
multimedia product.
The Group believes there are potentially more appropriate owners for Pure, given the economies of
scale in the consumer electronics market, who will be able to leverage its leading technologies and
brand. Imagination will treat the Pure division as a discontinued operation with immediate effect.
Imagination will also initiate a full operational review, including all R&D expenditure. This review,
which is expected to last several months, will ensure investment is focused on core activities which
are set to deliver attractive returns.

Bert Nordberg, Chairman, said:

“Hossein has led the creation of Imagination’s successful IP business model over many
years and through his vision and drive, the Group has become a global technology
leader. His many notable achievements include the development of graphics and video
processors for smartphones, gaming devices, TVs and the automotive industry and the
introduction of digital radios as a mainstream product.
“On behalf of the Board and everyone at Imagination, I would like to thank him for his
considerable contribution, his passion, leadership and many, many achievements. We
all wish him every success for the future.
“Trading conditions continue to be very demanding. We need to be very focussed on
continuing to meet our customers’ needs, and commercialising our IP, cost effectively,
based on our core business.
“The measures announced today will allow the business to maintain the necessary
investment in key areas, in order to further strengthen our unique IP, technologies and
system solutions. They will also set the Group on track to deliver attractive returns in
the coming years.”

Sir Hossein Yassaie, commented:

“I am proud of the successes Imagination has achieved over the last decade or so. We
have built Imagination from very small beginnings into the leading provider of graphics
processors as well as general purpose micro-processors and connectivity solutions.
Imagination is now one of the genuine UK-headquartered companies with significant
global influence and impact.
“It’s now time for someone else to lead this great company. I have been fortunate to
work with a hugely talented team and would like to thank all my colleagues for all their
support and dedication over the years. I would also like to thank the many customers
and partners who have chosen to work with us over many years.”
The information required to be given in relation to section 430(2B) of the Companies Act 2006 in
relation to Sir Hossein Yassaie will be available on the Group’s website in due course.

Statement re. Pure

IMG issued the following rns today:

Imagination Technologies Group plc (LSE: IMG, “Imagination”, “the Group”), a leading multimedia, processor and communications technology company, notes the recent press coverage.

As stated at the time of the half-year result in December 2015, the Group recognises the challenges it is facing given the current economic backdrop of the industry in which it operates. The Group is already and actively controlling the investments that it is making to minimise Opex growth. Imagination continues to monitor the industry situation and will take further actions as and when necessary.

Pure’s prime focus is now the growing digital radio market and its financial performance is improving rapidly. The Group is reviewing its strategic options for this business.

END

This was in response to yesterday's Sunday Times article which stated that in response to institutional shareholder pressue, the chairman and new CFO were going to offload Pure and also enter a sale & leaseback arrangement for the new HQ buildings.

It's been said many times ,over many years, on this blog, and pretty much by everyone else connected with IMG, that Pure needs to go. Note the prime focus of Pure has finally been changed from the 'of strategic importance' and 'pathfinder' to 'now the growing digital radio market'.

It was always the case that removing Ensigma's R&D out of Pure would perhaps make it profitable but that misses the main issue - we are an IP company, not a consumer OEM and if the IP is good enough (ensigma etc)  then 'they will come' and you don't need to put product on the shelves yourself. I don't think we'll ever approach the 30-40% margin aims as long as Pure is part of IMG, regardless of how well the rest of the business is doing.