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."

Enquiries

Imagination at MWC 2014

Relevant news will be posted here:

http://www.imgtec.com/News/Release/index.asp?NewsID=837

MOBILE WORLD CONGRESS, Barcelona, Spain – 24 February, 2014 – Imagination Technologies (IMG.L) is rolling out the first intellectual property (IP) core based on its innovative PowerVR Raptor imaging processor architecture which takes image processing to the next level for next generation applications. The high-performance, low-power, low-area PowerVR Series2 V2500 core offers a scalable and highly-configurable solution targeting a broad range of devices from cost-sensitive, mass-market feature phones to automotive to connected home security to premium smartphones and tablets. 

http://www.imgtec.com/News/Release/index.asp?NewsID=838

MOBILE WORLD CONGRESS, Barcelona, Spain – 24 February, 2014 – Imagination Technologies (IMG.L) and Actions Semiconductor Co., Ltd. (Nasdaq: ACTS), one of China’s leading fabless semiconductor companies, are extending their collaboration in bringing advanced graphics to a range of Actions’ OWL chipsets which are designed to address each segment of the tablet market. Actions is leveraging Imagination’s PowerVR graphics in multiple generations of its OWL chipsets, including the ATM7021, ATM7039 and ATM7029B, and will continue to use PowerVR for future generations. 

http://www.imgtec.com/News/Release/index.asp?NewsID=841

MOBILE WORLD CONGRESS, Barcelona, Spain – 24 February, 2014 – Imagination Technologies (IMG.L) announces that Toshiba Corporation’s new TZ500 series applications processors integrate multiple Imagination IP cores including PowerVR graphics and video processors (GPU and VPU) and Ensigma Series4 radio communications processor (RPU) for 802.11ac 2x2 functionality. - 

http://www.imgtec.com/News/Release/index.asp?NewsID=843

Jerusalem, Israel, and London, UK – February 24^th, 2014 – Mobileye, the world leader in Advanced Driver Assistance Systems (ADAS) and Imagination Technologies (IMG.L), announced today that they are extending their partnership focusing on creation of highly reliable, efficient vision processing for Mobileye’s ADAS technology.

Mobileye has already shipped over 2.5 million EyeQ2 and EyeQ3 SoCs that are based on Imagination’s MIPS processor architecture. These vision processors, together with Mobileye’s broad range of algorithms for mono-camera driver assistance systems, target vehicle active safety applications such as lane departure warning, vehicle detection, pedestrian detection, intelligent headlight control and traffic sign recognition

http://newsroom.intel.com/community/intel_newsroom/blog/2014/02/24/intel-gaining-in-mobile-and-accelerating-internet-of-things

New PVR Series 6 cores (Merrifield and Moorefield):

New Intel® Atom™ Processors and LTE-Advanced Communications Platform
Intel launched the 2.13GHz Intel Atom processor Z3480 ("Merrifield") that offers the ideal combination of fast, smart performance and long battery life for Android smartphones and tablets. The 64-bit ready SoC delivers best-in-class compute performance for the mainstream and performance segments, and solidly outperforms the competition in compute-intensive application, web application and light media editing performance.¹ Merrifield also delivers best-in-class battery life.²

Based on Intel's 22nm Silvermont microarchitecture, the new processor also features a PowerVR* Series 6 Graphics IP core from Imagination Technologies* and is designed for simple pairing with the Intel® XMM™ 7160 LTE platform. Merrifield is the first Intel Atom SoC to feature the new Intel® Integrated Sensor Solution, which efficiently manages sensor data to keep applications smart and contextually aware even when the device is in a low-power state. Intel expects Merrifield-based devices from multiple OEMs to launch beginning in the second quarter.

James noted that all Intel Atom processors today support a 64-bit computing experience. "Sixty-four bit computing is moving from the desktop to the mobile device," James said. "Intel knows 64-bit computing, and we're the only company currently shipping 64-bit processors supporting multiple operating systems today, and capable of supporting 64-bit Android when it is available." Intel has also delivered 64-bit kernels across operating systems, so customers who choose Intel Atom have a ready foundation for a 64-bit experience as the operating system and applications evolve.

Intel also disclosed new details on its next-generation 64-bit Intel Atom processor, code-named "Moorefield" for devices expected to be available in the second half of the year. Building on the Merrifield feature set, Moorefield adds two additional Intel architecture (IA) cores for up to 2.3GHz of compute performance, an enhanced GPU and support for faster memory. Moorefield is optimized for Intel's 2014 LTE platform, the Intel® XMM™ 7260, which the company also introduced today

http://www.pcper.com/news/Processors/MWC-2014-Intel-Atom-Moorefield-and-Merrifield-officially-unveiled

Merrifield Z34XX  (Rogue G6400)

Moorefield Z35XX (Rogue G6430)

http://withimagination.imgtec.com/index.php/powervr/allwinner-ultraocta-a80-processor-packs-powervr-series6-gpu-64-cores

First previewed at CES 2014, the Allwinner UltraOcta A80 processor is now making its formal debut at MWC 2014. The full set of specifications includes an eight-core big.LITTLE HMP (GTS) CPU paired with a PowerVR G6230 GPU, providing some of the best horsepower for graphics and compute available right now. 

http://www.pcper.com/news/Mobile/MWC-2014-Allwinner-launches-UltraOcta-A80-processor-bigLITTLE-and-PowerVR

Sir Hossein Yassaie, CEO, Imagination Technologies, said, "Our long-standing strategic relationship with Allwinner has resulted in a series of amazing products that offer high performance and low power consumption for highly affordable devices. The graphics and compute capabilities of the newly-announced Allwinner UltraOcta A80 processor are truly impressive. 

“With the UltraOcta processor, Allwinner are leveraging the full benefits of the Rogue GPU architecture to provide the best combination of features. The choice of a fully-featured PowerVR G6230 GPU enables them to deliver one of the best platforms for Android and other operating systems."

Announced just after MWC but a good win for Caskeid/FlowCloud


London, UK – 28 February, 2014 – Imagination Technologies (IMG.L) and Onkyo, one of the world’s foremost creators of innovative home entertainment products, announced today that they have entered an agreement to collaborate on the next generation of wireless audio music streaming systems and the global expansion of High Quality Audio. 
Says Munenori Otsuki, president and CEO, Onkyo Corporation: “In the last decade we have witnessed a massive increase in music consumption. Unfortunately during this period audio quality has been lost in the rush for convenience. The time has come to raise the bar back up. By working with Imagination and its partners, who are at the centre of this movement, we will aggressively expand wireless audio music streaming and High Quality Audio out of Japan to the rest of the world.” Onkyo launched Japan’s most successful High Quality Audio download platform called e-onkyo music in 2005.
Hossein Yassaie, CEO, Imagination added: “We are delighted to be working with such a technically capable audio company as Onkyo. Imagination’s Caskeid and FlowCloud technologies are crucial to enabling both the Streaming Music and High Quality Audio revolutions. Onkyo is a brand that can engineer and carry these products to market. I am certain the music listening experience is going to change through collaborations of this kind.” 

Imagination's Summary of MWC:

http://www.imgtec.com/News/Release/index.asp?NewsID=848


London, UK – 3^rd March, 2014 – Imagination Technologies (IMG.L) reports notable new silicon devices and mobile products using its range of SoC IP processors at Mobile World Congress (MWC) 2014 in Barcelona, which concluded on February 27^th.
Imagination’s technologies were at the heart of a broad range of products from the latest mobile phones and tablets to IoT (internet of things) and wearables, and also enabled exciting applications for imaging, augmented reality, gaming and more, which were demonstrated at the show.

Photos of the IMG stands from MWC  (thanks Susi):