Imagination Tech profits fall less than expected despite smartphone slowdown

- Adjusted operating profits fall 28% but beat forecasts- Revenues increase 13%- Internet of Things trends positive, smartphone growth slowsAnnual profits at Imagination Technologies dropped despite higher revenues in the year to April 30th, though figures still managed to beat analysts' forecasts.The company, which makes multimedia, communications and general purpose processors, also impressed the market on Tuesday by saying the demand for its Ensigma communications technology is "accelerating [...] driven by the emerging trends in the Internet of Things and home connectivity", as it continues to face a slowdown in the core smartphone market. Characteristics in the latter market "are trending towards maturity", it said.Imagination reported an adjusted operating profit of £24.1m, down 28% from £33.5m the year before but ahead of the consensus estimate of £23.2m.The company said reported operating profit fell to just £0.02m from £11.3m as underlying expenses increased by 30% due to investment made in R&D together with the full-year impact of the 2013 acquisition of MIPS.Group revenues increased by 13% to £170.8m, just shy of the £174m forecast.Licensing revenues jumped by 32% to £38.3m, helped by "substantial growth" in the second half from a range of existing and new licensees. Royalty revenues increased 15% to £109m.The company said that partners' chip shipments (excluding MIPS) fell by 1% to 530m units due to the slowdown in growth of the smartphone market and short-term competitive activities in the lower-end mobile segments. MIPS' partner shipments totalled 729m units.Meanwhile, its digital radio division Pure continued to experience a "difficult environment in the UK and some exports markets" with revenues falling 10% to £23.2m."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," said Chief Executive Hossein Yassaie.The stock was up 6.6% at 248.94p by 08:12 on Tuesday.BC