Imagination Technologies Confident For Continued Progress

LONDON (Alliance News) - Imagination Technologies Group PLC Wednesday expressed confidence that its progress will continue in line with its expectations, forecasting a heavier second half weighting than usual due to new product shipments, such as those with Apple Inc later in the year.

The company said that in the period from May 1 to Tuesday, it had seen encouraging activity in licensing, across all three main intellectual property product areas and its customer base.

In the quarter to end-June, royalty revenues were in line with expectations, as it saw growth from a number partners, as well as a short-term hit from product transitions. The average royalty rate for the quarter remained strong, Imagination said, and marginally higher than the previous year.

Imagination warned that both royalty and licensing revenues were hit by strength of sterling during the period, and cautioned that due to recent volatility of the pound it is difficult to predict what this hit will be for the full year to end-April 2015. Despite this, Imagination said it continued to be active in hedging its exposure to currency movements.

Imagination said its progress on licensing in the period supports its target of 10% licensing revenue growth for the full year.

The company's Pure business is trading in line with expectations following organisational changes at the end of the previous year, and it expects to make further progress with its latest product releases. This is expected to improve the businesses performance for the full year.

The company expects shipments of non-MIPS processor cores to increase in the year, with a strong weighting towards the second half, driven by new product launches. Shipments of MIPS processor cores are expected to be broadly flat year on year, although significant growth is expected in future years.

Jefferies maintained its Buy rating for the company, saying that whilst "currency may have its say but underlying licensing (up 10% year-on-year) and royalties are continuing to show year-on-year growth."

Shares in Imagination were trading up 3.3% at 195.20 pence Wednesday morning, the second biggest gainer in the FTSE 250.

By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews

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