12 Aug 2016 16:20
12 August 2016
Imagination Technologies Group plc
Annual Financial Report and Annual General Meeting
Imagination Technologies Group plc (LSE: IMG, "the Group") announces that in accordance with Listing Rule 9.6.1, copies of the following documents have been submitted to the National Storage Mechanism and will shortly be available for inspection at www.morningstar.co.uk/uk/NSM
1. Annual Report and Accounts for the year ended 30 April 2016 (the 'Annual Report');
2. Notice of 2016 Annual General Meeting (the 'AGM Notice');
3. Form of proxy;
4. Form of direction for participants in the Imagination Technologies Group plc Share Incentive Plan; and
5. Notification of availability of the Annual Report and the AGM Notice on the Company's website.
The above documents have been posted or otherwise made available to shareholders. In accordance with DTR 6.3.5R(3), the Annual Report and the AGM Notice is also available on the Company's website at www.imgtec.com.
The Annual General Meeting ('AGM') of Imagination Technologies Group plc will be held at the offices of Jefferies International Limited, Vintners Place, 68 Upper Thames Street, London, EC4V 3BJ on Tuesday, 6 September 2016 at 9:00am.
In compliance with The Disclosure and Transparency Rules (DTR) 6.3.5, the information in the Appendix below is extracted from the Annual Report and should be read in conjunction with the Company's Final Results announcement issued on 9 June 2016. The Annual Report and the Final Results announcement are available at www.imgtec.com. This announcement and the Final Results announcement together constitute the material required by DTR 6.3.5R to be communicated to the media in unedited full text through a Regulatory Information Service. This material is not a substitute for reading the Annual Report. Page numbers and cross-references in the extracted information below refer to sections in the Annual Report.
Enquiries:
Imagination Technologies Andrew Heath, Chief Executive Officer Guy Millward, Chief Financial Officer and Company Secretary
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+44 (0)1923 260511 |
Instinctif Partners Adrian Duffield / Kay Larsen |
+44 (0)207 457 2040 |
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APPENDIX: ADDITIONAL INFORMATION REQUIRED BY DTR 6.3.5
Audit Reports
Audited financial statements for the financial year ended 30 April 2016 are contained in the Annual Report. The Independent Auditor's Report on the consolidated financial statements is set out in full on pages 67 to 69 of the Annual Report. The Independent Auditor's Report on the consolidated financial statements is unqualified and does not contain any statements under section 498(2) or section 498(3) of the Companies Act 2006.
Principal risks
The following information is set out on pages 16 to 18 of the Annual Report.
The Group places great importance on the identification, assessment and effective mitigation and monitoring of our risks. Our approach to risk management helps us to deliver our objectives and maximise the returns of the Group.
The following table describes the risks that the Board considers to have a potential material impact on the Group. They are specific to the nature of our business notwithstanding that there are other risks that may occur and may impact the achievement of the Group's objectives.
The Board discussions on risk have focused on these items and the actions being taken to both manage and review them regularly.
Risk or uncertainty and potential impact | How we manage it |
COMPETITIVE POSITION The business operates in a highly competitive market and needs to be able to respond rapidly to competitive threats as well as customer requirements. A change in the business environment or business models employed by our customers could have a detrimental impact on our financial performance.
| Drive and deliver new product developments and enhancements which differentiate us competitively Establish trusted relationships with customers to ensure we fully understand their strategic direction Monitor and understand our competitors Focus on being responsive to customers and improving the quality and delivery of our products Seek out new market opportunities and pioneer unexploited sectors Adapt a flexible approach to different business models Obtaining advice on critical underpinning technologies and developments relevant to our core products from the Technology Advisory Committee. |
INTELLECTUAL PROPERTY Patent-related threats from third parties seeking to use patents as an alternative way of generating revenue. Infringing others patents. |
Build a portfolio of strategically important patents Regularly screen relevant third party patents to avoid infringement Track industry movements, particularly involving standardisation bodies, to predict and avoid patent risks Build strong relationships with external counsel to enable us to act quickly and defend our position Work closely with customers to respond quickly to potential threats. File more patents in key markets like China and India |
CUSTOMER CONCENTRATION The business currently has a large portion of revenue related to a small number of customers and technologies. Consolidation within the industry could drive this further and increase Imagination's dependence on a limited number of customers. |
Build a portfolio of technology that appeals to a broad range of customers and market segments Develop relationships with a wider number of customers spread across different sectors and jurisdictions Monitor trends and changes in the semiconductor industry Develop business models that reflect the changing industry landscape Develop sales strategies to broaden our customer base Increase marketing activity to highlight the breadth of marketsthat we target and operate |
CYBER RISK Cyber risk causes disruption to the business or loss of IP following a cyber-attack. This could cause interruption of internal or external facing systems, including; interruption to the business caused by a loss of data and reputational damage from a loss of personal or confidential data. The cost or effort to reconstitute data that has been stolen or corrupted and commercial loss from the theft of commercially sensitive data, including IP |
Establish a defence by deploying the latest generation of firewall protection Ongoing improvement in the rigour of authentication processes including wider use of single sign on Improve protection of confidential data on portable computers Improve process of system patching to close security loopholes Use of third party audits |
PRODUCTS MEETING CUSTOMER REQUIREMENTS Unable to deliver new products on time or achieve performance that does not meet market requirements in terms of specification, quality or timeliness could result in loss of market share with a corresponding impact on financial performance. |
Put in place resources to manage and monitor customer requirements Close project management, including using project management systems Checks throughout the project to ensure the expected outcomes including specification and timing will be achieved Thorough roadmap planning process including discussion with key customers for each business unit Additional R&D resources allocated to key projects Management training programme Change customers perception that we offer smart solutions beyond mobile |
MACRO-ECONOMIC DEVELOPMENTS Changes in global economic conditions can have a significant impact on our partners and customers and therefore may affect the financial performance of the business. |
Broad customer, engineering and products base tobalance risk Effective forecasting of business performance Foreign exchange hedging strategy implemented
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EFFECTIVE MANAGEMENT OF PEOPLE In a complex, geographically diverse and fast moving business it is critical that we retain and attract the skills and capabilities needed in sufficient numbers to deliver our objectives and maintain an entrepreneurial and dynamic culture. Internal control failure such as an employee committing fraud or bribery due to lack of integrity or awareness |
Ensure competitive remuneration package is designed to attract, retain and reward employees with ability and experience to execute group strategy Invest in management development training Ensure adequate succession planning is performed and documented for all key personnel Identify behaviours to support the development of Company culture Increase frequency and quality of communications
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DEBT FACILITIES After difficult trading conditions in FY16, the Group breached covenants on its banking facilities. HSBC has agreed to waive the breach and waive or reset FY17 covenants but the risk remains that further breaches could result in the withdrawal of the facility. |
Costs have been reduced to reduce cash out flows. Businesses are being sold and proceeds will reduce or eradicate debts. Property assets are used as security for the bank facility and could be sold to pay back the facility if required. Net debt has already been reduced by April 2016 from the position left by previous management at the end of October 2015. Cash is managed on a daily basis with detailed monitoring.
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Directors' Responsibility Statement
The following information is extracted from page 31 of the Annual Report.
The directors consider that the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the group's position and performance, business model and strategy.
Each of the directors, whose names and functions are listed on pages 25 to 27 confirm that, to the best of their knowledge:
· the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the company and the undertakings included in the consolidation taken as a whole; and
· the strategic report includes a fair review of the development and performance of the business and the position of the issuer and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.
Related party transactions
The following is extracted from Note 25 on page 110 to 111 of the Annual Report.
Identity of related parties
Transactions between the Company and its subsidiaries have been eliminated on consolidation and are not disclosed in this note.
Transactions with stakeholders deemed to be related party under IAS24
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| 2016£'000 | 2015£'000 |
Consolidated Income Statement Revenue - Ineda Revenue - Toumaz |
| 175 1,501 |
3812,870 |
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| 1,676 | 3,251 |
Statement of Financial Position Trade Debtors - Ineda Trade Debtors - Toumaz |
| - 940 |
13021 |
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| 940 | 151 |
Toumaz and Ineda are both deemed to be related parties under IAS24 due to the provision of key management services between the respective entities and Imagination Technologies Group plc.
Transactions with key management personnel
Key management personnel comprise the directors. In addition to their salaries, the Group also provides non-cash benefits to directors and contributes to post-employment benefit schemes on their behalf. Directors also participate in the Group's share incentive programmes. The share based payments are valued at their fair value at the date of grant. Full details of directors' compensation, including post-employment benefits is given in the Directors' remuneration report on pages 48 to 65.
The key management personnel compensations are as follows:
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| 2016£'000 | 2015£'000 |
EmolumentsPension contributionsShare based payments* |
| 89261(854) | 1,12446848 |
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| 99 | 2,018 |
* During the year, there was forfeiture of share awards for key management personnel resulting in a credit in the overall share based remuneration charge in the consolidated income statement.
Additional details of all key management's interests in the Company's shares and share options are set out in the Directors' remuneration report on pages 48 to 65.