Imagination Technologies Group Regulatory News (IMG)

10 September 2009

Imagination Technologies Group plc

Interim Management Statement

Imagination Technologies Group plc ('Imagination', LSE: IMG), a leading multimedia, communications and embedded processor technology company, is today issuing its Interim Management Statement for the period from 1 May 2010 to 9 September 2010.

Overview

There continues to be active and growing interest and engagements across the Group's technologies from both existing and new partners. This is driven by the strong relevance of the Group's IP to key transitions in existing markets as well as providing key enabling technologies for emerging markets. As a result of this focus, relationships with many of our partners are increasingly becoming long-term and strategic in nature and fundamental to their business success.

Technology

The Group continues to see growing engagements and commitments to both mature and the very latest POWERVR SGX cores, including several key market players. In addition, we have clear indications from several partners that our next generation graphics technology, POWERVR Series6, will maintain our technological edge over our competition. This latest generation will take advantage of our ecosystem which is the largest and fastest growing in the embedded and mobile graphics space. We already have multiple lead partners, who have selected this next generation technology and are working closely with us.

In addition to the continued adoption of our graphics technologies, we are seeing growing demand and engagements for our other key technologies. In particular, we are seeing growing adoption of our POWERVR video processors, which are increasingly being used alongside our graphics, driven by both video content and more recently by personal video telephony. The level of partners' interest and engagements in our ENSIGMA UCC - multi-standard communication and broadcast IP - has accelerated recently as the efficiency benefits of this offering become more apparent with the growing and diverse range of digital broadcast and connectivity requirements in the latest consumer products. Many of the above solutions, as well as our drive into the internet connected devices, take advantage of our multi-threaded META processor cores.

In the current financial year, we therefore expect to see a progressive increase in the number of partner chip designs incorporating our graphics technologies, video technologies as well as a growing proportion of devices with multiple Imagination IP cores including our ENSIGMA and META technologies.

As a result of these trends we expect licensing revenue to continue to make progress across the financial year as a whole, although as usual it is difficult to predict the precise timing of the closure of licensing deals.

Taking into account the formal royalty statements received from licensing partners for the second calendar quarter of the year, we expect the strong volume unit and royalty revenue growth to continue. This is driven by the continued increase in volume of existing silicon devices incorporating Imagination's IP, as well as the on-going launches of additional devices, in an ever growing number of new end-user products incorporating our partners' chips. The actual rate of increase in volume this financial year will be influenced by consumer spending and our partners' market deployment plans. All indications are that we are on track to achieve our target of around 200 million units shipping in the 2010/11 financial year.

We expect to see shipments increase in all markets with further significant growth in the mobile phone segment, as well as accelerated growth in our newer markets including TV/Set-Top Box and mobile computing (tablets/netbooks/ultra low power PC's).

PURE

PURE has continued to fulfil its prime role of path-finding and promoting the Group's technologies. The general adoption of digital radio standards overseas has continued to progress, albeit with variable rates of market development across different countries. We have also seen the market for connected audio devices starting to emerge globally. PURE has continued to develop leading and compelling products to address and drive these markets.

The recent launch of FlowSongs, which for the first time enables both one-button music purchase directly from a radio and easy delivery of cloud-based content, is among the key steps in developing these markets. This has been received very positively. This initial service will be extended over time to take full advantage of the capabilities of the underlying technologies.

We see PURE's groundwork in optimising our technologies for connected devices as key in enabling the Group to be able to provide a range of technologies, based around ENSIGMA UCC and META. These technologies are required for the increasing number of consumer and industrial devices which will inevitably incorporate connected functionality as standard.

We previously mentioned the tougher trading conditions in retail in the second half of last financial year. We have seen this continue into the current financial year with retailers remaining cautious. The overseas markets, whilst progressing, are also not immune from the current economic climate. However, based on the range of new products and the development of overseas markets, and despite the economic climate, we are looking for progress in PURE revenues for the year as a whole.

Outlook

The Group is on track for further good growth in the current financial year. This is based on the active licensing pipeline, current chip volume and royalty revenue growth, plus further expected development from PURE as overseas markets emerge and new technologies are delivered. Whilst short term timing issues on licensing and macro-economic volatility could have some impact in the short term on the rate of our development, the Board remains confident that the Group's solid progress will continue in line with its expectations.

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