Imagination Technologies H1 in line, sees much stronger H2

Graphics and video microchip maker Imagination Technologies posted lower first-half revenue and profits, but reported good first-half progress and said the second six months should be much stronger.

Imagination, which makes chips for the likes of Fujitsu, Intel, Texas Instruments and Toshiba, said group revenue came in at £82.2m against £85.2m a year ago. Adjusted operating profit was £5m versus £12.4m last time and the group made a reported operating loss of £9m against a profit of £1.4m a year ago.

Adjusted earnings per share were 1.3p against 3.8p last time and reported losses per share were 3.9p versus a loss of 0.4p a year ago.

The group said it is moving this year from making heavy investment in strategic products to a position where core products were all either generating or moving towards generating revenue.

It said the financial performance for the first half met expectations, with licensing revenue up 11% to £16m and royalty revenue increasing slightly to £56.3m.

Imagination signed 49 licences in the period, up from 43 beforehand, with partners including Ali, Avago, Broadcom, Celeno, Fujitsu, Intel, Lantiq, Loongson, MediaTek, Siklu, Texas Instruments, Toshiba and Toumaz.

The group is targeting a 10% rise in licensing revenue in the full year 2015 and expects a 10% rise in underlying operating costs during the year.

Chief executive Hossein Yassaie said: "Now that our product lines are complete and the heavy investment phase is over, we expect to see lower rates of operating cost growth going forward and increased focus on financial returns.

"As a result we now expect to see significant expansion in operating margins in the medium-term."

Shares rose 21.5p or 11.3% to 211.5p at 08:23 in London.