17th June 2004

Imagination Technologies Group plc announces an underwritten cash placing to raise £7.2 million


Members of the public are not eligible to take part in the Placing described below. Invitations to participate in the Placing will be limited to investment professionals within the meaning of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001 (as amended).

Your attention is drawn to the section marked “”GENERAL”” at the end of this announcement.

The full terms and conditions of the Placing are appended to this announcement.

This announcement is solely the responsibility of the Company and its directors. Neither Cazenove & Co. Ltd nor any of its subsidiaries nor any of their respective directors, employees and agents accept any liability whatsoever for the accuracy of any information or opinions contained in this document or for the omission of any material information, for which they are not responsible.

Introduction
Imagination Technologies Group plc (the “”Company”” and, together with its subsidiaries, “”Imagination””) today announces that it is raising £7.2 million (before expenses) through a placing (the “”Placing””) of 8,519,530 new ordinary shares in the capital of the Company (the “”Placing Shares””) at a price of 85 pence per Placing Share (the “”Placing Price””).

The Placing Shares are equivalent to approximately 4.73 per cent. Of the Company’s existing issued share capital and will, when issued, represent approximately 4.52 per cent. Of the Company’s enlarged issued share capital.

The net proceeds of the Placing will be used to supplement existing resources and demonstrate a strengthened financial position to existing and prospective partners. The additional funds will also be available to fund working capital at a time when Imagination remains heavily dependent on licensing income, the timing of which can be difficult to predict.

Cazenove & Co. Ltd (“”Cazenove””) is acting as financial adviser and bookrunner in relation to the Placing.

Details of the Placing
The Company will raise approximately £7.2 million (before expenses) through the Placing. The Placing Shares are to be placed with institutional investors only; members of the public are not eligible to participate in the Placing. The Placing Shares will be acquired by placees on the basis that they have not relied on any information, representation, and/or warranty from Cazenove or the Company, save for the information contained in this announcement and the terms and conditions appended hereto.

Application has been made to the UK Listing Authority and to the London Stock Exchange plc (the “”LSE””) for the Placing Shares to be admitted to the Official List and to trading on the LSE’s market for listed securities (“”Admission””). It is expected that Admission will become effective at 08.00 (London time) on 22 June 2004 and that dealings will commence at that time.

The Placing is fully underwritten by Cazenove under an agreement with the Company entered into today (the “”Placing Agreement””). The Placing is conditional on (i) the Placing Agreement having become unconditional in all respects and not having been terminated in accordance with its terms and (ii) Admission becoming effective by not later than 22 June 2004 or such later date as the Company and Cazenove shall agree, being not later than 30 June 2004.

Background to and reasons for the Placing
In the financial year to 31 March 2004, Imagination’s sales grew by 60 per cent. As it began to achieve commercial results from its strategy of delivering a unique range of semiconductor designs for System-on-Chip (“”SOC””) products and delivered significant growth in its pathfinder systems business, PURE Digital. Imagination now has 5 of the world’s top 10 semiconductor companies as partners and, during the last financial year, the number of customer chip designs using Imagination’s intellectual property (“”IP””) has doubled to 20.

In its core technology business, Imagination has a model which requires upfront research and development followed by licence agreements with partners for the use of its designs. These agreements provide licence and customisation fees for delivery of the designs followed by royalty income when the customer begins delivery of the semiconductor device containing Imagination’s IP. In the last financial year, royalty revenues were modest with only one chip shipping throughout the year, but as the 20 chip designs referred to above progressively come into production over the next 18 months the Board expects that the royalty revenues will begin to grow rapidly and generate cash. However, in the very short term Imagination remains heavily dependent on licensing income to finance the development activities to support its rapidly expanding partnership base. Whilst the Board is optimistic about the closure of further licensing business, both with existing and new partners, the timing of signing license agreements and hence cash flows remains difficult to predict in the short term.

The Board therefore believes that at this stage in Imagination’s development it is prudent to support its growth strategy with a strengthened balance sheet. Raising further equity funds will ensure that Imagination maintains financial stability in the short term, before the larger cash generative royalty revenues that are expected begin to be realised. It is important from a commercial perspective for Imagination to demonstrate a financially secure position to prospective customers as well as its existing partners, a number of whom are presently contemplating long term technical partnerships using Imagination’s IP.

Use of proceeds and financial effects of the Placing
The proceeds of the Placing will be used to supplement existing resources and demonstrate a strengthened financial position to existing and prospective partners. The additional funds will also be available to fund working capital at a time when Imagination remains heavily dependent on licensing income, the timing of which can be difficult to predict.

The Placing is intended to allow Imagination to continue to grow its business over the medium term, to the benefit of all of the Company’s shareholders.

Further information on Imagination
Imagination develops, licenses and supplies innovative silicon and software IP for multimedia and communication applications. Imagination offers its technologies in the form of compatible IP cores which can be licensed for use in highly-integrated SoC devices.

Imagination’s IP targets the markets for the high-technology entertainment and consumer applications such as digital audio and radio, digital TV and set-top boxes, consoles, PCs, mobile devices (PDAs, handheld gaming and advanced mobile phones), arcade and slot machines, and wireless networking.

Since it was founded in 1985, Imagination has introduced a succession of innovative technologies which have contributed to the development of multimedia and computer-based entertainment systems. Imagination employs over 290 people, with over 230 engineers in graphics, video, digital signal processing, silicon and software design teams. It has its headquarters in Kings Langley, Hertfordshire (UK) and offices in Chepstow (UK), Leeds (UK) and Tokyo (Japan).

Imagination’s IP has been licensed to companies such as Intel, NEC Corporation, Philips Semiconductor, Renesas, Samsung, Sega Corporation, Sharp Corporation, STMicroelectronics, Sunplus and Texas Instruments. Additionally, Imagination has a strategic partnership with ARM, which licenses specific Imagination graphics cores for use alongside its own cores. Imagination also has licensing and/or development relationships with fabless semiconductor companies such as Frontier Silicon and broadcasting companies such as Digital One.

Current trading and prospects
Imagination has an active and growing pipeline of licensing prospects across all of its IP offerings which should enable Imagination to secure new partnerships and repeat business. Whilst the Board expects royalty revenues to build up significantly over the coming 18 months and PURE Digital system revenues to continue to grow, in the near term the financial performance of Imagination is still dependent on licence revenues, the exact timing of which cannot be accurately predicted.

The continued high level of interest in Imagination’s technologies provides a strong base for future progress and reinforces the Board’s confidence in the future of the business.

Imagination Technologies Group plc
01923 260 511
Geoff Shingles
Hossein Yassaie
Trevor Selby

<b>Cazenove</b>
020 7588 2828
David Anderson
Shona Graham

GENERAL
Cazenove, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for Imagination as financial adviser and bookrunner and no one else in relation to the Placing and will not be responsible to any other person (whether or not such person is in receipt of this announcement) for providing the protections afforded to its customers or for advising any other person in relation to the Placing.

Certain statements made in this announcement are forward looking statements. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual results and performance to differ materially from any expected future results or performance, express or implied, by the forward looking statements. Factors that might cause forward looking statements to differ materially from actual results include, among other things, political, regulatory and economic factors. Imagination assumes no responsibility to update any of the forward looking statements contained in this announcement. Further, any indication in this announcement of the price at which ordinary shares of Imagination have been bought or sold in the past cannot be relied upon as a guide to future performance.

This announcement and the information contained herein is not for publication or distribution to persons in the United States, Australia, Canada, Japan, the Republic of Ireland, the Republic of South Africa or in any jurisdiction in which such publication or distribution is unlawful.

Members of the general public are not eligible to take part in the Placing. This announcement, in so far as it constitutes an invitation or inducement to participate in the Placing, is directed only at persons who have professional experience in matters relating to investments who are investment professionals within the meaning of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001 (as amended) ( “”Relevant Persons””). This announcement, in so far as it constitutes an invitation or inducement to participate in the Placing, must not be acted on or relied on by persons who are not Relevant Persons. Any investment or investment activity in so far as relating to participation in the Placing is available only to Relevant Persons and will be engaged in only with Relevant Persons.

The making of an offer in certain jurisdictions or to residents who are citizens of certain jurisdictions (“”Foreign Persons””), may be restricted by laws or regulations of the relevant jurisdictions. Foreign Persons should inform themselves about and observe any such applicable legal requirements in their respective jurisdiction.

This announcement does not constitute an offer to sell or issue, or constitute the solicitation of an offer to acquire or buy, any Placing Shares to any person in any jurisdiction.

The Placing Shares have not been, and will not be, registered under the US Securities Act 1933, as amended (the Securities Act) or with any securities regulatory authority of any State or other jurisdiction of the United States, and accordingly may not be offered or sold in the United States unless registered under the Securities Act or pursuant to an exemption from such registration. No regulatory authority has passed upon or endorsed the merits of the offering of the Placing Shares or the accuracy or adequacy of this document. Any representation to the contrary is a criminal offence in the United States.

<b>TERMS AND CONDITIONS OF THE PLACING

MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THE TERMS AND CONDITIONS SET OUT HEREIN ARE DIRECTED ONLY AT PERSONS SELECTED BY CAZENOVE WHO HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS AND ARE “”INVESTMENT PROFESSIONALS”” WITHIN THE MEANING OF ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTIONS) ORDER 2001 (AS AMENDED) (“”RELEVANT PERSONS””). THE TERMS AND CONDITIONS SET OUT HEREIN MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY INVESTMENT ACTIVITY TO WHICH THE TERMS AND CONDITIONS SET OUT HEREIN RELATE IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS.</b>

These terms and conditions and the information contained herein are not for publication or distribution, directly or indirectly, to persons in the United States, Canada, Australia, Japan, the Republic of South Africa, the Republic of Ireland or in any jurisdiction in which such publication or distribution is unlawful.

1. INTRODUCTION
These terms and conditions apply to Relevant Persons making an offer to subscribe for Placing Shares under the Placing.

Each Relevant Person to whom these conditions apply, as described above, who confirms his agreement to Cazenove and the Company to subscribe for Placing Shares (which may include Cazenove or their nominee(s)) (an “”Investor””) hereby agrees with each of Cazenove and the Company to be bound by these terms and conditions as being the terms and conditions upon which Placing Shares will be issued under the Placing and to be providing the representations, warranties, acknowledgements and undertakings set out herein. An Investor shall, without limitation, become so bound if Cazenove confirms to the Investor (i) the Placing Price and (ii) its allocation.

The Placing Shares have not been and will not be registered under the US Securities Act 1933 and may not be offered or sold within the United States absent registration or an exemption from registration under such act.

The Placing Shares have not been recommended, approved or disapproved by any United States federal or state securities commission or regulatory authority. Furthermore, the foregoing authorities have not confirmed the accuracy or determined the adequacy of this document. Any representation to the contrary is a criminal offence in the United States.

These terms and conditions do not constitute an offer to sell or issue or solicitation of an offer to buy or subscribe for the Placing Shares in any jurisdiction, including, without limitation, the United States, Canada, Australia or Japan. The distribution of these terms and conditions and the Press Announcement and sale of or subscription for the Placing Shares in certain jurisdictions may be restricted by law. Relevant Persons to whose attention these terms and conditions have been drawn are required by the Company and Cazenove to inform themselves about and to observe any such restrictions.

2. AGREEMENT TO ACQUIRE ORDINARY SHARES
Conditional on (i) Admission occurring on or prior to 8 a.m. on 22 June 2004 (or such later date as Cazenove and the Company may agree (not being later than 30 June 2004)) and (ii) the confirmation mentioned under paragraph 1 above, an Investor agrees to subscribe for, at the Placing Price, the number of Placing Shares allocated to such Investor under the Placing in accordance with the arrangements described in the press release to which these terms and conditions are appended. To the fullest extent permitted by law, each Investor acknowledges and agrees that it will not be entitled to exercise any remedy of rescission at any time. This does not affect any other rights such Investor may have.

3. PRINCIPAL TERMS OF THE PLACING
This section gives details of the terms and conditions of, and the mechanics of participation in, the Placing.

3.1 Cazenove is arranging the Placing as an agent for and on behalf of the Company. Participation will only be available to persons invited to participate by Cazenove.

3.2 The Placing Price shall be advised to potential Investors prior to them confirming their participation in the Placing.

3.3 An Investor’s irrevocable commitment to acquire a fixed number of Placing Shares at the Placing Price will be agreed with and confirmed by it orally and a written confirmation in the form of a contract note (in either electronic or paper form) will be dispatched as soon as possible thereafter. The Investor’s oral confirmation to Cazenove constitutes an irrevocable, legally binding contractual commitment to Cazenove, as agent for the Company, from the Investor to subscribe for a fixed number of Placing Shares on the terms and conditions set out in this section.

There will be no commission payable in relation to the Placing Shares.

Save in respect of depositary receipt arrangements or clearance services (as to which see warranty 5.6 below), no United Kingdom stamp duty or stamp duty reserve tax will be payable on the issue of the Placing Shares.

3.5 By participating in the Placing, each Investor agrees with Cazenove that the exercise by Cazenove of any right of termination or other discretion under the Placing Agreement shall be within the absolute discretion of Cazenove and that Cazenove need not make any reference to the Investor and that Cazenove shall have no liability whatsoever to the Investor in connection with any such exercise.

3.6 Investors will participate in the Placing on the basis of these terms and conditions and the Press Announcement.

4. PAYMENT, REGISTRATION AND SETTLEMENT
Each Investor undertakes to pay the Placing Price for the Placing Shares issued to such Investor in such manner as shall be directed by Cazenove.

Settlement of transactions in the Placing Shares will take place within the CREST system, subject to certain exceptions. Cazenove reserves the right to require settlement for and delivery of the Placing Shares to the Investors in such other means that it deems necessary if delivery or settlement is not possible within the CREST system within the timetable set out herein or would not be consistent with the regulatory requirements in the jurisdictions of such Investors.

It is expected that settlement will take place on 22 June 2004.

In the event of any failure by any Investor to pay as so directed by Cazenove, the relevant Investor shall be deemed hereby to have appointed Cazenove or any nominee of Cazenove to sell (in one or more transactions) any or all of the Placing Shares in respect of which payment shall not have been made as directed by Cazenove and to indemnify on demand Cazenove in respect of any liability for stamp duty and/or stamp duty reserve tax arising in respect of any such sale or sales (together with any interest or penalties thereon).

If Placing Shares are to be delivered to a custodian or settlement agent of an Investor, the relevant Investor should ensure that the written confirmation referred to above is copied and delivered immediately to the relevant person within that organisation.

5. REPRESENTATIONS AND WARRANTIES
By receiving these terms and conditions, each Investor and any person acting on his/its behalf is deemed to represent and warrant to Cazenove and the Company that:

5.1 it has read and understood these terms and conditions and the Press Announcement in their entirety;

5.2 if the Investor is a natural person, such Investor is not under the age of majority (18 years of age in the United Kingdom (“”UK””)) on the date of such Investor’s agreement to subscribe for Placing Shares under the Placing;

5.3 in agreeing to subscribe for Placing Shares under the Placing, the Investor is relying on these terms and conditions and the Press Announcement and not on any other information or representation concerning the Group or the Placing. Such Investor agrees that none of the Company, Cazenove nor any of their respective officers, partners, directors or employees will have any liability for any such other information or representation and, to the extent that any such person may be found to have any such liability, the Investor hereby waives any right that he/it may have to make any claim in relation thereto;

5.4 if the laws of any place outside the UK are applicable to the Investor’s agreement to subscribe for Placing Shares and/or acceptance thereof, such Investor has complied with all such laws and none of the parties mentioned under paragraph 1 above will infringe any laws outside the UK as a result of such Investor’s agreement to subscribe for Placing Shares and/or acceptance thereof or any actions arising from such Investor’s rights and obligations under the Investor’s agreement to subscribe for Placing Shares and/or acceptance thereof or under the articles of association of the Company (the “”Articles””);

5.5 in the case of a person who confirms to Cazenove on behalf of an Investor an agreement to subscribe for Placing Shares, that person represents and warrants that he has authority to do so on behalf of the Investor;

5.6 the Investor is not, and is not applying as nominee or agent for, a person who is, or may be, mentioned in any of sections 67, 70, 93 or 96 of the Finance Act 1986 (depository receipts and clearance services);

5.7 the Investor is a person who falls within paragraph (5) of Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001;

5.8 the Investor has complied with its obligations in connection with the prevention of money laundering under the Proceeds of Crime Act 2002 and the Money Laundering Regulations 2003 (the “”Regulations””) and, if it is making payment on behalf of a third party, that satisfactory evidence has been obtained and recorded by it to verify the identity of the third party as required by the Regulations;

5.9 the Investor has complied and will comply with all applicable provisions of the Financial Services and Markets Act 2000 (the “”FSMA””) with respect to anything done by it in relation to the Placing Shares in, or otherwise involving, the UK; and

the Investor has all necessary capacity and has obtained all necessary consents and authorities to enable it to commit to participate in the Placing and to perform its obligations in relation thereto (including, without limitation, in the case of any person on whose behalf it is acting, all necessary consents and authorities to agree to the terms set out or referred to in these terms and conditions).

6. ACKNOWLEDGEMENTS AND UNDERTAKINGS
By participating in the Placing, each Investor (and any person acting on his behalf):-

6.1 acknowledges that participation in the Placing is on the basis that it is not and will not be a client or customer of Cazenove and that Cazenove shall not have any duties or responsibilities to it for providing the protections afforded to their respective clients or customers or for providing advice in relation to the Placing or in respect of any representations, warranties, undertakings or indemnities contained in the Placing Agreement nor for the exercise or performance of any of Cazenove’s rights and obligations thereunder, including any right to waive or vary conditions or exercise any termination right;

6.2 undertakes and agrees that:

(i) the person whom it specifies for registration as holder of the Placing Shares will be (i) the Investor or (ii) the Investor’s nominee, as the case may be;

(ii) neither Cazenove nor the Company will be responsible for any liability to stamp duty or stamp duty reserve tax resulting from failure to observe this requirement; and

(iii) the Investor and any person acting on its behalf agrees to subscribe on the basis that the Placing Shares will be transferred to the CREST stock account of Cazenove who will hold them as nominee on its behalf until settlement in accordance with its standing settlement instructions;

6.3 acknowledges that the content of these terms and conditions and the Press Announcement is exclusively the responsibility of the Company and that neither Cazenove nor any person acting on their respective behalves is responsible for or shall have any liability for any information, representation or statement relating to the Company contained in these terms and conditions or the Press Announcement or any information previously published by or on behalf of the Company and will not be liable for any Investor’s decision to participate in the Placing based on any information, representation or statement contained in these terms and conditions or the Press Announcement or otherwise;

6.4 acknowledges and understands that the Company and Cazenove will rely upon the truth and accuracy of the representations, warranties and acknowledgements in paragraphs 5 and 6 of these terms and conditions which shall be given to each of Cazenove and the Company and shall be irrevocable;

6.5 acknowledges that the Placing Shares have not been and will not be registered under the US Securities Act or the securities legislation of any State of the United States, Australia, Canada, Japan, the Republic of South Africa or the Republic of Ireland and, subject to certain exceptions, may not be offered, sold, delivered or transferred, directly or indirectly, within those jurisdictions;

6.6 undertakes and agrees that it will not offer or sell any Placing Shares within the United States except in accordance with Rule 903 of Regulation S of the US Securities Act or to QIBs pursuant to the exemption from the registration requirements of the US Securities Act provided by Rule 144A; and

6.7 undertakes and agrees that neither it nor its affiliates nor any person acting on its or their behalf have engaged in or will engage in any “”general solicitation or general advertising”” (within the meaning of Regulation D under the US Securities Act) or “”directed selling efforts”” (as defined in Regulation S under the US Securities Act) in connection with any offer or sale of the Placing Shares.

7. SUPPLY AND DISCLOSURE OF INFORMATION
If the Company, Cazenove or any of their agents request any information about an Investor’s agreement to subscribe for Placing Shares, such Investor must promptly disclose it to them.

8. MISCELLANEOUS
The rights and remedies of Cazenove and the Company under these terms and conditions are in addition to any rights and remedies which would otherwise be available to each of them and the exercise or partial exercise of one will not prevent the exercise of others.

On application, each Investor may be asked to disclose, in writing or orally, to Cazenove:

(i) if he is an individual, his nationality; or

(ii) if he is a discretionary fund manager, the jurisdiction in which the funds are managed or owned.

All documents will be sent at the Investor’s risk. They may be sent by post to such Investor at an address notified to Cazenove.

Each Investor agrees to be bound by the Articles (as amended from time to time) once the Placing Shares which such Investor has agreed to subscribe for have been issued to such Investor.

The contract to subscribe for Placing Shares and the appointments and authorities mentioned herein will be governed by, and construed in accordance with, the laws of England. For the exclusive benefit of the parties mentioned under paragraph 1 above, each Investor irrevocably submits to the exclusive jurisdiction of the English courts in respect of these matters. This does not prevent an action being taken against an Investor in any other jurisdiction.

In the case of a joint agreement to subscribe for Placing Shares, references to an Investor in these terms and conditions are to each such Investor and such Investors’ liability is joint and several.

The Company and Cazenove expressly reserve the right to modify the Placing (including, without limitation, its timetable and settlement) at any time before the Placing Price and allocations are determined.

9. SELLING RESTRICTIONS
Before Admission becomes effective, Investors may only offer or sell Placing Shares in the United Kingdom:

9.1 to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their business; or

9.2 otherwise in circumstances which will not result in an offer to the public in the United Kingdom within the meaning of the FSMA.


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