19th March 2009

Imagination Technologies Group plc – Interim Management Statement


Imagination Technologies Group plc (‘Imagination’, LSE: IMG), a leading provider of System-on-Chip (SoC) Intellectual Property (IP), is today issuing its Interim Management Statement for the period from 1 November 2008 to 19 March 2009.

Technology Business

Following the record level of new licensing business booked during the first half of this financial year, we have seen continued active interest in and demand for our technologies. Whilst the economic environment has resulted in a generally slower and more careful decision making process by customers, it is also clear that customers’ core projects and roadmaps continue to be strongly driven as semiconductor and system companies aim to have competitive and innovative product offerings ready for when markets recover. As we have commented before, the nature of our licensing arrangements with our key partners has become increasingly strategic, with our technologies playing a key role in their product roadmaps.

In addition to the healthy backlog level carried forward into the second half, we have concluded a significant license with a major consumer electronics company in November as well as a number of smaller deals. We are currently progressing a number of significant licensing agreements with existing and new partners which we are looking to close during this second half. We are also seeing an active pipeline of interest in our technologies for future years. Whilst we expect licensing revenue to continue to make progress across the calendar year as a whole, as always it remains difficult to predict the precise timing of the closure of licensing deals.

Taking into account the most recent royalty statements received from our licensing partners for the period up to the end of December 2008, the ramp-up of existing products and the increasing number of new end-user products that are starting to ship, we expect to see strong volume unit growth for the current financial year. We now estimate that the total unit shipment for this financial year will exceed 75 million units, which compares to the 47 million units shipped for last financial year.

We are seeing initial production start and ramp-up of new products including newer IP cores from the POWERVR SGX graphics range, as well as video and display technologies which are driving growing shipments in new markets such as TV/STB and MID.

The technology business has continued to benefit from the stronger US dollar, more than offsetting the impact of the dollar on the PURE business as mentioned below.

PURE

As expected PURE has seen a general softening of the UK market due to the recession although Christmas revenue levels were only marginally below the previous year’s. In the UK, stock level reduction and more conservative ordering by the retailers were factors influencing the environment.

The export markets for PURE have continued to be very strong and will be a key growth driver going forward. Many countries, including France, Australia, Switzerland, Norway and Denmark have already committed to DAB-related digital radio with other major countries set to follow.

The UK government’s Digital Britain report’s commitment to the DAB platform, the recent strong announcement of the French government for a switch off plan for analogue radio and Germany’s plan to follow suit should ensure a strong, growing and global market for digital radio and PURE.

During the second half, PURE has made very strong progress in its connected/Internet radio and portal products with its Flow internet radio range winning many key awards and achieving close to 50% market share in less than six months. We continue to make the necessary investment in developing PURE products and channels to exploit these emerging and new markets.

Overall whilst PURE’s year-to-date revenues have been impacted by the recession, primarily as a result of UK retailers tightening stock levels during spring and summer of 2008, since Christmas we have seen improved revenues compared to last year. The exchange rate clearly has had an impact on margins for the PURE business in the short term, however this is being offset by planned price increases and product cost reductions.

Group
We retain a strong balance sheet with cash balances improving in the second half.

Our world-leading technologies and leading partner engagements position our technology business well for growing exploitation of major market opportunities. Strong and leading product lines, including the connected radio range, and the growing international opportunities will continue to drive PURE’s progress. We are continuing to invest carefully in research and development to ensure that we build on our position, maintain our product leadership and support our growing customer base. We expect to show further progress this financial year although, as we indicated at the time of our half-year results, the extent will also be influenced by macro-economic conditions.

ENQUIRIES:
Imagination Technologies Group plc
Hossein Yassaie, CEO
Trevor Selby, CFO
Tel: 01923 260 511

College Hill
Adrian Duffield/Carl Franklin
Tel: 020 7457 2020


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