25th July 2007

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 first Interim Management Statement for the period from 1 April 2007 to 24 July 2007. The Group’s AGM is also being held today.

Imagination continues to make good progress in both its Technology business and in its PURE Digital business.

Following on from the strong progress in licensing revenue last year, interest in our products in the Technology business continues to be strong. This is despite expectations of overall growth in the semiconductor market remaining modest in the short-term. This high-level of interest is driven by the direct relevance and competitiveness of our technologies in the key established and emerging markets. This position is further underpinned by the growing demand for our IP resulting from silicon integration trends and the need for our partners to deliver fully integrated devices with increased functionality. We are seeing strong demand for our broadening base of technologies across an increasing number of semiconductor companies, including tier-one, medium-sized and start-up companies. The strengthening of our global sales organisation in recent years is also enabling wider customer engagements.

The nature of our licensing arrangements with key semiconductor partners is increasingly becoming strategic and in addition we are now also seeing engagements with key systems companies who are directly designing silicon devices using our technology into their end-user products.

The applications for our technologies are continuing to progress across our target market sectors, as demonstrated by the recent licensing agreement with the global semiconductor company NEC Electronics Corporation for our PowerVR display technologies in the AV market.

Whilst we have not yet received formal volume and royalty statements from our licensing partners for the first quarter of the current financial year, the recent launch of high profile handsets from major manufacturers, such as the Nokia N95, Motorola MOTORIZR Z8, and other established or new suppliers, gives us confidence that we should see continued growth in chip volume and royalty revenue in this market sector. Demand is being driven by the increasing requirement in such devices for the capabilities that our graphics and video technologies enable, such as improved user interfaces, internet content support (e.g. Adobe Flash) gaming, video-playback and map/navigation handling. Across the year, we also expect this to be complemented by on-going progress in volume growth in our other existing market segments such as digital radio/audio and automotive markets where we have leading positions, as well as further progress in emerging segments such as mobile TV, digital TV, Ultra Mobile PC (UMPC) and Mobile Internet Device (MID) markets.

PURE Digital has continued to grow its market share in the digital radio market and remains the number one radio supplier in the UK. As we progress through the current year, PURE Digital will continue to strengthen its offering in existing areas and also release a more diversified range of products targeting other segments. In this respect, in addition to seeing upgraded models with increased functionality and an environmentally-friendly capability, branded EcoPlus, in current market segments, PURE Digital will release digital radios for the automotive market and also next-generation products that offer Internet radio and connectivity. We believe the latter will, in due course, provide PURE with several new market opportunities, not only from a geographic perspective but also in terms of business model. The move for countries to follow the UK’s lead in switching from analogue to digital radio is progressing with several countries deciding to utilise the new DAB+ standard. We expect PURE to play a strong role in these markets as they emerge.

The performance of the PURE business is heavily dependent on the Christmas period and plans are well advanced from a development, procurement and product ranging perspective for strong growth from PURE for this important period.

Whilst it is still early in the year, we remain confident that all aspects of our business should continue their momentum and progress and that the business will perform in line with our expectations.

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

College Hill Adrian Duffield/Ben Way Tel: 020 7457 2020


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