3rd July 2003

Placing of new Ordinary Shares


Imagination Technologies Group plc (“”;Imagination Technologies””; or the “”;Company””;) today announces a proposed placing of 8,500,000 new Ordinary Shares, representing 4.99 per cent of the existing issued ordinary share capital of the Company, at a price of 53.5p per share (the “”;Placing Price””;) to raise approximately £4.4 million, net of estimated expenses (the “”;Placing””;). The proceeds of the Placing will be used to strengthen the Company’s balance sheet.

The Placing
The Company is proposing to raise gross proceeds of £4.5 million, approximately £4.4 million net of estimated expenses, by way of the issue of 8,500,000 new Ordinary Shares at the Placing Price, representing 4.99 per cent of the existing issued ordinary share capital of the Company. The Placing Price represents a discount of approximately 4.5 per cent to the closing mid-market price of the Ordinary Shares on 2 July 2003.

Pursuant to a placing agreement dated 2 July 2003 between HSBC and the Company (“”;the Placing Agreement””;), HSBC has agreed to use its reasonable endeavours to procure placees for 8,500,000 new Ordinary Shares at the Placing Price. The Placing Agreement is conditional on, inter alia, the admission of the new Ordinary Shares to be issued pursuant to the Placing to the Official List of the UK Listing Authority and to trading on the London Stock Exchange’s market for listed securities. The Placing is not underwritten.

The new Ordinary Shares will rank pari passu in all respects with the existing Ordinary Shares of Imagination Technologies.

The Placing is directed only at persons having professional experience in matters relating to investments and, accordingly, the Placing Shares will only be available to such persons.

Use of proceeds
The £4.4m from the Placing will be used to further strengthen the Company’s balance sheet. The Directors are of the opinion that this additional strength will be commercially beneficial in enabling the Company to engage successfully with global semiconductor and system companies.

Current trading & outlook
Imagination Technologies released its preliminary results for the twelve months to 31 March 2003 on 19 May 2003. During last financial year, in spite of the difficult market conditions, the Company closed a number of significant licensing deals with major players including Intel, Sharp, Texas Instruments and Renesas (the Hitachi and Mitsubishi Semiconductor merger). These design wins clearly endorse both the technology and the overall strategy of the Company and have already secured at least ten system-on-chip (SoC) design wins, which form a strong foundation for significant future growth in the Company’s royalty revenues.

The Directors continue to see significant opportunities and a growing number of engagements for the Company’s three key technologies and its unique SoC IP solutions in applications, in particular, for the digital TV, mobile phone/PDA graphics, digital radio/audio and in-car navigation markets. In the short term the Company’s technology revenues will be primarily driven by license and customisation fees from deals already secured as well as from these new opportunities. Whilst we cannot be precise on timing, with an increasing range of IP cores and ongoing work to complete our IP offerings it is our aim to secure in excess of five new licensing partnership agreements during the current financial year.

The new Ordinary Shares
Application will be made for the new Ordinary Shares to be admitted to the Official List of the UK Listing Authority and to trading on the London Stock Exchange’s market for listed securities. It is expected that dealings will commence in the new Ordinary Shares on 10 July 2003. The new Ordinary Shares to be issued pursuant to the Placing will, when issued, rank pari passu with the existing Ordinary Shares including the right to receive all dividends or other distributions hereafter declared, made or paid in respect of the ordinary share capital of the Company. The new Ordinary Shares will initially be issued in uncertificated form through the CREST system.


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