Even though chip designer Imagination Technologies (IMG) delivered double-digit sales growth at the half-year stage, it still significantly missed brokers' consensus expectations - reflecting continued softness in the high-end smartphone market in developed economies. Accordingly, adjusted pre-tax profit fell by a fifth in the period to £13.2m and the shares slumped 15 per cent on the day the figures appeared.
Strip out the impact of the MIPS Technologies acquisition and the number of chips shipped climbed 18 per cent to 280m units, reflecting broad based end-market growth - although that too was below expectations. Management now reckons that partner chip shipments for the full-year, excluding MIPS, will be in a range of 580m-630m units - down from 650m units; partly reflecting lost market share in low-end handsets. Licensing revenues, at £14.4m, did recover from the £11.3m seen in the previous half, but remains well below last year's £17.8m. Still, the MIPS deal appears to be bedding down well. "Fundamentally we believe MIPS can create significant value for Imagination over the next few years," reckons chief executive Hossein Yassaie.
Following this weak performance, JP Morgan Cazenove has cut its forecasts and now expects full-year adjusted pre-tax profit of £29m, giving adjusted EPS of 8.12p (from £34m/8.97p in 2013), rising to 9.58p in 2015.
IMAGINATION TECHNOLOGIES (IMG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 212p | MARKET VALUE: | £564m | |
| TOUCH: | 212-214p | 12-MONTH HIGH: | 560p | LOW: 205p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 73p* | NET DEBT: | 9% | |
| Half-year to 31 Oct | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 71.4 | 10.5 | 3.0 | nil |
| 2013 | 85.2 | 2.23 | -0.4 | nil |
| % change | +19 | -79 | - | - |
*Includes intangible assets of £119m, or 45p a share Ex-div: - Payment: - | ||||
