Global interest in smartphones and other devices is feeding demand for the microchips that power them. That's good news for Imagination Technologies (IMG), which designs these components, licenses the blueprints out to the likes of Apple and receives a royalty for each chip shipped. Its shares climbed 6 per cent after it reported a 15 per cent rise in royalty revenues to £109m.
Its licensing sales also leapt by nearly a third to £38m as it added Toshiba, Lenovo and others to its customer base. And MIPS, the processor maker it acquired early last year, accounted for 48 of the 115 licences Imagination sold.
But investors may have some qualms about a company that has downgraded its forecasts three times in the past 15 months. Chief executive Sir Hossein Yassaie blames a flight from the turbid smartphone market among customers such as Texas Instruments, as well as slowing high-end device sales. "We're in calmer waters now," he insists. Another problem has been its Pure division, which sells digital radios. Adjusted operating losses at the unit widened by 14 per cent to £8.6m.
Broker Jefferies forecasts a pre-tax loss of £0.6m and negative EPS of 1.6p this year. However, it predicts a turnaround to pre-tax profits of £18.6m and EPS of 4.3p for the year to April 2016.
| IMAGINATION TECHNOLOGIES (IMG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 249p | MARKET VALUE: | £666m | |
| TOUCH: | 247-249p | 12-MONTH HIGH: | 366p | LOW: 142p |
| DIVIDEND YIELD: | nil | PE RATIO: | 829 | |
| NET ASSET VALUE: | 77p* | NET DEBT: | 2% | |
| Year to 30 Apr | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 81 | 10.2 | 6.0 | nil |
| 2011 | 98 | 16.4 | 7.7 | nil |
| 2012 | 127 | 28.5 | 8.0 | nil |
| 2013 | 151 | 12.2 | 2.4 | nil |
| 2014 | 171 | -0.3 | 0.3 | nil |
| % change | +13 | - | -88 | - |
*Includes intangible assets of £118m, or 44p a share | ||||
