Clear vision at Imagination

The losses in our table partly reflect the cost of that programme. Research and development expenses in the period totalled £62.3m - up from £56.1m. Chief executive Hossein Yassaie says Imagination has worked hard to assemble the "three key legs" of its business - multimedia, processors and connectivity. Sales and administrative costs also rose 10 per cent as the group ploughed resources into marketing its new technologies. These costs won't go away: management says underlying operating costs for the full year will be 10 per cent higher than in 2013-14.

Yet the investment seems to be bearing fruit. An 11 per cent increase in group licensing revenues to about £16m was particularly encouraging, as licensing fees generally turn into a future royalty stream. That stemmed from 49 new licenses - six more than last year. Interest in Imagination's technology is reassuringly broad: agreements were signed with over 20 partners, including Intel and Toshiba.

Meanwhile, royalty revenues were more or less flat. The MIPS processor division acquired in February 2013 benefitted from record second-quarter volumes, probably thanks to market share gains over rival designer Arm (ARM). But the non-MIPS business continues to decline.

The group also suffered a 35 per cent slump in half-year sales within its loss-making hardware division, Pure, to £9.4m. However, Pure plays an important role in showcasing Imagination's technology, says Mr Yassaie. He expects a new range of digital radios and wireless speakers to return the division to top-line growth this half.

Broker Investec forecasts full-year pre-tax profits of £21.9m, giving EPS of 6.3p, rising to £28.6m and 8.2p in the year to end-April 2016 (2013-14: £23.7m, 7.7p).