Rapid growth in the smartphone and tablet market is proving lucrative for Imagination, and with more and more electronics makers licensing its technology, the chip designer is living up to its premium valuation.
Major product launches by partners in the second half meant 325m chips featuring its technology were shipped in 2012, a third more than the previous year. Importantly, Imagination was able to maintain its industry-leading royalty rate despite volume increase, thanks to improved designs, meaning royalty revenues climbed an impressive 55 per cent to £63.8m.
New products were also a key factor in a 21 per cent increase in licensing revenues, and 136 new design wins were well up on the 115 achieved last year. Although half of that came from its traditional graphics technologies, new connectivity solutions accounted for a significant chunk. Finance director Richard Smith said he had also seen very high levels of activity in the Smart TV segment.
Digital radio business Pure remains loss-making, though, but adoption of digital radio standards overseas offset a difficult UK market to lift overall sales by 3.5 per cent to £29.3m. Mr Smith was confident that new wireless audio and, eventually, home automation products would sustain this upward trend.
Broker Peel Hunt expects adjusted pre-tax profits of £51.1m and EPS of 13.7p this year (from £36.8m and 11p in 2012).
IMAGINATION TECHNOLOGIES GROUP (IMG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 452p | MARKET VALUE: | £1.19bn | |
| TOUCH: | 452-453p | 12-MONTH HIGH: | 734p | LOW: 285p |
| DIVIDEND YIELD: | nil | PE RATIO: | 60 | |
| NET ASSET VALUE: | 67p* | NET CASH: | £60.7m | |
| Year to 30 Apr | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 60.0 | 1.9 | 1.00 | nil |
| 2009 | 64.1 | 2.7 | 3.70 | nil |
| 2010 | 80.9 | 10.2 | 6.00 | nil |
| 2011 | 98.0 | 16.4 | 7.70 | nil |
| 2012 | 127 | 28.5 | 7.90 | nil |
| % change | +30 | +74 | +3 | - |
*Includes intangible assets of £43.1m, or 16p a share | ||||
