19th March 2008

Imagination Technologies Group PLC – Interim Management Statement

Imagination Technologies Group plc (‘Imagination’, LSE:IMG), a leading provider of System-on-Chip (SoC) Intellectual Property (IP) is today issuing its Interim Management Statement for the period from 1 October 2007 to 18 March 2008.

Imagination has made continued progress in both its Technology business and in its PURE Digital business.

With respect to the Technology business, despite a softer semiconductor market environment, strong interest in our technologies from both existing and new partners is continuing. This demand, driven by the strong market relevance of our offerings, has been a feature of our business in recent years and resulted in a number of major strategic agreements closing during the first-half of the current financial year. Further to these we recently announced a new license deal with NEC and currently have a significant number of major license agreements at advanced contract stages. We expect a number of these to close prior to the end of our financial year on 30 April 2008*.

The design activities of our partners have led to a significant number of new SoCs being committed since the first half of the financial year; the total of committed SoCs now standing at 64 compared to 58 at the end of September 2007. These SoC design wins, which include many with tier one semiconductor companies, are a key measure of our fundamental progress and are the main driver behind our future royalty revenue growth.

Several SoCs incorporating our IP have been publicly announced since September including TI’s new OMAP 3440 and OMAP 3500 family (3515 and 3530), NEC’s NaviEngine 1, Marvell’s PXA310, and SiRFprima from SiRF. In addition, the strategic partnership with Intel in the UMPC (Ultra Mobile PC) and MID (Mobile Internet Device) segments should lead to important product announcements shortly and initial shipments starting around the end of the current financial year.

Partner SoC volumes have continued to gain momentum with over 35m units shipped with our technology during the first nine months of this financial year to the end of December, up from the 19.1m we reported for the first six months of the financial year to 30 September 2007. The signs so far suggest that the volume for the final four months of the financial year* should take our full-year shipment numbers to around 50m units, up from 25.7m units in the year to 31 March 2007.

These shipments are across a number of key markets including mobile phone, PMP, digital radio, and in-car navigation, with other segments developing too. In the second half to date, we have also seen growth in the volume of some lower-end devices which usually attract a lower per unit royalty. Over time, with the increasing number of SoCs with our newer generation technologies and/or higher content of Imagination IP coming to market, we see the mix migrating more towards higher-value as well as higher-end devices.

Whilst we have made good progress during the first nine months of the year in the key aspects of our Technology business, it is possible for the worsening global macro economic environment to have some impact on our progress towards the end of the financial year. However, despite any potential short-term slow-down, based on the continued strong growth in our partner SoC design wins and our active pipeline of licensing opportunities, we are confident in our on-going progress in securing further key design wins for our IP and in achieving the target of 200m annual unit volume shipment by our partners by around 2010.

For the PURE Digital business, the product offerings and retailer ranging were, as previously reported, firmly in place for the important Christmas period and this led to strong sales figures during the quarter ending December 2007 in line with our expectation. PURE Digital retained its position as the number one supplier of digital radios, marginally growing its market share during this important period. Recently launched products including the automotive digital radio, Highway, and the iPod-enabled Chronos iDock have been well received and have taken leading positions in the market.

Overall for the first nine months of the financial year the PURE Digital business has generally performed in line with our plans. Since January 2008, consistent with the general slow down in the retail market, we have seen a degree of softening of retail sales. However, given the strong contribution from the Christmas period’s sales, the overall impact will be limited for the current financial year.

In line with our on-going strategy, PURE Digital has an extensive roadmap that is designed to strengthen its position in its existing markets and further develop the emerging geographical opportunities. These include DAB+ and deployment of new connected audio technologies and products to fully drive and exploit internet and streaming audio opportunities in the UK and other markets. We expect this to allow PURE to maintain its momentum in its markets.


Imagination Technologies Group plc – Tel: 01923 260 511
Hossein Yassaie, CEO
Trevor Selby, CFO

College Hill – Tel: 020 7457 2020
Adrian Duffield/Ben Way

*As previously announced the current financial year has been extended to 13 months; running from 1 April 2007 to 30 April 2008.

About Imagination Technologies

Imagination Technologies Group plc is an international leader in the creation and licensing of semiconductor System-on-Chip Intellectual Property (SoC IP) and in the development and manufacture of DAB digital radios. The Group is headquartered in the United Kingdom, with sales and R&D offices worldwide.

Imagination’s Technology Division (www.imgtec.com) creates market-leading embedded graphics, video and display acceleration, multi-threaded processing and multi-standard receiver technologies, complemented by dynamic and extensive developer support programmes. These SoC IP products are licensed to a wide range of semiconductor and consumer electronics companies around the world and are being used in the following markets: digital radio and audio; mobile phone multimedia; car navigation & driver information; personal navigation; ultra mobile PC (UMPC) and mobile internet device (MID); digital TV & set top box; and mobile TV.

Imagination’s PURE Digital Division (www.pure.com) was established to develop consumer products to showcase the capabilities of Imagination’s SoC IP. As a fully integrated part of the Group, PURE has become the creator and manufacturer of the world’s most popular DAB digital radios and is the number one supplier of radios in the UK.

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