Imagination Technologies Fiscal Year Pretax Loss Widens as Investment Continues

By Rory Gallivan

LONDON--U.K. semiconductor group Imagination Technologies Group PLC (IMG.LN) posted a wider full-year pretax loss as it continued to invest in research and development.

Imagination, whose chips are found in devices made by Apple Inc. (AAPL), reported a pretax loss of 12 million pounds ($19.1 million) for the year ended April 30, against a GBP314,000 loss the previous year, on revenue up to GBP177 million from GBP170.8 million.

Royalty revenue from sales of devices containing Imagination's technology rose 9% to GBP118.9 million. Revenue from licensing its technology to other companies rose just 2% to GBP39 million, in line with the company's warning in March that licensing revenue would be close to the previous year's level, not up 10% as previously predicted.

Imagination, which competes with companies such as its much bigger U.K. rival ARM Holdings PLC (ARM.LN), said it is targeting licensing growth of 10% in the current year and that it expects royalty revenue to rise, without being more specific.

"As our revenues grow, the natural operational gearing of the business means that the financial performance is expected to significantly benefit from a slower growth in operating costs," said Chief Executive Hossein Yassaie.

"We therefore expect to see significant expansion in operating margins in the medium term," he added.

Write to Rory Gallivan at [e-mail]; Twitter: @RoryGallivan

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