Imagination Technologies swings to full-year loss

Imagination Technologies, which design chips for Apple, swung to a loss for the year ended 30 April as revenue dropped amid a significant restructuring of the business.

The company reported a pre-tax loss of £63.2m from a profit of £2.2m the year before, as revenue declined 23% to £120m.

Licensing revenue from continuing operations fell to £17.1m from £37.8m, while royalty revenue dropped to £102.7m from £118.4m due to the ramp down in sales of a legacy chip manufactured by a significant customer.

Imagination said it saw a “significant slowdown” in the semiconductor market, driven by weaker smartphone sales, a general economic slowdown and build-up of inventory in China. This resulted in lower license sales for the group and continued into the second half of the year.

Chief executive Andrew Heath said: “As previously indicated in our trading update in May, the last year has been particularly challenging for Imagination. The results reflect a combination of difficult trading conditions and a significant restructuring of the business.

“However, we have now taken the necessary action to put Imagination back onto a sound financial footing. We have also conducted a comprehensive operational review. Going forwards Imagination will be an IP licencing business.”

At 1043 BST, Imagination shares were down 4.8% to 174.75p.