AGM Hossein Yassaie, CEO and Richard Smith, CFO. 18 th September

Transcription

1 AGM 2015 Hossein Yassaie, CEO and Richard Smith, CFO 18 th September

2 FY15 highlights Group Strong licensing across all IP families Significant increase in committed SoCs Operating costs lower than previously guided Technology Significant new tier-one deals for PowerVR graphics & MIPS Encouraging year-on-year MIPS volume growth Growing momentum for Ensigma Significant design wins secured for Platform offerings Pure Narrower focus in product lines & geographical presence Improving performance in key markets Business well positioned for future growth Imagination Technologies FY15 AGM 18 th September

3 Financial Overview Richard Smith CFO

4 Financial highlights - 1 Technology revenues growing Licensing: up 2% to 39.0m (FY14: 38.3m) Royalties: up 9% to 118.9m (FY14: 109m) Licensing: increased activity across all IP families 121 licenses (FY14: 115) signed across more than 40 partners 52 PowerVR multimedia 47 MIPS processor 15 Ensigma communications 7 System level/support IP (including FlowCloud, VoIP and Caskeid) Platform IP capability gaining traction and fuelling momentum Imagination Technologies FY15 AGM 18 th September

5 Financial highlights - 2 Shipments: 1,327m units (FY14: 1,259m) Non-MIPS: 530m (FY14: 530m) MIPS: up 9% to 797m (FY14: 729m) Stronger average royalty rate on both non-mips and MIPS unit shipments due to mix Operating expenses Underlying operating expenses tightly controlled Better than guidance, with growth of only 9% for the full year Foreign exchange The average USD foreign exchange rate has been broadly neutral from FY14 to FY15 Imagination Technologies FY15 AGM 18 th September

6 Group adjusted profit & loss FY15 FY14 Change m m % Revenue Licensing % Royalties % Pure (21)% Other % Total revenue % Gross profit % Gross profit margin 90% 88% Underlying operating expenses (138.2) (126.4) 9% Adjusted operating profit (12)% Adjusted operating profit margin 12% 14% Net financing expense (3.4) (0.3) 1033% Adjusted profit before tax (18)% Licensing revenue robust Non-MIPS royalty revenues grew, despite flat unit volume MIPS unit volume and royalty revenue strengthened year on year Underlying operating expense growth better than guidance Net financing expense includes FX movement on USD loan Imagination Technologies FY15 AGM 18 th September

7 Unit volume in millions Technology business Licensing Units 45m 40m 35m 30m 25m 20m 15m 10m 5m m FY11 FY12 FY13 FY14 FY15 Royalties Non-MIPS MIPS FY11 FY12 FY13 FY14 FY15 Revenue Licensing: strongest year despite lower growth than expected Units: strong growth in MIPS; stable non-mips 140m 120m 100m 80m 60m 40m 200m 150m 100m 50m Royalties Licensing Other Royalties: solid growth in royalty revenues driven by volume and mix 20m m FY11 FY12 FY13 FY14 FY15 m FY11 FY12 FY13 FY14 FY15 Imagination Technologies FY15 AGM 18 th September

8 Pure FY15 FY14 Change m m % Revenue (21)% Adjusted operating loss (6.0) (7.4) (19)% Improved focus: Areas of strategic interest Products & geographical regions Markets & products with better returns Revenue reduced but improved profitability Imagination Technologies FY15 AGM 18 th September

9 Reconciliation of adjusted to reported profit FY15 FY14 m m Adjusted profit before tax Share based incentive costs (11.9) (13.2) Amortisation of intangibles from acquisitions (9.1) (8.6) Investments - gains and impairments (5.1) (2.2) Acquisition related items (1.1) 0.4 Corporate restructuring costs (0.7) (0.4) Release of contract obligation Provision for onerous supplier contracts (2.5) - Reported (loss) before tax (11.9) (0.3) Tax (charge) / credit (1.1) 1.1 Reported (loss) / profit after tax (13.0) 0.8 Loss on investments due to revaluation Tax: overseas tax charge partially offset by capital allowances credit Imagination Technologies FY15 AGM 18 th September

10 Group cash flow FY15 FY14 m m Adjusted profit before tax Depreciation Other (1.2) (1.6) Operating cashflows before working capital Working capital (28.8) 6.0 Cash generated by operations (4.1) 33.9 Interest (0.5) (0.6) Tax (1.2) (58.4) Net cashflows from operating activities (5.8) (25.1) Cash flows from Investing activities (15.0) (27.2) Cash flows from Financing activities 3.4 (5.3) Net (decrease)/increase in cash (17.4) (57.6) Effect of exchange rate fluctuation Opening cash position Closing cash position m operating cashflow Working capital movements due to timing of royalty receipts reflected in debtors at year end Capital expenditure primarily related to the redevelopment of property Over 60m of property assets (offices and data centre) Short term utilisation of RCF over period end to cover timing of royalty receipts Imagination Technologies FY15 AGM 18 th September

11 FY16 outlook as at 30 th June Licensing Based on increased backlog and active pipeline of prospects, target of 10% growth in licensing revenue in FY16 As usual dependent on timing of partners activities Royalties Expect growth in unit shipments and royalty revenue Pure Expect continued improvement in financial performance from refocus and operational changes already implemented Operating margin & expenses Expansion of operating margins in medium-term with longer-term target of 30% - 40%, with a rise in profitability in FY16 Full year operating expenses growth target in the range of 5% - 10% Imagination Technologies FY15 AGM 18 th September

12 Summary of Interim Update Licensing: Steady start to the year Increase in overall pipeline Holding guidance at this stage Royalties: June quarter impacted by overall slowdown in semi industry and customerspecific ramp down timing Strong recent and ongoing design wins expected to create significant added momentum in mid-term unit shipments Pure: In line with expectations Operating costs: Tightly managed; marginally lower than expectations Overall H1 looking weaker, but H2 expected to be stronger than previously expected Imagination Technologies FY15 AGM 18 th September

13 Business and Market Environment Hossein Yassaie, CEO

14 Market opportunities evolving & emerging Existing markets growing & changing Mobile phones and computing => maturity, low-end shifting up Home consumer => connected devices, connected consumers Enterprise and networking => ubiquitous connectivity, heterogeneous compute Automotive => connected, advanced automotive New markets emerging no established players Wearables IoT: health, energy, agriculture; transport; retail; security; toys Automation & robotics VR (Virtual Reality) & AR (Augmented Reality) becoming significant Real-time and big data analytics SoCs remain the key enablers System know-how the key differentiator Products + cloud services are disruptive combinations Imagination Technologies FY15 AGM 18 th September

15 Mega societal changes underway The arrival of the emerging world China, India, Brazil - size matters More consumers but also more competitors The connected and accessible world => one market Accelerating technological possibilities in many fields IoT, robotics/automation, biomedical etc - even bigger than Internet Global warming and the need for efficiency and conservation Manufacturing returning to local markets in many sectors The rise of the middle-class world and people s expectations Towards 100+ year human life spans and changing demographics Today s infrastructure cannot cope with tomorrow s population s needs Imagination Technologies FY15 AGM 18 th September

16 The semiconductor world is changing Consolidation in established markets Mostly in West and Japan Largely driven by mobile market consolidation Rapid rise of players in emerging economies Western companies investing in eastern partners Trend towards OEM verticalisation in several markets Driven by SoC-level differentiation New semis even closer to applications Have to become much more than just a semi Imagination Technologies FY15 AGM 18 th September

17 The developing landscape: four types of semi players 1. The super-high volume (SoC) semi Supporting large mainstream segments, driven by mobile SoC capability and/or proprietary architecture driven 2. The market focused, specialised semi Smaller and operating closer to more specialised applications Auto, Health, Home Automation, Industrial/Enterprise, 3. The vertical major OEM brand with internal semi SoCs + Cloud are key enablers & differentiators Branded products covering multiple segments 4. The partnership vertical OEM, Service Provider, Brand Replicating vertical model (category 3) but through partnership Custom SoC => an enabler and a differentiator Medium to large scale Imagination Technologies FY15 AGM 18 th September

18 IoT - very large but fragmented Both open communities and walled gardens The breadth of applications means no one player will dominate Tier-one walled garden communities will be first to develop and service adjacent markets Service level interoperability and security will be real growth enablers Ecosystems of many different skills will be essential to create solutions that really work Still early stage - too much re-branding of existing technologies and products as IoT IoT - in reality not one market Imagination Technologies FY15 AGM 18 th September

19 Security is another fundamental hurdle Every application has security demands Fundamental to all connected devices (including IoT) Today s solutions simply don t meet users and application needs Simplistic binary in/out model no longer good enough Since so many don t understand it, most copy others who claim they do We need universal solutions to security Heterogeneous - goes across every processing element in the SoC Multi-domain for multiple co-existing apps Multi-domain, system-wide security will become a must Imagination Technologies FY15 AGM 18 th September

20 Business update

21 + Smart vision + Audio/voice Connected Processor IoT where we can make a real difference Biggest impact where solutions address major societal issues We see three main levels: RPU Camera ISP Sensor hubs (application specific) Sensor hubs + audio/voice CPU Video Sensor hubs + audio/voice + smart vision Audio GPU Our silicon IP portfolio addresses the needs of all of these key markets Health Energy Agriculture Security &Safety Retail Transport Infrastructure Connected processors central to all hubs Smart cameras & audio demand complex local processing Imagination Technologies FY15 AGM 18 th September

22 Enabling IoT solutions Software as a Service Devices M2M Services IoT Applications (SaaS) Sensors Sensor Hub FlowCloud FlowRadio FlowTalk 3 rd Party 3 rd Party 3 rd Party Wi-Fi BT / BTLE 6LowPan Thread Brillo OpenWRT Registration Device Mgt Device History Event History Device App logs Authentication Authorisation Storage Device Messaging PaaS using open source framework Service Market place Built in metering Subscription plans Imagination Technologies FY15 AGM 18 th September

23 Today s security solutions are inadequate One CPU-centric secure zone is not enough Only secures the CPU Only one secure zone Proprietary hardware All secure apps in the same zone Communications Non-secure applications GPU graphics and compute Central Processor Secure zone SoC Fabric Secure: Payment Media Health Utility Open: Twitter Facebook Maps Games Trusted Hypervisor Root of Trust Unified Memory Imagination Technologies FY15 AGM 18 th September

24 OmniShield redefines the future Multi-domain, heterogeneous, hardware separation Multi-domain: up to 255 containers Heterogeneous: CPU GPU, RPU Hardware separation: virtualisation Open: prpl Security PEG Communications Non-secure applications GPU graphics and compute Central Processor SoC Fabric Secure: Payment Media Health Utility Open: Twitter Facebook Maps Games Trusted Hypervisor Root of Trust Unified Memory Imagination Technologies FY15 AGM 18 th September

25 Helping our customers leverage their know-how Mobile Wearables Smart Home Connected Cars Enterprise Networking IoT Domain Solutions Customer technologies & know-how Ecosystems software, tools, apps, middleware, hardware Customizable IP platforms PowerVR Multimedia Scalable IP Imagination Technologies FY15 AGM 18 th September

26 PowerVR multimedia Acknowledged technology & industry leaders Graphics, Video & Vision Processor IP families Significant & growing market 1bn+ growing to >5bn Clear leadership in mobile graphics for mid-high end; growing in the low end Series7: starting volume production Series8: in an advanced development stage; strong customer interest No 1 supplier for automotive dashboard display Significant and growing volume in TV/STB Strong volume in video including 4K Continuing to innovate GPU compute, VR, AR, ray tracing, computer vision Ray Tracing reference chip in the lab; initial tests promising Vision IP Platform: strategic and significant Imagination Technologies FY15 AGM 18 th September

27 MIPS processors The industry s much-needed & welcomed choice Strategy since acquisition: Existing customers: networking & digital home Reassured and relationships strengthening Mobile: new market wins Secured strategic design win for embedded processing in mobile SoCs App processing opening up as ISA dependency a non-issue medium-term Automotive: MobilEye leading ADAS supplier MIPS-based Embedded: Microchip key player in IoT, 32-bit MCUs Customers acknowledging commitment of Imagination Tier-ones see MIPS as strategic; new key multi-year design win Shipment strength continues across markets Strong technology with compelling roadmap Strong line-up from micro-controllers to 64-bit => real choice Multi-threading & OmniShield => differentiation in many markets Imagination Technologies FY15 AGM 18 th September

28 Promoting MIPS in Silicon Valley Imagination Technologies FY15 AGM 18 th September

29 Ensigma communications A massive opportunity as connectivity transitions to IP Efficient & scalable comms IP family Explorer RPUs for highest performance Wi-Fi & BT Wi-Fi 2x2ac now in production in partner s products New Whisper RPU cores targeting ultra-low power for IoT and wearables Uniquely positioned for the industry s transition to integrated comms IP Similar transition to that we saw in graphics Complete end-to-end solution Software to antenna Industry s largest centre of excellence ~ 200 engineers focussed on connectivity IP 10+ licensees & growing Several entering production in 2015 Imagination Technologies FY15 AGM 18 th September

30 IP platforms: addressing the emerging demand Pre-verified solutions - enabling the next wave of innovation Scalable IP Customisable IP Platforms Differentiated Customer SoC Optimal OEM products PowerVR graphics Pre-verified baseline SW PowerVR video PowerVR vision MIPS processors Ensigma communications Wi-Fi, BT TV, Radio CPU processors Peripheral IP Scalable & Secure Fabric Graphics & GPU Compute Video decode & encode Camera ISP Domain know-how Partner SW 3rd party SW Baseline SW RPU CPU Fabric GPU VDE VPU Peripherals Customer IP Imagination Technologies FY15 AGM 18 th September

31 Focusing on the essentials Significant operational changes; improving financials Losses reduced and key trends look encouraging Using DAB line-up and brand to drive adoption Extensive new product line-up announced at IFA: - Evoke F3 with BT and Spotify; new One range; Siesta Rise bedside radio; Evoke C-series all-in-one home audio systems Targeting international consumer & automotive markets Driving connectivity (Wi-Fi for internet radio, BT for streaming) Strategic support for key technologies and partnerships E.g. wireless speakers including multi-channel and IoT Have revised partnership model for music service to optimise cost Engineering supporting technology ecosystem growth Supporting IP business for Creator Ci20, Caskeid, Imagination Technologies FY15 AGM 18 th September

32 Leverage & profitability IP product profitability profile m Research Phase Development Market Entry Maturity PowerVR Long investment cycle Slow initial revenue ramp (licensing only) MIPS Accelerated later royalty + licensing ramp Imagination s operating margin expansion Planned strategic investment in complementary technologies =>impacted short-term margin All planned product lines are now in place => we re at the end of major new investments All business units either already in or entering revenue generation Ongoing tight & systematic control of Opex now sub 10% Ensigma Time Margin expansion => longer term goal 30%-40% FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 Imagination Technologies FY15 AGM 18 th September

33 Summary Technology Strong and comprehensive range of IP addressing all target applications Solution-centric IP platforms that efficiently address the needs of all customers Well aligned with the trends in the market and opportunities Pure Business rationalised and focussed on areas of strategic & financial significance Group Many opportunities and active licensing engagements across all IP families Some short-term softness in customer unit shipments but expect growing momentum for mid-term Leverage within the business model will enable expansion of operating margins with a long-term steady state of 30%-40% Business well positioned for future growth Imagination Technologies FY15 AGM 18 th September

34 Q&A