Imagination Technologies posts annual profit despite being dumped by Apple

British chipmaker Imagination Technologies has posted an annual profit despite its ongoing fallout with Apple. The firm recorded a £2.4 million pre-tax profit with group revenue up 19 per cent to £145.2 million, overhauling a £29.4 million loss from the previous year.

Shares in the company plummeted by more than 60 per cent in April, when Apple controversially revealed that it would be pulling the plug on its partnership with Imagination Technologies at some point within the next two years. With royalties from Apple accounting for around half of the British chipmaker’s revenue last year, Imagination Technologies continues to contest Apple’s ability to create its own product without violating the companies agreement. The Hertforshire-based chipmaker believes that Apple’s plan to replace Imagination’s intellectual property – used in Apple product graphics processors – with its own version would violate the company’s patents. 

"We improved our financial performance across the business, Boss Andrew Heath said: "We returned the business to profitability and saw good cash generation despite the outflow from the now discontinued businesses. However, Apple’s unsubstantiated assertions and the resultant dispute have forced us to change our course, despite the clear progress we have been making."

A company spokesperson added: "The dispute with Apple continues. As of yet no progress has been made. Options being reviewed. We believe that it would be extremely challenging to design a brand new GPU architecture from basics without infringing our intellectual property rights, accordingly we have not accepted Apple’s assertions. We initiated the dispute resolution procedure under the license agreement with a view to reaching an agreement through a more structured process.

“To be clear Apple made an unsubstantiated claim, which obliged us to inform the markets, leading to a significant decrease in our share price. The claim has led us to invoke a contractual dispute resolution procedure and has created significant uncertainty with respect to our business, including our employees. “We do not believe this to be acceptable business practice nor in line with Apple’s own ethics statements regarding suppliers. 

Imagination Technologies also put its MIPS and Ensigma operations up for sale in May. The company has now confirmed that the process is progressing well and proposals have been received for both businesses with ‘preliminary discussions’ already taking place.