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R&D focus brings VideoLogic to profit

Dreamcast royalties have begun to rake in the cash

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VideoLogic Group has seen its first profitable year since flotation. The UK company posted preliminary results of £1.8 million profit for the year ended 31 March, against last year's loss of £2.3 million. Gross profit was £9.5 million, compared to last year's £6.5 million, according to a company statement. Gross margins increased to 83 per cent. Trevor Selby, VideoLogic finance director, told The Register the success lay in the move towards technology research and development. Technology sales grew in excess of 50 per cent, including royalties on one million chips sold by NEC to Sega for the Dreamcast console in Japan. The company has also changed its name to Imagination Technologies. Overall turnover was down from £12 million to £11.5 million, but Selby said the conversion from a systems based to technology model had driven profits growth. VideoLogic used to make graphics boards, using other companies’ silicon. Now it designs software and circuitry inside chips, raking in royalties from every chip sold. "This transition has caused the breakthrough in profit, we have converted from 30 per cent gross margin to 83 per cent. We are very heavily R&D oriented," said Selby. VideoLogic is based in Hertfordshire, and over 100 of its 136 staff are engineering specialists. It also has offices in the US and Germany. Sega Dreamcast sales will boost overall turnover in the future, said Selby. He predicted royalties would go through the roof upon the console's introduction to the UK and the US in September. The company will also be hoping that last month's alliance with STMicroelectronics will help it break into the PC market. ®

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