Multi-media group Imagination Technologies - hitherto one of the year's hi-tech Cinderellas - became yesterday a heroine of the sector, with a 162% profits surge helping to hold up a sagging Techmark index in London.

The graphics, video and audio specialist made £4.7m in the year to March 31, from £1.8m in 1998/99, well ahead of the £3.9m that had been expected by City analysts.

Imagination owns the rights to the graphics chip for Sega's games console, and has a strategic partnership with ST Microelectronics of France, with whom it is to launch its first graphics chip for personal computers in June.

Imagination shares fell from an all-time closing price high of 610p in February to about 233p at the start of May on concerns over poor sales of Sega's Dreamcast machine, but yesterday it proved one of the anchors of Techmark, with the shares rising 18.5p to 261p.

Imagination's growth has been powered by the relationship with Sega, but the company expects increasing revenue from the partnership, announced last year, with ST, one of the main providers of chips for PCs. With ST, Imagination is producing chips for television set-top boxes.

It expects its £5m acquisition in March of Ensigma, the audio technology company, to bear fruit. Ensigma makes technology for radio studios, home entertainment systems and voice recognition devices, and is a leader in telephone "voice dialling". Its products are in use by the Ministry of Defence.

Imagination said the ST tie-up and the acquisition of Ensigma helped to broaden its intellectual property base, adding it had its eye on further acquisitions in related areas.

Earnings per share rose by 127% to 2.5p, from 1.1p in 1999.