Wireless drives record results as business diversifies into other mass markets

19 September 2013

Cardiff, UK. 19 September 2013: IQE plc (AIM: IQE, “IQE” or the “Group”), the leading global supplier of advanced wafer products and wafer services to the semiconductor industry, announces its half year results for the six months to 30 June 2013.

FINANCIAL HIGHLIGHTS

• Revenues up 84% to £63.0m (H1 2012: £34.3m) boosted by strategic acquisitions
• EBITDA up 162% to £10.5m (H1 2012: £4.0m)
• Adjusted PBT increases tenfold from £0.5m to £5.1m (reported PBT £2.5m)
• Adjusted basic EPS increases from 0.13p to 0.82p (reported basic EPS 0.39p).
• Strong conversion of operating profit into cash and completion of capex expansion programme marks return to free cash generation
• Net debt £37.7m (December 2012: £15.5m)

Note: EBITDA and adjusted profit measures exclude non-cash charges for share based payments, non-cash acquisition related charges and exceptional items as detailed in note 5. Free cash flow is net cash flow before acquisitions, financing and tax.

BUSINESS HIGHLIGHTS

• Clear leadership in wireless market evident in record financial performance
• Acquisition of Kopin Wireless integrated and performing strongly
• Significant milestones achieved in advanced solar (CPV), now primed for rapid mass market adoption
• Photonics transitioning to volume production including data centre and communication applications (VCSEL)
• Significant progress with gallium nitride (GaN) technology for Power Semiconductors and LED
• Internal business units created to address evolving market needs
• Programme to realise significant synergies on track
• Board remain confident of achieving earnings expectations for the full year


Dr Drew Nelson, IQE Chief Executive, said:

“These record financial results are a clear testimony to the transformation we’ve achieved over the last 18 months. Our two strategic wireless acquisitions have been successfully integrated and are performing very strongly. These deals represented the final building blocks in our wireless strategy, and we are now firmly focussed on delivery.

“Although the recent weakness in the global smartphone market, ahead of new product launches, has injected a greater degree of uncertainty in the short term, the overall wireless story remains as exciting as ever. The demand for greater connectivity, the increasing complexity of wireless communications and the explosion in data traffic continue to drive increasing demand for compound semiconductors. We are uniquely positioned to exploit this long term growth trend as the clear leader in providing a broad range of high performance wireless products.

“The advanced properties of compound semiconductors go far beyond just wireless communication. We have built a strong IP portfolio and are primed to exploit the adoption of compound semiconductors in a number of mass market applications. These include advanced solar (CPV), Power Semiconductors, LED lighting as well as a range of consumer and industrial applications utilising advanced lasers (VCSELs).

“Advanced solar (CPV) is a disruptive technology which is gaining traction in the energy market. Advances in cell and system efficiency are accelerating the adoption of CPV, which is widely expected to be a $200-500m market for compound semiconductor materials in the next three to five years. Having successfully hit all major technical and operational milestones, and recently posted new world record efficiencies from our production platform, we are now qualified for high volume manufacturing to commence over the coming months."

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Contacts:
IQE plc +44 (0) 29 2083 9400 Drew Nelson Phil Rasmussen Chris Meadows Espirito Santo Investment Bank + 44 (0) 20 7456 9191 John Llewellyn-Lloyd Alastair MacLachlan Canaccord Genuity + 44 (0) 20 7523 8000 Simon Bridges Cameron Duncan College Hill +44 (0) 20 7457 2020 Adrian Duffield Kay Larsen

 


Note to Editors IQE is the leading global supplier of advanced semiconductor wafers with products that cover a diverse range of applications, supported by an innovative outsourced foundry services portfolio that allows the Group to provide a 'one stop shop' for the wafer needs of the world's leading semiconductor manufacturers.
IQE uses advanced crystal growth technology (epitaxy) to manufacture and supply bespoke semiconductor wafers ('epiwafers') to the major chip manufacturing companies, who then use these wafers to make the chips which form the key components of virtually all high technology systems. IQE is unique in being able to supply wafers using all of the leading crystal growth technology platforms.
IQE's products are found in many leading-edge consumer, communication, computing and industrial applications, including a complete range of wafer products for the wireless industry, such as mobile handsets and wireless infrastructure, Wi-Fi, WiMAX, base stations, GPS, and satellite communications; and optical communications.
The Group also manufactures advanced optoelectronic and photonic components such as semiconductor lasers, vertical cavity surface emitting lasers (VCSELs) and optical sensors for a wide range of applications including optical storage (CD, DVD, BluRay), thermal imaging, leading-edge medical products, pico-projection, finger navigation ultra-high brightness LEDs, and high efficiency concentrated photovoltaic (CPV) solar cells.
The manufacturers of these chips are increasingly seeking to outsource wafer production to specialist foundries such as IQE in order to reduce overall wafer costs and accelerate time to market.
IQE also provides bespoke R&D services to deliver customised materials for specific applications and offers specialist technical staff to manufacture to specification either at its own facilities or on the customer's own sites. The Group is also able to leverage its global purchasing volumes to reduce the cost of raw materials. In this way, IQE's outsourced services, provide compelling benefits in terms of flexibility and predictability of cost, thereby significantly reducing operating risk.
IQE operates a number of manufacturing and R&D facilities across Europe, Asia and the USA. The Group also delivers its products and services through regional sales offices located in major economic centres worldwide.