Trading update and notice of results

20 July 2015

Trading update and Notice of Results

 

POSITIVE MOMENTUM CONTINUES AT IQE

 

IQE plc (AIM: IQE, “IQE” or the “Group”), the leading global supplier of advanced semiconductor wafer products and wafer services to the semiconductor industry, provides a trading statement for the six months ended 30 June 2015, with results in line with market expectations.

Expected H1 Financial Results 

  • Revenues of £53.2m, up 2% (H1 2014: £52.0m)
  • Adjusted operating profit of £6.7m, up 5% (H1 2014:£6.4m)
  • Adjusted fully diluted EPS of 0.9p, up 5% (H1 2014: 0.86p)      
  • Deferred consideration of £18.1m, down 42% (30 June 2014: £31.4m)
  • Net debt expected to be £31.1m, down 12% (30 June 2014: £35.5)

 First half trading is ahead of the same period last year delivering growth in EPS and a further reduction in borrowings. The Group has performed in line with expectations and remains on track to achieve its full year expectations.

Market Highlights

In the wireless market, key customers have continued to enjoy strong revenue growth.  The strong outlook is being driven by new flagship smartphone platforms, growth in sales to China, and upgrades to 4G/LTE.  This has primarily benefitted their filter businesses, but also provides a stable platform for compound semi-conductor components including Power Amplifiers (PAs).  

Strong sequential wireless revenue growth is expected in in the second half of the year, primarily reflecting normal seasonal trends.  Also, although of smaller consequence, some temporary production disruption suffered by one customer during Q2 has skewed some sales into Q3. This customer specific issue did not relate to IQE’s products, and has since been resolved.

The photonics business has continued to perform well.  It is enjoying strong and sustainable revenue growth.  This is being driven by a wide array of end market drivers including data centres, optical communication, industrial heating, and a range of sensing applications.

In advanced solar, IQE began pilot production during H1 15 with its triple junction technology now being deployed into field installations.  The end customer has a pipeline of projects scheduled for deployment in 2016/17, which we expect to drive steady growth in demand for IQE’s epitaxial wafers.

Good progress continues to be made in IQE’s other markets, including Gallium Nitride and Compound Semiconductor on Silicon technologies, which are expected to transition to volume over the next two to three years.

On 9 July 2015 IQE also announced a new Joint Venture with Cardiff University to drive the development and commercialisation of compound semiconductor technologies in Europe, and provide an anchor for the development of a compound semiconductor cluster.

The second half has started well, and the Board remains confident that the Group is on track to achieve its expectations for the full year. 

Dr Drew Nelson, Chief Executive of IQE, said:

“This was a solid start to the year, in which we delivered continued improvement in our financial results and further reduced our borrowings. 

“Our wireless business is proving to be a stable platform to leverage strong and sustainable growth in our photonics business.  Beyond this, we are making encouraging progress in advanced solar and power switching, both of which we believe will be high growth markets for IQE in the near future.

The second half has started well, and we are on track to meet our expectations and deliver continued growth in profits and cash generation. ”

Notice of Results

IQE will release its half year results on 15 September 2015.

 

Date: 20 July 2015

 

Contacts:

IQE plc +44 (0) 29 2083 9400

Drew Nelson

Phil Rasmussen

Chris Meadows

 

Canaccord Genuity + 44 (0) 20 7523 8000

Simon Bridges

Mark Whitmore

 

Peel Hunt +44 (0) 20 7418 8900

Richard Kauffer
Euan Brown

 

Broker Profile +44 (0) 20 7448 3244

Simon Courtenay

Harry Rippon