20 July 2016
Significant growth in revenues and profits reflect increasing revenue diversification
Cardiff, UK. 20th July 2016: IQE plc (AIM: IQE; "IQE", the "Group"), the leading global supplier of advanced wafer products and wafer services to the semiconductor industry, provides a trading statement for the six months ended 30 June 2016.
The Group announces that it expects to deliver a significant increase in revenues and profits for the first half of 2016, compared with the same period in 2015 and continues to reduce its balance sheet leverage*.
Sales in the first half are expected to be at least 15% higher than H1 2015, with the business enjoying an increasing diversification of revenues.
Photonics continues to grow rapidly, and is expected to deliver a double digit rate of growth in the first half. It is widely accepted that the Photonics market will continue its rapid growth over the coming years as Vertical Cavity Lasers (“VCSEL”) and Indium Phosphide Lasers (“InP”) are increasingly adopted for a wide range of end market applications. These include consumer products, fibre optic communications, data centres and industrial processes.
License income from joint ventures is expected to be c.£3.5m for the half year, with both joint ventures making good progress.
Wireless and InfraRed sales are expected to show a slight year on year increase.
The depreciation of Sterling against the US Dollar due to Brexit occurred shortly before the end of the half year, and as a result the financial impact on the first half was limited (translated at average exchange rates). However, the balance sheet impact was more significant, with a presentational increase in both assets and liabilities (converted at spot rate). Despite this, the Group has continued to reduce its leverage* in both Sterling and US Dollar terms due to its strong cash generation. Deferred consideration for previous acquisitions will be completely eliminated by September 2016. Other than the impact of currency fluctuations, we do not see any material impact of the decision to exit the EU on our business or prospects.
The Group made good progress on new product development and qualifications during the half, strengthening its IP position, and re-enforcing a positive outlook. The Board remains confident that the Group is on track to achieve full year expectations.
Notice of Results
The Group will report its half year results for 2016 on 13 September 2016.
Dr Drew Nelson, Chief Executive of IQE, said:
"The growth in IQE’s sales and profits reflect the increasing diversification of its revenues, the growing breadth of its end markets, and the strength of its IP portfolio. As a result, the Group’s strong cash generation continues to de-leverage* its balance sheet, with the deferred consideration from previous acquisitions on track to be completely eliminated by the end of September.
"The Group’s continued diversification of revenues is improving its resilience to end market fluctuations and our Photonics business continues to deliver strong double digit growth driven by a range of emerging end markets which are primed for significant and sustainable growth.
"Our joint ventures have progressed well and have delivered license income of £3.5m, whilst our Wireless and InfraRed businesses were stable, delivering slight increases in revenues.
"With the progress being made on new product qualifications, further product developments and with increasing revenue diversity, we remain on track to achieve full year expectations.”
This announcement contains inside information.
* Leverage is defined as deferred consideration plus net debt.
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