Interim Statement

13 September 2016

Accelerating growth in photonics helps deliver strong uplift in profit and cash generation

 

Cardiff, UK. 13 September 2016: 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 unaudited half year results for the six months to 30 June 2016.

 

 

 

£’ MILLION (except EPS)

30 June 2016

30 June 2015

Change

 

 

 

 

REVENUE

 

63.0

53.2

+18%

ADJUSTED OPERATING PROFIT*

 

10.8

6.7

+61%

ADJUSTED PROFIT BEFORE TAX*

 

10.1

5.9

+71%

NET PROFIT

10.0

4.5

 

+122%

ADJUSTED FULLY DILUTED EPS*

1.46p

0.90p

 

+62%

CASH GENERATED FROM OPERATIONS

 

12.4

4.5

+176%

LEVERAGE (NET DEBT + DEFERRED CONSIDERATION)

35.4

49.0

-28%

 

 

 

 

             

 

FINANCIAL HIGHLIGHTS

 

  • Strong financial performance with double digit growth in revenues, profits and cash generation
  • Revenues up 18% reflecting increasing revenues in all markets
  • Adjusted fully diluted EPS up 62% with the benefit of the Groups highly geared business model
  • Increased profitability converted into 176% increase in cash generated from operations
  • Balance sheet leverage reduced by 28% to £35.4m
  • Kopin deferred consideration balance of £10.7m settled in full in January 2016
  • Remaining balance of deferred consideration will be settled in full by the end of this month (September 16).


OPERATIONAL HIGHLIGHTS

 

  • Continuing diversification of revenues with non-wireless revenues accounting for 31% of sales (H1 2015: 24%)
  • Accelerating photonics growth, with sales up 45% year on year
  • Wireless performing well with sales up 7%
  • Robust performance in Infrared and CMOS++ with sales up in both segments
  • License income of £3.5m from joint ventures, which continue to perform well
  • Strong progress with new product qualifications underpin the pipeline for continuing growth
  • Continuing to strengthen technology leadership and IP portfolio

 

Dr Drew Nelson, IQE Chief Executive, said:

 

“IQE’s continued strong financial performance reflects the significant progress made in diversifying revenues over the past few years, and its growing portfolio of intellectual property.  A healthy performance in Wireless and IR has been supplemented by accelerated growth in photonics which is up 45%.  The photonics market is being driven by a diverse range of applications, and is at an early stage in the growth cycle. We expect our photonics business to continue to grow strongly for the foreseeable future.

 

IQE has developed a broad portfolio of intellectual property for advance semiconductor materials. In addition to the £3.5m of license income generated in the first half, this IP portfolio is increasingly enabling IQE to differentiate itself, and create a platform for continuing growth across its current and emerging markets.   IQE has a pipeline of new products and customer qualifications which underpin its growth ambitions, with programs expected to ramp through 2017 and 2018.    This includes new photonic applications, wireless base stations, advanced solar, and power switching applications.”

 

Note :
* the Directors believe that the adjusted measures provide a more useful comparison of business trends and performance.  Adjusted measures exclude exceptional items, share based payments and non-cash acquisition accounting charges.  Reconciliation of the adjusted measures to the statutory measures are included in note 5.

 

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