1st Quarter Results 2003

21st May 2003

IQE plc (IQE), the world's leading global outsource supplier of customised epitaxial wafers to the semi-conductor industry, today announces its 1st Quarter 2003 Results for the period ended 31 March 2003.

KEY POINTS

Q1/2003 sales were £4.959m, 7% lower than the previous quarter (Q4/2002: £5.316m) and 13% lower than the same quarter last year (Q1/2002: £ 5.680m).

• Q1/2003 operating loss was £3.420m, 35% lower than the previous quarter (Q4/2002: £5.276m) and 31% lower than the same quarter last year (Q4/2002: £4.977m) due to continued cost cutting measures and reduced depreciation charges resulting from the impairment charges taken in 2002.

• Q1/2003 operating cash outflow was £3.005m, compared with Q4/2002 £0.966m and Q1/2002 £3.319m.

• Q1/2003 capital expenditure was reduced to £0.070m compared with Q4/2002 £0.576m and Q1/2002 £1.366m. Exceptional costs of £0.299m were also incurred in the quarter associated with staff reductions and restructuring

• Q1/2003 total cash outflow was £4.217m (Q4/2002: £2.233m) including repayment of £1.219m of long term borrowing

• Continued aggressive cost cutting measures, including a reduction of 50 staff as previously reported and restructuring of the Group, which will save approximately £2.000m per year.

• Gross cash at the close of Q1/2003 was £13.497m (Q1/2002: £27.918m).

• Continued progress in diversifying the Group's product ranges, particularly in the optical technologies area away from its traditional reliance on optical communication products, should bear fruit in the coming quarters.

• Some delays in order pull through from one major customer in the wireless sector due to end customer design changes, otherwise continued strength in the RF wireless sector.

Commenting on the results, Dr Drew Nelson, President/CEO said "Although revenues fell slightly in Q1 due to strong pricing pressures and seasonal effects, wafer volumes continued to rise. The results were closely in line with those presented at the year end 2002 results, illustrating the continued difficult trading conditions in the technology markets. The Group is realising significant cost savings and these continuing efforts are resulting in lower cash outflows, despite the lower levels of sales. The Group remains confident that it is in a strong position in the outsource market but recognises the protection of its cash position is paramount, so management are focussed on growing sales, continual cost savings and working capital improvements. We expect a significantly reduced total cash outflow in Q2, including the repayment of approximately £0.8m of long term borrowing on relatively flat sales. The Board continues to believe that the Group will benefit strongly as the overall semiconductor industry recovers and will continue to strengthen its position as the leading outsource supplier of advanced wafer products to the sector."

For further information please contact :

 

IQE plc [tel: +44 (0) 2920 839400]

Drew Nelson
Tim Hawkes
Chris Meadows

Leslie Coventry

Buchanan Communications [+44 (0) 207 466 5000]

Nicola Cronk

Tim Thompson