Interim Results for the Half Year Ended 30 June 2005

24 Aug 2005


IQE plc (IQE), the leading global outsource supplier of customised wafers to the semiconductor industry, today announces its Interim Results for the half year ended 30 June 2005.

KEY POINTS

• First half revenues increased by 32% compared with H2/2004 to £9.665m (H2/2004: £7.316m) despite continuing adverse dollar exchange rate. In dollar terms, first half revenues increased by 37% compared with H2/2004

• Operating profit achieved in June, the first monthly operating profit since June 2001. Achieved at less than 30% capacity utilisation, demonstrating high level of operational gearing

• Gross loss reduced by £1.425m compared with H2/2004 on sales revenue increase of £2.349m

• EBITDA loss as detailed in the consolidated profit and loss account reduced by 46% to £1.902m (H2/2004: loss £3.512m)

• Net cash outflow from operating activities reduced by 30% to £3.118m (H2/2004: outflow £4.456m)

• Half year cash at £5.928m (H2/2004: £9.923m), ahead of internal budget for first half

• Operating cash breakeven run rate under tight control at £27m per annum with continued improvements in operating margins

• Total wafer area shipped increased by 36% to 986,000 sq.inches (H2/2004: 727,000 sq.inches)

• Won major industry award for Ultra Smooth strained silicon product, which was presented at the Semicon West exhibition in July

• Significant outsourcing research and development wins in first half of 2005

• Good prospects for continued increases in revenue in the second half of 2005 and the achievement of a sustainable positive cash flow

Commenting on the results, Dr Drew Nelson, President and CEO, said …….

“The IQE Group has made major progress in the first half of 2005 towards reaching operating profitability on an ongoing basis. Revenues rose substantially despite the adverse impact of the dollar exchange rate in the early part of H1/2005, fixed costs have been kept under close control and operational efficiencies have resulted in continued operational margin improvements. We exceeded our goal of monthly cash breakeven in June and posted our first monthly operating profit since June 2001 and, although the coming months will see some variability, we expect to achieve monthly cash breakeven or above on an ongoing basis during the latter part of H2/2005. The demonstration of monthly operating profitability is a key milestone, particularly as it was achieved at less than 30% of our overall capacity, which clearly demonstrates the high level of operational gearing of our business model. We have substantial opportunities to further enhance revenues and profitability as a result of numerous outsource qualification programmes and leading edge materials development programmes, and remain confident that our wafer outsourcing strategy, strong investment in productive capacity in prior years and our business model will lead to significant shareholder returns in the future.”
 

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Contacts:

IQE plc :
Drew Nelson +44 (0)2920-839400
Stuart Hall +44 (0)2920-839400
Chris Meadows +44 (0)2920-839400

Buchanan Communications :

Tim Thompson/Nicola Cronk +44 (0)2074-665000