Group transformed by three strategic transactions - well positioned to exploit leading position in growing markets

20 March 2013

Group transformed by three strategic transactions - well positioned to exploit leading position in growing markets

Cardiff, 20 March 2013: 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 final results for the year ended 31 December 2012.

Financial highlights

- Revenues up 17% to £88.0m (2011: £75.3m)   - Record second half performance     - H2 sales up 45% to £53.7m (2011 H2: £37.0m) - H2 EBITDA up 56% to £12.2m (2011 H2: £7.8m) EBITDA up 18% to £16.4m (2011: £14.0m) - Adjusted* pre-tax profit up 5% to £8.6m from £8.2m (reported £6.1m) - Adjusted* EPS of 1.59p (2011: 1.86p) and basic EPS of 1.16p (2011: 1.62p) - CAPEX of £13.1m (2011: £17.4m) marks completion of two year capacity expansion programme - Proforma* cash generated from operating activities of £13.2m, up 27% (down 54% to £4.1m on a statutory basis)

* Adjustments to profits and EPS reflect non-cash charges for share based payments, non-cash acquisition related charges and exceptional items (see note 3). Proforma cash generation reflects presentation had the acquisition been cash settled as detailed in the financial review.

Operational highlights
- Completed three strategic transactions involving Solar Junction Corporation (“Solar Junction”), RF Micro Devices epitaxy division (“RFMD”) and the epiwafer manufacturing business of Kopin Corporation (“Kopin Wireless”) since beginning of 2012:   -Provide commanding platform for continued strong growth   -Significantly reduce market risk and short term volatility   -Strengthen leading position in manufacture and supply of advanced compound semiconductors   -Provide further economies of scale and opportunities for cost savings -Excellent progress on qualification programmes:   -In production with five customers on advanced wireless BiHEMT products   -Photonics (optoelectronics) business transitioning into volume production   -2012 CPV solar milestones achieved on schedule; qualifications on track for production revenues in H2 2013 - Completed two-year major capacity expansion programme - Expanded product portfolio to benefit from wider global adoption of compound semiconductor technologies.

Dr Drew Nelson, IQE Chief Executive, said:
“IQE has been transformed over the last 14 months.
“Three major transactions, the completion of our capacity expansion programme and the achievement of a number of significant qualifications in both wireless and photonics (optoelectronics) have laid the foundations for accelerated growth in 2013 and beyond.
“Financially, our record second half performance in 2012 has provided a glimpse of what’s to come. Furthermore, the strengthening of our risk mitigation strategy reduces the potential for short-term customer demand volatility.
“The road ahead has never been clearer. The advanced properties of compound semiconductors are central to addressing the challenges and performance expectations facing the electronics industry. This is a matter of fundamental physics as the next wave of growth for the electronics industry will be enabled by combining the properties of advanced compound semiconductors with the cost advantages of silicon. This is already beginning to happen and will accelerate in the next few years.
“As IQE is at the forefront of this trend, we are increasingly confident that the Group is well positioned for strong growth in 2013 and beyond.
“Therefore our focus now is on delivery. The current financial year has started well, in line with the Board’s expectations, with the momentum seen in the second half of 2012 continuing.”


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IQE plc (+44 29 2083 9400) Drew Nelson Phil Rasmussen Chris Meadows
Espirito Santo Investment Bank (+44 20 7456 9191) Richard Crawley James Staveley

Canaccord Genuity (+44 20 7050 6500) Simon Bridges Cameron Duncan
College Hill (+44 20 7457 2020) Adrian Duffield Kay Larsen


Note to Editors IQE is the leading global supplier of advanced semiconductor wafers with products that cover a diverse range of applications, supported by an innovative outsourced foundry services portfolio that allows the Group to provide a 'one stop shop' for the wafer needs of the world's leading semiconductor manufacturers.
IQE uses advanced crystal growth technology (epitaxy) to manufacture and supply bespoke semiconductor wafers ('epiwafers') to the major chip manufacturing companies, who then use these wafers to make the chips which form the key components of virtually all high technology systems. IQE is unique in being able to supply wafers using all of the leading crystal growth technology platforms.
IQE's products are found in many leading-edge consumer, communication, computing and industrial applications, including a complete range of wafer products for the wireless industry, such as mobile handsets and wireless infrastructure, Wi-Fi, WiMAX, base stations, GPS, and satellite communications; and optical communications.
The Group also manufactures advanced optoelectronic and photonic components such as semiconductor lasers, vertical cavity surface emitting lasers (VCSELs) and optical sensors for a wide range of applications including optical storage (CD, DVD, BluRay), thermal imaging, leading-edge medical products, pico-projection, finger navigation ultra-high brightness LEDs, and high efficiency concentrated photovoltaic (CPV) solar cells.
The manufacturers of these chips are increasingly seeking to outsource wafer production to specialist foundries such as IQE in order to reduce overall wafer costs and accelerate time to market.
IQE also provides bespoke R&D services to deliver customised materials for specific applications and offers specialist technical staff to manufacture to specification either at its own facilities or on the customer's own sites. The Group is also able to leverage its global purchasing volumes to reduce the cost of raw materials. In this way, IQE's outsourced services, provide compelling benefits in terms of flexibility and predictability of cost, thereby significantly reducing operating risk.
IQE operates a number of manufacturing and R&D facilities across Europe, Asia and the USA. The Group also delivers its products and services through regional sales offices located in major economic centres worldwide.