Full Year 2024 Results

Cardiff, UK

13 May 2025

- Improved year-on-year profitability in line with expectations

- Jutta Meier appointed CEO

IQE plc (AIM: IQE, "IQE" or the "Group"), the leading global supplier of compound semiconductor wafer products and advanced material solutions, today announces its results for the full year ended 31 December 2024.

Jutta Meier, Chief Executive Officer and Chief Financial Officer of IQE, commented:

“IQE delivered a solid set of financials in line with our January 2025 trading update. Our focus has been on reducing costs and optimising our footprint, and I am pleased to see this has resulted in an improved adjusted EBITDA position year-on-year.

The Strategic Review remains ongoing and we have been encouraged by progress so far despite a challenging macro environment. IQE has a strong foundation from which to unlock value for all of our stakeholders and with a diverse customer pipeline, the continued end-market demand for our technology gives us confidence for the future. I am also delighted to be appointed as CEO as we continue to deliver on the positive progress we have made.”

FY 2024 Financial Summary

_{1 Adjusted EBITDA is earnings before interest, tax, depreciation, amortisation and certain non-cash charges, non-operational items and significant infrequent items set out in Note 4 in the financial statements section.
2 Cash capital expenditure stated is Property, Plant and Equipment cash capex.
3 Adjusted net debt is calculated as cash less borrowings but excluding lease liabilities and fair value gains/losses on derivative instruments.}

FY 2024 Financial Highlights

• Revenue for FY 2024 was broadly flat at £118.0m (FY 2023: £115.3m).
  • Wireless revenue of £67.3m (FY 2023: £53.9m) increased 25% year-on-year reflecting an increase in wireless GaAs sales linked to a higher penetration of Asian markets and an increase in GaN sales for 5G infrastructure.
  • Photonics revenue of £49.9m (FY 2023: £59.1m) decreased 16% year-on-year primarily because of softness in 3D Sensing and telecoms infrastructure markets, partially offset by a strong performance in Aerospace and Security markets for infrared-related products
  • CMOS++ revenue of £0.8m (FY 2023: £2.3m) was down 62% on a reported basis which reflects a strategic rebalancing of the business’ product portfolio and a shift in focus towards diversification into GaN Power and MicroLED. In FY 2025 IQE will no longer reporting CMOS++ revenue as a standalone segment.
• Adjusted EBITDA of £8.1m (FY 2023: £4.3m), an increase of 88% year-on-year primarily reflects the annualised impact of prior year cost mitigation actions and the implementation of additional cost management in the current year.
• Adjusted EBITDA margin of 7% (FY 2023: 4%) reflects the impact of actions to reduce costs and align capacity with customer volumes alongside consolidation of our manufacturing sites.
• Reported operating loss of £33.0m (FY 2023: £25.8m) impacted by non-cash asset impairments of £3.1m related to the Group’s US Wireless assets and restructuring costs of £7.6m, including non-cash intangible and tangible asset impairments of £5.4m related to the consolidation of the Group’s manufacturing operations.
• Reported net cashflow from operations of £1.3m (FY 2023: £10.1m) decreased in the year, reflecting inventory build to support 2025 deliveries.
• Cash capital expenditure (PP&E) of £11.4m (FY 2023: £12.2m) to support the Group’s strategic GaN diversification and growth strategy.
• Adjusted net debt of £18.8m as at 31 December 2024 (FY 2023: net debt of £2.2m) with an undrawn balance of $5.5m (£4.4m) on the Group’s Revolving Credit Facility.
• Convertible loan note financing of £18.0m (gross proceeds) completed in March 2025 to strengthen IQE’s near-term financial position.
• Cash and cash equivalents of £20.6m as at 31 March 2025 following receipt of CLN proceeds.
• Cost control and cash generation
  • Restructuring of the Group’s Executive Leadership Team
  • Headcount restructuring resulting in over 10% reduction
  • Adjusted SG&A reductions of 8% focused on discretionary non-labour expenses and headcount reductions.
  • Asset optimisation, including consolidation of capacity, restructuring of manufacturing shift patterns and the sale of excess tools resulting from site consolidation
• Global site optimisation programme
  • Completion of the consolidation of Pennsylvania MBE operations into North Carolina site with customer qualifications complete and production ramped
  • Sale of the Pennsylvania manufacturing site completed in December 2024 for $5.5m (£4.4m)
  • Strategic repositioning of the Massachusetts and North Carolina sites
  • Commencement of the consolidation of the Group’s South Wales activities into its Newport manufacturing site

Business update:

• Connect
  • Launched Quantum Dot Laser foundry service for high-efficiency optical communications in data centres with opportunity to take significant market share from incumbent laser technologies.
  • Expansion of GaN RF Aerospace & Security business serving fast-growing end-market, including satellite internet constellation platforms (Low Earth Orbit Satellites – LEOS).
  • Qualification of high-performance HBTs for power amplifiers in next-generation 5G smartphones, underpinned by growing customer demand for HBT portfolio serving Wi-Fi7 markets.
• Sense
  • Development of InP and GaSb laser and detector technologies with leading consumer OEM for healthcare sensing applications.
  • Strong progress with qualification of second-generation 3D Sensing VCSEL for mobile handset and tablet platforms.
  • Secured long term agreements with two leading Infrared sensing customers supported by largest purchase orders to date.
• Power
  • Joint Development Agreement with X-FAB to create a Europe-based GaN Power device platform solution for automotive, data centres and consumer applications.
  • First commercial orders received with 650V HEMT automotive qualifications and GaN Power capacity under qualification for delivery into IDM foundry partners.

• Display
  • Launch of 8” GaN-on-Si microLED foundry service with in-house wafer cleaning, compatible with advanced Silicon CMOS manufacturing.
  • Partnership extension with annual purchase order commitment from leading AR smart glasses designer for GaN based microLED displays.
  • Expansion of microLED customer pipeline with new qualification orders secured, served by increasing UK and US capacity for GaN product development.

Update on Strategic Review:

As previously announced, the Group is currently conducting a comprehensive Strategic Review of its asset base to ensure a strong capital position to further invest in core operations. As part of the Strategic Review, IQE is prioritising the possibility of a full sale of IQE Taiwan, alongside a potential IPO. The Board is leading the Strategic Review and continues to be advised by Lazard. While there can be no certainty as to the outcome of the Strategic Review, the Board is currently evaluating a range of proposals and will provide a further update when appropriate.

Board update:

The Board is pleased to announce that Jutta Meier will immediately become IQE's Chief Executive Officer following her successful period as Interim CEO. Jutta will continue in her dual role as CEO and CFO. Female representation on IQE’s Board now stands at an above average 57%.

Mark Cubitt will continue to act as Executive Chair, providing support to Jutta and the Executive Leadership Team through the ongoing Strategic Review. The composition of the Board will be re-evaluated following the conclusion of the Strategic Review.

Jutta and Mark received salary/fee adjustments from 1 May 2025 to reflect their increased responsibilities and workloads. With the Board’s agreement and effective from 1 July until 31 December 2025, both have opted for their pay adjustments to be received as share options under the Group’s existing share option scheme. The options will vest monthly but will not be exercisable until the start of 2026, and the number of share options granted will be uplifted to take account of exercise costs and, for Jutta only, her lost employer’s pension contributions. Other members of the Executive Leadership Team have also opted for their pay to be received in share options under the same conditions.

Mark Cubitt, Executive Chair of IQE, commend:

“I would like to recognise Jutta’s success as CEO of IQE since she took on the interim role over six months ago. The Board felt she was an excellent candidate and in that time she has stabilised and refocused the business and rebuilt confidence with both customers and employees. I am pleased to continue to work alongside her as IQE’s Executive Chair to deliver on our strategy, and I remain encouraged by the progress of our Strategic Review and its potential to unlock the untapped value within the Group.

Current trading and outlook:

Global markets are being impacted by macroeconomic uncertainty and as a result, some end customer demand is being fulfilled with existing inventory. This was visible in Q1 trading but is expected to correct in H2 2025. Costs and capacity continue to be optimised to improve margins and cashflow.

IQE’s customer pipeline remains strong and is predicted to grow in H2 2025, driven by new product and customer engagements. Additionally, existing segments including Aerospace and Security and optical communications are also expected to deliver growth, offsetting anticipated softness in wireless segments resulting from challenged consumer markets, particularly in Asia.

There is currently no direct impact to IQE from the implementation of US tariffs, however developments are being closely monitored and options are being explored with both suppliers and customers to mitigate any potential risk.

Revenue and adjusted EBITDA for the full year are expected to be within the range of analyst forecasts for FY 2025¹ , with weighting towards H2 consistent with the destocking seen in Q1 and typical industry seasonality. These forecasts assume the inclusion of IQE Taiwan revenues pending the outcome of the Strategic Review.

_{1. The analyst range of expectations for FY 2025 revenue are from £115.1m to £123.0m and for adjusted EBITDA from £7.4m to £10.0m.}

Results Presentation:

IQE will present its FY 2024 Results via webcast at 10:00am today, Tuesday 13 May 2025. If you would like to view this webcast, please register by using the below link and following the instructions:

https://brrmedia.news/IQE_FY_24

Contacts:

IQE plc
+44 (0) 29 2083 9400
Mark Cubitt
Jutta Meier
Amy Barlow

Lazard (Financial Adviser)
+44 (0) 20 7187 2000
Cyrus Kapadia
Keiran Wilson
Alexander Fiallos

Peel Hunt (Nomad and Joint Broker)
+44 (0) 20 7418 8900
Ben Cryer
Kate Bannatyne
Adam Telling

Deutsche Numis (Joint Broker)
+44 (0) 20 7260 1000
Simon Willis
Hugo Rubinstein
Iqra Amin

Headland Consultancy (Financial PR)
+ 44 (0) 20 38054822
Andy Rivett-Carnac: +44 (0) 7968 997 365
Chloe Francklin: +44 (0)78 3497 4624

GLOSSARY

GaN – Gallium Nitride
GaSb – Gallium Antimonide
InP – Indium Phosphide

ABOUT IQE

http://iqep.com

IQE is the leading global supplier of advanced compound semiconductor wafers and materials solutions that enable a diverse range of applications across:

• Smart Connected Devices
• Communications Infrastructure
• Automotive and Industrial
• Aerospace and Security

As a scaled global epitaxy wafer manufacturer, IQE is uniquely positioned in this market which has high barriers to entry. IQE supplies the global market and is enabling customers to innovate at chip and OEM level. By leveraging the Group’s intellectual property portfolio including know-how and patents, it produces epitaxy wafers of superior quality, yield and unit economics.

IQE is headquartered in Cardiff UK, with employees across manufacturing locations in the UK, US and Taiwan, and is listed on the AIM Stock Exchange in London.