AGM Statement
IQE PLC
25 May 2005
For immediate release 25 May 2005
IQE plc
AGM Trading Update Statement
IQE plc (IQE), the leading global outsource supplier of customised epitaxial
wafers to the semiconductor industry, is pleased to announce the results of its
AGM, together with an AGM trading update.
At the AGM, held at the Group's offices in Cardiff today, all resolutions were
duly passed. In addition, President and Chief Executive, Dr Drew Nelson,
provided the following trading update to the AGM;
'As anticipated in the annual results statement, revenues for the first half of
2005 will be substantially higher than either the first or second half of 2004.
Overall, unaudited Q1/2005 revenues increased by 20.2% in dollar terms and 15.3%
in sterling terms compared with Q1/2004. This represents the second consecutive
quarter of significant revenue growth since Q3/2004, and we expect this
sequential growth to continue, resulting in revenues for H1/2005 which are
expected to be approximately 20% higher than for H2/2004.
The increased revenues will result in substantially reduced losses and a
reduction in operating cash outflow for H1/2005 compared with previous half
years, although final repayment of some debt and additional working capital
consumption for inventory build-up as part of the large outsource contract,
which was signed late last year, and capital expenditure at Wafer Technology
will increase overall cash outflow in H1/2005 beyond EBITDA. Nevertheless, we
expect the half year cash position to be in-line with our 2005 budget levels.
The wireless sector has continued to be strong for the Group, with the large
outsource contract running to plan and other qualified customers increasing
their demand. Final qualifications, particularly in the Pacific Rim countries,
are coming to conclusion in the next few months, further increasing expected
demand. Output at IQE Inc in H1/2005 has been limited to some extent by
specific routine equipment maintenance programmes, but is expected to continue
to increase throughout H2/2005 as these programmes complete.
Visible laser demand, particularly for industrial applications, has continued to
be strong although this has been offset to some extent by delays to newer
product launches where IQE has become qualified by customers, but their product
takeoff has been slower than they had anticipated. Recent indications are that
these new products, particularly VCSEL based products, are gaining acceptance in
the marketplace and orders are now beginning to come in to reflect the expected
increase in demand. In addition, IQE Europe has made good progress with the
development of a high power DVD product for the booming Read/Write marketplace,
which is currently being evaluated for performance and reliability by some of
our key customers. We therefore expect significant revenue growth from this
division during the coming months.
Quarter on quarter revenue growth at IQE Silicon has been strong, albeit from a
low base, as more customers become qualified and existing customers continue to
ramp up their demand from IQE. Progress on IQE's proprietary strained silicon
development continues well, and it is anticipated that major milestones towards
a final Strained Silicon on Insulator product for the 65nm technology node will
be achieved in the next few months. Additional outsourced product development
programmes on behalf of customers have continued to progress as planned.
Finally, Wafer Technology's business has been slower than anticipated due to
temporary inventory readjustment in the LED marketplace, but excellent progress
has been made in developing improved surface finishes for the higher margin
laser markets, and these are currently under qualification by a number of
customers.
We continue to pursue and seek out further outsource contracts that will benefit
from the economies of scale and technological expertise that IQE Group companies
can offer, and good progress continues to be made in this respect, although the
scale of some of these opportunities necessarily means timing can be somewhat
unpredictable. We also continue to focus on cost control within the various
Group companies to ensure the breakeven revenue points continue to reduce.
As we achieve the expected revenue increases throughout H2/2005, we remain
confident that we will achieve our target of ongoing cash generation on a
monthly basis during this calendar year.'
For further information please contact:
IQE plc Tel: +44 (0)2920 839 400
Drew Nelson, President & Chief Executive
Buchanan Communications Tel: +44 (0)20 7466 5000
Tim Thompson
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