IQE Regulatory News (IQE)

25 May 2005 13:15

IQE PLC25 May 2005 For immediate release 25 May 2005 IQE plc AGM Trading Update Statement IQE plc (IQE), the leading global outsource supplier of customised epitaxialwafers to the semiconductor industry, is pleased to announce the results of itsAGM, together with an AGM trading update. At the AGM, held at the Group's offices in Cardiff today, all resolutions wereduly 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 of2005 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 consecutivequarter of significant revenue growth since Q3/2004, and we expect thissequential growth to continue, resulting in revenues for H1/2005 which areexpected to be approximately 20% higher than for H2/2004. The increased revenues will result in substantially reduced losses and areduction in operating cash outflow for H1/2005 compared with previous halfyears, although final repayment of some debt and additional working capitalconsumption for inventory build-up as part of the large outsource contract,which was signed late last year, and capital expenditure at Wafer Technologywill increase overall cash outflow in H1/2005 beyond EBITDA. Nevertheless, weexpect 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 largeoutsource contract running to plan and other qualified customers increasingtheir demand. Final qualifications, particularly in the Pacific Rim countries,are coming to conclusion in the next few months, further increasing expecteddemand. Output at IQE Inc in H1/2005 has been limited to some extent byspecific routine equipment maintenance programmes, but is expected to continueto increase throughout H2/2005 as these programmes complete. Visible laser demand, particularly for industrial applications, has continued tobe strong although this has been offset to some extent by delays to newerproduct launches where IQE has become qualified by customers, but their producttakeoff has been slower than they had anticipated. Recent indications are thatthese new products, particularly VCSEL based products, are gaining acceptance inthe marketplace and orders are now beginning to come in to reflect the expectedincrease in demand. In addition, IQE Europe has made good progress with thedevelopment of a high power DVD product for the booming Read/Write marketplace,which is currently being evaluated for performance and reliability by some ofour key customers. We therefore expect significant revenue growth from thisdivision during the coming months. Quarter on quarter revenue growth at IQE Silicon has been strong, albeit from alow base, as more customers become qualified and existing customers continue toramp up their demand from IQE. Progress on IQE's proprietary strained silicondevelopment continues well, and it is anticipated that major milestones towardsa final Strained Silicon on Insulator product for the 65nm technology node willbe achieved in the next few months. Additional outsourced product developmentprogrammes on behalf of customers have continued to progress as planned. Finally, Wafer Technology's business has been slower than anticipated due totemporary inventory readjustment in the LED marketplace, but excellent progresshas been made in developing improved surface finishes for the higher marginlaser markets, and these are currently under qualification by a number ofcustomers. We continue to pursue and seek out further outsource contracts that will benefitfrom the economies of scale and technological expertise that IQE Group companiescan offer, and good progress continues to be made in this respect, although thescale of some of these opportunities necessarily means timing can be somewhatunpredictable. We also continue to focus on cost control within the variousGroup companies to ensure the breakeven revenue points continue to reduce. As we achieve the expected revenue increases throughout H2/2005, we remainconfident that we will achieve our target of ongoing cash generation on amonthly basis during this calendar year." For further information please contact: IQE plc Tel: +44 (0)2920 839 400Drew Nelson, President & Chief ExecutiveBuchanan Communications Tel: +44 (0)20 7466 5000Tim Thompson This information is provided by RNS The company news service from the London Stock Exchange