Sparkling results from IQE

IQE saw 2015 revenues ups 2% to £114 million for an operating profit up nearly three times at £21 million and a profit after tax up 10x at £20 million.

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£21.2 million cash was generated which was 41% up on the previous year and debt was reduced by 25% to £23.2 million.

Photonics sales were up 28% to £16.0m

“The Group had another strong financial performance in 2015, with continued growth in revenues, profits and cash generation,” says IQE CEO Drew Nelson, “EPS is up 7% to 2.6p, and our strong cash generation has enabled us to continue to invest in new technologies whilst de-leveraging our balance sheet. Our balance sheet leverage peaked in January 2013 at c. £94m on the back of acquisitions, but we have significantly reduced this to c. £40m by the end of 2015, whilst almost doubling EBITDA from £16m to £29m over the same period.

“Our focus on building a strong IP portfolio reflects our vision of global leadership across a range of markets as advanced semiconductor materials become an increasingly important enabler of a wide range of electronics applications. This strategy underpins our strong financial performance, and the exciting outlook we see for our business.

“Moving forward we envisage a return to growth in Wireless, accelerating growth in Photonics, increasing contributions from Power and Solar, and continuing leverage of our powerful IP position through licensing, new product development and introductions.

“We have had a good start to 2016, and are trading in line with our expectations. The outlook remains positive, which underpins the Board’s confidence that we remain on track to achieve our expectations for the full year.”

IQE reported continued double digit growth in photonics revenues, with increasing adoption for a wide range of applications including data centres, consumer applications, industrial processes, and fibre to the premises. Market outlook and strong pipeline support continuing double digit growth.

The company recorded its licensing income reflects new revenue stream, with a combination of upfront and recurring income. This was earned from licenses to Joint Ventures (JVs). License income in Q1 of 2016 of approximately £2m.

IQE’s growing portfolio of epitaxial IP contains over 100 patents and a rich pool of trade secrets for the design and manufacture of advanced semiconductors :

Direct engagements with multiple Tier 1 OEMs reflect the increasing importance of epitaxial IP as a key enabling technology within electronic systems;

Market dynamics also reflect the increasing focus on advanced semiconductor materials technologies, with US competitor acquired for 3.5x revenues.

Joint ventures were established in the UK and Singapore for the development and commercialisation of advanced semiconductor technologies. The significance of this technology also recognised by the UK government with a £50m commitment in January 2016 to fund a Compound Semiconductor Applications Catapult in Cardiff, UK.

The growth in revenue was partially tempered by the widely reported weakness in the smartphone market, which was exacerbated by inventory adjustments. However, the outlook for wireless remains attractive with recent gains in market share, contract wins, and new product qualifications for base station applications.

Activity in the power semiconductor market continues to intensify. IQE has secured a strong IP position with cREO technology providing freedom to operate in this highly attractive market.

Advanced solar is making good progress in space applications, mitigating slow progress in the terrestrial market which has been hampered by macro-economics.

InfraRed maintains its market leadership position and, as announced on 26th January 2016 won a $3.7m contract with a leading global substrate manufacturer.

Read more IQE stories on Electronics Weekly »


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