Continued growth momentum in smartphone market ...

Cardiff,  UK. 7 September  2011: 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  half year results  for the six months to
30 June 2011.
FINANCIAL HIGHLIGHTS

  * Revenues up 16% to £38.3m (H1 2010: £33.0m)

      * Constant  currency  revenue  growth  of  23% - wireless sales up 21% and
        optoelectronic sales up 32% (organic 16%)

  * EBITDA up 13% to £6.1m (H1 2010: £5.4m)

  * Pre-tax profit up 28% to £2.8m (H1 2010: £2.2m)

  * Adjusted EPS* up 18% to 0.71 pence (H1 2010: 0.60 pence)

  * EPS up 20% to 0.60 pence (H1 2010: 0.50 pence)

  * Strong cash conversion from operations £5.9m  (H1 2010: £1.9m)

  * Ungeared balance sheet, net funds £1.0m (Dec 2010: £7.0m)

BUSINESS HIGHLIGHTS

  * Continued  strong  sales  performance  in  key  markets: wireless up 14% and
    optoelectronics up 25%

  * Wireless  growth driven by continued strong adoption of smartphone and other
    mobile computing devices

      * IQE's  products in majority of top-tier smartphones: broad customer base
        and growing market share (over 30%)

      * Engaged in over 20 new significant product qualifications

      * Over 100% growth in Gallium Nitride based high power RF business

  * Significant growth in opto-electronics:

      * Significant  organic growth  driven by  emerging technologies, including
        CPV  solar,  infrared  materials  and  VCSELs  for finger navigation and
        optical interconnects.

      * Infrared  materials  growth  supported  by  2010 acquisition of US based
        Galaxy semiconductors.

  * Several patent applications across broad technology range submitted

  * Continued  investment  in  further  production  capacity  to address growing
    demand in 2012 and beyond.

*Adjusted EPS - EPS before non-cash share based payment charges
Dr Drew Nelson, IQE Chief Executive, said:
"The continued growth in demand for our wireless products driven by strong
global smartphone adoption,  coupled with increased revenues   from our
optoelectronic wafers have enabled us to maintain our momentum in the first half
of 2011 with a diversifying revenue stream.

"Our core wireless markets continue to grow rapidly whilst the new markets
around energy efficiency and consumer communications are also developing well.

"The end markets for our products continue to look attractive and offer
sustainable high growth. Our overall upbeat outlook is tempered by recent
growing uncertainty in the global economy. This has the potential to impact
inventory levels downstream in the supply chain or of individual customers
although we have not seen any evidence of this at this time. Given IQE's
strategic positioning, the Board remains confident of meeting current market
expectations and of the Group's exciting longer term growth prospects."


Contacts:

 IQE plc                           [phone]

 Drew Nelson

 Phil Rasmussen

 Chris Meadows



 Espirito Santo Investment Bank   + 44 (0) 20 7456 9191

 Richard Crawley

 James Bromhead



 College Hill                      [phone]

 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  ('epi-wafers')  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;  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
concentrator 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 eight facilities located in  Cardiff (two), Milton Keynes and Bath
in  the  UK;  in  Bethlehem,  Pennsylvania,  Somerset,  New  Jersey and Spokane,
Washington  in  the  USA;  and  Singapore.  The  Group also has 11 sales offices
located in major economic centres worldwide.

INTERIM RESULTS 2010
1. GROUP OVERVIEW
IQE  is the  world's leading  supplier of  advanced wafers  to the semiconductor
industry  with a strategy that focuses on developing, maintaining and exploiting
intellectually property-rich technologies for high-growth, high-volume markets.
The  Group has developed a  unique set of competitive  advantages to provide its
customers  with world-leading  epitaxial wafer  foundry services.  By delivering
these  advantages  both  consistently  and  globally,  and  through  its  strong
operational performance, IQE has become the leader in its field.
IQE  manufactures  compound  semiconductor  wafers  for major chip manufacturing
companies, which use these wafers to make the chips that form the key components
of   virtually  all  high-technology  systems  from  wireless  devices  such  as
smartphones,  to photonic devices  such as advanced  solar energy generation and
high efficiency lighting.
IQE  offers the industry's broadest product  portfolio using the widest range of
production platforms.
2. RESULTS
Revenues  grew by 16% to £38.3m (H1  2010: £33.0m) including £1.1m of sales from
Galaxy  Compound  Semiconductors  ("Galaxy"),  which  was acquired in the fourth
quarter of 2010.
In  constant  currency,  revenues  grew  by 23% (organic growth 19%), reflecting
wireless sales up 21% and opto electronic sales up 32% (organic growth 16%).
Gross  profits increased by  15% to £8.4m (H1  2010: £7.3m) representing a gross
margin of 22% (H1 2010: 22%).
Selling,  general and  administrative expenses  increased by  £0.8m to £5.4m (H1
2010: £4.6m),  after the inclusion of Galaxy (£0.2m) and a fixed assets disposal
in H1 2010 which netted £0.5m.
EBITDA increased by 13% to £6.1m (H1 2010: £5.4m).
Adjusted  operating profit, excluding  share based payments,  increase by 13% to
£3.6m  (2010: £3.2m).   Operating profit  increased by  12% to £3.0m  (H1 2010:
£2.7m)
Adjusted  pretax  profit  increased  by  27% to  £3.4m (H1 2010: £2.7m) after an
interest  charge of £0.2m  (H1 2010: £0.5m).  Reported  pre-tax profit was £2.8m
(H1 2010: £2.2m).
The  Group benefitted from a  £0.3m tax credit relating  to R&D tax refunds.  In
addition,  the Group has tax losses available  to offset over £30m of future tax
charges.
Retained  profit for the  period was £3.1m  (H1 2010: £2.2m).  Adjusted retained
profit up 37% to £3.7m (H1 2010: £2.7m).
Adjusted  EPS were up  *% to 0.71p (H1  2010: 0.60p). Earnings per share were up
20% to 0.60p (H1 2010: 0.50p),
Cash inflow from operations increased by £4.0m to £5.9m (H1 2010: £1.9m).
Net funds of £1.0m (31 December 2010: £7.0m).
3. STRATEGY, MARKET POSITION AND OPPORTUNITY
IQE's   strategy   remains  focused  on  delivering  technology  and  production
leadership in high-growth markets. The Group offers its customers the industry's
broadest   product   range,  access  to  the  latest,  innovative  technologies,
unrivalled  capabilities across  a range  of manufacturing platforms, facilities
across three continents and an enviable intellectual property portfolio.
IQE  has successfully established a clear leadership position in the high-growth
wireless  communications  sector,  currently  accounting  for  around 75% of its
sales. Through innovation and technology leadership, IQE is actively replicating
its  success  in  the  wireless  sector  across a number of emerging high-growth
markets   including   VCSEL   technology   (for  applications  such  as  optical
connectivity,  laser projection and finger navigation), CPV solar technology and
high-efficiency solid-state light sources.


IQE offers its customers a powerful set of USPs:

  * most   comprehensive,   IP   rich   product  portfolio  covering  all  major
    applications;

  * global multi-site production capabilities;

  * choice of all the key manufacturing platforms;

  * global  presence with broad  contact base and  access to all  the key global
    markets; and

  * competitive pricing enabled by economies of scale including purchasing power
    and research and development efficiencies.

IQE  has a proven track record in developing, protecting and commercialising its
intellectual  property in support of the four technology "megatrends," which the
Board  believe will  be the  main growth  drivers for  IQE over the next decade,
namely;

  * high-speed connectivity;

  * sustainable clean energy generation and the efficient use of energy;

  * the explosion of personal consumer devices for enhanced lifestyle; and

  * the increased sophistication and performance of security related systems.

Each  of  the  megatrends  involves  a  wave  of  technology  upgrades driven by
economic,  environmental, consumer  or regulatory  pressures, and  each is being
enabled  to  a  very  large  degree  by  compound  semiconductor  materials  and
technology.
IQE  is contributing  strongly to  each of  these megatrends  across all  of its
business   segments   by   providing  the  key  technologies  that  are  already
transforming a wide range of end user markets.
4. PRODUCTS

Wireless
The   accelerated   adoption  of  advanced,  high-speed  mobile  communications,
including  3G, 4G/LTE, WiFi,  GPS  and  other  wireless technologies into mobile
handsets, smartphones, personal computers, tablet PCs and a host of other mobile
and  satellite enabled devices is driving rapidly increasing demand for multiple
compound semiconductor content in front end communication modules.
As  mobile technologies continue  to advance at  a rapid pace  with new features
constantly  emerging, the role of advanced compound-semiconductor materials such
as  gallium  arsenide  (GaAs)  has  become  critical in enabling high-speed data
communication, while maintaining low levels of power consumption.
IQE's  products are  critical in  the drive  to 3G, 4G and beyond, providing the
speed,  power  and  efficiency  to  facilitate  features such as high-resolution
imaging,  video streaming, high-speed wireless data access, voice over IP (VoIP)
and  satellite navigation. Each new generation  of mobile device contains a much
higher compound semiconductor content than the previous generation to facilitate
backward   compatibility,   increased  functionality  and  improved  operational
performance.
Industry analysts predict that total handset shipments will increase from 1.6bn
in  2010 to 1.7bn in 2011, representing an overall  growth rate of 6%. In 2010,
smartphones  represented  only  22% of  handset  sales  with  industry  analysts
including  Gartner and  iSuppli, predicting  that smartphone  sales will grow at
28% CAGR, surpassing 1bn units by 2015.
The  wider use of  smartphones is expected  to be enhanced  as manufacturers and
wireless  operators  roll  out  4G networks  and  devices.  A  number  of recent
announcements  indicate that  this roll-out  is likely  to start  from Q1 2012.
Furthermore,  increasing sales  of tablet  PCs is  expected to bolster the total
number of mobile broadband devices from 100m units in 2010 to over 350m units in
2015.
Wireless sector growth is expected to be further enhanced between 2012 and 2020
with  the widespread adoption of machine-to-machine communications such as smart
metering.
IQE's  strategy has been to maintain a  range of wireless products (HBTs, pHEMTs
and  BiFETs)  across  all  key  chip  manufacturers in the sector. This strategy
provides  some  insurance  against  market  share  gains  and losses amongst our
customer  base and has worked very well in recent years although 100% mitigation
cannot  be guaranteed because of variations in  the product mix from customer to
customer and with new products at different stages of qualification.

IQE  is  very  strongly  positioned  to  take maximum advantage of this powerful
communication trend and continues to strengthen its position:

  * qualified  with  and  in  production  with  all  the  top  12 wireless  chip
    manufacturers  globally,  with  at  least  one  major  customer product line
    (multiple lines with several customers);

  * already  in qualification of  a further 20 major  product lines with the top
    12 customers;

  * developed  high end products  with at least  six of the  major customers for
    4G/LTE roll out during 2012; and.

  * established  global leadership  in GaN  technology for high performance/high
    linearity  wireless systems including base  stations and line amplifiers for
    cable and satellite TV.

Optoelectronics
Connectivity and consumer
Consumer demand for faster and more flexible means of communication is driving a
number  of  high-growth,  high-volume  applications  that  depend  on  compound-
semiconductor  technology.  This includes optical cables (such as Active Optical
Cables, optical USB and Intel's Light Peak / Thunderbolt), finger navigation for
mobile  devices,  and  laser  projection  systems.   Optical  cables  are widely
expected  to  displace  the  copper  cables  used  to connect computers, TVs and
peripherals.
IQE  is  the  world  leader  in  Vertical  Cavity Surface Emitting Laser (VCSEL)
technology,  which lies  at the  heart of  optical cables and finger navigation.
 Red, green and blue semiconductor lasers are also used to generate images in an
emerging  range of pico-projectors. It  is anticipated that pico-projectors will
quickly  be  embedded  within  handsets,  tablet  pcs, digital cameras and other
portable  devices,  with  almost  100m units  expected  to  be shipped in 2017.
Although  a number of first generation pico-projectors may use cheaper LED light
sources,  rapid improvements in  semiconductor laser technology  are expected to
drive  a surge in laser pico-projectors over the coming years. In addition, many
other  applications such  as laser  printers, industrial  cutting, cosmetics and
medical  applications  will  drive  rapid  deployment of miniature semiconductor
lasers.
IQE  continues to make strong progress in  becoming established as the leader in
 the supply chain for these applications:

  * supplying  three  of  the  top  six  VCSEL  manufacturers  globally  and  in
    qualification with a further two;

  * multiple qualifications ongoing with 10 other Tier 2 VCSEL customers;

  * major global supplier of red laser materials for wide ranging applications;

  * significant progress on development of free-standing GaN substrates and blue
    lasers using NanogaN  patented technology; and

  * global  leader in  advanced infrared  imaging materials  by virtue of WT and
    recently acquired Galaxy Inc business units.

Cleantech
Demand  for IQE's products in  this area are being  driven by the sustained move
towards  clean,  efficient  and  sustainable  energy  sources (solar cells), and
highly  efficient light sources (LEDs) in order  to reduce the impact of climate
change and the reliance on fossil fuels to provide a much cleaner environment.
IQE's technology provides the material for the most efficient and cost effective
solar cells for power generation in the form of CPV (Concentrator Photo Voltaic)
solar cells.
CPV  solar energy generation is approaching an inflection point at which CAGR is
expected  to be around 175% over  the next five years  compared with 19% for the
overall  solar market. This is driven by  the growing appreciation that in sunny
areas,  CPV is projected to  have the lowest cost  of production of electricity,
including  fossil and  nuclear fuels.  Even with  the significant  growth in the
sector,  at 1.6GW installed capacity CPV will only account for 4% of total solar
energy  generation  in  2015, but  will  require  as many compound semiconductor
wafers as the entire wireless industry consumes today.
IQE  is uniquely  positioned as  a global  leader in  the advanced semiconductor
enabling technology for CPV.

  * submitted five patents;

  * engaged with four of the top five cell manufacturers at various levels; and

  * supplying  advanced  quantum  confined  products,  producing  high levels of
    efficiency.


Closely  linked  with  sustainable  power  generation  is  the move towards high
efficiency  lighting in the form of  Ultra High Efficiency Light Emitting Diodes
(LEDs).  Lighting accounts for over 20% of the world's energy consumption. A key
driver  for the adoption  of alternative lighting  technology will be the almost
universal banning of incandescent lighting technology from 2012. LED Solid State
Lighting  is emerging as the major technology to displace existing lighting, and
has  been predicted by Hans van Wijngaarde  of Philips to account for 90% of the
general  lighting market by 2020. IQE's strategy  is based on the development of
much  higher quality substrates  using NanoGaN's patented  technology to develop
extremely high power LED chips for the general lighting market.
Electronics
The  ever-increasing  demand  for  higher  speed  and  improved performance from
today's  electronic devices is ushering in  a new era of semiconductor materials
that   combine   the   versatility  of  silicon,  which  has  been  the  default
semiconductor material for the last half century, with the power and performance
of compound semiconductors that have emerged as true 21st century materials.
 IQE  is at the forefront of developing highly advanced technology for producing
compound  semiconductor on  Si wafers  and have  also developed  a new  range of
engineered  substrates such as Germanium on Insulator (GeOI) for next-generation
integrated circuits and devices.
IQE  has established strong positions in both technologies, working with some of
the industry's biggest names. The Group has

  * been  granted three patents, jointly with Intel; two further applications in
    hand;

  * published over 21 papers and made nine conference presentations jointly with
    partners;

  * developed  the world's first 8" fully  integrated CS on Si  wafer as part of
    major US COSMOS programme;

  * developed  a range of engineered substrates including germanium on insulator
    (GeOI),  silicon on insulator (SOI), silicon on sapphire (SOS) and germanuim
    on silicon (GeOS); and

  * undertaken  development of GaN on Silicon  for large volume power conversion
    markets.




5. TRADING OUTLOOK

Growth  in demand for IQE's products during the first half of 2011 was driven by
the  increasing demand for wireless components  used in smartphone and tablet PC
technologies,  which contain a significantly  higher content of gallium arsenide
(GaAs)  products than  previous generations  of handheld  devices, together with
significantly increasing demand for a range of opto electronic products.
Smartphones  represent a  fundamental structural  shift in mobile communications
and  will still only account for 28% of  the total handset marketplace in 2011.
Industry  analysts predict continued growth  in smartphone shipments for several
years  to come. In addition, the rapid  roll out of LTE and 4G communications in
2012 and  beyond, and  the proliferation  of wireless  applications such as with
smart  meters  and  point-to-point  communications,  will add further demand for
IQE's wireless products.
Demand  for wireless  products is  strongly supported  by accelerating growth of
optoelectronic  devices  across  a  range  of new technologies and applications,
including optical communications, finger navigation, lasers for projection, high
efficiency LEDs and CPV materials for advanced solar energy generation.
The  end  markets  for  our  products  continue  to  look  attractive  and offer
sustainable  high  growth.  Our  overall  upbeat  outlook  is tempered by recent
growing  uncertainty in  the global  economy. This  has the  potential to impact
inventory  levels  downstream  in  the  supply  chain or of individual customers
although  we  have  not  seen  any  evidence  of  this at this time. Given IQE's
strategic  positioning, the  Board remains  confident of  meeting current market
expectations and of the Group's exciting longer term growth prospects.
Dr Drew Nelson
CEO




-------------------------------------------------------------------------------


                                                 6 months  6 months  12 months
                                                       to        to         to

CONSOLIDATED INCOME                                30 Jun    30 Jun     31 Dec
STATEMENT                                            2011      2010       2010



(All figures £'000s)                Note        Unaudited Unaudited    Audited


-------------------------------------------------------------------------------


Revenue                                            38,304    33,017     72,650

Cost of sales                                    (29,893)  (25,684)   (56,050)
-------------------------------------------------------------------------------
Gross profit                                        8,411     7,333     16,600



Selling, general and                              (5,403)   (4,643)    (9,392)
administrative expenses
-------------------------------------------------------------------------------
Operating profit                                    3,008     2,690      7,208



Finance costs                                       (192)     (489)      (874)
-------------------------------------------------------------------------------
Profit before tax                                   2,816     2,201      6,334

Income tax income                                     285         -      1,172
-------------------------------------------------------------------------------
Profit attributable to equity shareholders          3,101     2,201      7,506
-------------------------------------------------------------------------------




Adjusted earnings per share          3              0.71p     0.60p      1.91p

Earnings per share                   3              0.60p     0.50p      1.63p



Adjusted diluted earnings            3              0.66p     0.54p      1.76p
per share

Diluted earnings per share           3              0.55p     0.44p      1.50p




Earnings before interest, tax, depreciation and amortisation (EBITDA) have
been calculated as follows:



Profit attributable to equity shareholders          3,101     2,201      7,506

Tax                                                 (285)         -    (1,172)

Share based payments                                  596       488      1,302

Net interest payable                                  192       489        874

Depreciation of tangible                            2,020     1,891      3,619
fixed assets

Amortisation of intangible fixed assets               485       348        986
-------------------------------------------------------------------------------
EBITDA                                              6,109     5,417     13,115
-------------------------------------------------------------------------------





--------------------------------------------------------------------------------

CONSOLIDATED STATEMENT OF                      6 months to  6 months   12 months
                                                                  to          to

COMPREHENSIVE INCOME                           30 Jun 2011    30 Jun 31 Dec 2010
                                                                2010



(All figures £'000s)                             Unaudited Unaudited     Audited
--------------------------------------------------------------------------------
Profit attributable to                               3,101     2,201       7,506
equity shareholders

Cash flow hedges                                       243     (203)         116

Currency translation differences on foreign           (58)     1,725       3,095
currency net investments
--------------------------------------------------------------------------------
Total comprehensive income for the period            3,286     3,723      10,717
--------------------------------------------------------------------------------






                                                   As At     As At     As At

CONSOLIDATED BALANCE SHEET                   30 Jun 2011    30 Jun    31 Dec
                                                              2010      2010



(All figures £'000s)                           Unaudited Unaudited   Audited
-----------------------------------------------------------------------------


Non-current assets :

Intangible assets                                 31,699    21,200    30,645

Property, plant and equipment                     32,069    20,852    23,804

Deferred tax asset                                   824         -       824
-----------------------------------------------------------------------------
Total non-current assets                          64,592    42,052    55,273
-----------------------------------------------------------------------------


Current assets :

Inventories                                       13,630    10,879    11,603

Trade and other receivables                       18,164    16,514    16,741

Cash and cash equivalents                          6,067     1,394    12,507
-----------------------------------------------------------------------------
Total current assets                              37,861    28,787    40,851
-----------------------------------------------------------------------------
Total assets                                     102,453    70,839    96,124
-----------------------------------------------------------------------------


Current liabilities :

Borrowings                                         (816)  (13,612)   (4,077)

Trade and other payables                        (29,335)  (16,748)  (20,073)
-----------------------------------------------------------------------------
Total current liabilities                       (30,151)  (30,360)  (24,150)
-----------------------------------------------------------------------------


Non-current liabilities :

Borrowings                                       (4,244)   (3,343)   (1,409)

Other payables                                   (1,563)   (3,040)   (8,291)
-----------------------------------------------------------------------------
Total non-current liabilities                    (5,807)   (6,383)   (9,700)
-----------------------------------------------------------------------------
Total liabilities                               (35,958)  (36,743)  (33,850)
-----------------------------------------------------------------------------
Net assets                                        66,495    34,096    62,274
-----------------------------------------------------------------------------


Shareholders' equity :

Ordinary shares                                    5,247     4,457     5,153

Share premium                                     22,078     1,458    21,237

Profit and loss account                           31,120    22,714    28,019

Other reserves                                     8,050     5,467     7,865
-----------------------------------------------------------------------------
Total shareholders' equity                        66,495    34,096    62,274
-----------------------------------------------------------------------------


--------------------------------------------------------------------------------


                                            6 months to 6 months to 12 months to

CONSOLIDATED CASH FLOW STATEMENT            30 Jun 2011 30 Jun 2010  31 Dec 2010



(All figures                                  Unaudited   Unaudited      Audited
£'000s)
--------------------------------------------------------------------------------

Cash flows from operating activities :

Cash inflow from operations              5        5,881       1,891       10,250

Net interest paid                                 (257)       (553)        (904)

Income tax received                                  13           -          361
--------------------------------------------------------------------------------
Net cash inflow from operating activities         5,637       1,338        9,707
--------------------------------------------------------------------------------


Cash flows from investing activities :

Acquisition of Galaxy Compound                    (622)           -            1
Semiconductors, Inc

Development expenditure                         (1,651)     (1,739)      (3,379)

Investment in other intangible fixed assets        (60)       (171)        (389)

Purchase of property, plant and equipment       (8,924)     (1,161)      (4,995)

Proceeds from sale of tangible fixed assets          42       1,551        1,467
--------------------------------------------------------------------------------
Net cash used in investing activities          (11,215)     (1,520)      (7,295)
--------------------------------------------------------------------------------


Cash flows from financing activities :

Issues of ordinary share capital                    580          37       20,512

Loans and leases (repaid)/received              (1,487)     (2,738)     (14,741)
--------------------------------------------------------------------------------
Net cash (used in)/generated from financing       (907)     (2,701)        5,771
activities
--------------------------------------------------------------------------------
Net (decrease)/increase in cash and cash        (6,485)     (2,883)        8,183
equivalents


Cash and cash equivalents at the beginning       12,507       4,233        4,233
 of the period

Exchange gains/(losses) on cash and                  45          44           91
bank overdrafts
--------------------------------------------------------------------------------
Cash and cash equivalents at the end of  6        6,067       1,394       12,507
the period
--------------------------------------------------------------------------------

1 BASIS OF PREPARATION
These  interim results have  been prepared under  the historical cost convention
and  in accordance with International Financial Reporting Standards ("IFRS") and
interpretations in issue at 30 June 2011.
The  interim  results  were  approved  by  the  Board of Directors and the Audit
Committee  on 6 September 2011. The interim  results do not constitute statutory
accounts within the meaning of the Companies Act 2006 and have not been audited.
 Comparative figures in the interim results for the year ended 31 December 2010
have been taken from the published audited statutory financial statements.   All
other periods presented are unaudited.
                               6 months to 6 months to 12 months to

2 SEGMENTAL INFORMATION        30 Jun 2011 30 Jun 2010  31 Dec 2010



(All figures £'000s)             Unaudited   Unaudited      Audited
--------------------------------------------------------------------


Revenue by business segment
:

Wireless                            28,282      24,795       55,062

Optoelectronics                      8,925       7,134       15,393

Electronics                          1,097       1,088        2,195
--------------------------------------------------------------------
Total revenue                       38,304      33,017       72,650
--------------------------------------------------------------------


EBITDA by business segment :

Wireless                             4,735       4,710       11,093

Optoelectronics                      1,463         704        1,874

Electronics                           (89)           3          148
--------------------------------------------------------------------
Total EBITDA                         6,109       5,417       13,115
--------------------------------------------------------------------


Operating profit/(loss) by business segment :

Wireless                             2,400       2,558        6,748

Optoelectronics                        877         281          649

Electronics                          (269)       (149)        (189)
--------------------------------------------------------------------
Total operating profit               3,008       2,690        7,208
--------------------------------------------------------------------





3  EARNINGS PER SHARE                       6 months to 6 months to 12 months to

                                            30 Jun 2011 30 Jun 2010  31 Dec 2010



                                              Unaudited   Unaudited      Audited
--------------------------------------------------------------------------------


Results in £'000s:

Profit attributable to ordinary                   3,101       2,201        7,506
shareholders

Share based payments                                596         488        1,302
--------------------------------------------------------------------------------
Adjusted profit attributable to ordinary          3,697       2,689        8,808
shareholders
--------------------------------------------------------------------------------

Number of shares:

Weighted average number of ordinary shares  519,683,065 444,585,171  461,849,899

Dilutive share options                       43,896,647  55,432,916   39,491,923
--------------------------------------------------------------------------------
Adjusted weighted average number of         563,579,712 500,018,087  501,333,822
ordinary shares
--------------------------------------------------------------------------------

Adjusted earnings per share                       0.71p       0.60p        1.91p

Basic earnings per share                          0.60p       0.50p        1.63p


Adjusted diluted earnings per share               0.66p       0.54p        1.76p

Diluted earnings per share                        0.55p       0.44p        1.50p



Basic earnings per share is calculated by dividing the profit attributable to
ordinary shareholders by the weighted average number of ordinary shares during
the period.

Diluted earnings per share is calculated by dividing the profit attributable to
ordinary shareholders by the weighted average number of shares and 'in the
money' share options in issue. Share options are classified as 'in the money' if
their exercise price is lower than the average share price for the period. As
required by IAS 33, this calculation assumes that the proceeds receivable from
the exercise of 'in the money' options would be used to purchase shares in the
open market in order to reduce the number of new shares that would need to be
issued.



4 STATEMENT OF CHANGES IN                  6 months to 6 months to 12 months to

   SHAREHOLDERS' EQUITY                    30 Jun 2011 30 Jun 2010  31 Dec 2010



(All figures £'000s)                         Unaudited   Unaudited      Audited
-------------------------------------------------------------------------------

Profit attributable to equity shareholders       3,101       2,201        7,506

Cash flow hedges                                   243       (203)          116

Net exchange differences offset in                (58)       1,725        3,095
reserves
-------------------------------------------------------------------------------
Total comprehensive income                       3,286       3,723       10,717


Employee share option scheme                       580         536          446

Share placing                                        -           -       19,876

Other issues of ordinary shares                    355           -        1,398
-------------------------------------------------------------------------------
Total transactions with owners                     935         536       21,720


Shareholders' equity at start of period         62,274      29,837       29,837
-------------------------------------------------------------------------------
Shareholders' equity at end of period           66,495      34,096       62,274
-------------------------------------------------------------------------------








                                            6 months to 6 months to 12 months to

5 CASH GENERATED FROM OPERATIONS            30 Jun 2011 30 Jun 2010  31 Dec 2010



(All figures £'000s)                          Unaudited   Unaudited      Audited
--------------------------------------------------------------------------------

Operating profit                                  3,008       2,690        7,208



Depreciation of tangible assets                   2,020       1,891        3,619

Amortisation of intangible assets                   485         348          986

Gain on sale of tangible assets                    (38)       (447)        (539)

Government grants released                            -        (19)         (44)

Cash costs related to acquisition of                  -           -           80
subsidiary

Non cash share based payment costs                  596         488        1,302
--------------------------------------------------------------------------------
Cash from operations before changes in            6,071       4,951       12,612
working capital



(Increase)/decrease in inventories              (2,060)         422        (203)

(Increase)/decrease in trade and other          (1,053)     (2,378)      (1,968)
receivables

Increase/(decrease) in trade and other            2,923     (1,104)        (191)
payables
--------------------------------------------------------------------------------
Cash inflow generated from operations             5,881       1,891       10,250
--------------------------------------------------------------------------------




                                             As At         As At         As At

 6 ANALYSIS OF NET DEBT                30 Jun 2011   30 Jun 2010   31 Dec 2010



 (All figures £'000s)                    Unaudited     Unaudited       Audited
-------------------------------------------------------------------------------


 Cash and cash equivalents                   6,067         1,394        12,507



 Loans due after one year                  (3,442)       (3,329)       (1,331)

 Loans due within one year                   (530)      (13,552)       (4,033)

 Finance leases due after one year           (802)          (14)          (78)

 Finance leases due within one year          (286)          (60)          (44)
-------------------------------------------------------------------------------
 Total borrowings                          (5,060)      (16,955)       (5,486)
-------------------------------------------------------------------------------
 Net funds/(debt)                            1,007      (15,561)         7,021
-------------------------------------------------------------------------------








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[HUG#1544573]