Interim Results
IQE PLC
22 August 2007
22 August 2007
IQE plc
Global wireless strategy drives IQE to operational profitability
IQE plc (AIM: IQE, 'the Group'), the leading global supplier of advanced wafer
products and services to the semiconductor industry, announces its Interim
Results for the half year ended 30 June 2007.
HIGHLIGHTS
• Revenues up 62% at £23.7m (H1/2006: £14.6m), despite the impact of an
adverse USD exchange rate. Revenue up 80% at constant exchange rates to
£26.2m.
• Gross profit up 206% at £3.9m (H1/2006: £1.3m)
• EBITDA profit £1.3m (H1/2006: EBITDA loss £1.1m before exceptional gain)
• Operating profit £0.1m (H1/2006 operating loss £1.8m before exceptional
gain)
• Cash generated from operations £0.4m (H1/2006 outflow £3.4m)
• Net cash outflow £2.8m (H1/2006 outflow £5.1m)
• Half year cash balance £1.3m (H1/2006 £1.2m)
• Acquisitions made during 2006 integrated smoothly and contributing
strongly
• Also announced today; a multi-year preferred supplier agreement signed
with an existing customer, one of the leading wireless chip manufacturer,
expected to be worth at least $50m over first two years - see separate
statement
• Relocating to larger state-of-the-art facility in Singapore to enable
significant future capacity expansion in Asia Pacific
• Major R&D programme secured worth $4m
Dr Drew Nelson, IQE Chief Executive, commenting on the results said:
'Continued strong growth in the global wireless marketplace combined with a
shift towards high-end, fully-featured handsets, high speed wi-fi and satellite
communications systems, all of which use increasing amounts of our products,
have driven revenues ahead of expectations during the first half of the year.
This is despite the impact of a slow start in January and February and a weak
dollar.
'Our position in the wireless market was substantially bolstered by the two
major acquisitions made during 2006. This has positioned IQE as the clear
leader in the supply of wafer products to the global wireless communications
industry as confirmed by Strategy Analytics. We have also today announced the
award of a very substantial, multi-year, preferred supply agreement with one of
the world's largest wireless chip manufacturers, worth in total at least $50
million over the next two years.
'I am extremely pleased to announce the Group's move into operating profit as a
result of the substantially increased revenues and strong operational gearing.
This is a key milestone in our continuing progress and clearly demonstrates the
strength of the business model. As more customers become cross qualified at our
various manufacturing locations worldwide, we will be able to leverage our
additional manufacturing capacity, which we expect will result in continued
strong growth.'
Contacts:
IQE plc :
Drew Nelson +44 (0)2920-839400
Phil Rasmussen
Chris Meadows
College Hill:
Adrian Duffield / Ben Way +44 (0)20 7457 2020
Noble and Company :
John Llewellyn-Lloyd/ Sam Reynolds +44 (0)2077-632200
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, wi-max, base stations, GPS, and satellite communications; optical
communications, optical storage (CD, DVD), laser optical mouse, laser printers
and photocopiers, thermal imagers, leading-edge medical products, barcode, high
efficiency LEDs and a variety of advanced silicon-based systems.
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 six manufacturing facilities located in Cardiff (two) and Milton
Keynes in the UK; in Bethlehem, Pennsylvania and Somerset, New Jersey in the
USA; and in Singapore. The Group also has 11 sales offices located in major
economic centres worldwide.
INTERIM RESULTS 2007
1. OVERVIEW
The Group is now firmly established as the world's leading supplier of advanced
wafer products and services to the semiconductor industry through its commitment
to customer service, cost-effective products, unparalleled technical
capabilities and its substantial investment in state-of-the-art manufacturing
tools and facilities worldwide. IQE is the only supplier able to provide a full
range of advanced epi-wafer products using all the key technology platforms, and
offering global multi-site contingency planning, with operations in Europe, USA
and Asia Pacific. This unique offering is viewed by existing and potential
customers as a significant competitive advantage.
Revenues increased strongly during H1/2007 despite a flat start to trading in
January and February and a weak dollar and were up 62% at £23.7m (H1/2006:
£14.6m). At constant exchange rates, revenues would have grown by approximately
80% to £26.2m. This strong growth was largely driven by growth in the wireless
market. There was a substantial improvement in trading performance and the
achievement of EBITDA profit of £1.3m (H1/2006: EBITDA loss £0.8m) and an
operating profit of £0.1m (H1/2006 operating loss £1.5m).
These results endorse the Group's strategy of becoming the leading supplier of
wireless products enabled by the two acquisitions made during the second half of
2006. These acquisitions have been integrated successfully into the Group and
performed well ahead of management expectations. By gaining exposure to the
wireless power amplifier and the Asia Pacific markets, the product and customer
reach of IQE has been substantially enhanced. Existing customers have reacted
enthusiastically to these acquisitions and to IQE's unique offering in the
wireless sector. This higher profile has also generated significant interest
with potential new customers, who see the benefits of IQE's full product range,
multi-site, multi-technology offering and overall global presence. The Group's
strategy provides a clear competitive advantage which is allowing it to
aggressively pursue higher market share.
2. RESULTS
Revenues were £23.7m (H1/2006: £14.6m) which represents a 62% increase compared
with H1/2006 despite a significant worsening in exchange rate to USD 1.97/GBP
(H1/2006: USD1.78/GBP). There was also a significant increase in gross profit to
£3.9m (H1/2006: £1.3m), a 206% increase.
Selling, general and administrative expenses (SG&A costs) were up 23% at £3.8m
(H1/2006: £3.1m before exceptional gain of £0.3m) equivalent to 16% of revenues
(H1/2006: 19%) as a direct result of the fixed costs associated with the two
acquired businesses. On a like for like basis, SG&A costs were flat.
The Group reported EBITDA of £1.3m (H1/2006: EBITDA loss £0.8m) and an operating
profit of £0.1m (H1/2006: operating loss £1.5m). The loss for the period fell
sharply to £0.5m (H1/2006: loss £1.6m) equivalent to a loss per share of 0.12
pence (H1/2006: loss per share 0.52 pence).
Cash management continued to be a priority with the focus firmly concentrated on
controlling operating costs and carefully managing working capital. During the
period, the Group achieved a cash inflow from operations of £0.4m (H1/2006:
outflow £3.4m).
Capital expenditure was £4.0m (H1/2006: £1.0m) and consisted mainly of the
purchase of property (£2.5m) and additional manufacturing equipment at IQE RF
for increased production capacity for a key customer. This was funded by £3.7m
of new loans.
The net receipt from loans and leases was £1.8m (H1/2006: net repayment £0.7m).
Cash on hand at 30 June 2007 was £1.3m (H1/2006: £1.2m) and total borrowings
increased to £11.6m (H1/2006: £4.6m), resulting in an increase in net debt to
£10.4m (H1/2006: £3.4m). The Group has access to working capital facilities of
£5.0m (H1/2006: £2.0m).
3. OPERATIONS
The Group operates in three key sectors: wireless, optoelectronics (opto) and
electronics.
Over 70% of the Group's revenue currently comes from the wireless sector. IQE
is now the largest supplier of wafers in this rapidly growing market, supplying
products and services which are used in a wide variety of devices, including
mobile handsets, cellular base-stations, GPS, set top boxes and other satellite
communication systems, as well as the rapidly growing wi-fi, wi-max, wi-bro,
wireless LAN, laptop wi-fi and other wireless-enabled technologies that are
becoming ubiquitous in business, industrial and consumer applications.
The optoelectronics (opto) market also continues to be a key focus for the Group
accounting for approximately 20% of revenues. In this market the Group supplies
a wide range of high-end opto electronic wafer products for leading-edge
consumer, communication and computing applications, which include wafers for
fibre-optic communication networks, lasers for printing and other office
applications, optical storage (CD/DVD) systems, laser mouse products, LEDs and
other laser based components, and devices covering a wide variety of automotive,
aerospace, industrial and medical applications. In addition, the Group is
aggressively pursuing the development of compound semiconductor based
Terrestrial Solar Cell technology for clean and efficient energy generation, and
ultra high efficiency LED technology for energy saving general lighting
applications
IQE also operates at the cutting edge of advanced silicon-based epi technology
for high end Integrated Circuit (IC) and high density memory applications in the
electronics sector, and is actively developing ultra high speed, ultra high
density memory technologies through funded R&D programmes. This business sector
is growing rapidly as these new technologies are increasingly adopted by large
multinational chip manufacturers.
During the first half, IQE negotiated a very attractive opportunity to relocate
the Singapore operation into a much larger, state-of-the-art clean room facility
at minimal capital cost. This will provide substantially increased expansion
capability to support the rapidly growing business in the Asia Pacific region,
particularly in China where IQE's customers are planning major expansions. The
move will be achieved with minimal impact to ongoing operations and has
attracted significant Singaporean Government assistance, including the offer of
tax free status over the next ten years.
The Group has recently been awarded substantial R&D contracts worth in the order
of USD4m. One, as part of a UK consortium, is to develop ultra high efficiency
Light Emitting Diodes (LEDs) for solid state lighting, expected to be the key
technology to replace the incandescent bulb as it is progressively banned by
Governments around the globe in response to global warming. Other R&D contracts
include the development of Strontium Titanium Oxide on Silicon epi-wafers (STO/
Si) using IQE's state-of-the-art molecular beam epitaxy (MBE) systems and the
development of advanced material structures for increased processing speed for
future ICs. The Group is also progressing its Terrestrial Solar Cell activities
through customer funded programmes, which have already demonstrated world class
efficiency performance levels.
4. MAJOR CONTRACT WIN
The Group has also today announced that it has been awarded a very substantial,
multi-year, preferred supplier agreement with ANADIGICS Inc, one of the world's
leading wireless chip manufacturers.
IQE's wafer products for this customer are used to manufacture chips for 3G
handsets and base stations, latest generation (802.11n) wi-fi systems for
infrastructure and wi-fi enabled laptop computers, broadband fibre optic systems
and satellite set top box applications. It is estimated that the value of this
business will be at least $50m over the first two years.
5. TRADING PROSPECTS
The acquisitions made during 2006 and the Group's strong focus on the rapidly
growing wireless communications marketplace have ensured that IQE is now firmly
delivering on its growth strategy. The increase in wireless volumes (mobile
phones, wi-fi, wi-max, GPS, direct broadcast TV and Bluetooth) and,
significantly, the continued trend to higher speed, feature rich devices is
fuelling strong demand for IQE products. Recent upgrades to the overall handset
market for 2007 and 2008 are mainly for high-end replacement phones, and this is
seen as a strong indicator of continually growing demand for the Group's
GaAs-based power amplifier and switch products.
In addition to the Group's strong position in the wireless market, IQE is firmly
established as a leading supplier of high end optoelectronic products,
particularly laser based wafer technologies, with widespread application in many
areas, including optical storage, office based laser printers and copiers,
optical fibre communications, computer laser mouse applications, and several
other industrial, automotive and medical systems.
The Group's future product strategy and technology roadmap include compound
semiconductor wafers for advanced wireless products, terrestrial solar cell
applications where excellent results have already been achieved, laser based
projection and high definition optical storage systems, and ultra high speed,
high density memory device applications.
The Board remains confident that the robust global strategy, the Group's high
operational gearing and the continued strength of the markets in which IQE
operates position it well to deliver continued strong growth.
INTERIM RESULTS FOR 6 MONTHS TO 30 JUNE 2007
6 months 6 months 12 months
CONSOLIDATED INCOME STATEMENT to 30 Jun to 30 Jun to 31 Dec
2007 2006 2006
(All figures GBP000s) Note Unaudited Unaudited Unaudited
Revenue 23,680 14,591 32,421
Cost of Sales (19,806) (13,325) (30,072)
Gross Profit 3,873 1,267 2,349
Gross Profit % 16.4 8.7 7.2
Selling, General and Administrative Expenses 3 (3,809) (2,787) (6,050)
(Including Exceptional Gain)
Operating Profit/(Loss) 64 (1,520) (3,701)
Operating Profit/(Loss) % 0.3 (10.4) (11.4)
Operating Profit/(Loss) before Exceptional Gain 64 (1,775) (3,956)
Exceptional Gain 3 0 255 255
Operating Profit/(Loss) 64 (1,520) (3,701)
Operating Profit/(Loss) % before Exceptional Gain 0.3 (12.2) (12.2)
Finance Income 5 49 104
Finance Costs (572) (170) (393)
Loss for the Period (503) (1,641) (3,990)
Basic Loss Pence per Ordinary 1p Share 4 (0.12) (0.52) (1.14)
Diluted Loss Pence per Ordinary 1p Share 4 (0.12) (0.52) (1.14)
Loss for the Period (503) (1,641) (3,990)
Net Interest Payable 567 121 289
Depreciation of Fixed Assets 1,111 682 1,617
Amortisation of Intangible Assets 157 46 136
Earnings before Interest, Taxes, Depreciation and 1,332 (792) (1,948)
Amortisation (EBITDA)
6 months 6 months 12 months
CONSOLIDATED STATEMENT OF RECOGNISED to 30 Jun to 30 Jun to 31 Dec
INCOME AND EXPENSE 2007 2006 2006
(All figures GBP000s) Unaudited Unaudited Unaudited
Loss for the Period (503) (1,641) (3,990)
Currency translation differences on foreign currency net (233) (313) (916)
investments
Total Recognised Expense for the Period (736) (1,955) (4,906)
As At As At As At
CONSOLIDATED BALANCE SHEET 30 Jun 30 Jun 31 Dec
2007 2006 2006
(All figures GBP000s) Unaudited Unaudited Unaudited
Non-Current Assets :
Intangible Assets 11,644 123 11,095
Tangible Assets 14,510 8,780 11,803
Total Non-Current Assets 26,153 8,903 22,898
Current Assets :
Inventories 8,094 5,592 8,580
Trade and Other Receivables 8,540 4,973 6,480
Cash and Cash Equivalents 1,263 1,193 4,071
Total Current Assets 17,897 11,758 19,131
Total Assets 44,050 20,662 42,029
Current Liabilities :
Borrowings (3,583) (1,468) (2,755)
Trade and Other Payables (8,851) (5,268) (8,040)
Total Current Liabilities (12,434) (6,736) (10,795)
Non-Current Liabilities :
Borrowings (8,046) (3,151) (7,234)
Deferred Income (141) (179) (160)
Total Non-Current Liabilities (8,187) (3,330) (7,394)
Total Liabilities (20,621) (10,066) (18,190)
Net Assets 23,430 10,595 23,840
Shareholders' Equity :
Ordinary Shares 4,308 3,169 4,299
Share Premium 172,155 157,314 172,030
Other Reserves (951) (658) (910)
Profit and Loss Account (152,082) (149,230) (151,579)
Total Shareholders' Equity 23,430 10,595 23,840
6 months 6 months 12 months
CONSOLIDATED CASH FLOW STATEMENT to 30 Jun to 30 Jun to 31 Dec
2007 2006 2006
(All figures GBP000s) Unaudited Unaudited Unaudited
Cash Flows from Operating Activities :
Cash Generated from Operations 393 (3,436) (4,418)
Interest Received 5 49 104
Interest Paid (427) (170) (368)
Net Cash Used in Operating Activities (29) (3,557) (4,683)
Cash Flows from Investing Activities :
Purchase of Subsidiary Undertakings 0 0 (11,227)
Cash Acquired in Subsidiary Undertakings 0 0 1,023
Development Expenditure (730) 0 (222)
Purchase of Tangible Fixed Assets (3,974) (977) (1,430)
Proceeds from Sale of Tangible Fixed Assets 0 160 251
Net Cash Used in Investing Activities (4,704) (817) (11,605)
Cash Flows from Financing Activities :
Issues of Ordinary Share Capital 127 51 15,920
Loans and Leases Received/(Repaid) 1,798 (730) (1,806)
Net Cash Generated from Financing Activities 1,925 (679) 14,114
Net Decrease in Cash and Cash Equivalents (2,808) (5,053) (2,174)
Cash and Cash Equivalents at the Beginning of the 4,071 6,245 6,245
Period
Cash and Cash Equivalents at the End of the Period 1,263 1,193 4,071
NOTES TO THE INTERIM FINANCIAL STATEMENTS
1 BASIS OF PREPARATION
These unaudited interim financial statements have been prepared under the
historical cost convention and in accordance with International Financial
Reporting Standards ('IFRS') and interpretations expected to be in issue at 31
December 2007. The principal accounting policies of the Group are stated below.
The interim financial statements were approved by the Board of Directors and
the Audit Committee on 21 August 2007. The interim financial statements do not
constitute statutory accounts within the meaning of the Companies Act 1985 and
have not been audited. Comparative figures in the financial statements for the
year ended 31 December 2006 have been taken from the Group's audited UK GAAP
statutory accounts on which the company's auditors, PricewaterhouseCoopers LLP,
expressed an unqualified opinion and amended by adjustments required by IFRS.
All periods presented are unaudited.
In anticipation of changes required under IFRS, the Group has published an IFRS
transition statement on 14 August 2007. This statement sets out the effect of
adopting IFRS for the Group, the basis of preparation, the accounting policies,
and details of significant adjustments in respect of the opening balance sheet
at 1 January 2006, the results for the year ended 31 December 2006 and the
balance sheet at 31 December 2006.
The interim financial statements will be announced to all shareholders on the
London Stock Exchange and published on the Group's website on 22 August 2007.
Copies will be available to members of the public upon application to the
Company Secretary at Pascal Close, Cypress Drive, St Mellons, Cardiff CF3 0LW.
6 months 6 months 12 months
2 SEGMENTAL INFORMATION to 30 Jun to 30 Jun to 31 Dec
2007 2006 2006
(All figures GBP000s) Unaudited Unaudited Unaudited
Revenue by Business Segment :
Wireless 17,326 8,713 20,271
Optoelectronics 5,097 4,965 10,066
Electronics 1,256 913 2,084
Total Revenue 23,680 14,591 32,421
Operating Profit/(Loss) by Business Segment:
Wireless 1,261 (78) (166)
Optoelectronics (938) (860) (2,361)
Electronics (258) (583) (1,174)
Total Operating Profit/(Loss) 64 (1,520) (3,701)
6 months 6 months 12 months
3 EXCEPTIONAL GAIN to 30 Jun to 30 Jun to 31 Dec
2007 2006 2006
(All figures GBP000s) Unaudited Unaudited Unaudited
Onerous lease provision credited in 0 (255) (255)
administrative expenses
Exceptional gain 0 (255) (255)
The exceptional gain in 2006 of £255,000 relates to the onerous lease provision
in respect of a vacant property at IQE (Europe) Limited which has been released
to the profit and loss account as the Group is no longer the tenant.
6 months 6 months 12 months
4 LOSS PER SHARE to 30 Jun to 30 Jun to 31 Dec
2007 2006 2006
Unaudited Unaudited Unaudited
Loss for the Period GBP 000s (503) (1,641) (3,990)
Weighted Average Number of Ordinary Shares 430,362,629 315,976,014 350,729,318
Diluted Share Options 6,931,004 6,919,658 8,593,469
Adjusted Weighted Average Number of Ordinary Shares 437,293,633 322,895,672 359,322,787
Basic Loss Pence per Share (0.12) (0.52) (1.14)
Diluted Loss Pence per Share (0.12) (0.52) (1.14)
Basic loss per share is calculated by dividing the loss attributable to ordinary
shareholders by the weighted average number of ordinary shares during the
period. Diluted loss per share is calculated by adjusting the weighted average
number of ordinary shares in issue on the assumption of conversion of all
dilutive potential ordinary shares.
IAS 33 requires the presentation of diluted Loss Pence per Share when a company
could be called upon to issue shares that would decrease net profit or increase
net loss per share. For a loss-making company with outstanding share options,
net loss per share would only be increased by the exercise of the out of the
money options. Since it seems inappropriate to assume that option holders would
act irrationally, no adjustment has been made to diluted Loss Pence per Share
for out of the money share options.
6 months 6 months 12 months
5 STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY to 30 Jun to 30 Jun to 31 Dec
2007 2006 2006
(All figures GBP000s) Unaudited Unaudited Unaudited
At the Beginning of the Period 23,839 12,326 12,326
Loss for the Period Attributable to Equity (503) (1,641) (3,990)
Shareholders
Share Option Costs Credited to Reserves 198 170 500
Shares Issued net of Issue Costs 127 51 15,920
Deferred Consideration on Acquisition of Subsidiary 0 0 0
Net Exchange Differences Offset in Reserves (233) (313) (916)
At the End of the Period 23,429 10,593 23,839
6 months 6 months 12 months
6 CASH GENERATED FROM OPERATIONS to 30 Jun to 30 Jun to 31 Dec
2007 2006 2006
(All figures GBP000s) Unaudited Unaudited Unaudited
Operating Profit/(Loss) 64 (1,520) (3,701)
Depreciation of Tangible Assets 1,111 682 1,617
Amortisation of Intangible Assets 157 46 136
Loss/(Gain) on Sale of Tangible Assets 0 (62) (38)
Government Grants Released (19) (19) (39)
Non-Cash Share Option Costs 198 170 500
Operating Profit/(Loss) before Changes in Working 1,511 (703) (1,525)
Capital
Decrease/(Increase) in Inventories 487 (1,280) (1,536)
(Increase)/Decrease in Trade and Other Receivables (2,060) (1,569) (1,930)
Increase/(Decrease) in Trade and Other Payables 455 116 572
Cash Inflow/(Outflow) Generated from Operations 393 (3,436) (4,418)
As At As At As At
7 ANALYSIS OF NET DEBT 30 Jun 30 Jun 31 Dec
2007 2006 2006
(All figures GBP000s) Unaudited Unaudited Unaudited
Cash at Bank and in Hand 1,252 1,187 3,085
Highly Liquid Investments 11 6 986
Total Cash and Cash Equivalents 1,263 1,193 4,071
Loans Due after One Year (8,040) (3,151) (7,226)
Loans Due within One Year (3,582) (1,468) (2,731)
Finance Leases Due after One Year (6) 0 (8)
Finance Leases Due within One Year (1) 0 (24)
Total Borrowings (11,629) (4,619) (9,989)
Net Debt (10,366) (3,426) (5,918)
6 months 12 months
8 RECONCILIATION OF OPERATING LOSS UNDER UK GAAP TO IFRS to 30 Jun to 31 Dec
2006 2006
(All figures GBP000s) Unaudited Unaudited
Operating Loss per UK GAAP (1,450) (3,976)
Capitalisation of development costs (5) 222
Amortisation of intangible assets (46) (136)
Amortisation of goodwill 0 166
Provision for holiday pay (19) 24
Operating Loss per IFRS (1,520) (3,701)
9 RECONCILIATION OF SHAREHOLDERS' UK GAAP IFRS 3 IAS 38 IAS 19
EQUITY AT 31 DECEMBER 2005 Business Intangible Employee
UNDER UK GAAP TO IFRS Reformatted Combinations Assets Benefits IFRS
(All figures GBP000s) Unaudited Unaudited Unaudited Unaudited Unaudited
Non-Current Assets :
Intangible Assets 0 0 183 0 183
Tangible Assets 8,816 0 (62) 0 8,754
Total Non-Current Assets 8,816 0 121 0 8,937
Current Assets :
Inventories 4,312 0 0 0 4,312
Trade and Other Receivables 3,404 0 0 0 3,404
Cash and Cash Equivalents 6,245 0 0 0 6,245
Total Current Assets 13,961 0 0 0 13,961
Current Liabilities :
Borrowings (1,739) 0 0 0 (1,739)
Trade and Other Payables (4,616) 0 0 (117) (4,733)
Total Current Liabilities (6,355) 0 0 (117) (6,472)
Non-Current Liabilities :
Borrowings (3,646) 0 0 0 (3,646)
Deferred Income (199) 0 0 0 (199)
Provision for Liabilities and (255) 0 0 0 (255)
Charges
Total Non-Current Liabilities (4,100) 0 0 0 (4,100)
Net Assets 12,323 0 121 (117) 12,327
Shareholders' Equity :
Ordinary Shares 3,163 0 0 0 3,163
Share Premium 157,264 0 0 0 157,264
Other Reserves (509) 0 0 0 (509)
Profit and Loss Account (147,594) 0 121 (117) (147,590)
Total Shareholders' Equity 12,323 0 121 (117) 12,327
10 RECONCILIATION OF SHAREHOLDERS' UK GAAP IFRS 3 IAS 38 IAS 19
EQUITY AT 30 JUNE 2006 Business Intangible Employee
UNDER UK GAAP TO IFRS Reformatted Combinations Assets Benefits IFRS
(All figures GBP000s) Unaudited Unaudited Unaudited Unaudited Unaudited
Non-Current Assets :
Intangible Assets 0 0 123 0 123
Tangible Assets 8,833 0 (53) 0 8,780
Total Non-Current Assets 8,833 0 70 0 8,903
Current Assets :
Inventories 5,592 0 0 0 5,592
Trade and Other Receivables 4,973 0 0 0 4,973
Cash and Cash Equivalents 1,193 0 0 0 1,193
Total Current Assets 11,758 0 0 0 11,758
Current Liabilities :
Borrowings (1,468) 0 0 0 (1,468)
Trade and Other Payables (5,132) 0 0 (136) (5,268)
Total Current Liabilities (6,600) 0 0 (136) (6,736)
Non-Current Liabilities :
Borrowings (3,151) 0 0 0 (3,151)
Deferred Income (179) 0 0 0 (179)
Total Non-Current Liabilities (3,330) 0 0 0 (3,330)
Net Assets 10,661 0 70 (136) 10,595
Shareholders' Equity :
Ordinary Shares 3,169 0 0 0 3,169
Share Premium 157,314 0 0 0 157,314
Other Reserves (658) 0 0 0 (658)
Profit and Loss Account (149,164) 0 70 (136) (149,230)
Total Shareholders' Equity 10,661 0 70 (136) 10,595
11 RECONCILIATION OF SHAREHOLDERS' UK GAAP IFRS 3 IAS 38 IAS 19
EQUITY AT 31 DECEMBER 2006 Business Intangible Employee
UNDER UK GAAP TO IFRS Reformatted Combinations Assets Benefits IFRS
(All figures GBP000s) Unaudited Unaudited Unaudited Unaudited Unaudited
Non-Current Assets :
Goodwill 10,903 (2,303) 0 0 8,600
Intangible Assets 0 2,172 323 0 2,495
Tangible Assets 11,861 0 (58) 0 11,803
Total Non-Current Assets 22,765 (131) 265 0 22,898
Current Assets :
Inventories 8,580 0 0 0 8,580
Trade and Other Receivables 6,480 0 0 0 6,480
Cash and Cash Equivalents 4,071 0 0 0 4,071
Total Current Assets 19,131 0 0 0 19,131
Current Liabilities :
Borrowings (2,755) 0 0 0 (2,755)
Trade and Other Payables (8,161) 214 0 (93) (8,040)
Total Current Liabilities (10,916) 214 0 (93) (10,795)
Non-Current Liabilities :
Borrowings (7,234) 0 0 0 (7,234)
Deferred Income (160) 0 0 0 (160)
Total Non-Current Liabilities (7,394) 0 0 0 (7,394)
Net Assets 23,585 83 265 (93) 23,840
Shareholders' Equity :
Ordinary Shares 4,299 0 0 0 4,299
Share Premium 172,030 0 0 0 172,030
Other Reserves (910) 0 0 0 (910)
Profit and Loss Account (151,834) 83 265 (93) (151,579)
Total Shareholders' Equity 23,585 83 265 (93) 23,840
12 CONTINGENT LIABILITY
The Group received a claim in 2005 for approximately £1 million in respect of
national insurance contributions in relation to share options that were issued
in 1999. Having sought legal opinion, the Board remains robust in its opinion
that the Group has meritorious defences to this claim. Accordingly, no
provision has been made in the Interim results.
INDEPENDENT REVIEW REPORT TO IQE Plc
Introduction
We have been instructed by the company to review the financial information for
the six months ended 30 June 2007 which comprises a summarised profit and loss
account, a statement of total gains and losses, summarised balance sheet
information as at 30 June 2007, a summarised cash flow statement, comparative
figures and related notes. We have read the other information contained in the
interim report and considered whether it contains any apparent misstatements or
material inconsistencies with the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The rules of the
Alternative Investment Market require that the accounting policies and
presentation applied to the interim figures should be consistent with those
applied in preparing the preceding annual accounts except where any changes, and
the reasons for them, are disclosed.
This interim report has been prepared in accordance with the basis set out in
Note 1.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the disclosed accounting policies have
been applied. A review excludes audit procedures such as tests of controls and
verification of assets, liabilities and transactions. It is substantially less
in scope than an audit and therefore provides a lower level of assurance.
Accordingly we do not express an audit opinion on the financial information.
This report, including the conclusion, has been prepared for and only for the
company and for no other purpose. We do not, in producing this report, accept or
assume responsibility for any other purpose or to any other person to whom this
report is shown or into whose hands it may come save where expressly agreed by
our prior consent in writing.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2007.
PricewaterhouseCoopers LLP
Chartered Accountants and Registered Auditors
Cardiff
22 August 2007
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