Final Results

IQE PLC
26 March 2003

26 MARCH 2003



                                    IQE plc

               4th Quarter and Preliminary Full Year Results 2002

IQE plc (IQE), the world's leading global outsource supplier of customised
epitaxial wafers to the semi-conductor industry, today announces its 4th Quarter
and Preliminary Full Year Results for the period ended 31 December 2002.

HIGHLIGHTS

-                    Q4 sales were 5% lower than the previous quarter at £5.316m
(Q3/2002: £5.607m) mainly due to the weakening of the US$, and were 31% less
than the same period last year (Q4/2001: £7.696m) as a result of the dramatic
downturn in the optical telecoms market.

-                    Full year sales were down by 45% at £22.960m (2001:
£42.047m).

-                    As detailed in the Profit and Loss Account Analysis, Q4
operating loss before goodwill amortisation, exceptional operating items and
non-recurring charges was £5.276m compared with a loss of £3.795m in the same
period in 2001.     Operating loss for the full year before goodwill,
exceptionals and non-recurring costs was £21.134m (2001: £3.467m).

-                    Operating cash outflow for Q4 reduced to £0.966m compared
with £3.598m for the previous quarter and £4.516m for the same quarter in the
previous year, and capital expenditure reduced to £0.576m compared to £2.784m in
Q4 2001.

-                    Aggressive cost cutting measures undertaken during year,
including a headcount reduction of 120 staff (30% of workforce) completed in
March 2003 saving over £6.000m/annum of payroll and other costs.

-                    Year end gross cash stood at £17.715m compared with
£30.532m at end 2001.

-                    Continued good progress at IQE Silicon Compounds including
the successful completion of customer qualification programs and continued
growth in interest in SiGe and related products.

-                    Strong evidence of sustainable pick up in wireless product
business serviced by US operations with several major customers now taking
regular volume deliveries.

-                    Non-recurring charges in Q4 of £47.607m of which £47.329m
was accelerated depreciation (impairment of fixed assets).



Commenting on the results, Dr Drew Nelson, President/CEO said '2002 was an
exceptionally difficult year for the semiconductor industry, particularly in the
field of optical communications which had been a key market for the Group.
However, some market segments had begun to recover by the year end, notably the
RF Wireless market where IQE has built a strong competitive position. During the
year, the Group achieved major reductions in its cost base by aggressively
cutting overheads, whilst continuing to diversify its product ranges to reduce
dependence on the optical communications sector.  These initiatives are
beginning to bear fruit and with gross cash of £17.7 million at year end,
continuing moves to outsourcing throughout the semiconductor industry, and
further product diversification, we continue to believe the Group is strongly
positioned as the economy recovers.'



For further information please contact :

IQE plc
Drew Nelson, (President/CEO) [phone]
Tim Hawkes (Acting CFO) [phone]
Chris Meadows (Investor Relations) [phone]
Leslie Coventry (Company Secretary) [phone]

Buchanan Communications
Tim Thompson/Nicola Cronk, [phone]


4th QUARTER / FULL YEAR RESULTS

INTRODUCTION

The semiconductor markets remained depressed throughout the fourth quarter
exacerbated by the continuing downturn in the global economy.  In the
opto-electronics market, many of the Group's key customers continued to
experience poor visibility accompanied by weak sales and profitability. However,
the electronics sector, particularly the RF wireless market, had begun showing
signs of recovery that has been sustained through to the first quarter of 2003.

There was strong evidence in the fourth quarter that the restructuring
programmes and strict cost controls were starting to impact with a significant
reduction in cash outflow.   With sales for the three months only 5% lower than
the previous quarter, the Management team believes the electronics market sector
has finally bottomed out and that there are strong indicators that IQE stands to
gain significant market share as key players come back on line, and increasingly
recognise the risk reduction and cost benefits of wafer outsourcing.

RESULTS

Despite a continuation from Q3 in the increased market demand for wireless
products, the weakening of the US$ resulted in sales revenues in Q4 being down
5% on Q3 at £5.316m (Q3, 2002: £5.607m), representing a decrease of 31% year on
year (Q4/2001: £7.696m).  Sales for the full year to December were 45% lower
than the previous full year at £22.960m (2001: £42.047m).  As detailed in the
Profit and Loss Account Analysis, the reduction in sales revenue compared with
Q3 2002 resulted in the negative gross margin excluding non-recurring costs in
Q4 increasing to -44% (Q3/2002: -40%).  However, following the impairment of
assets, depreciation charges in COGS will reduce by £1.655m per quarter,
improving gross margin to -13% based on Q4 sales and costs.

In-house research and development effort increased in the quarter to £0.811m,
representing 15.2% of sales (Q3/2002: £0.525m, 9% of sales), to support
increased development activity particularly in the areas of new products such as
InP HBTs, Si Ge, Strained Silicon, long wavelength VCSELs and InGaP HBTs, all of
which was expensed in the quarter.  Nonetheless, R&D expenditure for the quarter
was down in absolute terms from the same period in 2001 (Q4/2001: £0.894m, 11.6%
of sales). Total research and development costs for the year amounted to £3.210m
(2001: £3.792m), which was equivalent to 14% of sales (2001: 9% of sales).
Sustained efforts to control costs meant that SG&A expenses excluding
non-recurring costs continued to reduce to £2.138m (Q3/2002: £2.705m) (Q4/2001:
£2.801m)

Non-recurring costs charged in the Profit and Loss Account Analysis in Q4
consisted of £47.329m accelerated depreciation (impairment of fixed assets)
reducing the net book value of the majority of fixed assets to market valuation
and £0.278m provision for the lease on a vacated property at Wafer Technology.
Full year non-recurring costs were £93.507m consisting mainly of £55.931m
impairment of fixed assets, £33.411m write-off of Wafer Technology goodwill,
£2.855m provision for slow moving/ obsolete inventory and £0.528m provision for
vacated leased properties.   Excluding the impact of these one off charges, the
overall operating loss for the quarter was £5.276m compared with a loss in the
previous quarter of £5.457m and a loss of £3.795m in the same period in 2001.
Cumulative operating loss for the year before goodwill, exceptionals and
non-recurring costs was £21.134m.  Excluding goodwill and one off charges, the
loss per share for the year was 12.25 pence.

The Group incurred an operating cash outflow for the year of £8.995m (2001:
outflow of £7.066m) before capital expenditure, which reduced substantially in
Q4 to £0.576m (Q4/2001: £2.784m). Total capital expenditure for the year
amounted to £3.765m (2001: £25.170m), bringing the net cash outflow for the year
before financing to £12.843m (2001: £31.703m). With no further significant
capital expenditure planned for 2003 and £17.715m gross cash, the Group believes
it has sufficient cash reserves to see it through the current industry downturn.

As a result of the unprecedented market conditions, the Board looked critically
at the carrying value of assets on the Groups balance sheet, and decided to take
an accelerated depreciation charge, thereby writing the majority of assets down
to their market valuation.  This in no way reduces their effectiveness for large
scale production, but is more a prudent recognition that their carrying value on
the balance sheet did not reflect the current market valuation for the majority
of such assets.

OPERATIONS

Increasing contracts for wireless products at IQE Inc during Q4 largely offset
the decline in contracts for opto-electronic products from IQE (Europe), the
overall reduction in sales being mainly due to exchange rate variations.  As a
result of the dramatic decline in the fibre optic component market, there has
been a major shift in emphasis at IQE (Europe), with a concerted marketing
effort in the Far East concentrating on opto-electronic materials for consumer
(CD/DVD) rather than communications products. Marketing effort has also focussed
on electronic products where IQE has a world class offering for InGaP HBTs
produced on the MOCVD platforms at IQE (Europe). The HBT product from IQE
(Europe) has met with significant success and is being qualified by a number of
manufacturers worldwide, although the qualification process can take typically 6
to 9 months to complete.

In the wireless marketplace, the Company continues to see quantifiable and
sustainable signs of improvement to trading conditions, with more and more
significant production orders being agreed with customers.  In addition, new
product development continues to be successful, particularly with InP HBTs which
are being designed into a number of 'next generation' customer products.

Wafer Technology continues to perform well on specialist wafer products,
although their more mature business has also suffered as a consequence of the
very difficult market conditions. Overall, Wafer Technology is performing
strongly against its competitors in the marketplace and business has held up
reasonably well to the extent that the business is approaching cash break-even.

IQE Silicon Compounds continues to make progress in terms of more standard
buried silicon based epitaxy and feedback has continued to be very positive with
respect to the new SiGe and strained silicon products, although the adoption of
the new technology by customers has been slowed by the constraints imposed by
the prevailing market conditions.

Overall, the current trading environment continues to be extremely challenging,
particularly in the opto-electronics sector. Continued weakness in this area is
being offset to a significant extent by the improving environment in the
wireless sector.  However, in order to conserve cash, the Group has taken a
number of cost control initiatives that are anticipated to help it to
re-establish positive cash flow and profitability as the semiconductor industry
recovers, whilst maintaining critical production capability, resource and
infrastructure to ensure the business is properly positioned to exploit its full
medium and long term potential.

OUTLOOK

The semiconductor industry continues to suffer from very low visibility at the
present time, and is experiencing considerable pricing pressures throughout the
supply chain. Against this very difficult background, IQE has managed to keep
sales virtually flat over the last three quarters, save for exchange rate
variations. We have increased our market share in the RF Wireless sector which
is showing continued strength, and have made strong progress in diversifying our
product ranges away from the traditional reliance on the optical communications
market sector.

Although we anticipate the market remaining very difficult for the coming
quarters, we continue to see more emphasis placed by our customers on
outsourcing and, with a significantly reduced cost base, we believe we will
benefit significantly as the semiconductor markets recovers.



Dr Drew Nelson
President/CEO
IQE plc



IQE PLC
ACCOUNTS FOR 12 MONTHS TO 31 DECEMBER 2002


PROFIT AND LOSS ACCOUNT


                                            3 months to    3 months to    12 months to    12 months to
(All figures GBP000s)              Note     31 Dec 2002    31 Dec 2001     31 Dec 2002     31 Dec 2001

Turnover                                          5,316          7,696          22,960          42,047
Cost of Sales                      2, 4        (55,005)        (7,796)        (90,579)        (32,381)

Gross Profit/(Loss)                            (49,689)          (100)        (67,619)           9,666

S G and A Costs including
Distribution :
   Research/Development                           (811)          (894)         (3,210)         (3,792)
   Selling/General/Administration               (2,383)        (2,801)        (10,401)         (9,341)

Operating Profit/(Loss) before
Goodwill/Exceptionals                          (52,883)        (3,795)        (81,230)         (3,467)

Goodwill Written off                3               (0)          (472)        (34,302)         (1,835)
Exceptional Items                   4                89          (253)         (2,686)           (759)

Operating Profit/(Loss) after
Goodwill/Exceptionals                          (52,794)        (4,520)       (118,218)         (6,061)

Interest Received/(Paid)                            (6)          (109)            (16)             211

Net Profit/(Loss) before Tax                   (52,800)        (4,629)       (118,234)         (5,850)

Current Tax                                           0          (419)             (0)           (104)
Deferred Tax                                      1,217            640           1,217             373
Dividends                                             0              0             (0)             (0)

Net Profit/(Loss) after Tax                    (51,583)        (4,407)       (117,017)         (5,580)

Basic Earnings Pence/Share                      (27.81)         (2.67)         (63.08)          (3.38)
Basic Earnings Pence/Share excl
Goodwill                                        (27.81)         (2.39)         (44.59)          (2.27)
Diluted Earnings Pence/Share        6           (27.81)         (2.67)         (63.08)          (3.38)
Diluted Earnings Pence/Share excl
Goodwill                            6           (27.81)         (2.39)         (44.59)          (2.27)

Net Profit/(Loss) before Interest
/Taxes/ Depreciation and
Amortization (EBITDA)                           (3,109)        (2,466)        (19,537)           2,196




PROFIT AND LOSS ACCOUNT ANALYSIS
                                        3          3         3         3         12         12         12        12
                                months to  months to months to months to  months to  months to  months to months to
                                   31 Dec     31 Dec    31 Dec    31 Dec     31 Dec     31 Dec     31 Dec    31 Dec
(All figures GBP000s)    Note        2002       2002      2002      2001       2002       2002       2002      2001
                                                 non                                       non
                                recurring  recurring     Total     total  recurring  recurring      total     total
                                            (note 5)                                  (note 5)

Turnover                            5,316          0     5,316     7,696     23,050       (90)     22,960    42,047
Cost of Sales            2, 4     (7,643)   (47,362)  (55,005)   (7,796)   (31,283)   (59,296)   (90,579)  (32,381)

Gross Profit/(Loss)               (2,327)   (47,362)  (49,689)     (100)    (8,233)   (59,386)   (67,619)     9,666
Gross Profit/(Loss) %              (43.8)                          (1.3)     (35.7)                            23.0

S G and A Costs
including Distribution :
  Research/Development              (811)          0     (811)     (894)    (3,210)          0    (3,210)   (3,792)
  Selling/General/Admin    2      (2,138)      (245)   (2,383)   (2,801)    (9,691)      (710)   (10,401)   (9,341)

Operating Profit/(Loss)
before Goodwill/
Exceptionals                      (5,276)   (47,607)  (52,883)   (3,795)   (21,134)   (60,096)   (81,230)   (3,467)
                                  
Operating Profit/(Loss)
% before Goodwill/
Exceptionals                       (99.2)                         (49.3)     (91.7)                           (8.2)

Goodwill Written off       3          (0)          0       (0)     (472)      (891)   (33,411)   (34,302)   (1,835)
Exceptional Items          4           89          0        89     (253)    (2,686)          0    (2,686)     (759)

Operating Profit/(Loss)
after Goodwill/
Exceptionals                      (5,187)   (47,607)  (52,794)   (4,520)   (24,711)   (93,507)  (118,218)   (6,061)
Operating Profit/(Loss)
% after Goodwill/
Exceptionals                       (97.6)                         (58.7)    (107.2)                          (14.4)

Interest Received/(Paid)              (6)          0       (6)     (109)       (16)          0       (16)       211

Net Profit/(Loss) before          (5,193)   (47,607)  (52,800)   (4,629)   (24,727)   (93,507)  (118,234)   (5,850)
Tax
Net Profit/(Loss) %                (97.7)                         (60.1)    (107.3)                          (13.9)

Current Tax                             0          0         0     (419)        (0)          0        (0)     (104)
Deferred Tax                        1,217          0     1,217       640      1,217          0      1,217       373
Dividends                               0          0         0         0        (0)          0        (0)       (0)

Net Profit/(Loss) after           (3,976)   (47,607)  (51,583)   (4,407)   (23,510)   (93,507)  (117,017)   (5,580)
Tax

Basic Earnings Pence/              (2.14)              (27.81)    (2.67)    (12.73)               (63.36)    (3.41)
Share
Basic Earnings Pence/
Share excl Goodwill                (2.14)              (27.81)    (2.39)    (12.25)               (44.79)    (2.29)
Diluted Earnings Pence/
Share                      6       (2.07)              (26.83)    (2.60)    (12.73)               (63.36)    (3.31)
Diluted Earnings Pence/
Share excl Goodwill        6       (2.07)              (26.83)    (2.32)    (12.25)               (44.79)    (2.22)
                           
Net Profit/(Loss) before
Interest/Taxes/
Depreciation and
Amortization (EBITDA)             (2,831)      (278)   (3,109)   (2,466)   (15,372)    (4,165)   (19,537)     2,196
                                  


BALANCE SHEET

                                                              As At                 As At
(All figures GBP000s)                                   31 Dec 2002           31 Dec 2001

Fixed Assets :
   Intangible Fixed Assets                                        0                34,658
   Tangible Fixed Assets                                     13,862                74,193
   Investment in Own Shares                                       9                     3
   Capitalized Research and Development                           0                     0
   Total Fixed Assets                                        13,871               108,854

Current Assets :
   Stocks                                                     4,988                12,277
   Debtors                                                    3,721                 7,495
   Cash and Bank                                             17,715                30,532
   Total Current Assets                                      26,425                50,304

Creditors Falling Due within One Year                      (11,908)              (11,945)

Net Current Assets                                           14,516                38,359

Total Assets less Current Liabilities                        28,388               147,213

Creditors Falling Due after One Year :
   Deferred Income                                            (452)                 (173)
   Long Term Borrowings                                     (5,999)               (8,211)

Provision for Liabilities and Charges :
   Deferred Taxes                                               (0)               (1,217)

Net Assets                                                   21,936               137,611


Capital and Reserves :
   Called Up Share Capital                                    1,871                 1,824
   Merger Reserve                                             (605)                 (605)
   Share Premium Account                                    140,328               136,661
   Shares to be Issued                                          133                   938
   Retained Earnings                                      (119,507)               (2,490)
   Other Reserves                                             (284)                 1,284

Total Equity Shareholders' Funds                             21,936               137,611



CASH FLOW STATEMENT


                                     3 months to     3 months to     12 months to     12 months to
(All figures GBPs)                   31 Dec 2002     31 Dec 2001      31 Dec 2002      31 Dec 2001

Net Inflow/(Outflow) from
Operations                                 (966)         (4,516)          (8,995)          (7,066)

Returns on Investment and
Servicing Finance :
   Interest Received/(Paid)                  (6)           (109)             (16)              211

Capital Expenditures :
   Purchases of Fixed Assets
   less Leases Received                    (576)         (2,784)          (3,765)         (25,170)
   Capitalized Development Cost                0             250              (0)              (0)

Dividends Received/(Paid)                      0               0                0                0

Taxes Received/(Paid)                        (9)              33             (67)              321

Net Inflow/(Outflow) before
Financing                                (1,557)         (7,125)         (12,843)         (31,703)

Financing :
   Issues of Ordinary Share
   Capital                                    73          24,958            3,267           25,049
   Loans Received/(Repaid)                  (74)           (267)            (662)            (462)
   Leases (Repaid)                         (675)           (546)          (2,578)          (1,863)

Net Inflow/(Outflow) from
Financing                                  (676)          24,145               27           22,724

Increase/(Decrease) in Cash and
Bank Overdrafts                          (2,233)          17,020         (12,816)          (8,979)




RECONCILIATION OF PROFIT TO CASH
INFLOW/(OUTFLOW) FROM OPERATIONS

                                     3 months to    3 months to       12 months to        12 months to
(All figures GBP000s)                31 Dec 2002    31 Dec 2001        31 Dec 2002         31 Dec 2001

Operating Profit after Goodwill/
Exceptionals                            (52,794)        (4,520)          (118,218)             (6,061)
                                        
Depreciation Charged                      49,685          1,452             64,379               6,422
Goodwill Written off                           0            472             34,302               1,835
(Increase)/Decrease in Stocks                950          1,581              7,289             (4,392)
(Increase)/Decrease in Debtors             1,298          3,125              3,774               2,882
Increase/(Decrease) in Creditors           (494)        (6,749)              (800)             (7,857)
Grants Released                             (31)          (486)              (141)               (504)
Grants Received                              420            608                420                 608

Net Cash Inflow/(Outflow) from
Operations                                 (966)        (4,516)            (8,995)             (7,066)
                                           


RECONCILIATION OF NET CASH FLOW
TO MOVEMENT IN NET FUNDS

                                     3 months to     3 months to     12 months to     12 months to
(All figures GBP000s)                31 Dec 2002     31 Dec 2001      31 Dec 2002      31 Dec 2001

Increase/(Decrease) in Cash              (2,233)          17,020         (12,816)          (8,979)

Loans (Received)/Repaid                       74             267              662              462
Leases Repaid                                675             546            2,578            1,863

Change in Funds Resulting from
Cash Flows                               (1,484)          17,833          (9,576)          (6,654)
                                         

New Finance Leases                             3           (282)            (389)          (7,054)
New Loans Non Cash                             3               0          (1,315)              (0)

Net Movement                             (1,478)          17,551         (11,280)         (13,708)
Net Funds at Start                         9,295           1,555           19,104           32,813
Exchange Differences                         143             (1)              136              (0)

Net Funds at Close                         7,959          19,104            7,959           19,104


Analysis of Net Funds :
   Cash and Bank                          17,715          30,532           17,715           30,532
   Loans Due after One Year              (3,049)         (2,899)          (3,049)          (2,899)
   Loans Due within One Year             (1,035)           (674)          (1,035)            (674)
   HP Creditors/Finance Leases           (5,672)         (7,855)          (5,672)          (7,855)

   Total                                   7,959          19,104            7,959           19,104






NOTES TO THE ACCOUNTS

1  BASIS OF PREPARATION

The financial information is prepared under the historical cost convention
and in accordance with applicable accounting standards, which have been applied
on a consistent basis during the period under review.   The particular
accounting policies adopted are described below  :

    -      Turnover represents amounts invoiced, exclusive of value added tax

    -       Tangible fixed assets are stated at cost less accumulated
depreciation and any provisions for impairment.  Cost comprises all costs that
are directly attributable to bringing the asset into working condition for its
intended use, as defined by Financial Reporting Standard Number 15.
Depreciation has been calculated so as to write down the cost of assets to their
residual values over the following estimated useful economic lives.  No
depreciation is provided on land or assets in the course of construction, or on
assets in periods of non-use where no physical or technological deterioration
occurs and the remaining useful economic life is extended by the period of
non-use.

Freehold buildings                                                   25 years
Short leasehold improvements                                         5/27 years
Plant and machinery                                                  5/10 years
Fixtures and fittings                                                4/5 years
Motor vehicles                                                       4 years

    -      The financial information consolidates the financial statements of
the Company and all of its subsidiaries.

    -      Stocks are stated at the lower of cost and net realizable value.

    -      Research and development expenditure is fully written off when
incurred except where contracts of sufficient value exist or are likely to exist
in the foreseeable future, in which case it is written off over a two year
period commencing with the start of the contracts to which the costs relate.

    -                    Transactions in foreign currencies during the period
are recorded in sterling at the rates ruling at the dates of the transactions.
Monetary assets and liabilities in foreign currencies are translated into
sterling at the rates ruling at the balance sheet date.   All exchange
differences are taken to the profit and loss account.

            The balance sheets of IQE Inc are translated into sterling at the
closing rates of exchange for the period, while the profit and loss accounts are
translated into sterling at the average rates of exchange for the period.  The
resulting translation differences are taken direct to reserves.

    -      The Group operates defined contribution pension schemes.
Contributions are charged in the profit and loss account as they become payable
in accordance with the rules of the schemes.

    -      Deferred taxation is provided in full on timing differences that
result in an obligation at the balance sheet date to pay more tax, or a right to
pay less tax, at a future date at rates expected to apply when they crystallize
based on current tax rates and law.  Timing differences arise from the inclusion
of items of income and expenditure in taxation computations in periods different
from those in which they are included in financial statements.

    -      Deferred tax is not provided on timing differences arising from the
revaluation of fixed assets where there is no binding contract to dispose of
those assets.  Deferred tax assets are recognized to the extent that it is
regarded as more likely than not that they will be recovered.   Deferred tax
assets and liabilities are not discounted

    -                    Government grants receivable in connection with
expenditure on tangible fixed assets are accounted for as deferred income, which
is credited to the profit and loss account by instalments over the expected
useful economic life of the related assets on a basis consistent with the
depreciation policy.    Revenue grants for the reimbursement of costs incurred
are deducted from the costs to which they related, in the period in which the
costs are incurred.

    -      Assets held under finance leases and hire purchase contracts are
capitalized at their fair value on inception of the leases and depreciated over
the shorter of the period of the lease and the estimated useful economic lives
of the assets.   The finance charges are allocated over the period of the lease
in proportion to the capital amount outstanding and are charged to the profit
and loss account.    Operating lease rentals are charged to the profit and loss
account in equal amounts over the lease term.

    -      The only derivative instruments utilized by the Group are forward
exchange contracts.  The Group does not enter  into speculative derivative
contracts.   Forward exchange contracts are used for hedging purposes to alter
the risk profile of an existing underlying exposure of the Group in line with
the Group's risk management policies.

2    RESTATEMENT OF COSTS

Costs totalling £655K, which had been incurred as at September 2002, have
been reallocated from SG and A costs to production costs in order to be
consistent with the charging basis applied in 2001.

3  GOODWILL

The goodwill arising on the acquisition of Wafer Technology International
Limited and its subsidiary Wafer Technology Limited had been capitalized and was
being amortized over its useful life, which was considered by the Directors to
be 20 years.   However, the Directors have carried out an evaluation of the
investment and, in the light of current market conditions, have considered that
no goodwill exists.   Accordingly, the remaining value of goodwill has been
written off.

4    EXCEPTIONAL ITEMS

Exceptional items comprise :
                                                                      2002           2001

Legal fees                                                          £1,984K          £759K
Restructuring costs                                                  £702K            £0K


Legal fees relate to a complaint lodged by IQE (Europe) against Rockwell
regarding a declaratory judgment that IQE Europe's processes did not infringe a
Rockwell-owned MOCVD patent which expired on 11 January 2000 plus claims for
damages related to this matter.   Rockwell counter-claimed, alleging breaches of
a licence agreement by IQE (Europe).  The two parties have now settled their
dispute.   Under the terms of the settlement, IQE (Europe) has paid Rockwell
$500K and provided them with 300,000 shares in IQE plc in return for their
agreement that neither IQE (Europe) nor its customers had infringed the MOCVD
patent.   A further $500K will be paid to Rockwell after 31 December 2002.   The
cost of the settlement has been charged in full in these accounts.

Restructuring costs relate to the cost of staff redundancies at IQE
(Europe), IQE Inc and Wafer Technology Ltd as part of the Group's cost reduction
program.

The Group also incurred an exceptional cost of £55,391K (2001 : Nil) in
respect of fixed asset impairment which has been charged to cost of sales in
these accounts.

5  NON RECURRING COSTS

Non recurring costs in the profit and loss account analysis comprise fixed
asset impairment, the write down of the valuation of stocks, onerous lease
provisions and the write off of the goodwill arising on the acquisition of Wafer
Technology Ltd.

6  EARNINGS PER SHARE

FRS 14 requires the presentation of diluted EPS 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 options holders would act
irrationally, no adjustment has been made to diluted EPS for out of the money
share options.

7  STATUTORY ACCOUNTS

The financial information set out in this announcement does not constitute
the Company's statutory accounts for the years ended 31 December 2002 or 2001.
The financial information for the year ended 31 December 2001 is derived from
the Company's statutory accounts for the year ended 31 December 2001, which have
been delivered to the Registrar of Companies.   The auditors reported on those
accounts; their report was unqualified and did not contain a statement under
s237 (2) or (3) Companies Act 1985.

The statutory accounts for the year ended 31 December 2002 will be finalized
on the basis of the financial information presented by the Directors in this
preliminary announcement and will be delivered to the Registrar of Companies
following the Company's Annual General Meeting.

                      This information is provided by RNS
            The company news service from the London Stock Exchange