Year-end trading update: Strong second half del...

IQE plc

Strong second half delivers significant increase in profits and cash generation


19 January 2010

IQE plc (AIM: IQE, "IQE" or the "Group") the leading global supplier of advanced
semiconductor wafer products and services to the semiconductor industry,
provides a trading update for the year ended 31 December 2009.

The Group experienced a strong second half recovery following the industry-wide
destocking that adversely impacted the first six months of 2009. As a result,
IQE expects to report full year 2009 results in line with market expectations,
despite the adverse currency impact of sterling strengthening against the US
Dollar in the second half.

Second half revenues are expected to be 45% higher than first half.  With the
benefit of high operational gearing and stringent cost controls, IQE expects to
report more than a threefold increase in second half EBITDA from £1.9m in the
first half, to deliver a full year EBITDA of approximately £8m.

Continued tight control of working capital and capex delivered substantial free
cash generation in the second half of 2009.  As a result, net debt is expected
to be significantly better than market expectations at approximately £15m - a
reduction of approximately £4m since June 2009.

IQE's strong second half performance reflects increasing demand for Gallium
Arsenide ('GaAs') wafers in the wireless communications market, as well as a
diverse range of high growth opto electronics markets.

The growth in wireless is being driven by a structural shift as GaAs-rich
smartphones enjoy a rapid increase in popularity, and emerging economies such as
the BRIC nations roll out 3G networks to satisfy increasing demand for
high-speed mobile internet and data services.

The growth in optoelectronics is being driven by a diverse range of factors.
Demand for solar cells and solid state lighting is growing in response to
regulatory and environmental pressures. In contrast, consumer and industrial
demand is driving growth in a number of applications including 'hands free'
gaming, laser projection, high speed data communications (broadband), and
advanced optical storage.


Dr Drew Nelson, IQE's Chief Executive, said:

"We have demonstrated a high degree of resilience through a challenging year.
Proactive management protected the business through the downturn, without
jeopardising our ability to respond when sales volumes recovered strongly in the
second half.

"Despite the economic turmoil, IQE has continued to strengthen its market
position by attracting new talent and gaining new product qualifications to
increase market share.

"We are making good progress in developing and commercialising key intellectual
property that will provide a competitive advantage and secure leading positions
in a number of emerging high-growth markets including solar power, laser
projection systems and solid state lighting.

"The Board remains confident that IQE is well positioned to achieve continued
growth in sales, profits and cash flow in 2010."

IQE expects to report its preliminary results on 24 March 2010.




Contacts:

IQE plc ([phone])
Chris Meadows
Phil Rasmussen
Drew Nelson

Noble & Company Limited (+ 44 20 7763 2200)
John Llewellyn-Lloyd
Sam Reynolds

College Hill ([phone])
Adrian Duffield
Carl Franklin



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