IQE PLC – 2019 HALF YEAR RESULTS

IQE PLC – 2019 HALF YEAR RESULTS

  H1 2019
£’m*
H1 2018
£’m*
REVENUE 66.7 73.4
     
ADJUSTED EBITDA*** 7.4 13.5
     
OPERATING (LOSS) / PROFIT (3.1) 6.6
     
ADJUSTED OPERATING (LOSS) / PROFIT (1.9) 7.6
     
REPORTED (LOSS) / PROFIT BEFORE TAX (3.7) 6.6
     
REPORTED (LOSS) / PROFIT AFTER TAX (10.7) 4.2
 
DILUTED EPS (1.38p) 0.50p
     
ADJUSTED DILUTED EPS (1.29p) 0.76p
   
CASH GENERATED FROM OPERATIONS 4.0 7.6
   
CAPITAL INVESTMENT (PP&E) 19.1 19.4
     
NET (DEBT) / FUNDS** (0.8) 40.6

*   All figures £’m excluding adjusted diluted EPS
** Net (debt) / funds excludes IFRS16 lease liabilities (see note 4.5)
Adjusted Measures: The Directors believe that the adjusted measures provide a more useful comparison of business trends and performance. Adjusted measures exclude exceptional items, share based payments and non-cash acquisition accounting charges as detailed in note 7.  The following highlights of the first half results is based on these adjusted profit measures, unless otherwise stated.

  • Revenue of £66.7m (H1 2018: £73.4m) is 9% down year on year, impacted by a weak smartphone handset market and reductions in demand in the context of a technology market slowdown, international trade tensions and fall in demand from a major InP laser customer.
  • Adjusted operating loss of £1.9m (H1 2018: profit £7.6m) reflects negative operating leverage from a cost base scaled for volume which includes an increase in depreciation and amortisation of £2.4m resulting from the investment in capacity.
  • Negative EPS of 1.29p due to the operating loss plus a one-off non-cash deferred US tax charge resulting from a shift in the balance of future projected manufacturing between the US and UK / Asia.
  • Cash generated from operations of £4.0m (H1 2018: £7.6m) reduced due to lower trading volumes. Additional asset financing facility agreed post half year-end.

Dr Drew Nelson, Chief Executive Officer of IQE, said:
“I am pleased that IQE has delivered results which are in line with the trading update from June this year and to reiterate our full-year guidance, despite a number of challenging market conditions facing our industry in the first half of 2019.

“We remain confident in IQE’s ability to adapt to global supply chain shifts and have made significant strategic and operational progress with our global expansion projects. This includes completing the infrastructure phase at our Mega Foundry in Newport, South Wales as well as the capacity expansion in Taiwan and Massachusetts, US.

These investments in the Group’s global manufacturing footprint, coupled with IQE’s unique breadth of compound semiconductor materials experience and IP portfolio, position the Group well for future growth and margin expansion as volumes increase, driven by the growth opportunities in 5G and connected devices.”

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