TIDMIQE
IQE plc
("IQE" or the "Group")
2021 FULL YEAR RESULTS
Cardiff, UK
29 March 2022
Strong operational progress in 2021
Strategic realignment a priority for 2022
IQE plc (AIM: IQE, "IQE" or the "Group"), the leading supplier
of compound semiconductor wafer products and advanced material
solutions to the global semiconductor industry, announces its
results for the full year ended 31 December 2021.
Americo Lemos, Chief Executive Officer of IQE, said:
"In my first few months I have been very impressed by the
quality of IQE's people, technology and customers. As the only
global outsourced epitaxy provider and a leader in our field, IQE
is uniquely placed to capitalise on major technological trends
while navigating a challenging external environment.
To secure this growth, we must first build a commercial engine
that is orientated to our end markets, focussed on our customers
and aligned with our technology innovation. My vision is to grow
IQE through multiple strategic and long-term customer
relationships. We will be developing this strategy more fully
during 2022 and I look forward to communicating further in due
course."
FY 2021 Financials
FY 2021 FY 2020 Change Constant currency change
GBP'm* GBP'm* (%) (%)
Revenue 154.1 178.0 (13%) (7%)
Adjusted EBITDA** 18.7 30.1 (38%) (17%)
Operating loss (20.0) (5.5)
Adjusted operating (loss)
/ profit (6.5) 5.4
Reported loss after tax (31.0) (2.9)
Net cash flow from
operations 18.9 35.5 (47%)
Adjusted cash flow from
operations 17.9 36.3 (51%)
Capital investment (PP&E) 15.1 5.0 201%
Net debt / (cash***) (5.8) 1.9
Diluted EPS (p) (3.87p) (0.41p)
Adjusted diluted EPS (p) (2.41p) 0.29p
* All figures GBP'm excluding diluted and adjusted diluted
EPS.
** Adjusted Measures: Alternative performance measures are
disclosed separately after a number of adjusted non-cash, one-off
or non-operational items where it is deemed necessary by the
Directors to do so to provide further understanding of the
financial performance of the Group. Adjusted items are material
items of income or expense that have been shown separately due to
the significance of their nature or amount as detailed in note
4.
*** Net debt excludes IFRS16 lease liabilities.
The following highlights of the full year results are based on
these adjusted profit measures, unless otherwise stated.
Operational Highlights
-- Global site optimisation programme
-- Consolidation of US MBE production at IQE's larger and more
scalable North Carolina site following the closure of Pennsylvania
site in 2024
-- Closure of IQE's Singapore site by mid-2022 realising c.GBP4.8m
per annum of cash savings as part of our MBE consolidation plan
-- Completion of the acquisition of minority interests in IQE Taiwan
Corporation in December 2021
-- Business development progress
-- Long-term strategic collaboration agreement signed with
GlobalFoundries(R) in Q4 2021 to develop vital GaN on Si
technologies for mobile and wireless infrastructure applications
-- Multi-year strategic partnership signed in Q3 2021 with a major
semiconductor foundry to develop epiwafers for 5G small cells in
Asia
-- Technology development
-- Expansion of VCSEL portfolio with turnkey IQVCSEL(TM) product line,
with initial deliveries made to multiple customers
-- Achievement of key power and reliability milestones for
IQDN-VCSEL(TM) technology for advanced sensing applications
at longer wavelengths on 150 mm GaAs substrates, relevant
to future LiDAR technologies
-- Scaling of VCSEL on Ge technology (IQGeVCSEL) to 200 mm,
enabling a step-change in industry economics in support of
broader adoption of 3D sensing
-- Business transformation progress
-- Business systems and process transformation programme commenced to
provide a consistent, agile and scalable platform for business
growth, including strategic IT transformation agreement entered
into with Critical Manufacturing
Strategic perspectives and Outlook
Looking ahead, the Group is completing a full review of strategy
under new CEO, Americo Lemos. The refreshed strategy for the Group
will be completed and communicated in H2 and will be focussed on
the key principles of:
-- Placing customers at the centre of everything we do
-- Taking a markets/products based approach
-- Maintaining our technology innovation leadership
-- Capturing greater value through long term and strategic agreements
-- Scaling while optimising our global footprint
Operations remain resilient in 2022 to the challenging
macro-economic and geopolitical backdrop. The Group continues to
monitor and work to mitigate potential headwinds in global
semiconductor supply chains.
In 2022 the Group will focus on building a platform for growth
to deliver further progress in 2023 and beyond. The Group is
confident this refreshed strategy will enable a multi-year cycle of
growth, driven by the macro trends of 5G, IoT and the Metaverse, as
the global economy and semiconductor markets recover from current
risks and disruption.
Overall, the Group expects to grow revenues by a low single
digit % in 2022 (at constant currency), with growth weighted
towards H2. At this level, the Group anticipates a similar adjusted
EBITDA margin % to 2021 (at constant currency). Capital expenditure
of GBP10-15m is expected on PP&E and GBP6-8m on capitalised
intangibles relating to development costs and IT
transformation.
Group Trading Performance
Group revenue for FY 2021 was down 13% to GBP154.1m (FY 2020:
GBP178.0m). The Group experienced a FX headwind of c.GBP10.6m
affecting GBP revenue on a reported basis, with the majority of
revenues being earned in USD. On a constant currency basis, Group
revenue was down 7% at GBP165m, in line with the November 2021
trading update of GBP164m.
Wireless revenue of GBP83.2m (FY 2020: GBP94.2m) was down 12%
year-on-year on a reported basis and down 6% on a constant currency
basis. Strong growth in demand for wafers used in 5G handsets and
WiFi 6 routers, resulted in an increase of 19% year-on-year for
Wireless GaAs. This growth was offset by a reduction in demand for
GaN wafers used in 5G infrastructure, with revenue down by 49%
year-on-year. After a strong performance for GaN in 2020 resulting
from the initial wave of 5G mMIMO base station deployments,
particularly in Asia, delays to further global deployments were
experienced in 2021. A multi-year replacement cycle is still
anticipated for 5G infrastructure, including strong anticipated GaN
content.
Photonics revenue of GBP68.1m (FY 2020: GBP81.6m) was down 17%
year-on-year on a reported basis and down 11% on a constant
currency basis. VCSEL revenue for 3D sensing applications was down
by 19% as a result of smaller chip sizes. The Group maintained
strong market share in its key supply chain and remains well
positioned for future product evolutions. Delays were experienced
in certain aerospace and security orders, with Infrared revenues
down 8% year-on-year. This represents a change in phasing, with no
anticipated loss of market share. InP and other revenues were up by
16%, predominantly due to strength in datacom and telecom markets
as well as new growth areas of sensing.
CMOS++ revenue of GBP2.8m (FY 2020: GBP2.2m) was up by 28%
year-on-year, adding scale to the Group's Si epitaxy operation
which is important to the integration of compound semiconductors on
silicon.
Group Adjusted EBITDA of GBP18.7m (FY 2020: GBP30.1m) on a
reported basis is equivalent to GBP25.0m on a constant currency
basis. The constant currency EBITDA margin of 15% was in line with
the November 2021 trading update of c.15% margin. The year-on-year
fall in margin is predominantly related to the Group's operational
gearing. The Group plans to improve its profitability going forward
through a global site optimisation programme and growing margins by
achieving higher volumes and hence economies of scale at its
strategic site locations.
A Reported Operating Loss of GBP20.0m (FY 2020: (GBP5.5m)) is
derived as a result of the trading performance and a number of
one-off exceptional items (see below), with an adjusted operating
loss of GBP6.5m (FY 2020: GBP5.4m profit).
Net cashflow from operations of GBP18.9m (FY 2020: GBP35.5m)
representing 96% conversion of Adjusted EBITDA, resulting in a net
debt position (excluding lease liabilities) of GBP5.8m as at 31
December 2021 (FY 2020: net cash of GBP1.9m). The Group renewed a
$35m revolving credit facility with HSBC in December 2021 and had a
cash position as at 31 December 2021 of GBP10.8m.
Capital expenditure of GBP15.1m on PP&E (FY 2020: GBP5.0m)
in line with the November trading update of GBP14-17m, focussed on
the deployment of additional tools to meet growing demand for 5G
handset and WiFi 6 products in Taiwan. The Group continues to
invest in research and development with technology capitalisation
of GBP3.3m of intangible assets (FY 2020: GBP5.4m).
Adjustments to Reported Items
In order to focus the business, longer term developments such as
cREO(R) and Photonic Quasi Crystal are being de-prioritised in the
short term to focus our development programmes on market driven
solutions. IQE will retain the technology, capability and IP
enabling redeployment if and when appropriate.
-- An exceptional intangible asset impairment charge of GBP7.4m has been
recognised within the Reported Operating Loss. This comprises a non-cash
impairment charge of GBP4.7m related to cREO(R) development costs and
patents, following a decision to pause development activities on this
technology until a commercial opportunity arises, in line with the
markets based approach set out in our strategic priorities.
-- A non-cash impairment charge of GBP2.7m has also been recognised for
Quasi Photonic Crystal (QPC) and Diffusers, following a similar decision
to suspend development activities.
Exceptional restructuring costs of GBP3.7m have been recognised
in respect of site closures that are part of the Group's global
site optimisation programme.
-- Restructuring costs of GBP0.7m (2020: GBP0.2m) relate to the previously
announced closure of the Group's manufacturing facility in Pennsylvania,
USA. The Group's MBE activities in Pennsylvania will be consolidated into
the North Carolina site by 2024.
-- Restructuring costs of GBP3.0m (2020: GBPnil) relate to the previously
announced closure of the Group's manufacturing facility in Singapore. The
Singapore site will be closed by mid-2022 and will result in GBP4.8m of
annualised cash cost savings.
The Group has also recognised a non-cash Share Based Payments
charge of GBP1.7m (FY 2020: GBP0.3m) and CEO transition costs of
GBP0.7m (FY 2020: GBPnil). Excluding these exceptional charges
totalling GBP13.5m, the Group has recorded an Adjusted Operating
Loss in FY 2021 of GBP6.5m (FY 2020: GBP5.4m profit).
Results Presentation
IQE will present the FY 2021 Results via webcast at 9:00am UK
time today, 29 March 2022. If you would like to view this webcast,
please register by using the below link and following the
instructions:
https://webcasting.brrmedia.co.uk/broadcast/62335d781c349d634ccb28b7
Contacts:
IQE plc
+44 (0) 29 2083 9400
Americo Lemos
Tim Pullen
Amy Barlow
Peel Hunt LLP (Nomad and Joint Broker)
+44 (0) 20 7418 8900
Edward Knight
Paul Gillam
James Smith
Citigroup Global Markets Limited (Joint Broker)
+44 (0) 20 7986 4000
Christopher Wren
Peter Catterall
Headland Consultancy (Financial PR)
+ 44 (0) 20 38054822
Andy Rivett-Carnac: +44 (0) 7968 997 365
Marta Parry-Jones: +44 (0) 7884742400
Financial Review
The Group reports financial performance in conformity with UK
adopted international accounting standards ("UK adopted IFRS") and
provides disclosure of additional alternative non IFRS GAAP
performance measures to provide further understanding of financial
performance. Details of the alternative performance measures used
by the Group including a reconciliation to reported IFRS GAAP
performance measures are set out in note 4.
The Group has experienced strong year on year growth in demand
for wireless GaAs wafers (20%) used in 5G handset power amplifiers
and Wifi 6 routers in 2021. This is part of a multi-year
replacement cycle driven by a macro technological trend. This has
been offset by a reduction in demand for wireless GaN wafers (50%)
for 5G infrastructure due to a slowdown in massive MIMO
deployments, particularly in Asia, when compared to 2020 and a
reduction in VCSEL 3D sensing revenues (20%). In combination with
foreign exchange headwinds on a reported basis, this has resulted
in a reduction in revenue of 13.4% to GBP154,096,000 (2020:
GBP178,016,000) which is equivalent to GBP165,000,000 at constant
currency, which represents a 7.3% underlying year-on-year
reduction.
The Group's Wireless business segment represents the largest
proportion of the Group's revenue accounting for 54.0% (2020:
52.9%) of total wafer sales with Photonics representing 44.2%
(2020: 45.9%) and CMOSS++ representing 1.8% (2020: 1.2%).
Wireless wafer revenues decreased 11.6% (5.5% at constant
currency) to GBP83,217,000 (2020: GBP94,193,000). The decrease in
wireless wafer revenues reflects a significant decline in wireless
GaN epi-wafer sales that has only partially been offset by
increased sales of wireless GaAs epi-wafers for 5G and WiFi 6.
Demand for wireless GaN epi-wafers has been weak due to end-market
dynamics, including significantly lower levels of massive MIMO base
station deployments in Asia and the slow rate of deployments in
Western markets. GaN epi-wafers remain an essential material for 5G
infrastructure and demand is expected to recover over the
multi-year deployment cycle. Demand for wireless GaAs epi-wafers
has continued to grow in 2021 despite some softening of demand in
Q4, driven by 5G penetration of the smartphone handset market and
WiFi 6, a dynamic which has resulted in high utilisation of
manufacturing capacity at the Group's Taiwan facility, where the
Group has invested in eight new and refurbished tools which are
currently being commissioned to support further growth in wireless
GaAs epi-wafer demand in 2022 and beyond.
Photonics wafer revenues decreased 16.6% (10.4% at constant
currency) to GBP68,067,000 (2020: GBP81,627,000). The decrease in
photonics wafer revenues reflects lower demand for VCSEL's used in
3D sensing which has primarily arisen from a combination of chip
design changes and softening in smartphone supply chains towards
the end of 2021 and as a result of lower other photonic product
sales linked to a combination of factors including the re-phasing
of certain defence and security orders associated with large
programmes into 2022 and the slower introduction of sales of
certain new products.
Statutory gross profit decreased from GBP33,150,000 to
GBP17,644,000. The decrease in gross profit reflects a combination
of lower trading volumes and a reduction in overall gross profit
margin percentage to 11.5% (2020: 18.6%) as the Group has
experienced a reduction in utilisation of manufacturing capacity at
some of its sites, in the current year. Adjusted gross profit,
which excludes the charge for share based payments, decreased from
GBP33,327,000 to GBP18,771,000 with a decline in gross margin from
18.7% to 12.2%.
Selling, general and administrative ('SG&A') expenses
increased from GBP34,697,000 to GBP37,699,000. Adjusted SG&A,
which excludes adjustments for share based payments, restructuring
costs, Chief Executive Officer recruitment costs and certain
non-current asset impairments decreased from GBP27,759,000 to
GBP25,302,000. Decreases in adjusted SG&A primarily reflect
certain employee related cost savings and reductions in certain
other areas of corporate expenditure that have been required
commensurate with the decline in current year revenue.
As part of the Group's global footprint optimisation plan
restructuring costs totalling GBP3,681,000 (2020: GBP162,000) have
been incurred relating to costs associated with the announced
closures of the Group's manufacturing facilities in Singapore and
Pennsylvania, USA. Within the restructuring costs are GBP3,020,000
(2020: GBPnil) relating to a combination of site decommissioning
and employee related costs in Singapore and GBP661,000 (2020:
GBP162,000) relating to employee related costs in Pennsylvania,
USA. These site closures are part of the Group's global footprint
optimisation plan.
Chief Executive Officer recruitment costs of GBP741,000 (2020:
GBPnil) include settlement costs and legal fees of GBP318,000
associated with the transition of the former Chief Executive
Officer to a non-executive role and external recruitment fees of
GBP423,000.
Impairment of intangibles of GBP7,411,000 (2020: GBP6,537,000)
relates to the write-down in value of the Group's cREO(TM) filter
technology development cost and patent assets totalling
GBP4,693,000 (2020: GBPnil) and the impairment of Photonic quasi
crystal technology related development costs and patent assets
totalling GBP2,718,000 (2020: GBPnil) where the Group has taken the
decision to pause development related activities given the current
lack of visibility over the timeline to commercialisation of each
of the technologies.
A reported operating loss of GBP19,978,000 has been incurred
(2020: Loss of GBP5,517,000). Reflecting the adjustments noted
above, an adjusted operating loss of GBP6,454,000 in 2021 compares
to an adjusted operating profit of GBP5,386,000 in 2020 with the
loss in 2021 principally reflecting the impact of the decline in
year-on-year revenue. The segmental analysis in note 4 reflects the
adjusted operating margins for the primary segments (before central
corporate support costs). Wireless adjusted operating margins and
photonics operating margins declined from 12.1% and 11.1% in 2020
to 8.8% and 2.6% in 2021, primarily reflecting reductions in volume
and the associated under- utilisation of certain manufacturing
capacity.
Finance costs have remained broadly consistent year-on-year at
GBP2,213,000 (2020: GBP2,165,000) and reflect GBP905,000 (2020:
GBP949,000) of bank and other interest costs primarily related to
the Group's HSBC Bank plc asset finance facility and the interest
expense on lease liabilities of GBP1,308,000 (2020:
GBP1,216,000).
The tax charge of GBP8,811,000 (2020: GBP1,001,000 credit)
consists of a current tax charge of GBP1,124,000 (2020:
GBP1,132,000) primarily relating to taxable profits generated by
the Group's Taiwanese operations and a deferred tax charge of
GBP7,687,000 (2020: GBP2,133,000 credit) which principally reflects
the partial reversal and de-recognition of previously recognised UK
and US tax losses. Deferred tax asset recognition has been
restricted in the UK to reflect future forecast profitability, an
assessment that includes the impact of the Group's consolidation
and investment in central and functional roles in the UK whilst US
deferred tax asset recognition has been restricted in the US to
reflect lower future forecast profitability arising from a
combination of the Group's consolidation of its US manufacturing
operations and the continued shift in the balance of future
forecast manufacturing and hence profits from the Group's US
operations to its UK and Asian operation. The effective tax rate of
13.3% (2020: 21.4%) applicable to the tax charge of GBP1,803,000
(2020: GBP1,520,000) on adjusted items is less than the UK
statutory tax rate of 19% primarily due to the non-recognition of
deferred tax assets for current year UK, US and Singapore trading
losses which include the adjusted Chief Executive Officer
recruitment and Singapore and Pennsylvania site closure costs.
The increase in the loss for the year to GBP31,002,000 (2020:
GBP2,893,000) reflects a combination of the decline in revenue in
the wireless and photonics business segments, reduced profitability
within both segments as the Group has experienced an increase in
under-utilisation of manufacturing capacity and the impact of
adjusted non-cash and other non-operational items which at an
adjusted level, has reduced the loss to GBP19,281,000 (2020:
GBP2,702,000 profit).
Basic and diluted loss per share has increased from a loss per
share of 0.41p to a loss per share of 3.87p in the current year
with adjusted basic loss per share of 2.41p (2020: 0.29p earnings)
and adjusted diluted loss per share of 2.41p (2020: 0.29p earnings)
reflecting the Group's loss at a statutory and adjusted profit
level.
Cash generated from operations decreased in the year to
GBP18,883,000 (2020: GBP35,457,000) reflecting the Group's reduced
trading performance partially offset by strong management of
working capital. The Group has continued to invest in growing
capacity to meet demand with capital expenditure of GBP15,051,000
(2020: GBP4,993,000) principally focused in Taiwan to support
future forecast growth in wireless GaAs epi-wafer demand,
intangible asset expenditure of GBP345,000 (2020: GBP731,000)
focused on a combination of intellectual property and the Group's
multi-year strategic IT transformation programme and investment in
targeted capitalised technology development of GBP2,994,000 (2020:
GBP4,678,000).
The decrease in cash generated from operations, combined with
investing activity cash costs of GBP18,305.000 (2020:
GBP10,402,000), repayment of bank borrowings of GBP6,145,000 (2020:
GBP7,030,000), repayment of lease liabilities (including interest)
of GBP5,013,000 (2020: GBP3,764,000) and payment of the final cash
costs of GBP1,792,000 (2020: GBP1,363,000) associated with the
prior period acquisition of the minority interest in the Group's
Taiwanese subsidiary, IQE Taiwan ROC have combined to reduce the
Group's cash balances from GBP24,663,000 in 2020 to GBP10,791,000
in 2021 resulting in a full year net debt position of GBP5,804,000
(excluding lease liabilities) compared to a net funds position of
GBP1,923,000 (excluding lease liabilities) in 2020.
Equity shareholder funds total GBP234,621,000 (2020:
GBP260,435,000) with the movement from 2020 primarily reflecting
the loss for the year, the impact of finalisation of the prior year
acquisition of the Taiwanese minority interest and foreign exchange
differences arising on the retranslation of net investments in
overseas subsidiaries.
Financial Statements
Financial summary
2021 2020
GBP'000 GBP'000
----------------------------------------------- -------- --------
Revenue 154,096 178,016
Adjusted EBITDA (see below) 18,679 30,101
Operating (loss)/profit
-- Adjusted* (6,454) 5,386
-- Reported (19,978) (5,517)
(Loss)/profit after tax
-- Adjusted* (19,281) 2,702
-- Reported (31,002) (2,893)
Net cash flow from operations
Before adjustments (note 5) 17,940 36,324
Reported 18,883 35,457
Free cash flow**
Before exceptional cash flows (1,640) 24,929
Reported (697) 24,062
Net (debt)/cash excluding lease liabilities*** (5,804) 1,923
Equity shareholders' funds 234,621 260,435
Basic EPS -- adjusted**** (2.41p) 0.29p
Basic EPS -- unadjusted (3.87p) (0.41p)
Diluted EPS -- adjusted**** (2.41p) 0.29p
----------------------------------------------- -------- --------
Diluted EPS -- unadjusted (3.87p) (0.41p)
----------------------------------------------- -------- --------
* The adjusted performance measures for 2021 and 2020 are reconciled in note 4. The adjusted performance measures for 2017-2019 are reconciled in those financial statements.
** Free cash flow is defined as net cash flow outflow of GBP14,080,000 (2020: GBP16,003,000 inflow) before cash flows from financing activities of GBP11,170,000 (2020: GBP5,701,000) and net interest paid of GBP2,213,000 (2020: GBP2,358,000).
*** Net (debt)/cash is defined as cash less borrowings but excluding lease liabilities.
**** Adjusted EPS measures exclude the impact of certain non-cash charges, non-operational items and significant infrequent items that would distort period on period comparability (see note 5).
Consolidated income statement for the year ended 31 December
2021
2021 2020
GBP'000 GBP'000
----------------------------------------------------- --------- ---------
Revenue 154,096 178,016
----------------------------------------------------- --------- ---------
Cost of sales (136,452) (144,866)
----------------------------------------------------- --------- ---------
Gross profit 17,644 33,150
Selling, general and administrative expenses (37,699) (34,697)
Impairment loss on financial assets - (3,788)
Profit on disposal of property, plant and equipment 77 (182)
----------------------------------------------------- --------- ---------
Operating loss (19,978) (5,517)
Finance costs (2,213) (2,165)
Reversal/share of losses of joint ventures accounted
for using the equity method - 3,788
----------------------------------------------------- --------- ---------
Adjusted (loss)/profit before income tax (8,667) 3,221
----------------------------------------------------- --------- ---------
Adjustments (13,524) (7,115)
----------------------------------------------------- --------- ---------
Loss before income tax (22,191) (3,894)
----------------------------------------------------- --------- ---------
Taxation (8,811) 1,001
----------------------------------------------------- --------- ---------
Loss for the year (31,002) (2,893)
----------------------------------------------------- --------- ---------
Loss attributable to:
Equity shareholders (31,002) (3,271)
Non-controlling interest - 378
----------------------------------------------------- --------- ---------
(31,002) (2,893)
----------------------------------------------------- --------- ---------
Loss per share attributable to owners of the parent
during the year
Basic loss per share (3.87p) (0.41p)
Diluted loss earnings per share (3.87p) (0.41p)
----------------------------------------------------- --------- ---------
Adjusted basic and diluted loss per share are presented in note
5.
All items included in the loss for the year relate to continuing
operations.
Non-controlling interest relates to minority shareholder
interests in the Group's subsidiary, IQE Taiwan ROC, prior to the
acquisition of the minority shareholding on 5 October 2020.
The company has elected to take the exemption under section 408
of the Companies Act 2006 from presenting the parent company profit
and loss account.
Consolidated statement of comprehensive income for the year
ended 31 December 2021
2021 2020
GBP'000 GBP'000
---------------------------------------------------------- -------- --------
Loss for the year (31,002) (2,893)
---------------------------------------------------------- -------- --------
Exchange differences on translation of foreign operations* 4,744 (6,104)
---------------------------------------------------------- -------- --------
Total comprehensive expense for the year (26,258) (8,997)
---------------------------------------------------------- -------- --------
Total comprehensive expense attributable to:
Equity shareholders (26,258) (9,482)
Non-controlling interest - 485
---------------------------------------------------------- -------- --------
(26,258) (8,997)
---------------------------------------------------------- -------- --------
* Items that may be subsequently be reclassified to profit or loss.
Items in the statement above are disclosed net of tax.
Consolidated balance sheet as at 31 December 2021
2021 2020
GBP'000 GBP'000
------------------------------------------------------ --------- ---------
Non-current assets
Intangible assets 95,866 105,772
Fixed asset investments - --
Property, plant and equipment 129,730 126,229
Right of use assets 44,267 37,339
Deferred tax assets - 7,821
Other financial assets - --
------------------------------------------------------ --------- ---------
Total non-current assets 269,863 277,161
------------------------------------------------------ --------- ---------
Current assets
Inventories 31,710 30,887
Trade and other receivables 38,860 38,575
Cash and cash equivalents 10,791 24,663
------------------------------------------------------ --------- ---------
Total current assets 81,361 94,125
------------------------------------------------------ --------- ---------
Total assets 351,224 371,286
------------------------------------------------------ --------- ---------
Current liabilities
Trade and other payables (37,083) (35,605)
Current tax liabilities (1,342) (1,426)
Bank borrowings (6,230) (6,201)
Lease liabilities (4,694) (4,798)
Provisions for other liabilities and charges (3,686) (515)
------------------------------------------------------ --------- ---------
Total current liabilities (53,035) (48,545)
------------------------------------------------------ --------- ---------
Non-current liabilities
Bank borrowings (10,365) (16,539)
Lease liabilities (49,693) (42,226)
Deferred tax liabilities (2,060) (2,054)
Provisions for other liabilities and charges (1,450) (1,487)
------------------------------------------------------ --------- ---------
Total non-current liabilities (63,568) (62,306)
------------------------------------------------------ --------- ---------
Total liabilities (116,603) (110,851)
------------------------------------------------------ --------- ---------
Net assets 234,621 260,435
------------------------------------------------------ --------- ---------
Equity attributable to the shareholders of the parent
Share capital 8,036 8,004
Share premium 154,632 154,185
Retained earnings 29,295 62,089
Exchange rate reserve 26,035 21,291
Other reserves 16,623 14,866
------------------------------------------------------ --------- ---------
234,621 260,435
------------------------------------------------------ --------- ---------
Non-controlling interest - --
------------------------------------------------------ --------- ---------
Total equity 234,621 260,435
------------------------------------------------------ --------- ---------
Consolidated statement of changes in equity for the year ended
31 December 2021
Exchange
Rate
Share capital Share premium Retained earnings reserve Other reserves Non-controlling interests Total equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- ------------- ------------- ----------------- -------- -------------- ------------------------- ------------
At 1 January
2021 8,004 154,185 62,089 21,291 14,866 - 260,435
---------------- ------------- ------------- ----------------- -------- -------------- ------------------------- ------------
Comprehensive
expense
Loss for the
year - - (31,002) - - - (31,002)
Other
comprehensive
income for the
year - - - 4,744 - - 4,744
---------------- ------------- ------------- ----------------- -------- -------------- ------------------------- ------------
Total
comprehensive
expense for the
year - - (31,002) 4,744 - - (26,258)
Transactions
with owners
Share based
payments - - - - 1,850 - 1,850
Tax relating to
share options - - - - (93) - (93)
Proceeds from
shares issued 32 447 - - - - 479
Acquisition of
non-controlling
interest - - (1,792) - - - (1,792)
---------------- ------------- ------------- ----------------- -------- -------------- ------------------------- ------------
Total
transactions
with owners 32 447 (1,792) - 1,757 - 444
---------------- ------------- ------------- ----------------- -------- -------------- ------------------------- ------------
At 31 December
2021 8,036 154,632 29,295 26,035 16,623 - 234,621
---------------- ------------- ------------- ----------------- -------- -------------- ------------------------- ------------
Exchange
Rate
Share capital Share premium Retained earnings reserve Other reserves Non-controlling interests Total equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- ------------- ------------- ----------------- -------- -------------- ------------------------- ------------
At 1 January
2020 7,961 152,385 63,826 27,502 14,919 3,850 270,443
---------------- ------------- ------------- ----------------- -------- -------------- ------------------------- ------------
Comprehensive
expense
(Loss)/profit
for the year -- -- (3,271) -- -- 378 (2,893)
Other
comprehensive
expense for the
year -- -- -- (6,211) -- 107 (6,104)
---------------- ------------- ------------- ----------------- -------- -------------- ------------------------- ------------
Total
comprehensive
expense for the
year -- -- (3,271) (6,211) -- 485 (8,997)
Transactions
with owners
Share based
payments -- -- -- -- 55 -- 55
Tax relating to
share options -- -- -- -- 57 -- 57
Proceeds from
shares issued 17 388 -- -- (165) -- 240
Acquisition of
non-controlling
interest 26 1,412 1,534 -- -- (4,335) (1,363)
---------------- ------------- ------------- ----------------- -------- -------------- ------------------------- ------------
Total
transactions
with owners 43 1,800 1,534 -- (53) (4,335) (1,011)
---------------- ------------- ------------- ----------------- -------- -------------- ------------------------- ------------
At 31 December
2020 8,004 154,185 62,089 21,291 14,866 -- 260,435
---------------- ------------- ------------- ----------------- -------- -------------- ------------------------- ------------
Other reserves relate to share based payments.
Consolidated cash flow statement for the year ended 31 December
2021
Restated
2021 2020
GBP'000 GBP'000
-------------------------------------------------------- -------- --------
Cash flows from operating activities
-------------------------------------------------------- -------- --------
Adjusted cash inflow from operations 17,940 36,324
-------------------------------------------------------- -------- --------
Cash impact of adjustments 943 (867)
-------------------------------------------------------- -------- --------
Cash generated from operations 18,883 35,457
Net interest paid (2,213) (2,358)
-------------------------------------------------------- -------- --------
Income tax paid (1,275) (993)
-------------------------------------------------------- -------- --------
Net cash generated from operating activities 15,395 32,106
-------------------------------------------------------- -------- --------
Cash flows from investing activities
Purchase of property, plant and equipment (15,051) (4,993)
Purchase of intangible assets (345) (731)
Capitalised development expenditure (2,994) (4,678)
Proceeds from disposal of property, plant and equipment 85 --
Net cash used in investing activities (18,305) (10,402)
-------------------------------------------------------- -------- --------
Cash flows from financing activities
Acquisition of minority interest (1,792) (1,363)
Proceeds from issuance of ordinary shares 472 240
Proceeds from borrowings - 5,000
Repayment of borrowings (6,145) (7,030)
Payment of lease liabilities (3,705) (2,548)
-------------------------------------------------------- -------- --------
Net cash used in financing activities (11,170) (5,701)
-------------------------------------------------------- -------- --------
Net (decrease)/increase in cash and cash equivalents (14,080) 16,003
Cash and cash equivalents at 1 January 24,663 8,800
Exchange losses on cash and cash equivalents 208 (140)
-------------------------------------------------------- -------- --------
Cash and cash equivalents at 31 December 10,791 24,663
-------------------------------------------------------- -------- --------
The comparative financial information for 2020 has been restated
to reclassify cash flows associated with Acquisition of minority
interest from investing activities to financing activities and to
reclassify interest lease cash flows from financing activities to
net interest paid in cash generated from operating activities. The
reclassifications have had no impact on net assets, loss after tax
or total cash flow for 2020.
Notes to the financial statements for the year ended 31 December
2021
1. General information
IQE plc ('the company') and its subsidiaries (together 'the
Group') develop, manufacture and sell advanced semiconductor
materials. The Group has manufacturing facilities in Europe, United
States of America and Asia and sells to customers located
globally.
IQE plc is a public limited company incorporated in the United
Kingdom under the Companies Act 2006. The Company is domiciled in
the United Kingdom and is quoted on the Alternative Investment
Market (AIM). The address of the Company's registered office is
Pascal Close, St Mellons, Cardiff, CF3 0LW.
2. Significant accounting policies
The principal accounting policies applied in the preparation of
these consolidated financial statements are set out below. These
policies have been consistently applied to all years presented.
2.1 Basis of preparation
The financial statements have been prepared and approved by the
directors in accordance with international accounting standards in
conformity with UK adopted international accounting standards ("UK
adopted IFRS"). The financial statements have been prepared under
the historical cost convention except where fair value measurement
is required by IFRS.
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of
applying the Group's accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the consolidated
financial statements are disclosed in note 3.
2.2 Going concern
The Group made a loss of GBP31,002,000 (2020: GBP2,893,000 loss)
and used GBP13,872,000 of cash and cash equivalents (2020:
GBP15,863,000 generated) resulting in a net debt position
(excluding lease liabilities) of GBP5,804,000 (2020: GBP1,923,000
net cash) as at 31 December 2021.
The following matters have been considered by the directors in
determining the appropriateness of the going concern basis of
preparation in the financial statements:
-- The Group's operations are geographically diversified. Manufacturing
operations are located at ten different sites across three continents,
significantly lessening the impact of potential disruption at any single
site as a result of the ongoing Coronavirus pandemic. All manufacturing
sites continue to remain operational and production has not been affected
by any disruption at any of the Group's global sites.
-- The Group dual or multi-sources key raw materials (substrates, gases,
spares and consumables) wherever possible, from a broad range of global
suppliers, reducing the likelihood of potential disruption to production
from any single supplier. The Group continues to work closely with
suppliers and customers to manage inventory levels in order to create
supply chain resilience against potential disruption. All manufacturing
sites continue to remain operational and production has not been affected
by any supply chain disruption.
-- The Group's trading has remained resilient throughout the year ended 31
December 2021 although emerging softness in smartphone related demand,
weakness in 5G infrastructure demand and on-going foreign exchange
headwinds have resulted in a decline in revenue for the year to
GBP154,096,000 (2020: GBP178,016,000) and an adjusted loss before tax of
GBP8,667,000 (2020: GBP3,221,000 profit).
-- The Group's net debt (excluding lease liabilities) position of
GBP5,804,000 (2020: GBP1,923,000 funds) remains low in the context of
total available facilities of GBP55,900,000 (2020: GBP55,550,000) with
the increase in the net debt position principally reflecting the Group's
investment activities where investment in technology development and
capacity expansion in the second half of 2021 has exceeded cash generated
from operations. Net debt (excluding lease liabilities) consists of
GBP10,791,000 (2020: GBP24,633,000) of cash net of bank loans of
GBP16,595,000 (2020: GBP22,740,000) which are repayable over a period to
29 August 2024.
-- On 24 January 2019, the Group agreed a new GBP25,900,000 ($35,000,000)
three-year multi-currency revolving credit facility from HSBC Bank plc.
On 30 December 2021 the multi-currency revolving credit facility was
extended for an additional 15-month period to 30 April 2023 and includes
an option that requires HSBC Bank plc consent to extend the facility for
a further 12-month period to 30 April 2024. The Group has complied with
all covenants associated with the facility.
-- On 29 August 2019, the Group agreed a new GBP30,000,000 five-year Asset
Finance Loan facility from HSBC Bank plc of which GBP25,000,000 has been
drawn. The Group has complied with all covenants associated with the
facility.
-- The Group generated cash from operating activities of GBP15,395,000
(2020: GBP32,106,000) and its financial forecasts and projections for the
period up to and including 31 December 2023 show that the Group is
forecast to continue to comply with its banking covenants and has
adequate cash resources to continue operating for the foreseeable future.
-- The Group's severe but plausible downside financial forecasts have been
prepared with significant reductions to future forecast revenues,
designed to reflect severe downside scenarios associated with demand
risks for the period to 31 December 2023. The severe but plausible
downside scenario, applied to the Group's financial forecasts, which take
account of current trading and customer demand, assumes a 17% reduction
in 2022 revenue and a 31% reduction in 2023 revenue partially offset by
mitigations within the control of the company, including deferred
investment in employee related costs and certain capital projects across
the forecast period. The severe but plausible downside scenario
illustrates that the Group is forecast to continue to comply with its
banking covenants but would require either the exercise of the extension
option contained in the revolving credit facility from HSBC Bank plc, or
refinancing of the revolving credit facility at the extension option date
in April 2023. The severe but plausible downside scenario illustrates
that a facility of GBP16,500,000, significantly below the Group's
current committed revolving credit facility of GBP25,900,000 could be
required in 2023. The Group has a long-standing and trusted relationship
with its bankers, HSBC Bank plc, who remain supportive and who have, at
the date of this report, formally extended the Group's GBP25,900,000
($35,000,000) revolving credit facility until April 2023 with an option,
that requires HSBC Bank plc consent, to extend the facility for a further
12-month period. On this basis, the directors believe that the group has,
or will have access, to adequate cash resources to continue operating for
the foreseeable future even in a severe but plausible downside scenario.
The Group meets its day-to-day working capital and other cash
requirements through its bank facilities and available cash. The
Group's cash flow forecasts and projections, in conjunction with
the level of assessed covenant headroom on the Group's committed
bank facilities show that the Group and the Company have adequate
cash resources to continue operating and to meet its liabilities as
they fall due for a period of at least 12 months from the date of
approval of the financial statements, such that the directors
consider it appropriate to adopt the going concern basis of
accounting in preparing the consolidated financial statements.
2.3 Changes in accounting policy and disclosures
(a) New standards, amendments and interpretations.
The following new standards, amendments and interpretations have
been adopted by the Group for the first time for the financial year
beginning on 1 January 2021:
-- Amendments to IFRS 9 'Financial Instruments', IAS 39 'Financial
Instruments: Recognition and Measurement', IFRS 7 'Financial Instruments:
Disclosures, IFRS 4 'Insurance Contracts', IFRS 16 'Leases' related to
interest rate benchmark reform (phase two) and the issues that arise from
the implementation of the reforms, including the replacement of one
benchmark with an alternative one.
-- Amendment to IFRS 16 'Leases' which provides an optional practical
expedient for lessees from assessing whether a rent concession related to
COVID-19 is a lease modification.
-- Amendments to IFRS 16 'Leases' which provides an extension to an optional
practical expedient for lessees from assessing whether a rent concession
related to COVID-19 is a lease modification beyond 30 June 2021.
The adoption of these standards, amendments and interpretations
has not had a material impact on the financial statements of the
Group or parent company.
(b) New standards, amendments and interpretations issued but not
effective and not adopted early
A number of new standards, amendments to standards and
interpretations which are set out below are effective for annual
periods beginning after 1 January 2021 and have not been applied in
preparing these consolidated financial statements.
-- Amendment to IFRS 3 'Business combinations' to update references to the
Conceptual Framework for Financial Reporting without changing the
accounting requirements for business combinations.
-- Amendments to IAS 16 'Property, plant and equipment' to prohibit the
deduction from cost of property, plant and equipment amounts received
from selling items produced while preparing the asset for its intended
use with any such sales and related cost recognised in profit or loss.
-- Amendments to IAS 37 'Provisions, contingent liabilities and contingent
assets' to specify which costs a company includes when assessing whether
a contract will be loss making.
-- Annual improvements to IFRSs 2018-2020 cycle to make minor amendments to
IFRS 1 'First-time adoption of IFRS', IFRS 9 'Financial Instruments', IAS
41 'Agriculture' and amendments to the illustrative examples accompanying
IFRS 16 'Leases'.
-- IFRS 17 'Insurance contracts' which establishes the principles for the
recognition, measurement, presentation and disclosure of insurance
contracts and supersedes IFRS 4 'Insurance Contracts'
-- Amendments to IAS 1 'Presentation of financial statements' on
classification of liabilities which is intended to clarify that
liabilities are classified as either current or non-current depending
upon the rights that exist at the end of the reporting period and
amendments to the disclosure of accounting policies which will require
disclosure of material rather than significant accounting policies.
-- Amendment to IAS 8 'Accounting policies, changes in accounting estimates
and errors' to introduce a new definition for accounting estimates which
clarifies that an accounting estimate is a monetary amount in the
financial statements that is subject to measurement uncertainty.
-- Amendment to IAS 12 'Income taxes' to clarify the accounting treatment
for deferred tax on certain transactions with a narrowing of the scope of
the initial recognition exemption so that it does not apply to
transactions that give rise to equal and offsetting temporary
differences.
The Directors anticipate that at the time of this report none of
the new standards, amendments to standards and interpretations are
expected to have a material effect on the financial statements of
the Group or parent company.
3. Segmental analysis
3.1 Description of segments and principal activities
The Chief Operating Decision Maker is defined as the Executive
Management Board. The Executive Management Board, consisting of the
Chief Executive Officer, Chief Financial Officer, Chief Operations
Officer, Chief Technology Officer, Executive VP Global Business
Development, Wireless and Emerging Products, Executive VP Global
Business Development, Photonics & Infrared and the Global Human
Resources Director consider the group's performance from a product
perspective and have identified three primary reportable
segments:
-- Wireless -- this part of the business manufactures and sells compound
semiconductor material for the wireless market which includes radio
frequency devices that enable wireless communications.
-- Photonics -- this part of the business manufactures and sells compound
semiconductor material for the photonics market which includes
applications that either transmit or sense light, both visible and
infrared.
-- CMOSS++ -- this part of the business manufactures and sells advanced
semiconductor materials related to silicon which include the combination
of the advanced properties of compound semiconductors with those of lower
cost of silicon technologies.
The Executive Management Board primarily use revenue and a
measure of adjusted operating profit to assess the performance of
the operating segments. Measures of total assets and liabilities
for each reportable segment are not reported to the Executive
Management Board and therefore have not been disclosed.
2021 2020
Revenue GBP'000 GBP'000
---------------------------------------------------- -------- --------
Wireless 83,217 94,193
Photonics 68,067 81,627
CMOS++ 2,812 2,196
---------------------------------------------------- -------- --------
Revenue 154,096 178,016
---------------------------------------------------- -------- --------
Adjusted operating (loss) / profit
---------------------------------------------------- -------- --------
Wireless 7,305 11,393
Photonics 1,737 9,080
CMOS++ (586) (714)
Central corporate costs (14,910) (14,373)
---------------------------------------------------- -------- --------
Adjusted operating (loss) / profit (6,454) 5,386
Adjusted items (see note 4) (13,524) (10,903)
---------------------------------------------------- -------- --------
Operating loss (19,978) (5,517)
Reversal/share of losses of joint venture accounted
for using the equity method - 3,788
Finance costs (2,213) (2,165)
---------------------------------------------------- -------- --------
Loss before tax (22,191) (3,894)
---------------------------------------------------- -------- --------
4. Adjusted profit measures
The Group's results report certain financial measures after a
number of adjusted items that are not defined or recognised under
IFRS including adjusted operating profit, adjusted profit before
income tax and adjusted earnings per share. The Directors believe
that the adjusted profit measures provide a useful comparison of
business trends and performance and allow management and other
stakeholders to better compare the performance of the Group between
the current and prior year, excluding the effects of certain
non-cash charges, non-operational items and significant infrequent
items that would distort period on period comparability. The Group
uses these adjusted profit measures for internal planning,
budgeting, reporting and assessment of the performance of the
business.
The tables below show the adjustments made to arrive at the
adjusted profit measures and the impact on the Group's reported
financial performance.
2021 2020
Adjusted Adjusted Reported Adjusted Adjusted Reported
Results Items Results Results Items Results
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------- --------- -------- --------- --------- -------- ---------
Revenue 154,096 - 154,096 178,016 -- 178,016
-------------- --------- -------- --------- --------- -------- ---------
Cost of sales (135,325) (1,127) (136,452) (144,689) (177) (144,866)
-------------- --------- -------- --------- --------- -------- ---------
Gross profit 18,771 (1,127) 17,644 33,327 (177) 33,150
SG&A (25,302) (12,397) (37,699) (27,759) (6,938) (34,697)
Impairment
loss on
financial
assets - - - -- (3,788) (3,788)
Profit on
disposal of
PPE 77 - 77 (182) -- (182)
-------------- --------- -------- --------- --------- -------- ---------
Operating
(loss)/profit (6,454) (13,524) (19,978) 5,386 (10,903) (5,517)
Reversal of JV
losses - - - -- 3,788 3,788
Finance costs (2,213) - (2,213) (2,165) -- (2,165)
-------------- --------- -------- --------- --------- -------- ---------
(Loss)/profit
before tax (8,667) (13,524) (22,191) 3,221 (7,115) (3,894)
-------------- --------- -------- --------- --------- -------- ---------
Taxation (10,614) 1,803 (8,811) (519) 1,520 1,001
-------------- --------- -------- --------- --------- -------- ---------
(Loss)/profit
for the
period (19,281) (11,721) (31,002) 2,702 (5,595) (2,893)
-------------- --------- -------- --------- --------- -------- ---------
2021 2020
Pre-tax Tax Adjusted Pre-tax Tax Adjusted
Adjustment Impact Results Adjustment Impact Results
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------- ----------- -------- --------- ----------- -------- ---------
Share based
payments (1,691) (13) (1,704) (265) 210 (55)
Chief
Executive
Officer
Recruitment (741) - (741) - - -
Restructuring (3,681) - (3,681) (162) 39 (123)
Impairment --
intangibles (7,411) 1,816 (5,595) (6,537) 1,242 (5,295)
Onerous
contract - - - (1,840) 350 (1,490)
Patent dispute
legal fees - - - 1,689 (321) 1,368
Impairment --
financial
assets - - - (3,788) -- (3,788)
Share of JV
losses --
financial
asset - - - 3,788 -- 3,788
Total (13,524) 1,803 (11,721) (7,115) 1,520 (5,595)
-------------- ----------- -------- --------- ----------- -------- ---------
The nature of the adjusted items is as follows:
-- Share based payments -- The charge (2020: charge) relates to share based
payments recorded in accordance with IFRS 2 'Share based payment' of
which GBP1,127,000 (2020: GBP177,000) has been classified within cost of
sales in gross profit and GBP564,000 (2020: GBP88,000) has been
classified as selling, general and administrative expenses in operating
profit. GBP46,000 cash has been defrayed in the year (2020: GBPnil) in
respect of employer social security contributions following the exercise
of unapproved employee share options.
-- Chief Executive Officer recruitment -- The charge of GBP741,000 include
settlement costs and legal fees of GBP319,000 associated with the
transition of the former Chief Executive Officer to a non-executive role
and external recruitment fees of GBP422,000. Cash costs defrayed in the
year total GBP152,000 (2020: GBPnil)
-- Restructuring -- The charge of GBP3,681,000 relates to restructuring
costs relating to the announced closure of the Group's manufacturing
facility in Pennsylvania, USA and the Group's manufacturing facility in
Singapore.
-- Restructuring charges of GBP661,000 (2020: GBP162,000) relate to employee
related costs relating to the announced closure of the Group's
manufacturing facility in Pennsylvania, USA. The charge was classified as
selling, general and administrative expenses within operating loss. Cash
costs defrayed in the year total GBP342,000 (2020: GBPnil).
-- Restructuring charges of GBP3,020,000 (2020: GBPnil) consist of employee
related costs of GBP1,540,000 (2020: GBPnil) and site decommissioning
costs of GBP1,480,000 (2020: GBPnil) relating to the announced closure of
the Group's manufacturing facility in Singapore. The charge was
classified as selling, general and administrative expenses within
operating loss. Cash costs defrayed in the year total GBPnil (2020:
GBPnil).
2021 2020
GBP'000 GBP'000
------------------------------------------------ -------- --------
Loss attributable to equity shareholders (31,002) (3,271)
Non-controlling interest - 378
Finance costs 2,213 2,165
Tax 8,811 (1,001)
Depreciation of property, plant and equipment 13,309 12,983
Depreciation of right of use assets 3,854 3,681
Amortisation of intangible fixed assets 8,047 7,869
Loss/(profit) on disposal of PPE (77) 182
Adjusted Items 13,524 7,115
------------------------------------------------ -------- --------
Share based payments 1,691 265
Chief Executive Officer Recruitment 741 -
Restructuring 3,681 162
Impairment of intangibles 7,411 6,537
Patent dispute settlement and legal costs - (1,689)
Onerous contract provision - 1,840
Impairment of financial asset - 3,788
Share of joint venture losses (financial asset) - (3,788)
Adjusted EBITDA 18,679 30,101
Share based payments (1,691) (265)
Chief Executive Officer Recruitment (741) -
Restructuring (3,681) (162)
Patent dispute settlement and legal costs - 1,689
Onerous contract provision - (1,840)
Impairment of financial asset - (3,788)
Share of joint venture losses (financial asset) - 3,788
------------------------------------------------ -------- --------
EBITDA 12,566 29,523
------------------------------------------------ -------- --------
5. Loss per share
Basic loss per share is calculated by dividing the loss
attributable to ordinary shareholders by the weighted average
number of ordinary shares in issue during the year.
Diluted loss per share is calculated by dividing the loss
attributable to ordinary shareholders by the weighted average
number of shares and the dilutive effect of '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
year. 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.
The directors also present an adjusted earnings per share
measure which eliminates certain adjusted items. The Directors
believe that the adjusted earnings per share measure provides a
useful comparison of performance and allow management and other
stakeholders to better compare the performance of the Group between
the current and prior year, excluding the effects of certain
non-cash charges, non-operational items and significant infrequent
items that would distort period on period comparability. The
adjustments are detailed in note 5.
2021 2020
GBP'000 GBP'000
---------------------------------------------------- ----------- -----------
Loss attributable to ordinary shareholders (31,002) (3,271)
---------------------------------------------------- ----------- -----------
Adjustments to loss after tax (note 4) 11,721 5,595
---------------------------------------------------- ----------- -----------
Adjusted (loss)/profit attributable to ordinary
shareholders (19,281) 2,324
---------------------------------------------------- ----------- -----------
2021 2020
Number Number
---------------------------------------------------- ----------- -----------
Weighted average number of ordinary shares 801,653,662 797,228,579
---------------------------------------------------- ----------- -----------
Dilutive share options 4,097,303 11,395,298
---------------------------------------------------- ----------- -----------
Adjusted weighted average number of ordinary shares 805,750,965 808,623,877
---------------------------------------------------- ----------- -----------
Adjusted basic loss per share (2.41p) 0.29p
Basic loss per share (3.87p) (0.41p)
Adjusted diluted loss per share (2.41p) 0.29p
---------------------------------------------------- ----------- -----------
Diluted loss per share (3.87p) (0.41p)
---------------------------------------------------- ----------- -----------
6. Cash generated from operations
2021 2020
Group GBP'000 GBP'000
------------------------------------------------------ -------- --------
Loss before tax (22,191) (3,894)
Finance costs 2,213 2,165
Depreciation of property, plant and equipment 13,309 12,983
Depreciation of right of use assets 3,854 3,681
Amortisation of intangible assets 8,047 7,869
Impairment of intangible assets 7,411 6,537
Impairment of PP&E 74 -
Impairment of financial assets - 3,788
Share of joint venture - (3,788)
Inventory write downs (note 17) 866 3,025
Loss/(profit) on disposal of fixed assets (77) 182
Non-cash provision movements 3,617 2,002
------------------------------------------------------ -------- --------
Share based payments 1,691 265
------------------------------------------------------ -------- --------
Cash inflow from operations before changes in working
capital 18,814 34,815
(Increase)/decrease in inventories (1,368) (4,128)
Decrease/(increase) in trade and other receivables 2,930 (7,151)
------------------------------------------------------ -------- --------
(Decrease)/increase in trade and other payables (1,493) 11,921
------------------------------------------------------ -------- --------
Cash inflow from operations 18,883 35,457
------------------------------------------------------ -------- --------
The financial information set out above does not constitute the
company's statutory accounts for the years ended 31 December 2021
or 2020 but is derived from those accounts. Statutory accounts for
2020 have been delivered to the registrar of companies, and those
for 2021 will be delivered in due course. The auditor has reported
on those accounts; their reports were (i) unqualified, (ii) did not
include a reference to any matters to which the auditor drew
attention by way of emphasis without qualifying their report and
(iii) did not contain a statement under section 498 (2) or (3) of
the Companies Act 2006.
ABOUT IQE
https://www.globenewswire.com/Tracker?data=4kVXIv7QKvhfqo-TT_PuOHN-1UoY4sj5tZ4yAtEjri0INEnD6NLgVnn35EBuv8wdUvorQtk7iO265PlcyrCEr7QxJh_ZCruSrq-a08bwPEgrgejnCAr9BUdgLc1pcl6joj_Mvw11BiiuLkgLj-Gow66sQUgz6kc339Mp5FQeIYLwl1QBdb_otyNx7kNkvFI4Sy7mTXHSTTeAfeZkNq_JfGNGaX_sAPqzrN2jBuotAbU=
http://iqep.com
IQE is the leading global supplier of advanced compound
semiconductor wafers and materials solutions that enable a diverse
range of applications across:
-- handset devices
-- global telecoms infrastructure
-- connected devices
-- 3D sensing
As a scaled global epitaxy wafer manufacturer, IQE is uniquely
positioned in this market which has high barriers to entry. IQE
supplies the whole market and is agnostic to the winners and losers
at chip and OEM level. By leveraging the Group's intellectual
property portfolio including know-how and patents, it produces
epitaxy wafers of superior quality, yield and unit economics.
IQE is headquartered in Cardiff UK, with c. 685 employees across
nine manufacturing locations in the UK, US, Taiwan and Singapore,
and is listed on the AIM Stock Exchange in London.
(END) Dow Jones Newswires
March 29, 2022 02:00 ET (06:00 GMT)
Copyright (c) 2022 Dow Jones & Company, Inc.
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