TIDMIQE
RNS Number : 3336Y
IQE PLC
06 September 2022
IQE plc
("IQE" or the "Group")
H1 2022 RESULTS
Cardiff, UK
6 September 2022
H1 Trading in line with management expectations
Strong progress against strategic priorities
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
interim results for the six months ended 30 June 2022.
Americo Lemos, Chief Executive Officer of IQE, said:
"Earlier in the year we set out our strategic priorities to
transform IQE, and in the first half of 2022 we made strong
progress against these goals. Simultaneously, the business has
demonstrated resilience despite the ongoing challenging global
environment. The importance of compound semiconductors to a series
of fundamental mega trends which will shape the global economy is
gaining increasing recognition. I remain excited by the strength of
IQE's proposition coupled with the opportunities ahead to diversify
and grow our business to deliver value for all our
stakeholders."
H1 2022 Financials
H1 2022 H1 2021 Change Change at
GBP'm* GBP'm* (%) constant
currency
(%)
Revenue 86.2 79.5 8.4 1.4
Adjusted EBITDA** 12.3 11.6 6.2 -
Operating loss (7.4) (1.9)
Adjusted operating loss (1.4) (0.9)
Reported loss after tax (8.3) (2.7)
Diluted EPS (1.03p) (0.34p)
Adjusted diluted EPS (0.36p) (0.21p)
Cash generated from operations 6.2 10.4
Adjusted cash from operations 8.3 9.1
Capital Investment (PP&E) 3.8 6.1
Net (debt***) / funds (6.7) 0.9
* All figures GBP'm excluding diluted and adjusted diluted EPS.
** Adjusted Measures: Alternative performance measures are
disclosed separately after a number of non-cash charges,
non-operational items and significant infrequent items that would
distort period on period comparability . 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 8.
*** Net debt excludes IFRS16 lease liabilities and fair value
gains/losses on derivative instruments.
The following highlights of the first half results is based on
these adjusted profit measures, unless otherwise stated.
Financial Highlights
-- Revenue of GBP86.2m (H1 2021: GBP79.5m) up 8.4% on a reported
basis (1.4% growth at constant currency due to a currency
tailwind), in line with previously issued guidance
-- Wireless revenue of GBP46.6m (H1 2021: GBP41.6m) up 12.0% on
a reported basis and 4.3% at constant currency
-- Driven by GaN sales to Aerospace and Security customers
-- Resilient GaAs sales weighted towards 5G and WiFi 6 markets,
countering a slowdown and inventory build in the wider handset
market
-- Photonics revenue of GBP38.5m (H1 2021: GBP36.4m) up 5.7% on
a reported basis and down -0.6% on a constant currency basis
-- Continued maintenance of high market share in 3D Sensing VCSELs for consumer markets
-- Resurgence in InP products for datacom
-- CMOS++ revenue of GBP1.1m (H1 2021: GBP1.5m) a decrease of
27.2% on a reported basis and 33.3% on a constant currency basis,
due to the re-phasing of a large customer order from H1 2022 to H2
2022
-- Adjusted EBITDA of GBP12.3m (H1 2021: GBP11.6m) up 6.0% on a
reported basis and flat at constant currency, in line with
previously issued guidance
-- Reported operating loss of GBP7.4m (H1 2021: GBP1.9m loss)
-- Impacted by impairment of intangible assets following
investment decisions disclosed at FY 2021 results and planned
closure costs associated with exit of Singapore facility as
previously announced
-- Adjusted cash inflow from operations of GBP8.3m (H1 2021: GBP9.1m)
-- Total net cash capex and cash investment in intangibles of GBP3.5m (H1 2021: GBP8.1m)
-- GBP3.8m investment in PP&E capex related to previously
disclosed tool investments in Taiwan
-- Proceeds of GBP4.1m from the disposal of assets related to Singapore site closure
-- Purchase of intangibles of GBP2.3m primarily relates to
ongoing systems transformation programme
-- Ongoing investment in R&D with GBP1.6m (H1 2021: GBP1.8m)
of development costs capitalised in the period
-- Adjusted net debt of GBP6.7m as at 30 June 2022 (net debt of
GBP5.8m as at 31 Dec 2021, net funds of GBP0.9m as at 30 June
2021)
Operational Highlights
-- As previously highlighted, the Group's refreshed strategy is
focussed on building a solid platform for growth in 2022 to deliver
further progress in 2023 and beyond
-- Additional detail on this strategy will be presented at IQE's
Capital Markets Day on Wednesday 9 November 2022
-- Strong progress achieved to facilitate a future multi-year
cycle of growth, driven by the macro trends of 5G, IoT and the
Metaverse
-- Developing the Group's commercial engine orientated to IQE's
end markets, focussed on our customers, and aligned with our
technology innovation
-- Expanding and strengthening engagement with new and existing customers
-- Implementing the Group's systems transformation programme to
ensure agile and efficient business operations
-- Business development progress
-- Strategic partnership with Porotech announced in May to
commercialise unique microLEDs for production at scale, with IQE as
the epitaxy foundry partner
-- Multi-year, high-volume strategic supply agreement with
Lumentum announced in June for the development and production of a
broad ranging of sensing products, including IQE as epitaxy partner
of choice for LiDAR for autonomous vehicles
-- Technology development
-- Developed the world's first commercially available 200 mm
(8") VCSEL epiwafer, enabling a step-change in unit economics and
resulting in market expansion for IQE into a broader range of
customers and end products
-- Global site optimisation programme
-- Closure of Singapore site in June 2022
-- Project to close Pennsylvania site and consolidate US MBE
operations within North Carolina site is on track to be completed
by 2024
-- Environmental, Social and Governance ("ESG") progress
-- Formation of an ESG Board Committee to develop and monitor
the execution of IQE's ESG strategy and oversee communication of
relevant activity
-- Formal commitment to Net Zero carbon neutrality across
operations by 2050, in accordance with the Science Based Targets
initiative
Outlook
IQE management reiterates its full year 2022 revenue guidance of
low single digit percentage growth (at constant currency), as
strong Photonics sales driven by 3D sensing VCSELs and emerging
revenues in microLEDs offset a degree of anticipated, macro-driven,
softness in Wireless markets.
Operations remain resilient to macro-economic and supply chain
risks. IQE is in a unique position to work with customers to ensure
supply chain resilience and build strategic capacity across its
global footprint.
At this level of revenue, the Group anticipates a similar
adjusted EBITDA margin % to 2021 (at constant currency).
It is expected that full year PP&E capital expenditure will
be in the range of GBP10-15m and we anticipate c.GBP8m of
capitalised intangibles relating to development costs and systems
transformation, both in line with previous guidance.
Results Presentation
IQE will present its H1 2022 Results via webcast at 9:00am BST
today, Tuesday 6 September 2022. If you would like to view this
webcast, please register by using the below link and follow the
instructions:
https://stream.brrmedia.co.uk/broadcast/62ed08185a5e221df3779da4
Capital Markets Day
IQE will host a Capital Markets Day on Wednesday 9 November
2022, further details of which will be announced in due course.
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
Paul Gillam
James Smith
Numis (Joint Broker)
+44 (0) 20 7260 1000
Simon Willis
Hugo Rubinstein
Iqra Amin
Headland Consultancy (Financial PR)
+ 44 (0) 20 38054822
Andy Rivett-Carnac: +44 (0) 7968 997 365
Antonia Pollock: +44 (0) 7789 954 356
Marta Parry-Jones: +44 (0) 7884742400
ABOUT IQE
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
eight manufacturing locations in the UK, US and Taiwan, and is
listed on the AIM Stock Exchange in London.
Financial Review
6 months 6 months 12 months
to to to
30 Jun 30 Jun 31 Dec
Consolidated Income Statement 2022 2021 2021
(All figures GBP'000s) Note Unaudited Unaudited Audited
------------------------------------- ----- ----------- ----------- ------------
Revenue 7 86,198 79,544 154,096
Cost of sales (71,845) (67,336) (136,452)
------------------------------------- ----- ----------- ----------- ------------
Gross profit 14,353 12,208 17,644
Selling, general and administrative
expenses (19,877) (14,006) (37,699)
(Loss) / profit on disposal
of intangible assets and property,
plant and equipment (590) - 77
Other losses 4 (1,317) (136) -
Operating loss 7 (7,431) (1,934) (19,978)
Finance costs (1,100) (1,067) (2,213)
Adjusted loss before income
tax (2,540) (1,933) (8,667)
Adjustments 8 (5,991) (1,068) (13,524)
------------------------------------- ----- ----------- ----------- ------------
Loss before income tax 7 (8,531) (3,001) (22,191)
Taxation 279 272 (8,811)
------------------------------------- ----- ----------- ----------- ------------
Loss for the period (8,252) (2,729) (31,002)
-------------------------------------------- ----------- ----------- ------------
Loss attributable to:
Equity shareholders (8,252) (2,729) (31,002)
(8,252) (2,729) (31,002)
-------------------------------------------- ----------- ----------- ------------
Loss per share attributable to
owners of the parent during the
period
Basic loss per share 10 (1.03p) (0.34p) (3.87p)
Diluted loss per share 10 (1.03p) (0.34p) (3.87p)
-------------------------------------------- ----------- ----------- ------------
Adjusted basic and diluted earnings per share are presented in
Note 10.
All items included in the loss for the period relate to
continuing operations.
Consolidated statement of comprehensive 6 months 6 months 12 months
income to to to
30 Jun 30 Jun 31 Dec
2022 2021 2021
(All figures GBP'000s) Unaudited Unaudited Audited
------------------------------------------ ----------- ----------- ------------
Loss for the period (8,252) (2,729) (31,002)
Exchange differences on translation
of foreign operations* 16,776 (1,057) 4,744
------------------------------------------ ----------- ----------- ------------
Total comprehensive expense for
the period 8,524 (3,786) (26,258)
------------------------------------------ ----------- ----------- ------------
Total comprehensive expense attributable
to:
Equity shareholders 8,524 (3,786) (26,258)
8,524 (3,786) (26,258)
------------------------------------------ ----------- ----------- ------------
* Balance might subsequently be reclassified to the income
statement when it becomes realised.
Consolidated Balance Sheet Restated
As At As At As At
30 Jun 30 Jun 31 Dec
2022 2021 2021
(All figures GBP'000s) Note Unaudited Unaudited Audited
--------------------------------------- ----- ---------- ----------- ----------
Non-current assets
Intangible assets 99,616 102,461 95,866
Property, plant and equipment 126,971 125,088 129,730
Right of use assets 43,350 42,539 44,267
Deferred tax assets - 8,526 -
Total non-current assets 269,937 278,614 269,863
--------------------------------------- ----- ---------- ----------- ----------
Current assets
Inventories 34,706 29,247 31,710
Trade and other receivables 53,246 39,459 38,860
Cash and cash equivalents 12 15,390 20,556 10,791
--------------------------------------- ----- ---------- ----------- ----------
Total current assets 103,342 89,262 81,361
--------------------------------------- ----- ---------- ----------- ----------
Total assets 373,279 367,876 351,224
--------------------------------------- ----- ---------- ----------- ----------
Current liabilities
Trade and other payables (44,016) (32,628) (37,083)
Current tax liabilities (1,230) (1,221) (1,342)
Bank borrowings 12 (14,912) (6,201) (6,230)
Derivative financial instruments 12 (1,327) (136) -
Lease liabilities 12 (5,287) (4,394) (4,694)
Provisions for other liabilities
and charges (3,803) (2,430) (3,686)
Total current liabilities (70,575) (47,010) (53,035)
--------------------------------------- ----- ---------- ----------- ----------
Non-current liabilities
Bank borrowings 12 (7,205) (13,466) (10,365)
Lease liabilities 12 (48,372) (48,245) (49,693)
Provisions for other liabilities
and charges (1,464) (1,303) (2,060)
Deferred tax liabilities (1,317) (1,981) (1,450)
--------------------------------------- ----- ---------- ----------- ----------
Total non-current liabilities (58,358) (64,995) (63,568)
--------------------------------------- ----- ---------- ----------- ----------
Total liabilities (128,933) (112,005) (116,603)
--------------------------------------- ----- ---------- ----------- ----------
Net assets 244,346 255,871 234,621
--------------------------------------- ----- ---------- ----------- ----------
Equity attributable to shareholders
of the parent
Share capital 14 8,046 8,013 8,036
Share premium 154,675 154,375 154,632
Retained earnings 21,043 57,731 29,295
Exchange rate reserve 42,811 20,234 26,035
Other reserves 17,771 15,518 16,623
--------------------------------------- ----- ---------- ----------- ----------
Total equity 244,346 255,871 234,621
--------------------------------------- ----- ---------- ----------- ----------
The comparative financial information at 30 June 2021 has been
restated to separately disclose derivative financial instrument
liabilities. The restatement has had no impact on net assets, loss
after tax or total cash flow for the 6 months to 30 June 2021.
Consolidated Statement of Changes in Equity
Unaudited Share Share Retained Exchange Other Total
capital premium earnings rate reserve reserves equity
(All figures GBP'000s)
At 1 January 2022 8,036 154,632 29,295 26,035 16,623 234,621
------------------------------- -------- -------- --------- ------------- --------- -------
Loss for the period - - (8,252) - - (8,252)
Other comprehensive
income for the period - - - 16,776 - 16,776
Total comprehensive
(expense) / income - - (8,252) 16,776 - 8,524
Share based payments - - - - 1,148 1,148
Proceeds from shares
issued 10 43 - - - 53
Total transactions
with owners 10 43 - - 1,148 1,201
At 30 June 2022 8,046 154,675 21,043 42,811 17,771 244,346
------------------------------- -------- -------- --------- ------------- --------- -------
Unaudited Share Share Retained Exchange Other Total
capital premium earnings rate reserve reserves equity
(All figures GBP'000s)
At 1 January 2021 8,004 154,185 62,089 21,291 14,866 260,435
------------------------------- -------- -------- --------- ------------- --------- -------
Loss for the period - - (2,729) - - (2,729)
Other comprehensive
expense for the period - - - (1,057) - (1,057)
Total comprehensive
expense - - (2,729) (1,057) - (3,786)
Share based payments - - - - 754 754
Tax relating to share
options - - - - (102) (102)
Proceeds from shares
issued 9 190 - - - 199
Acquisition of non-controlling
interest - - (1,629) - - (1,629)
------------------------------- -------- -------- --------- ------------- --------- -------
Total transactions
with owners 9 190 (1,629) - 652 (778)
At 30 June 2021 8,013 154,375 57,731 20,234 15,518 255,871
------------------------------- -------- -------- --------- ------------- --------- -------
Audited Share Share Retained Exchange Other Total
capital premium earnings rate reserve reserves equity
(All figures GBP'000s)
At 1 January 2021 8,004 154,185 62,089 21,291 14,866 260,435
------------------------------- -------- -------- --------- ------------- --------- --------
Loss for the year - - (31,002) - - (31,002)
Other comprehensive
income for the year - - - 4,744 - 4,744
Total comprehensive
(expense) / income - - (31,002) 4,744 - (26,258)
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
------------------------------- -------- -------- --------- ------------- --------- --------
Restated
Consolidated Cash Flow Statement 6 months 6 months 12 months
to to to
30 Jun 30 Jun 31 Dec
2022 2021 2021
(All figures GBP'000s) Note Unaudited Unaudited Audited
----------------------------------- ----------- ----------- ----------- ------------
Cash flows from operating activities
------------------------------------------- --- ----------- ----------- ------------
Adjusted cash inflow from operations 8,349 9,077 17,940
Cash impact of adjustments 8 (2,173) 1,277 943
------------------------------------------- --- ----------- ----------- ------------
Cash generated from operations 11 6,176 10,354 18,883
Net interest paid (1,100) (594) (2,213)
Income tax paid (628) (842) (1,275)
------------------------------------------- --- ----------- ----------- ------------
Net cash generated from operating
activities 4,448 8,918 15,395
------------------------------------------------ ----------- ----------- ------------
Cash flows from investing activities
Purchase of property, plant and equipment (3,751) (6,138) (15,051)
Purchase of intangible assets (2,254) (147) (345)
Capitalised development expenditure (1,567) (1,846) (2,994)
Proceeds from disposal of property,
plant and equipment 4,091 - 85
------------------------------------------- --- ----------- ----------- ------------
Net cash used in investing activities (3,481) (8,131) (18,305)
------------------------------------------- --- ----------- ----------- ------------
Cash flows from financing activities
Acquisition of minority interest - - (1,792)
Proceeds from issuance of ordinary
shares 53 208 472
Proceeds from borrowings 7,856 - -
Repayment of borrowings (3,156) (3,073) (6,145)
Payment of lease liabilities (1,923) (1,838) (3,705)
------------------------------------------- --- ----------- ----------- ------------
Net cash generated / (used) from
financing activities 2,830 (4,703) (11,170)
------------------------------------------------ ----------- ----------- ------------
Net increase / (decrease) in cash
and cash equivalents 3,797 (3,916) (14,080)
Cash and cash equivalents at the
beginning of the period 10,791 24,663 24,663
Exchange gains / (losses) on cash
and cash equivalents 802 (191) 208
------------------------------------------- --- ----------- ----------- ------------
Cash and cash equivalents at
the end of the period 12 15,390 20,556 10,791
------------------------------------------- --- ----------- ----------- ------------
The comparative financial information for the 6 months to 30
June 2021 has been restated 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 the 6 months
to 30 June 2021.
1. REPORTING ENTITY
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).
These condensed consolidated interim financial statements
('interim financial statements') as at and for the six months ended
30 June 2022 comprise the Company and its Subsidiaries (together
referred to as 'the Group'). The principal activities of the Group
are the development, manufacture and sale of advanced semiconductor
materials.
2. BASIS OF PREPARATION
These interim financial statements have been prepared in
accordance with IAS 34 'Interim Financial Reporting', and should be
read in conjunction with the Group's last annual consolidated
financial statements as at and for the year ended 31 December 2021
which were approved by the Board of Directors on 29 March 2022 and
have been delivered to the Registrar of Companies. The report of
the auditors on those financial statements was unqualified, did not
contain an emphasis of matter paragraph and did not contain any
statement under section 498 of the Companies Act 2006.
The interim financial statements do not include all of the
information required for a complete set of IFRS financial
statements and do not constitute statutory accounts within the
meaning of section 434 of the Companies Act 2006. However, selected
explanatory notes are included to explain events and transactions
that are significant to an understanding of the changes in the
Group's financial position and performance since the last annual
financial statements.
Comparative information in the interim financial statements as
at and for the year ended 31 December 2021 has been taken from the
published audited financial statements as at and for the year ended
31 December 2021. All other periods presented are unaudited.
The Board of Directors and the Audit Committee approved the
interim financial statements on 5 September 2022.
3. GOING CONCERN
The Group made a loss of GBP8.3m (H1 2021: GBP2.7m, FY21:
GBP31.0m) and used GBP4.1m of cash and cash equivalents (H1 2021:
GBP3.9m, FY21: GBP14.1m) excluding proceeds from bank borrowings of
GBP7.9m (H1 2021: GBPnil, FY21: GBPnil) which has resulted in an
increase in the net debt position (excluding lease liabilities and
fair value gains/losses on derivative instruments ) to GBP6.7m (H1
2021: GBP0.9m net funds, FY21: GBP5.8m net debt) as at 30 June
2022.
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
half year ended 30 June 2022 despite softness in smartphone related
demand and continued weakness in 5G infrastructure demand with
revenue of GBP86.2m (H1 2021: GBP79.5m, FY21: GBP154.1m) and an
adjusted loss before tax of GBP2.5m (H1 2021: GBP1.9m, FY21:
GBP8.7m) which is broadly consistent with performance for the half
year ended 30 June 2021 on a constant currency basis.
-- The Group's net debt (excluding lease liabilities and fair
value gains/losses on derivative instruments) position of GBP6.7m
(H1 2021: GBP0.9m net funds, FY21: GBP5.8m net debt) remains low in
the context of total available facilities of GBP58.7m (H1 2021:
GBP55.2m, FY21: GBP55.9m) with the increase in the net debt
position principally reflecting the Group's investment activities
where investment in IT systems and processes, technology
development and capacity expansion has exceeded cash generated from
operations. Net debt (excluding lease liabilities and fair value
gains/losses on derivative instruments) consists of GBP15.4m (H1
2021: GBP20.6m, FY21: GBP10.8m) of cash net of bank loans of
GBP22.1m (H1 2021: GBP19.7m, FY21: GBP16.6m) which are repayable
over a period up to 29 August 2024.
On 24 January 2019, the Group agreed a new GBP28.7m ($35.0m)
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 unexercised 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 GBP30.0m five-year
Asset Finance Loan facility from HSBC Bank plc of which GBP25.0m
was drawn and GBP13.5m remains outstanding at the period end. The
Group has complied with all covenants associated with the
facility.
-- The Group generated cash from operating activities of GBP4.4m
(H1 2021: GBP8.9m, FY21: GBP15.4m) 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 25% reduction in H2 2022 revenue and a 40%
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 GBP22.1m, below
the Group's current committed revolving credit facility of GBP28.7m
could be required in 2023. The Group has a long-standing and
trusted relationship with its bankers, HSBC Bank plc, who remain
supportive following the recent refinancing of the revolving credit
facility which contains an option, that requires HSBC Bank plc
consent, to extend the facility for a further 12-month period from
30 April 2023 to 30 April 2024. 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 extension option contained in the Group's revolving credit
facility and the level of assessed covenant headroom on the Group's
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 interim financial statements.
4. USE OF JUDGEMENTS AND ESTIMATES
In preparing these interim financial statements, management has
made judgements and estimates that affect the application of
accounting policies and the reported amounts of assets,
liabilities, income and expense. Actual results may differ from
these estimates. The impact of Coronavirus in the six-month period
ended 30 June 2022 has not resulted in any indicators of impairment
or had a meaningful impact on significant judgements or the level
of estimation uncertainty associated with the application of the
Group's accounting policies. Coronavirus has had no material
adverse impact on the Group's business operations with production
continuing uninterrupted at all global sites.
The significant judgements made by management in applying the
Group's accounting policies and the key sources of estimation
uncertainty were the same as those described in the last annual
financial statements except as follows:
-- Intangible assets - Technology development costs and patents
-- Measurement of fair values associated with outstanding
derivative forward currency contracts
Intangible assets - Technology development costs (distributed
feedback laser technology assets)
The Group has product development costs totalling GBP3.4m linked
to its distributed feedback laser technology where the Group has
taken the decision to discontinue the development and
commercialisation of the technology.
Although distributed feedback laser technology has a number of
potential applications the level of customer and partner engagement
that is required to develop the technology has remained low, a
position that has led to the decision to discontinue the
development and commercialisation of the technology given the lack
of a clear near-term route to the delivery of commercial volumes
and cash flows.
The current lack of visibility on the timeline to commercialise
the product development technology assets and the decision to
discontinue development of the assets has resulted in a non-cash
intangible asset charge of GBP3.4m that has been charged to
'selling, general and administrative expenses' in the consolidated
income statement following the write-down of all distributed
feedback laser product development cost assets to GBPnil.
Derivative Forward Currency Contracts
At 30 June 2022 the Group had outstanding derivative forward
currency contracts with a nominal value of $20.7m (H1 2021: $13.1m,
FY21: $21.0m) for the sale of US$ in exchange for GBPGBP.
The Group's accounting policies require that derivative forward
currency contracts are measured at fair value. When measuring the
fair value of an asset or a liability, the Group uses market
observable data as far as possible. Fair values are categorised
into different levels in a fair value hierarchy based on the inputs
used in the valuation techniques as follows:
- Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities
- Level 2: Inputs other than quoted prices included in Level 1
that are observable for the asset or liability, either directly
(i.e as prices) or indirectly (i.e derived from prices)
- Level 3: Inputs for the asset or liability that are not based
on observable market data (unobservable inputs)
Derivative forward currency contracts have been categorised as
Level 1 in the fair value hierarchy. The fair value of the
derivative instrument has been assessed using quoted prices in
active markets for identical assets or liabilities using
independent mark to market valuations provided by an appropriately
regulated financial institution.
The fair value liability of GBP1.3m (H1 2021: GBP0.1m liability,
FY21: GBPnil) has been included in the balance sheet in 'derivative
financial instruments' with the fair value loss on the derivative
instruments included in 'Other losses' in the consolidated income
statement.
5. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies applied in these interim financial
statements are the same as those applied in the Group's
consolidated financial statements as at and for the year ended 31
December 2021. A number of new standards are effective from 1
January 2022 but they do not have a material effect on the Group's
financial statements.
Recent accounting developments and the policy for recognising
and measuring income taxes in the interim period are described
below.
5.1 Recent accounting developments
In preparing the interim financial statements, the Group has
adopted the following Standards, amendments and interpretations,
which are effective for 2022 and will be adopted in the financial
statements for the year ended 31 December 2022:
-- 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'.
The adoption of these standards and amendments has not had a
material impact on the interim financial statements.
5.2 Income tax expense
Income tax expense is recognised at an amount determined by
multiplying the profit / (loss) before tax for the interim
reporting period by management's best estimate of the
weighted-average annual income tax rate expected for the full
financial year, adjusted for the tax effect of certain items
recognised in full in the interim period. As such, the effective
tax rate in the interim financial statements may differ from
management's estimate of the effective tax rate for the annual
financial statements.
6. PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks and uncertainties affecting the Group are
set out in the Strategic Report in the 2021 Annual report and
financial statements and remain unchanged at 30 June 2022.
The principal risks and uncertainties include health, safety and
environment, loss of key personnel, cybersecurity, infringement or
loss of intellectual property, legal and regulatory compliance,
changes in international export control laws, competition and/or
erosion of market opportunity, customer concentration, insufficient
cash or funding to underpin investment opportunities, the failure
of new products or technology to deliver expected levels of revenue
and profitability, disruption or inflation in global supply chains,
transformation of IT systems causing business disruption and
insufficient liquidity or cash funding to meet financial
obligations as they fall due.
7. SEGMENTAL INFORMATION
6 Months 6 Months 12 Months
to 30 June to 30 June to 31 Dec
2022 2021 2021
Revenue Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Wireless 46,629 41,631 83,217
Photonics 38,475 36,409 68,067
CMOS++ 1,094 1,504 2,812
Revenue 86,198 79,544 154,096
------------------------- ------------- ------------- ------------
Adjusted operating loss
Wireless 5,533 3,731 7,305
Photonics 1,899 3,514 1,737
CMOS++ (704) (401) (586)
Central corporate costs (8,168) (7,710) (14,910)
Adjusted operating loss (1,440) (866) (6,454)
Adjusted items (5,991) (1,068) (13,524)
------------------------- ------------- ------------- ------------
Operating loss (7,431) (1,934) (19,978)
Finance costs (1,100) (1,067) (2,213)
Loss before tax (8,531) (3,001) (22,191)
------------------------- ------------- ------------- ------------
8. 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.
6 months 6 months
to 30 Jun to 30 Jun 2021
Adjusted Adjusted 2022 Adjusted Adjusted 2021 Adjusted Adjusted Reported
Reported Reported
GBP'000s Results Items Results Results Items Results Results Items Results
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Revenue 86,198 - 86,198 79,544 - 79,544 154,096 - 154,096
Cost of
sales (71,475) (370) (71,845) (67,083) (253) (67,336) (135,325) (1,127) (136,452)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Gross
profit 14,723 (370) 14,353 12,461 (253) 12,208 18,771 (1,127) 17,644
Other
losses (1,317) - (1,317) (136) - (136) - - -
SG&A (14,252) (5,625) (19,877) (13,191) (815) (14,006) (25,302) (12,397) (37,699)
(Loss) /
profit on
disposal
of PPE (594) 4 (590) - - - 77 - 77
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Operating
loss (1,440) (5,991) (7,431) (866) (1,068) (1,934) (6,454) (13,524) (19,978)
Finance
costs (1,100) - (1,100) (1,067) - (1,067) (2,213) - (2,213)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Loss
before
tax (2,540) (5,991) (8,531) (1,933) (1,068) (3,001) (8,667) (13,524) (22,191)
Taxation (395) 674 279 243 29 272 (10,614) 1,803 (8,811)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Loss for
the
period (2,935) (5,317) (8,252) (1,690) (1,039) (2,729) (19,281) (11,721) (31,002)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
6 months 6 months
to 30 Jun to 30 Jun 2021
Pre-tax Tax 2022 Pre-tax Tax 2021 Pre-tax Tax Reported
Reported Reported
GBP'000s Adjustment Impact Results Adjustment Impact Results Adjustment Impact Results
--------------------- ---------- ------ ---------- ---------- ------ ---------- ---------- ------ ----------
Share based
payments (1,110) - (1,110) (758) (45) (803) (1,691) (13) (1,704)
Share based
payments -
Chief executive
officer recruitment (38) - (38) - - - - - -
Chief executive
officer recruitment (154) - (154) - - - (741) - (741)
Impairment
- intangibles (3,363) 410 (2,953) - - - (7,411) 1,816 (5,595)
Restructuring (1,330) - (1,330) (310) 74 (236) (3,681) - (3,681)
Restructuring
- profit on
disposal of
PPE 4 264 268 - - - - - -
Total (5,991) 674 (5,317) (1,068) 29 (1,039) (13,524) 1,803 (11,721)
--------------------- ---------- ------ ---------- ---------- ------ ---------- ---------- ------ ----------
The nature of the adjusted items is as follows:
-- Share based payments - The charge recorded in accordance with
IFRS 2 'share based payment' of which GBP0.4m (H1 2021: GBP0.3m,
FY21: GBP1.1m) has been classified within cost of sales in gross
profit and GBP0.7m (H1 2021: GBP0.5m, FY21: GBP0.6m) in selling,
general and administrative expenses within operating loss.
-- Chief Executive Officer recruitment - The Chief Executive
Officer's starting bonus of GBP1.0m, of which GBP0.2m relates to a
share-based payment award and GBP0.8m relates to a cash award is
payable over the first three years of employment. The charge of
GBP0.2m (H1 2021: GBPnil, FY21: GBP0.7m) includes share award and
cash costs associated with the new Chief Executive Officer's
starting bonus of GBP0.2m (H1 2021: GBPnil, FY21: GBPnil),
settlement costs and legal fees of GBPnil (H1 2021: GBPnil, FY21:
GBP0.3m) associated with the transition of the former Chief
Executive Officer to a non-executive role and external recruitment
fees of GBPnil (H1 2021: GBPnil, FY21: GBP0.4m). Cash costs
defrayed in the period total GBP0.6m (H1 2021: GBPnil, FY21:
GBP0.2m).
-- Restructuring - The charge of GBP1.3m (H1 2021: GBP0.3m,
FY21: GBP3.7m) relates to restructuring costs relating to the
announced closure of the Group's manufacturing facility in
Pennsylvania, USA and the closure of the Group's manufacturing
facility in Singapore.
- Restructuring charges of GBP0.3m (H1 2021: GBP0.3m, FY21:
GBP0.7m) 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 period
total GBP0.1m (H1 2021: GBPnil, FY21: GBP0.3m).
- Restructuring charges of GBP1.0m (H1 2021: GBPnil, FY21:
GBP3.0m) consist of employee related costs of GBP0.1m (H1 2021:
GBPnil, FY21: GBP1.5m) and site decommissioning costs of GBP0.9m
(H1 2021: GBPnil, FY21: GBP1.5m) relating to the 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 period total GBP1.1m (H1
2021: GBPnil, FY21: GBPnil).
-- Impairment of intangibles - The non-cash charge of GBP3.4m
(H1 2021: GBPnil, FY21: GBP7.4m) relates to the impairment of
certain technology development cost assets.
- The non-cash impairment charge of GBP3.4m relates to the
impairment of distributed feedback laser technology development
costs where the Group has taken the decision to discontinue the
development and commercialisation of the technology.
- The prior year non-cash impairment charge of GBP7.4m related
to the impairment of cREO(TM) filter technology development costs
and patent assets totalling GBP4.7m and the impairment of Photonic
quasi crystal technology related development cost assets totalling
GBP2.7m where the Group had taken the decision to pause development
related activities which have not recommenced in the current period
given the lack of visibility over the timeline to commercialisation
of each of the technologies.
-- Profit on disposal of PPE - The profit on disposal of PPE of
GBPnil (H1 2021: GBPnil, FY21: GBPnil) relates to the sale of
certain items of plant and equipment as part of the closure of the
Group's manufacturing facility in Singapore. Cash proceeds received
in the period for the sale of plant and equipment total GBP4.1m (H1
2021: GBPnil, FY21: GBPnil)
The cash impact of adjusted items in the consolidated cash flow
statement represent costs associated with the recruitment of the
group's new Chief Executive Officer (GBP0.6m), onerous contract
royalty payments related to the Group's cREO(TM) technology
(GBP0.4m), payment of employee related costs associated with the
announced closure of the Group's site in Pennsylvania (GBP0.1m) and
payment of employee and site related decommissioning costs
associated with the closure of the Group's manufacturing facility
in Singapore (GBP1.1m) net of the sale proceeds associated with
certain items of plant and equipment sold as part of the closure of
the Group's manufacturing facility in Singapore (GBP4.1m).
Adjusted EBITDA (adjusted earnings before interest, tax,
depreciation and amortisation) has been calculated as follows:
(All figures GBP'000s) 6 months to 6 months to 12 months to
30 June 2022 30 June 2021 31 Dec 2021
Unaudited Unaudited Audited
----------------------------------------------- -------------- -------------- -------------
Loss attributable to equity shareholders (8,252) (2,729) (31,002)
Finance costs 1,100 1,067 2,213
Tax (279) (272) 8,811
Depreciation of property, plant and equipment 7,359 6,583 13,309
Depreciation of right of use assets 1,989 1,888 3,854
Amortisation of intangible fixed assets 3,831 4,006 8,047
Loss / (profit) on disposal of PPE 590 - (77)
Adjusted Items 5,995 1,068 13,524
----------------------------------------------- -------------- -------------- -------------
Share based payments 1,110 758 1,691
Share based payments - CEO recruitment 38 - -
CEO recruitment 154 - 741
Restructuring 1,330 310 3,681
Impairment of intangibles 3,363 - 7,411
Adjusted EBITDA 12,333 11,611 18,679
Share based payments (1,110) (310) (1,691)
Share based payments - CEO recruitment (38) - -
CEO recruitment (154) - (741)
Restructuring (1,330) (758) (3,681)
----------------------------------------------- -------------- -------------- -------------
EBITDA 9,701 10,543 12,566
----------------------------------------------- -------------- -------------- -------------
9. TAXATION
The Group's consolidated effective tax rate for the six months
ended 30 June 2022 was 3.3% (H1 2021: 9.1%, 2021: 39.7%). The
effective tax rate differs from the theoretical amount that would
arise from applying the standard corporation tax in the UK of 19.0%
(H1 2021: 19.0%, FY21: 19.0%) principally due to the following
factors:
-- The Group's results report certain financial measures after a
number of adjusted items with a net tax impact of GBP0.7m as
detailed in note 8.
- The tax impact on the Group's impairment of intangible
development cost assets reflects the Group's effective rate of tax
in Taiwan for Taiwanese impaired assets and the non-recognition of
current year tax losses for the element of UK and USA impaired
assets.
- The deferred tax impact associated with the disposal of
certain plant and equipment following closure of the Group's
manufacturing facility in Singapore.
-- Differences in overseas tax rates, principally Taiwan.
-- Non-recognition of current year tax losses, principally in the UK, USA and Singapore.
10. LOSS PER SHARE
6 months 6 months 12 months
to to to
30 June 30 June 31 Dec
2022 2021 2021
(All figures GBP'000s) Unaudited Unaudited Audited
Loss attributable to ordinary shareholders (8,252) (2,729) (31,002)
Adjustments to loss after tax (note
8) 5,317 1,039 11,721
Adjusted loss attributable to ordinary
shareholders (2,935) (1,690) (19,281)
-------------------------------------------- ------------ ------------ ------------
Number of shares:
Weighted average number of ordinary
shares 804,236,241 801,020,442 801,653,662
Dilutive share options 7,369,508 14,931,713 4,097,303
-------------------------------------------- ------------ ------------ ------------
811,605,749 815,952,155 805,750,965
-------------------------------------------- ------------ ------------ ------------
Adjusted loss per share (0.36p) (0.21p) (2.41p)
Basic loss per share (1.03p) (0.34p) (3.87p)
Adjusted diluted loss per share (0.36p) (0.21p) (2.41p)
Diluted loss per share (1.03p) (0.34p) (3.87p)
Basic loss per share is calculated by dividing the loss
attributable to ordinary shareholders by the weighted average
number of ordinary shares during the period.
Diluted loss per share is calculated by dividing the loss
attributable to ordinary shareholders by the weighted average
number of shares and '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 period. 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.
11. CASH GENERATED FROM OPERATIONS
(All figures GBP'000s) 6 months 6 months 12 months
to to to
30 June 30 June 31 Dec
2022 2021 2021
Unaudited Unaudited Audited
-------------------------------------- ----------- ----------- ----------
Loss before tax (8,531) (3,001) (22,191)
Finance costs 1,100 1,067 2,213
Depreciation of property, plant
and equipment 7,359 6,583 13,309
Depreciation of right of use
assets 1,989 1,888 3,854
Amortisation of intangible assets 3,831 4,006 8,047
Impairment of intangible assets 3,363 - 7,411
Impairment of property, plant
and equipment - - 74
Inventory write downs 499 623 866
Loss / (profit) on disposal of
property, plant and equipment 590 - (77)
Provision movements (208) 104 3,137
Fair value loss on derivative 1,317 - -
financial instruments
Share based payments 1,148 758 1,691
-------------------------------------- ----------- ----------- ----------
Cash inflow from operations
before changes in working capital 12,457 12,028 18,334
(Increase) / decrease in inventories (1,376) 769 (1,368)
(Increase) / decrease in trade
and other receivables (6,092) (878) 2,930
(Decrease) / increase in trade
and other payables 1,187 (1,565) (1,013)
-------------------------------------- ----------- ----------- ----------
Cash inflow from operations 6,176 10,354 18,883
-------------------------------------- ----------- ----------- ----------
12. ANALYSIS OF NET DEBT
(All figures GBP'000s) Restated
6 months 6 months 12 months
to to to
30 June 30 June 31 Dec
2022 2021 2021
Unaudited Unaudited Audited
------------------------------------ ------------ ----------- ------------
Bank borrowings due after one
year (7,205) (13,466) (10,365)
Bank borrowings due within one
year (14,912) (6,201) (6,230)
Lease liabilities due after one
year (48,372) (48,245) (49,693)
Lease liabilities due within one
year (5,287) (4,394) (4,694)
------------------------------------ ------------ ----------- ------------
Total borrowings (75,776) (72,306) (70,982)
Fair value of derivative financial
instruments (1,327) (136) -
Cash and cash equivalents 15,390 20,556 10,791
------------------------------------ ------------ ----------- ------------
Net debt (61,713) (51,886) (60,191)
------------------------------------ ------------ ----------- ------------
The comparative financial information for the 6 months to 30
June 2021 has been restated to include the fair value of derivative
financial instruments in net debt.
On 24 January 2019, the Company agreed a new GBP28,700,000
($35,000,000) multi-currency revolving credit facility, provided by
HSBC Bank plc that is secured over the assets of IQE plc and
certain subsidiary companies. On 30 December 2021 the
multi-currency revolving credit facility was extended for an
additional 15-month period to 30 April 2023 with an option that
requires HSBC Bank plc consent to extend the facility for a further
12-month period to 30 April 2024. The facility has an interest rate
margin of between 2.00 and 2.80 per cent per annum over SONIA on
any drawn balances.
On 29 August 2019, the Company agreed a new GBP30,000,000 asset
finance facility, provided by HSBC Bank plc that is secured over
various plant and machinery assets. The facility has a five-year
term and an interest rate margin of 1.65% per annum over base rate
on any drawn balances.
Bank borrowings relate to amounts drawn down on the Group's
asset finance facility and revolving credit facility.
Cash and cash equivalents comprise balances held in instant
access bank accounts and other short-term deposits
with a maturity of less than 3 months.
13. SHARE BASED PAYMENT ARRANGEMENTS
Long term incentive awards
On 26 May 2000, as amended by shareholders at the Annual General
Meeting on 17 May 2002, The Group established a share option plan
that entitles the Group's Remuneration Committee to grant long term
incentive awards over shares in the company to directors and
employees of the Group.
On 25 February 2022 and 14 March 2022, long term incentive
awards that become exercisable between three and ten years from 31
March 2022, subject to continued employment and achievement of
performance conditions over a three-year vesting period were
awarded to directors and employees of the Group. Performance
conditions associated with the awards include a combination of
earnings per share targets, total shareholder return targets,
revenue targets and the achievement of strategic objectives. Under
the terms of these awards, holders of vested options are entitled
to purchase shares at the nominal value of the shares at the date
of grant. All options are to be settled by physical delivery of
shares. The terms and conditions of the share options granted
during the six months ended 30 June 2022 are as follows:
Contractual
Number life of
Grant date/employees of instruments options Vesting conditions
entitled
-------------------------- ----------------- -------------- ------------------------------
Share award granted 583,709 N/A Share award is subject
to new CEO as part to clawback if the CEO
of starting bonus resigns or his employment
on 10 January 2022 is terminated within a
three-year period from
10 January 2022
-------------------------- ----------------- -------------- ------------------------------
Option grant to executive 4,543,897 10 years 3 years-service from grant
directors on 25 February date, diluted adjusted
2022 earnings per share targets
between 0.60p - 1.00p,
relative shareholder return
targets of between 100%
- 130% versus the FTSE
All Share Index, absolute
shareholder return targets
of between 8% - 16%, revenue
growth targets between
10%p.a - 20%p.a and the
achievement of strategic
objectives
Option grant to employees 9,551,689 10 years 3 years-service from grant
on 14 March 2022 date and achievement of
strategic objectives
-------------------------- ----------------- -------------- ------------------------------
Measurement of grant date fair values
The fair value of the long-term incentive awards, calculated as
GBP5.0m (H1 2021: GBP3.3m, FY21: GBP4.5m) at the grant date has
been determined using the Monte Carlo and Black Scholes models. The
following inputs were used in the measurement of the fair values at
grant date.
Principal assumptions 2022 2021
--------------------------------------------- ------ ------
Weighted average share price at grant date 41.71 44.00
Weighted average exercise price 4.60 8.20
Weighted average vesting period (years) 3 3
Option life (years) 10 10
Weighted average expected life (years) 3 3
Weighted average expected volatility factor 73% 68%
Weighted average risk-free rate 0.9% 0.4%
Dividend yield 0% 0%
--------------------------------------------- ------ ------
The expected volatility factor is based on historical share
price volatility over the three years immediately preceding the
grant of the option. The expected life is the average expected
period to exercise. The risk-free rate of return is the yield of
zero-coupon UK government bonds of a term consistent with the
assumed option life.
Non-market performance conditions are incorporated into the
calculation of fair value by estimating the proportion of share
options that will vest and be exercised based on a combination of
historical trends and future expected trading performance. These
are reassessed at the end of each period for each tranche of
unvested options.
14. SHARE CAPITAL
6 months 6 months 12 months
Number of shares to to to
30 June 30 June 31 Dec
2022 2021 2021
Unaudited Unaudited Audited
----------------------------- ------------ ------------ ------------
As at 1 January 803,555,756 800,364,569 800,364,569
Employee share schemes 1,002,961 954,910 3,191,187
As at 30 June / 31 December 804,558,717 801,319,479 803,555,756
----------------------------- ------------ ------------ ------------
6 months 6 months 12 months
(All figures GBP'000s) to to to
30 June 30 June 31 Dec
2022 2021 2021
Unaudited Unaudited Audited
----------------------------- ----------- ----------- ----------
As at 1 January 8,036 8,004 8,004
Employee share schemes 10 9 32
As at 30 June / 31 December 8,046 8,013 8,036
----------------------------- ----------- ----------- ----------
15. RELATED PARTY TRANSACTIONS
Transactions with Joint Ventures
Compound Semiconductor Centre Limited ('CSC')
The Group established CSC with its joint venture partner as a
centre of excellence for the development and commercialisation of
advanced compound semiconductor wafer products in Europe and on its
formation, the Group contributed assets to the joint venture valued
at GBP12,000,000 as part of its initial investment.
The activities of CSC include research and development into
advanced compound semiconductor wafer products, the provision of
contract manufacturing services for compound semiconductor wafers
to certain subsidiaries within the IQE plc Group and the provision
of compound semiconductor manufacturing services to other third
parties.
CSC operates from its manufacturing facilities in Cardiff,
United Kingdom and leases certain additional administrative
building space from the Group. During the period the CSC leased
this space from the Group for GBP57,500 (H1 2021 GBP57,500, FY21:
GBP115,000) and procured certain administrative support services
from the Group for GBP117,500 (H1 2021: GBP117,500, FY21:
GBP235,000). As part of the administrative support services
provided to CSC the Group procured goods and services, recharged to
CSC at cost, totalling GBP2,069,000 (H1 2021: GBP1,661,584, FY21:
GBP3,881,648).
CSC granted the Group the right to use its assets following its
formation for a minimum five-year period. Costs associated with the
right to use the CSC's assets are treated by the Group as operating
lease costs. Costs are charged by the CSC at a price which reflects
the CSC's cash cost of production (including direct labour,
materials and site costs) but excludes any related depreciation or
amortisation of the CSC's property, plant and equipment and
intangible assets respectively under the terms of the joint venture
agreement between the parties. Costs associated with the right to
use the CSC's assets totalled GBP3,288,400 (H1 2021: GBP3,012,300,
FY20: GBP6,234,000) in the period.
At 30 June 2022 an amount of GBP439,000 (H1 2021: GBP349,000,
FY21: GBP1,030,000) was owed from the CSC.
In the Groups balance sheet 'A' Preference Shares with a nominal
value of GBP8,800,000 (H1 2021: GBP8,800,000, FY21: GBP8,800,000)
are included in financial assets at an amortised cost of GBPnil (H1
2021: GBPnil, FY21: GBPnil) and the Group has a shareholder loan of
GBP245,500 (H1 2021: GBP243,000, FY21: GBP244,000) due from
CSC.
RESPONSIBILITY STATEMENT
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been prepared
in accordance with IAS 34 Interim Financial Reporting as adopted
for use in the UK;
-- the interim management report includes a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure Guidance and Transparency
Rules, being an indication of important events that have occurred
during the first six months of the financial year and their impact
on the condensed set of financial statements; and a description of
the principal risks and uncertainties for the remaining six months
of the year; and
(b) DTR 4.2.8R of the Disclosure Guidance and Transparency
Rules, being related party transactions that have taken place in
the first six months of the current financial year and that have
materially affected the financial position or performance of the
entity during that period; and any changes in the related party
transactions described in the last annual report that could do
so.
Americo Lemos Tim Pullen
Chief Executive Officer, IQE plc. Chief Financial Officer, IQE plc.
5 September 2022 5 September 2022
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END
IR UVUNRUUUKRAR
(END) Dow Jones Newswires
September 06, 2022 02:00 ET (06:00 GMT)
Iqe (LSE:IQE)
Gráfica de Acción Histórica
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Iqe (LSE:IQE)
Gráfica de Acción Histórica
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