IQE PLC Iqe Plc : H1 2017 - Interim Results

 
TIDMIQE 
 
 
   IQE plc 
 
   Strong ramp in sales of VCSEL wafers marks the start of a new wave of 
growth with a pipeline of new mass market technologies. 
 
   Cardiff, UK. 5 September 2017: IQE plc (AIM: IQE, "IQE" or the "Group"), 
the leading global supplier of advanced wafer products and wafer 
services to the semiconductor industry, announces its unaudited half 
year results for the six months to 30 June 2017. 
 
 
 
 
GBP' MILLION (except EPS)             30 June 2017  30 June 2016  Change 
 
REVENUE                                       70.4          63.0   +12% 
 WAFERS                                       69.4          59.5   +17% 
 LICENSING                                     1.0           3.5   -71% 
ADJUSTED OPERATING PROFIT*                    10.6          10.8   -2% 
 WAFERS                                        9.6           7.3   +32% 
 LICENSING                                     1.0           3.5   -71% 
ADJUSTED PROFIT BEFORE TAX*                    9.6          10.1     -5% 
 
PROFIT FOR THE PERIOD                          7.3          10.0    -27% 
 
ADJUSTED FULLY DILUTED EPS*                  1.35p         1.46p     -8% 
CASH GENERATED FROM OPERATIONS                11.2          12.4    -10% 
CAPITAL INVESTMENT                            15.4           7.6    102% 
LEVERAGE (NET DEBT + DEFERRED 
 CONSIDERATION)                               41.9          35.4     18% 
 
 
 
   HIGHLIGHTS 
 
 
   -- Wafer sales up 17% against H1 2016, delivering a 32% increase in the 
      related operating and adjusted operating profit. 
 
   -- Overall revenues up 12% against H1 2016. 
 
   -- Sales up in all three primary markets with Wireless up 9%, Photonics up 
      48%, and Infrared up 19% compared with H1 of 2016. Foreign exchange 
      tailwind of c10% following the devaluation of sterling in 2016. 
 
   -- Continued strong growth in Photonics includes the early phase of a 
      significant ramp in VCSEL wafers for a mass market consumer application, 
      and contributed to record monthly Photonics sales in June 2017. 
 
   -- License income of GBP1.0m, compared with GBP3.5m in H1 2016 (which 
      included upfront amounts).  No upfront license income in H1 2017. 
 
   -- Conversion of adjusted operating profit (GBP10.6m) into operating cash 
      (GBP11.2m) of 106% after funding GBP3.7m investment in working capital, 
      largely in connection with mass market VCSEL ramp (H1 2016: 115% 
      conversion). 
 
   -- Investment in capex and product development of GBP15.4m (H1 2016: 
      GBP7.6m) to support further growth, including the expected mass market 
      adoption of VCSELs.  This investment was funded primarily through organic 
      cash generation, and supplemented by debt funding. 
 
   -- A further capacity expansion plan initiated to meet higher levels of 
      demand which are expected in H2 2018.  5 new tools on order and lease 
      signed on new premises in South Wales which provides a flexible and cost 
      effective route to add up to 100 new tools, which would double IQE's 
      current tool count. 
 
   -- Breadth and depth of customer engagement across a range of technologies 
      and applications sets the scene for increasing revenue diversity and 
      growth through 2018 and beyond. 
 
   -- Direct engagement with OEMs has expanded to multiple programmes across a 
      range of materials technologies, validating the strength of IQE's IP 
      portfolio as a key differentiator and strong competitive advantage. 
      These programmes are central to several next generation mass market 
      applications. 
 
   -- Net debt up GBP2.4m since year end to GBP41.9m (December 2016: GBP39.5m). 
 
 
 
   * The Directors believe that the adjusted measures provide a more useful 
comparison of business trends and performance. Adjusted measures exclude 
exceptional items, share based payments and non-cash acquisition 
accounting charges as detailed in note 5. 
 
   Dr Drew Nelson, IQE Chief Executive, said: 
 
   "The compound semiconductor industry is moving through an inflection 
point.  Many of the key innovations that are taking place in the 
technology world would not be possible without the advanced properties 
of compound semiconductor materials.  Indeed, compound semiconductors 
are the fundamental enabler of innovations such as 3D sensing, biometric 
sensors, electric and autonomous vehicles, high speed wireless and 
optical communications, and advanced manufacturing. 
 
   "IQE has developed an unparalleled breath of materials IP, which 
position it to prosper from the inflection that is taking place in our 
industry.   Our broad portfolio of IP is a powerful competitive 
advantage which is enabling us to differentiate ourselves in the 
marketplace.  The strength of our IP has enabled us to broaden our 
direct engagement with OEMs from single points of engagement a few years 
ago, to multiple programmes enabling a number of next generation mass 
market technologies. 
 
   "IQE's outlook has never looked better.  The broad range of customer 
engagements across multiple technologies and multiple end markets, 
provide a clear path to increase revenue diversity and accelerate growth 
over the coming months and years ahead.   The breadth and depth of 
customer engagement underpins the Board's confidence in approving the 
capacity expansion plan, which provides a flexible and cost effective 
route to significantly scaling up in our business over the next few 
years" 
 
   The information contained within this announcement is deemed to 
constitute inside information as stipulated under the Market Abuse 
Regulations (EU) No. 596/2014. Upon the publication of this announcement, 
this inside information is now considered to be in the public domain. 
 
   CONTACTS 
 
   IQE plc [phone] 
 
   Drew Nelson 
 
   Phil Rasmussen 
 
   Chris Meadows 
 
   Canaccord Genuity + 44 (0) 20 7523 8000 
 
   Simon Bridges 
 
   Henry Fitzgerald O'Connor 
 
   Richard Andrews 
 
   Peel Hunt [phone] 
 
   Edward Knight 
 
   Nick Prowling 
 
   Note to Editors 
 
   IQE is the leading global supplier of advanced semiconductor wafers with 
products that cover a diverse range of applications, supported by an 
innovative outsourced foundry services portfolio that allows the Group 
to provide a 'one stop shop' for the wafer needs of the world's leading 
semiconductor manufacturers. 
 
   IQE uses advanced crystal growth technology (epitaxy) to manufacture and 
supply bespoke semiconductor wafers ('epiwafers') to the major chip 
manufacturing companies, who then use these wafers to make the chips 
which form the key components of virtually all high technology systems. 
IQE is unique in being able to supply wafers using all of the leading 
crystal growth technology platforms. 
 
   IQE's products are found in many leading-edge consumer, communication, 
computing and industrial applications, including a complete range of 
wafer products for the wireless industry, such as mobile handsets and 
wireless infrastructure, Wi-Fi, base stations, GPS, and satellite 
communications and optical communications. 
 
   The Group also manufactures advanced optoelectronic and photonic 
components such as semiconductor lasers, vertical cavity surface 
emitting lasers (VCSELs) and optical sensors for a wide range of 
applications including optical storage, thermal imaging, leading-edge 
medical products, pico-projection, finger navigation ultra-high 
brightness LEDs, and high efficiency concentrated photovoltaic (CPV) 
solar cells. 
 
   The manufacturers of these chips are increasingly seeking to outsource 
wafer production to specialist foundries such as IQE in order to reduce 
overall wafer costs and accelerate time to market. 
 
   IQE also provides bespoke R&D services to deliver customised materials 
for specific applications and offers specialist technical staff to 
manufacture to specification either at its own facilities or on the 
customer's own sites. The Group is also able to leverage its global 
purchasing volumes to reduce the cost of raw materials. In this way, 
IQE's outsourced services, provide compelling benefits in terms of 
flexibility and predictability of cost, thereby significantly reducing 
operating risk. 
 
   IQE operates a number of manufacturing and R&D facilities across Europe, 
Asia and the USA. The Group also delivers its products and services 
through regional sales offices located in major economic centres 
worldwide. 
 
 
 
   INTERIM RESULTS 2017 
 
   1. INDUSTRY BACKGROUND 
 
   Integrated circuits or "chips" are the critical components which lie at 
the heart of all electronic devices.  In the past, these chips have been 
primarily fabricated using silicon.  Silicon is an abundant 
semiconducting element which has enabled the Silicon chip market to grow 
to over $350 billion per annum.  However, like every element, silicon 
has a finite, and therefore limited, set of properties. 
 
   There are many other semiconducting elements which have much more 
advanced properties than silicon.  Compound semiconductors refers to the 
technology of combining these other semiconducting elements to create 
materials which overcome the inherent performance limitations of 
silicon.  This enables chip companies to produce compound semiconductor 
chips which achieve functionality that silicon chips just cannot match. 
Indeed, the wireless communications revolution, fibre optic 
communication (the internet), and LED lighting would not be possible 
without compound semiconductors. 
 
   2. IQE AND THE COMPOUND SEMI SUPPLY CHAIN 
 
   The three key steps in the supply chain are typically viewed as 
"wafers-chips-devices". IQE designs and fabricates compound 
semiconductor wafers.  It generates its revenues primarily from selling 
bespoke wafers to its customers, who in turn fabricate these wafers into 
compound semiconductor chips such as wireless communication chips, laser 
devices or advanced sensors. These chips are then incorporated into 
devices such as smartphones, base stations or other electronic systems 
and gadgets. 
 

   IQE also generates income from licensing IP to Joint Ventures, being 
related entities which are not controlled by IQE.  These joint ventures 
were established with IQE's partners to provide a bridge between 
academia and industry.  Our university partners are participating in 
these JV's to provide a cost-effective route to commercialise their new 
technologies, whereas IQE and its industrial partner are using the JV's 
to seed future revenues by using their "right of first refusal" over the 
commercial supply for these new technologies. 
 
   IQE differentiates itself from its competitors through technology 
leadership, economies of scale, and dual site manufacturing for security 
of supply.  This has enabled IQE to develop a strong leadership position, 
where it is recognised globally as the market leader, with an estimated 
55% share of the wireless market and an unparalleled breadth of 
materials technologies. 
 
   IQE has developed a market facing organisational structure, based around 
its 6 key markets: Wireless, Photonics, Infrared, Solar, Power, and 
CMOS++. 
 
   3. RESULTS 
 
   The Group's results are reported after a number of one-off items and 
non-cash accounting charges. In aggregate, these resulted in a net 
charge of GBP2.5m in H1 2017 (H1 2016: GBP0.2m) consisting of non-cash 
accounting charges of GBP2.8m (H1 2016: GBP1.8m), the release of 
deferred consideration (H1 2016: GBP2.1m credit) in the prior year and a 
related deferred tax credit of GBP0.3m (H1 2016: GBP0.6m charge).  These 
items are fully detailed in note 5, in order to assist with an 
assessment of the Group's underlying business performance. The following 
commentary on the first half results is based on these adjusted profit 
measures. 
 
   First half revenues increased by 12% to GBP70.4m (H1 2016: GBP63.0m). 
Wafer sales of GBP69.4m were up 17% against H1 2016.  This reflects 
increased sales in each of its primary markets: Wireless sales were up 
9% to GBP47.3m, Photonics sales ups 48% to GBP15.9m and InfraRed sales 
up 19% to GBP5.6m.  License income from joint ventures was GBP1.0m (H1 
2016: GBP3.5m), reflecting that IQE benefitted from significant upfront 
license fees in H1 2016. 
 
   Gross margins on wafer sales increased from 24% to 25%, and gross margin 
on license income remained at 100%.  Overall gross margin of 26% was 
lower than prior year (H1 2016: 28%), reflecting the mix effect of lower 
license income in 2017. 
 
   Selling, General and Administration expenses (SG&A), increased 3% to 
GBP7.5m (H1 2016: GBP7.3m).  Despite the increase in sales, the 
operating profit of GBP10.6m was 2% lower than prior year (H1 2016: 
GBP10.8m), which benefitted from one-off upfront license income.  There 
was no upfront license income in H1 2017. 
 
   Adjusted profit after tax reduced GBP0.4m to GBP9.8m (H1 2016: GBP10.2m), 
which combined with an increase in the fully diluted share count (due to 
the increase in share price) resulted in an 8% decrease in adjusted 
fully diluted EPS from 1.46p to 1.35p.  After exceptional charges of 
GBP2.5m (H1 2016: GBP1.7m), the reported profit after tax decreased from 
GBP9.8m to GBP7.3m. 
 
   The Group's net debt increased by GBP2.4m since the prior year end to 
GBP41.9m (December 2016: GBP39.5m).   Deferred consideration, which 
related to previous acquisitions, is nil, having being settled in full 
during H2 of 2016. 
 
   The Group has approximately GBP115m of accumulated tax losses, which 
represent a potential reduction in future tax payable of GBP33m. The tax 
credit of GBP0.6m (H1 2016: GBP0.4m charge) primarily reflects the 
recognition of additional tax losses consistent with the Groups growth 
opportunities, partially offset by tax charges in Asia where historical 
brought forward tax losses have now been utilised. This has resulted in 
an adjusted effective tax rate of -2.8% which has reduced from 1.8% in 
H1 2016 (FY 2016: -3.9%) and a reported effective tax rate of -8.4% (H1 
2016: 4.2%, FY 2016: -2.1%). 
 
   4. VISION AND STRATEGY 
 
 
 
   The evolution of semiconductors 
 
   Compound semiconductors are continuing to play an increasingly important 
role in the electronics industry as their advanced properties exceed the 
performance limitations of silicon semiconductors. Through continuing 
innovation, compound semiconductor technologies are now achieving the 
cost-performance thresholds that is accelerating their adoption on many 
fronts.  Moreover, as the technology continues through this inflection 
point of mass adoption, it is approaching a paradigm shift with the 
emergence of "Compound Semiconductor on Silicon" technology (CS-on-Si). 
 
 
   CS-on-Si combines the superior performance of compound semiconductors 
with the low cost of traditional silicon technology to create a high 
performance, low cost hybrid solution.  This technology has been under 
development for more than a decade, through a host of government and 
industry funded programmes that has engaged blues chips, leading 
universities and specialist high technology companies alike.  IQE has 
been firmly embedded in these programmes as a materials specialist, and 
has many patents in this field.  This transition is almost upon us, as 
the supply chain anticipates initial commercialisation of GaN-on-Si for 
wireless base stations as early as 2018. 
 
   Vision and strategy 
 
   Our vision is to be the leading global provider of advanced 
semiconductor materials - the global "go to" compound semiconductor 
materials specialist in the electronics industry. 
 
   To realise this vision requires the ability to deliver "enabling 
technology", which meets the price points needed for adoption, and which 
can be delivered reliably, on-time, every-time with the ability to scale 
rapidly.  IQE has positioned itself well for this challenge, having 
built the broadest portfolio of materials IP in the industry, and 
developed a unique platform for a secure low cost supply. Moreover, IQE 
believes it has developed a reputation to match - for excellence and 
reliability. 
 
   As part of the Group's strategy, IQE announced in July 2017 that, as 
part of its expansion plans, it has agreed a lease of a new premises in 
South Wales.  The lease is with the Cardiff City Region, which has a 
goal of supporting the development of the Compound Semiconductor Cluster 
in South Wales.  This lease provides the infrastructure needed for IQE's 
expansion in a highly cost effective manner.  The lease is for 11 years, 
and provides IQE with an option to extend the lease or purchase the 
freehold. In parallel, the Group has placed orders for new MOCVD 
equipment. 
 
   5. MARKETS 
 
   The Group has established six business units along market lines, to 
address its primary and emerging markets, the emerging markets of Solar 
and Power control are not yet significant enough to be separated in our 
segmental reporting. 
 
   Wireless 
 
   "Wireless" refers to a broad range of applications from mobile devices 
such as smartphones, tablets, routers, and WiFi through to large system 
applications such as base stations and radar.  It is IQE's largest 
market today, and accounted for 68% of wafer sales in the first half of 
2017 (H1 2016: 73%).  This has been the main growth driver in IQE's 
business over the last decade. 
 
   The smartphone revolution was triggered by the launch of the iPhone in 
2007.  The consumer "feeding frenzy" that followed delivered double 
digit growth in the market for wireless materials including power 
amplifiers (PAs), driven by both the increase in the volume of handsets 
sold and an increasing chip content in each handset. Through this period 
of strong growth IQE built its global leadership position in wireless, 
and now enjoys an estimated 55% global market share.  However, the 
market has been more subdued over the past few years reflecting a lull 
in mobile phone handset innovation, and technology/fabrication trends 
resulting in smaller die size has resulted in the materials market 
remaining relatively flat over that period.  However, the much 
speculated revival in handset innovation, and the advent of 5G, provide 
clear routes to the return of double digit growth in this segment. 
 
   At present, growth in IQE's wireless division is being driven by high 
voltage applications such radars and base stations. Although this has 
historically represented only a modest part of IQE's wireless sales 
(C.10-15%), it is a high growth area delivering double digit growth. 
In these applications, compound semiconductor technology (GaN-on-SiC) is 
replacing incumbent silicon technology (LDMOS) which is unable to meet 
the rising performance required for today's high speed communication 
systems.  Moreover, working closely with its chip customers, IQE has 
developed GaN-on-Si technology which delivers the high performance of 
compound semiconductors but at a dramatically lower cost of manufacture, 
and hence offers the potential to disrupt this market and deliver strong 
growth for IQE in the near term. 
 
   A further dimension to IQE's wireless business is the market for 
wireless filters.  This is a very large market, which is already more 
than double the size of the existing wireless PA market, and growing 
rapidly.  Currently, a range of filters are made using poly-crystal 
aluminium nitride material.  However, IQE has developed and internally 
demonstrated a single-crystal aluminium nitride material which offers 
superior performance characteristics. Further development is required 
before this technology can be commercialised, but initial results 
reflect substantial promise, and the potential to commercialise over a 
2-3 year time frame. 
 
   Photonics 
 
   Photonics refers to semiconductor applications which emit or detect 
light - essentially lasers and sensors.  It accounted for 23% of the 
Group's wafer sales in the first half of 2017 (H1 2016: 18%).  It is the 
fastest growing segment within IQE, and delivered a growth rate of 48% 
in the first half following several years of strong double digit growth. 
 
   The critical materials technologies in this market are VCSEL (Vertical 

Cavity Surface Emitting Lasers) and InP (Indium Phosphide).  After 
several years of development, the advances in these technologies and the 
improvement in manufacturing processes means that these technologies are 
now hitting the performance and cost points necessary for mass market 
adoption. 
 
   The application space for VCSEL is very broad and spans mass-market 
consumer applications, fibre optic communication, and industrial and 
health applications.  Specific uses include 3D sensing, LIDAR, gesture 
recognition, laser autofocus, proximity sensing, fibre optics for data 
centres, industrial heating, machine control and biometrics to name but 
a few. 
 
   IQE is the technology and market leader in VCSEL materials, working with 
leading chip companies and OEMs directly.  Indeed, IQE's IP is a strong 
differentiator which provides a powerful competitive advantage in the 
VCSEL marketplace, and which has enabled IQE to secure multiple 
multi-year contracts for mass market applications. 
 
   Over the past few years, IQE has enjoyed strong double-digit growth in 
its VCSEL business, much of which has been customer funded development 
spanning a broad base of customers and applications.  In its recent 
trading update, IQE announced the start of a ramp in a mass market 
consumer application using VCSELs. This application, which relates to a 
sensing technology, helped deliver record sales for IQE in June, and 
offers the potential for a dramatic acceleration in VCSEL sales growth 
over the next few years. 
 
   InP is the technology that is critical to fibre optics in 
telecommunications.  The main growth drivers here are "Fibre to the 
Premises" (FTTx), data centre infrastructure and mobile base station 
backhaul.   The continued exponential growth in data traffic is driving 
the roll out of fibre "to the last mile" across the planet, the need for 
greatly increased data storage capacity with rapid access to data and 
4G/LTE backhaul Fibre Optic links. 
 
   A key technology in InP fibre optics is Distributed Feedback Lasers 
("DFB"s).  In contrast to our other technologies, there is an 
intermediary step in the supply chain which sits between the epitaxial 
wafer production and the chip fabrication.  In particular, a "grating" 
is added to the epitaxial wafer, followed by further epitaxial films on 
top of the grating.  Historically, IQE has only provided the base 
epitaxial wafers with third parties undertaking the additional steps. 
However, IQE has developed a cost effective, highly flexible grating 
technology which solves some of the key challenges currently facing this 
sector. This technology has passed internal testing and is being 
qualified by customers.  We believe that this is a disruptive technology 
which could allow for rapid growth and market share gains for IQE in 
this segment in the near term. 
 
   In overview, we believe that our photonics business is at the start of a 
long term and exciting high growth curve.  Our growth ambitions are 
underpinned by an impressive pipeline of programmes with blue chip 
customers for high volume applications, and IP which provides IQE with 
powerful competitive advantages. 
 
   Infrared 
 
   We are the market leader in the supply of indium antimonide (InSb) and 
gallium antimonide (GaSb) materials used in high resolution infrared 
systems, with an estimated market share of approximately 80%. This 
segment accounted for approximately 8% of the Group's wafer sales in the 
first half of 2017 (H1 2016: 8%). 
 
   Sales are currently concentrated in defence related applications, but 
through our engagement in programmes in consumer, medical and industrial 
imagining, we expect this segment to increasingly transition into new 
high volume markets over the coming years. 
 
   Power 
 
   "Power" relates to the use of semiconductors in Power Switching and LED 
lighting applications.   IQE is developing materials solutions to 
address some of the key technological challenges faced in these markets. 
The size and scale of these markets are many times larger than IQE's 
existing markets, so these represent truly transformational 
opportunities for IQE. 
 
   Power switching devices are used where electricity is switched between 
AC and DC, or where voltage is switched.  This happens throughout 
electricity generation and distribution, and in virtually all 
applications that are powered from the grid, from transformers in 
industrial machinery and electric vehicles, through to power supplies 
for your laptop. The market for power switching chips is estimated to be 
worth at least $12 billion, which is approximately 4x the size of the 
existing wireless power amplifier chip market. Again, a truly 
transformational opportunity. 
 
   At present, these power switching chips are made using silicon, which 
has performance limitations.  Accordingly, the industry is investing 
heavily in a step change in technology to overcome this inefficiency and 
deliver a high performing lower cost solution.  That step change is the 
adoption of a hybrid compound semiconductor on silicon technology called 
GaN on Si.  IQE is at the forefront of the materials development. 
 
   We are all becoming accustomed with LED technology as it gathers 
momentum in a range of lighting applications from automotive lighting to 
office lighting and residential lighting.  The prevalent materials 
technology in this industry is currently "gallium nitride on sapphire", 
but it is widely accepted that GaN on Si will become an important 
technology in this space. This provides a major opportunity for IQE to 
leverage its development of GaN on Si for Power into this adjacent 
market. 
 
   Advanced Solar 
 
   Solar panels are largely made from silicon, which is inherently 
inefficient in converting sunlight into electricity, typically achieving 
efficiencies of only 15-20%.  In contrast, compound semiconductors are 
significantly more efficient, and today deliver efficiencies of over 
44%.   Furthermore, there is a technology roadmap to increase this 
efficiency to over 50%.  With its supply chain partners, IQE has 
developed technology leadership and is working to qualify this into 
production. 
 
   There are two key markets for this Compound Semiconductor solar 
technology: "space" (satellite power supplies) and "terrestrial" 
(renewable energy).    The adoption of this technology in terrestrial in 
the short term is limited by the historic low oil price and over-supply 
within the silicon panel market, but this remains a major market 
opportunity as these issues unwind.  Therefore, our primarily focus is 
on penetrating the space market, where this technology is already 
embedded. As technology leader we have a clear strategy to penetrate the 
market and win market share. 
 
   CMOS++ 
 
   The ever-increasing demand for higher speed and improved performance 
from today's electronic devices is ushering in a new era of 
semiconductor materials that combine the scale and low (per chip) cost 
base of the silicon industry with the power and performance of compound 
semiconductors. 
 
   IQE is at the forefront of developing this technology, and is working 
with a range of partners from global industry giants, universities and 
governments to dynamic start-ups.  As a result, we have developed an 
enviable portfolio of technologies and patents which position us well to 
increasingly participate in the continuing evolution of the 
semiconductor industry. 
 
   6. CORPORATE GOVERNANCE 
 
   Following the AGM on 13(th) June 2017, Professor Simon Gibson OBE 
retired from the Board.  The Board would like to take this opportunity 
to thank Simon for his significant commitment and the contribution that 
Simon provided over the past 15 years. 
 
   7. CURRENT TRADING AND OUTLOOK 
 
 
 
   The Group has continued to make good strategic, operational and 
financial progress in 2017, and has a clear vision and roadmap for the 
continuing growth of the business.  The first half progressed well, and 
ended strongly with the start of a major new product ramp.  In light of 
the benefit of a strong pipeline and increasing revenue diversification 
the Board remains confident that the Group is on track to deliver full 
year earnings in line with the recently upgraded expectations. 
 
   Dr Drew Nelson, CEO 
 
 
 
 
 
 
 
CONSOLIDATED INCOME STATEMENT           6 months to  6 months to  12 months to 
                                        30 Jun 2017  30 Jun 2016  31 Dec 2016 
 
(All figures GBP'000s)            Note   Unaudited    Unaudited     Audited 
Revenue                                      70,370       63,010       132,707 
Cost of sales                              (53,665)     (45,766)      (97,979) 
Gross profit                                 16,705       17,244        34,728 
Other income                                      -        2,163         2,340 
Selling, general and 
 administrative expenses                    (8,920)      (8,270)      (16,356) 
(Loss)/profit on disposal of 
 property, plant and equipment                  (4)          137          (47) 
Operating profit                              7,781       11,274        20,665 
Net finance costs                           (1,025)        (802)       (1,633) 
Adjusted profit before tax                    9,561       10,061        20,630 
Adjustments                          5      (2,805)          411       (1,598) 
Profit before tax                             6,756       10,472        19,032 
Income tax credit/(charge)                      566        (444)           408 
Profit for the period                         7,322       10,028        19,440 
Profit attributable to: 
Equity shareholders                           7,297        9,936        19,276 
Non-controlling interests                        25           92           164 
                                              7,322       10,028        19,440 
 
Basic earnings per share           6    1.07p        1.49p        2.87p 
 
Diluted earnings per share         6    1.00p        1.43p        2.71p 
 
 
   Adjusted basic and diluted earnings per share is presented in Note 6. 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
                                                                               12 
                                                       6 months   6 months   months 
CONSOLIDATED STATEMENT OF                                 to         to        to 
                                                        30 Jun     30 Jun    31 Dec 
COMPREHENSIVE INCOME                                     2017       2016      2016 
 
(All figures GBP'000s)                                 Unaudited  Unaudited  Audited 
Profit for the period                                      7,322     10,028   19,440 
Currency translation differences on foreign currency 
 net investments*                                        (7,521)     12,713   24,347 
Total comprehensive income for the period                  (199)     22,741   43,787 
Total comprehensive income attributable to: 
Equity shareholders                                        (236)     22,333   43,063 
Non-controlling interests                                     37        408      724 
                                                           (199)     22,741   43,787 
 
 
   * This may be subsequently reclassified to the income statement when it 
becomes realised. 
 
 
 
 
                                            As At        As At        As At 
CONSOLIDATED BALANCE SHEET               30 Jun 2017  30 Jun 2016  31 Dec 2016 
 
(All figures GBP'000s)                    Unaudited    Unaudited     Audited 
 
Non-current assets : 
Intangible assets                            105,903       95,990      103,972 
Property, plant and equipment                 81,968       73,331       85,001 
Deferred tax asset                            18,155       15,745       18,181 
Financial Assets                               8,000        8,000        8,000 
Total non-current assets                     214,026      193,066      215,154 
 
Current assets : 
Inventories                                   30,358       23,767       28,498 
Trade and other receivables                   31,683       25,838       30,868 
Cash and cash equivalents             8        5,465        4,311        4,957 
Total current assets                          67,506       53,916       64,323 
Total assets                                 281,532      246,982      279,477 
 
Current liabilities : 
Borrowings                            8      (5,778)      (3,344)      (7,652) 
Trade and other payables                    (34,030)     (33,083)     (36,939) 
Provisions for other liabilities 
 and charges                          9      (1,544)      (1,351)      (1,421) 
Total current liabilities                   (41,352)     (37,778)     (46,012) 
 
Non-current liabilities : 
Borrowings                            8     (41,549)     (34,553)     (36,854) 
Provisions for other liabilities 
 and charges                          9      (1,455)      (2,778)      (2,167) 
Total non-current liabilities               (43,004)     (37,331)     (39,021) 
Total liabilities                           (84,356)     (75,109)     (85,033) 
Net assets                                   197,176      171,873      194,444 
 
Equity attributable to shareholders 
: 
Share capital                        10        6,830        6,723        6,755 
Share premium                                 52,735       50,609       51,081 
Retained earnings                             96,773       80,136       89,476 
Other reserves                                37,644       31,564       43,975 
                                             193,982      169,032      191,287 
Non-controlling Interest                       3,194        2,841        3,157 
Total equity                                 197,176      171,873      194,444 
 
 
 
 
 
 
   CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 
 
 
 
 
 
                                                                                 Exchange 
Unaudited                                             Share    Share   Retained    rate     Other    Non-controlling   Total 
 (All figures GBP'000s)                              capital  premium  earnings  reserve   reserves     interests     equity 
 
Balance as at 1 January 2017                           6,755   51,081    89,476    31,712    12,263            3,157  194,444 
 
Profit for the period                                      -        -     7,297         -         -               25    7,322 
Foreign exchange                                           -        -         -   (7,533)         -               12  (7,521) 
Total comprehensive income                                 -        -     7,297   (7,533)         -               37    (199) 
 
Issues of ordinary shares including employee share 
 schemes                                                  75    1,654         -         -     1,202                -    2,931 
Total transactions with owners                            75    1,654         -         -     1,202                -    2,931 
 
Balance as at 30 June 2017                             6,830   52,735    96,773    24,179    13,465            3,194  197,176 
 
                                                                                 Exchange 
Unaudited                                              Share    Share  Retained      rate     Other  Non-controlling    Total 
 (All figures GBP'000s)                              capital  premium  earnings   reserve  reserves        interests   equity 
 
Balance as at 1 January 2016                           6,655   49,600    70,200     7,925    10,221            2,433  147,034 
 
Profit for the period                                      -              9,936         -         -               92   10,028 
Foreign exchange                                           -        -         -    12,397         -              316   12,713 
Total comprehensive income/(expense)                       -        -     9,936    12,397         -              408   22,741 
 
Issues of ordinary shares including employee share 
 schemes                                                  68    1,009         -         -     1,021                -    2,098 
Total transactions with owners                            68    1,009         -         -     1,021                -    2,098 
 
Balance as at 30 June 2016                             6,723   50,609    80,136    20,322    11,242            2,841  171,873 
 
 
 
 
 
                                                                                 Exchange 
Audited                                               Share    Share   Retained    rate     Other    Non-controlling   Total 
 (All figures GBP'000s)                              capital  premium  earnings  reserve   reserves     interests     equity 
 
Balance at 1 January 2016                              6,655   49,600    70,200     7,925    10,221            2,433  147,034 
 
 
Profit for the year                                        -        -    19,276         -         -              164   19,440 
Foreign exchange                                           -        -         -    23,787         -              560   24,347 
Total comprehensive income                                 -        -    19,276    23,787         -              724   43,787 
 
 
Issues of ordinary shares including employee share 
 schemes                                                 100    1,481         -         -     2,042                -    3,623 
Total transactions with owners                           100    1,481         -         -     2,042                -    3,623 
 
Balance at 31 December 2016                            6,755   51,081    89,476    31,712    12,263            3,157  194,444 
 
 
 
 
 
                                                       6 months to  6 months to  12 months to 
CONSOLIDATED CASH FLOW STATEMENT                       30 Jun 2017  30 Jun 2016  31 Dec 2016 
 
(All figures GBP'000s)                                  Unaudited    Unaudited     Audited 
 
Cash flows from operating activities : 
Adjusted cash inflow from operations                        11,877       13,010        24,281 
Cash impact of adjustments                          5        (682)        (605)       (1,818) 
Cash inflow from operations                         7       11,195       12,405        22,463 
Net interest paid                                          (1,043)        (723)       (1,489) 
Income tax paid                                              (946)        (684)         (839) 
Net cash generated from operating activities                 9,206       10,998        20,135 
 
Cash flows from investing activities : 
Acquisition deferred consideration for 
 Kopin Wireless                                                  -     (10,650)      (11,250) 
Investment in intangible fixed assets                      (9,604)      (3,539)       (8,104) 
Purchase of property, plant and equipment                  (5,763)      (4,065)      (10,956) 
Net cash used in investing activities                     (15,367)     (18,254)      (30,310) 
 
Cash flows from financing activities : 
Issues of ordinary share capital                               989           74           578 
Repayment of borrowings                                    (9,395)      (1,765)       (3,341) 
Increase in borrowings                                      15,239        8,269        12,623 
Net cash generated from financing activities                 6,833        6,578         9,860 
                                                               672        (678)         (315) 
Cash and cash equivalents at the beginning of the 
 period                                                      4,957        4,644         4,644 
Exchange (losses)/gains on cash and cash 
 equivalents                                                 (164)          345           628 
Cash and cash equivalents at the end of 
 the period                                         8        5,465        4,311         4,957 
 
 
 
   1 BASIS OF PREPARATION 
 
   These interim results have been prepared under the historical cost 

convention and in accordance with International Financial Reporting 
Standards ("IFRS") and interpretations in issue at 30 June 2017. 
 
   The interim results were approved by the Board of Directors and the 
Audit Committee on 30 August 2017. The interim results do not constitute 
statutory accounts within the meaning of section 434 of the Companies 
Act 2006 and have not been audited.  Comparative figures in the interim 
results for the year ended 31 December 2016 have been taken from the 
published audited statutory financial statements.   All other periods 
presented are unaudited. Statutory accounts for the year ended 31 
December 2016 were approved by the Board of Directors on 21 March 2017 
and were delivered to the Registrar of Companies. The report of the 
auditors on those accounts was unqualified, did not contain an emphasis 
of matter paragraph and did not contain any statement under section 498 
of the Companies Act 2006. 
 
   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). 
 
   As permitted these interim results for the half-year ended 30 June 2017 
have been prepared in accordance with UK AIM rules and IAS 34, 'Interim 
financial reporting' as adopted by the European Union. These interim 
financial results should be read in conjunction with the annual 
financial statements for the year ended 31 December 2016, which have 
been prepared in accordance with IFRSs as adopted by the European Union. 
The accounting policies applied are consistent with those of the annual 
financial statements for the year ended 31 December 2016, as described 
in those annual financial statements. 
 
   The financial information contained in these interim results has been 
reviewed by the Company's auditor in accordance with ISRE 2410 however 
this does not constitute an audit. 
 
   Having considered the Group's forecasts the Directors have formed a 
judgment that there is a reasonable expectation that the Group has 
adequate resources to continue in operational existence for the 
foreseeable future. For this reason the Directors continue to adopt the 
going concern basis in preparing the condensed consolidated financial 
information. 
 
   2 ACCOUNTING POLICIES 
 
   The accounting policies adopted are consistent with those of the annual 
financial statements for the year ended 31 December 2016, as described 
in those financial statements on pages 78 to 82. 
 
   Recent accounting developments 
 
   In preparing the condensed consolidated half-yearly financial 
information the Group has adopted the following Standards, amendments 
and interpretations which are effective for 2017 and will be adopted for 
the year ended 31 December 2017: 
 
 
   -- Amendment to IFRS 12 "Disclosure of interests in other entities' 
      clarifying scope. 
 
   -- Amendments  to clarify the classification and measurement of share-based 
      payment transactions 
 
   -- IAS Amendments to IAS 7, "Statement of cash flows" on disclosure 
      initiative. 
 
   -- Amendments to IAS 12,'Income taxes' on Recognition of deferred tax assets 
      for unrealised losses. 
 
 
 
   The adoption of these standards and amendments has not had a material 
impact on the interim financial information. 
 
   The following new standards and amendments to standards and 
interpretations have been issued but are not yet endorsed for annual 
periods beginning after 1 January 2017 (noted below), and have not been 
adopted in preparing the condensed consolidated half-yearly financial 
information. 
 
 
   -- Annual improvements 2014-2016 cycle 
 
   -- Amendments  to clarify the classification and measurement of share-based 
      payment transactions 
 
   -- Amendment to IFRS 2, 'Share based payments' to clarify the classification 
      and measurement of certain share based payment transactions 
 
   -- IFRS 15 'Revenue from contracts with customers' 
 
   -- IFRS 9 'Financial instruments' 
 
   -- IFRS 16 'Leases' 
 
   -- IFRS 17 'Insurance contracts' 
 
   -- Amendment to IAS 28 'Investments in associates and joint ventures' to 
      clarify certain fair value measurements 
 
   -- Amendment to IAS 40 'Investment property' to clarify transfers or 
      property, to, or from, investment property 
 
 
 
 
 
   Financial Instruments 
 
   The carrying value of cash, trade and other receivables, other equity 
instruments, trade and other payables and borrowings also represent 
their estimated fair values. There are no material differences between 
carrying value and fair value at 30 June 2017. 
 
   Additional disclosure of the basis of measurement and policies in 
respect of financial instruments are described on pages 102 to 105 of 
our 2016 Annual Report and remain unchanged at 30 June 2017. 
 
   Estimates 
 
   The preparation of interim financial statements requires management to 
make judgements, estimates and assumptions that affect the application 
of accounting policies and the reported amounts of assets and 
liabilities, income and expense. Actual results may differ from these 
estimates. 
 
   In preparing these condensed interim financial statements, 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 that applied to the consolidated financial statements 
for the year ended 31 December 2016. 
 
   Impairment 
 
   No Impairment charges have been recognised in the period to 30 June 
2017. 
 
   3 PRINCIPAL RISKS AND UNCERTAINTIES 
 
   The principal risks and uncertainties impacting the Group are described 
on pages 28 to 31 of our 2016 Annual Report and remain unchanged at 30 
June 2017. 
 
   They include: competition, technological change, financial liquidity, 
natural disasters, retention of key employees, business interruption - 
supply chain, customer concentration and legislative compliance. 
 
 
 
   4. SEGMENTAL INFORMATION 
 
 
 
 
                 6 Months to 30 June 2017  6 Months to 30 June 2016  12 Months to 31 Dec 2016 
                         Unaudited                 Unaudited                  Audited 
                         GBP'000                   GBP'000                   GBP'000 
Revenue 
Wireless                           47,257                    43,228                    91,291 
Photonics                          15,867                    10,705                    22,792 
Infra Red                           5,594                     4,689                    10,560 
CMOS++                                702                       871                     1,406 
Total Segment 
 Revenue                           69,420                    59,493                   126,049 
License income 
 from sales to 
 joint 
 ventures                             950                     3,517                     6,658 
Total Revenue                      70,370                    63,010                   132,707 
 
Adjusted 
operating 
profit 
Wireless                            7,298                     6,741                    13,040 
Photonics                           6,451                     4,549                     9,254 
Infra Red                           1,360                     1,034                     2,651 
CMOS++                              (977)                   (1,368)                   (1,576) 
Segment 
 adjusted 
 operating 
 profit                            14,132                    10,956                    23,369 
 
Central 
 corporate 
 costs                            (4,531)                   (3,691)                   (7,908) 
Profit from 
 license income 
 from sales to 
 joint 
 ventures                             950                     3,517                     6,658 
Adjusted 
 operating 
 profit                            10,551                    10,782                    22,119 
 
Non-cash 
 accounting 
 charges                          (2,805)                   (1,752)                   (3,560) 
Net reduction 
 in contingent 
 deferred 
 consideration                          -                     2,163                     2,340 
Restructuring 
 and 
 reorganisation                         -                         -                     (378) 
Finance costs                       (990)                     (721)                   (1,489) 
Profit before 
 tax                                6,756                    10,472                    19,032 
 
 
   The segmental disclosure for the 6 months to 30 June 2016 and the 12 
months to 31 December 2016 has been restated to separately disclose 
central costs following reorganisation of the Group's functions. Central 
corporate costs include all head office and other corporate related 
support functions. 
 
   5 ADJUSTED PROFIT MEASURES 
 
   The group's results are reported after a number of imputed non-cash 
charges and non-recurring items.  Therefore, we have provided additional 
information to aid an understanding of the group's performance. 
 
 
 
 
                          6 months to 30  6 months to 30 
Adjustments to profit        Jun 2017        Jun 2016         12 months to 
 (All figures GBP'000s)     Unaudited       Unaudited      31 Dec 2016 Audited 
Non-cash accounting 
 charges                         (2,805)         (1,752)               (3,560) 
Gain on release of 
 contingent deferred 
 consideration                         -           2,163                 2,340 
Restructuring and 
 reorganisation                        -               -                 (378) 
Total before tax                 (2,805)             411               (1,598) 
Deferred tax on 
 adjustments                         301           (629)                 (402) 
Total after tax                  (2,504)           (218)               (2,000) 
 
 
   The non-cash accounting charges of GBP2.8m (H1 2016: GBP1.8m, FY16: 
GBP3.6m) reflect a charge for share based payments of GBP2.0m (H1 2016: 
GBP1.0m, FY16: GBP2.0m), the amortisation of acquired intangibles 

GBP0.7m (H1 2016: GBP0.7m, FY16: GBP1.4m) and the unwind of the 
discounting of long term balances of GBP0.1m (H1 2016: GBP0.1m, FY16: 
GBP0.2m). 
 
   The adjustments above are classified GBP1.3m (H1 2016: GBP0.7m, FY16: 
GBP1.7m) within gross margin, GBP1.4m (H1 2016: GBP1.0m, FY16: GBP1.7m) 
within selling, general and administrative expenses and GBP0.1m (H1 
2016: GBP0.1m, FY16: GBP0.2m) in net finance costs. 
 
   The Group generated a non-cash profit of GBPnil (H1 2016: GBP2.2m, FY16: 
GBP2.3m) arising from a reduction in the estimated remaining deferred 
consideration (settled via trade discount) in respect of a previous 
acquisition. The non-cash profit arising in prior periods has been 
classified within other income and expenses in the consolidated income 
statement. The deferred consideration was settled in full in FY16. 
 
   The restructuring and reorganisation costs in the prior period (H1 2016: 
GBPnil, FY16: GBP0.4m) reflect some one-off redundancy and asset write 
downs associated with the restructuring of the groups manufacturing 
operations. 
 
   The deferred tax credit of GBP0.3m (H1 2016: GBP0.6m credit, FY16: 
GBP0.4m credit) reflects the deferred tax impact associated with the 
adjustments to profit. 
 
   The cash flow impact of adjustments in the first half of 2017 of 
GBP682,000 relates to lease rental payments associated with a previously 
provided onerous lease. 
 
   Certain items noted above are accounting estimates based on judgements, 
accordingly, the actual amounts may differ from these estimates. 
 
 
 
   5 ADJUSTED PROFIT MEASURES (Continued) 
 
 
 
 
                            6 months to  6 months to 
                            30 Jun 2017  30 Jun 2016      12 months to 
 (All figures GBP'000s)      Unaudited    Unaudited    31 Dec 2016 Audited 
 
Adjusted gross margin            18,047       17,925                36,415 
Reported gross margin            16,705       17,244                34,728 
 
Adjusted sales, general 
 and administrative 
 expenses                       (7,492)      (7,280)              (14,249) 
Reported sales, general 
 and administrative 
 expenses                       (8,920)      (8,270)              (16,356) 
 
Adjusted operating profit        10,551       10,782                22,119 
Reported operating profit         7,781       11,274                20,665 
 
Adjusted profit before tax        9,561       10,061                20,630 
Reported profit before tax        6,756       10,472                19,032 
Adjusted profit after tax         9,826       10,246                21,440 
Reported profit after tax         7,322       10,028                19,440 
 
 
 
 
 
Earnings before interest, tax, depreciation and amortisation 
 (EBITDA) have been calculated as follows: 
 
                           6 months    6 months 
                           to 30 Jun  to 30 Jun 
                             2017        2016 
 (All figures GBP'000s)    Unaudited  Unaudited   12 months to 31 Dec 2016 Audited 
Profit attributable to 
 equity shareholders           7,297       9,936                            19,276 
Minority interest                 25          92                               164 
Tax                            (566)         444                             (408) 
Finance costs                  1,025         802                             1,633 
Depreciation of tangible 
 fixed assets                  3,092       3,120                             5,561 
Amortisation of 
 intangible fixed assets       2,714       2,444                             5,377 
Share based payments*          2,034       1,021                             2,042 
Profit and Loss on 
 disposal*                         4       (137)                                47 
Release of contingent 
 deferred consideration*           -     (2,163)                           (2,340) 
Restructuring and 
 re-organisation*                  -           -                               378 
EBITDA                        15,625      15,559                            31,730 
 
 
   *Exceptional items impacting EBITDA include the following items: share 
based payments, profit and loss on disposal, impairment of assets, 
provision for onerous lease, wireless business unit re-organisation 
costs and the release of contingent deferred consideration. 
 
   6 EARNINGS PER SHARE 
 
 
 
 
                                    6 months to  6 months to  12 months to 
                                    30 Jun 2017  30 Jun 2016  31 Dec 2016 
                                     Unaudited    Unaudited     Audited 
 
Results in GBP'000s: 
Profit attributable to ordinary 
 shareholders                             7,297        9,936        19,276 
Adjustments to profit after tax 
 (note 5)                                 2,504          218         2,000 
Adjusted profit attributable to 
 ordinary shareholders                    9,801       10,154        21,276 
 
Number of shares: 
Weighted average number of 
 ordinary shares                    676,378,550  666,683,779   671,532,674 
Dilutive share options               49,256,183   27,885,351    38,548,084 
Adjusted weighted average number 
 of ordinary shares                 725,634,733  694,569,130   710,080,758 
 
Adjusted basic earnings per share         1.45p        1.52p         3.17p 
Basic earnings per share                  1.07p        1.49p         2.87p 
 
Adjusted diluted earnings per             1.35p        1.46p         3.00p 
 share 
Diluted earnings per share                1.00p        1.43p         2.71p 
 
 
   Basic earnings per share is calculated by dividing the profit 
attributable to ordinary shareholders by the weighted average number of 
ordinary shares during the period. 
 
   Diluted earnings per share is calculated by dividing the profit 
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. 
 
 
 
   7 CASH GENERATED FROM OPERATIONS 
 
 
 
 
                                                             6 months to  6 months to  12 months to 
                                                             30 Jun 2017  30 Jun 2016  31 Dec 2016 
 
(All figures GBP'000s)                                        Unaudited    Unaudited     Audited 
 
Profit before tax                                                  6,756       10,472        19,032 
Finance costs                                                      1,025          802         1,633 
Depreciation of property, plant and equipment                      3,092        3,120         5,561 
Amortisation of intangible assets                                  2,714        2,444         5,377 
Loss/(profit) on disposal of fixed assets                              4        (137)            47 
Gain on release of contingent deferred consideration                   -      (2,163)       (2,340) 
Contingent deferred consideration (settled through 
 contractual discounts)                                                -      (2,528)       (3,959) 
Share based payments                                               2,034        1,021         2,042 
Cash inflow from operations before changes in working 
capital                                                           15,625       13,031        27,393 
Increase in inventories                                          (2,698)      (1,546)       (4,206) 
(Increase)/decrease in trade and other receivables               (2,966)          774         1,437 
Increase/(decrease) in trade and other payables                    1,234          146       (2,161) 
Cash inflow from operations                                       11,195       12,405        22,463 
 
 
   8 ANALYSIS OF NET DEBT 
 
 
 
 
                                        As At        As At        As At 
                                     30 Jun 2017  30 Jun 2016  31 Dec 2016 
 
(All figures GBP'000s)                Unaudited    Unaudited     Audited 
 
Bank borrowings due after one year      (41,549)     (34,553)     (36,854) 
Bank borrowings due within one year      (5,778)      (3,344)      (7,652) 
Finance leases due after one year              -            -            - 
Finance leases due within one year             -            -            - 
Total borrowings                        (47,327)     (37,897)     (44,506) 
Cash and cash equivalents                  5,465        4,311        4,957 
Net debt                                (41,862)     (33,586)     (39,549) 
 
 
 
   9 PROVISIONS FOR OTHER LIABILITIES AND CHARGES 
 
 
 
 
                                       As at        As at        As at 
                                    30 Jun 2017  30 Jun 2016  31 Dec 2016 
 
(All figures GBP'000s)               Unaudited    Unaudited     Audited 
 
As at 1 January                           3,588        4,038        4,038 
Charged to the income statement             140           53          104 
Utilised during the period                (682)        (605)      (1,283) 
Foreign exchange                           (47)          643          729 
As at 30 June / 31 December               2,999        4,129        3,588 
 
 
 
   As part of the re-organisation and rationalisation of the Group's 
facilities the Group ceased its manufacturing activities in Singapore 
and established the Compound Semiconductor Development Centre. The 
provision above represents the onerous lease obligation in respect of 
the Singapore property. This is expected to be utilised over the next 
two years. The provision has been discounted using a risk free rate of 
2.5%. 
 
   10 SHARE CAPITAL 
 
 
 
 
                                        As At        As at        As at 
                                     30 Jun 2017  30 Jun 2016  31 Dec 2016 
 

Number of shares                      Unaudited    Unaudited     Audited 
 
As at 1 January                      675,506,061  665,533,170  655,533,170 
Employee share schemes                 7,516,861    1,667,010    4,831,424 
Shares issued to settle Translucent 
 deferred consideration                        -    5,141,467    5,141,467 
As at 30 June / 31 December          683,022,922  672,341,647  675,506,061 
 
 
 
   In the period to the 30 June 2017 7,516,861 (H1 2016: 1,677,010, FY16: 
4,831,424) ordinary shares were issued to satisfy employee share 
schemes. 
 
 
 
 
                                        As At        As at        As at 
                                     30 Jun 2017  30 Jun 2016  31 Dec 2016 
 
(All figures GBP'000s)                Unaudited    Unaudited     Audited 
 
As at 1 January                            6,755        6,655        6,655 
Employee share schemes                        75           17           48 
Shares issued to settle Translucent 
 consideration                                 -           51           52 
As at 30 June / 31 December                6,830        6,723        6,755 
 
 
 
   11 RELATED PARTY TRANSACTIONS 
 
   The Group recognised revenue of GBP1.0m (H1 2016: GBP0.8m, FY16: 
GBP1.7m) and made purchases of GBP6.4m (H1 2016: GBP4.2m, FY16: GBP7.2m) 
from its joint venture in Singapore, the Compound Semiconductor 
Development Centre Private Limited. 
 
   The Group also recognised revenue of GBPnil (H1 2016: GBP2.8m, FY16: 
GBP4.9m), made purchases of GBP3.3m (H1 2016: GBP2.0m, FY16: GBP4.0m) 
and recharged other costs of GBP1.4m (H1 2016: GBP0.2m, FY16: GBP0.4m) 
with its joint venture in the UK the Compound Semiconductor Centre 
Limited. 
 
   This announcement is distributed by Nasdaq Corporate Solutions on behalf 
of Nasdaq Corporate Solutions clients. 
 
   The issuer of this announcement warrants that they are solely 
responsible for the content, accuracy and originality of the information 
contained therein. 
 
   Source: IQE plc via Globenewswire 
 
 
  http://www.iqep.com 
 

(END) Dow Jones Newswires

September 05, 2017 02:00 ET (06:00 GMT)

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