EGM Result and Trading Update

RNS Number:6289R
IQE PLC
04 November 2003

4 November 2003


                            IQE plc ("the Company")


 Result of Placing and Open Offer and Extraordinary General Meeting and trading
                                     update


IQE plc, a leading global outsource supplier of advanced wafers to the
semiconductor industry, is pleased to announce the successful completion of a
Placing and Open offer, raising #18.75 million (#17.9 million net of expenses).

On 7 October 2003, the Board of IQE, announced proposals to raise #18.75 million
(before expenses) by means of a Placing and an Open Offer of a total of
125,000,000 new Ordinary Shares arranged and underwritten by Evolution Beeson
Gregory at a price of 15p per share ("Issue Price"). Qualifying Shareholders
were invited to apply under the Open Offer on the basis of 2 Ordinary Shares for
every 15 existing Ordinary Shares held.

The latest time for receipt of completed Application Forms and payment in full
in respect of the Open Offer was 3.00 p.m. on 31 October 2003. Of the total of
25,195,152 new Ordinary Shares being issued under the Open Offer, 6,572,202 new
Ordinary Shares were pre-placed firm with institutions and the balance of
18,622,950 were conditionally placed subject to clawback to satisfy valid
acceptances under the Open Offer. Of these shares, valid applications have been
received by Qualifying Shareholders in respect of 11,131,347 new Ordinary
Shares, representing 44.2 per cent. of those shares conditionally placed subject
to clawback and 59.8 per cent. of the total new Ordinary Shares being issued
under the Open Offer. The remaining 7,491,603 new Ordinary Shares, being those
not taken up by Qualifying Shareholders, will be taken up by those institutions
with whom they were conditionally placed.

At the EGM held at 2.30 p.m. yesterday, the resolutions proposed and set out in
the notice dated 7 October 2003, principally concerning the Placing and Open
Offer, were duly passed. Consequently, the Company is pleased to announce that
the only remaining condition is admission of the New Ordinary Shares to trading
on AIM, which is expected to take place at 8.00 a.m. on 5 November 2003.

Commenting on current trading, Dr Drew Nelson, CEO said:

"As detailed in our 2003 interim results, visibility throughout the
semiconductor industry remains poor. However, against this backdrop, we had
anticipated some tangible signs of progress in Q4. We are therefore pleased to
announce recent contract wins for various IQE Group Companies. These include the
successful completion of qualification and pilot production orders for both CD
and DVD laser wafer manufacture from leading Asia-Pacific manufacturers and
significant progress in our strained silicon qualification programmes, where IQE
product is now being processed on an evaluation basis through leading edge chip
lines with two major industry players. We view this is as a significant
commitment by these players.

A summary of current trading throughout the Group is as follows:

IQE Europe

Although the optoelectronics market for communication devices has remained
depressed for a considerable period, a number of customers are now indicating
inventory burn will be largely complete by the middle of 2004 and reordering
ought to begin to start in that time-frame, with some customers indicating
reorders commencing in early 2004. Within the last two weeks, two major
Asia-Pacific customers for wafers for optical storage applications (both CD and
DVD) have placed orders with IQE Europe for initial pilot production quantities
and have indicated production ramp through 2004. Although these are unlikely to
have an impact during the remainder of 2003, they are expected to have a
material impact in 2004. Other qualifications continue with a broad range of
customers across several new wafer products serving the markets for CD and DVD
optical storage, high power industrial lasers, high brightness LEDs, HBT wafers
and vertical cavity surface emitting lasers (VCSELs).

IQE Inc

IQE Inc has successfully qualified with four key players over the last 12 months
in the wireless component supply chain who supply directly to handset
manufacturers. However, visibility throughout the supply chain still remains
relatively poor. IQE Inc is currently qualifying with other noteworthy industry
players and as the pressure on costs throughout the supply chain intensifies,
significant outsourcing opportunities with key players are now being actively
pursued.

IQE Silicon Compounds

IQE's proprietary strained silicon product, which was launched at the Semicon
West Show in San Jose in July 2003, has met with a high level of industry
interest and is currently under evaluation by several major wafer manufacturers.
In addition, and of particular significance, IQE's Strained Silicon product has
recently been selected by two major Silicon chip manufacturers to run through
their leading edge chip processes on an evaluation basis, including a sub 100 nm
process. In materials characterisation, certain features of IQE's Strained
Silicon product relating to device processing were notably better than those of
other competitive products. As part of a major development programme recently
agreed with one of the leading chip manufacturers, IQE Silicon will have access
to device and circuit results from an advanced chip process. Over the next 9-12
months it is expected that collaboration with major chip manufacturers will help
improve our Strained Silicon product, with the goal of becoming qualified on a
leading edge chip process in that time-frame.

IQE Wafer Technology

Wafer Technology continues to show a solid order book with increasing demand now
beginning to come through for higher margin products such as InP and InSb. The
Company is currently expanding some parts of its manufacturing organisation to
respond to increasing demand and continues to make progress towards cash
break-even.

Outlook

Although many of the developments currently taking place will not materially
impact the financial results in the second half of 2003, it is likely that the
benefits of these will start to become apparent during the first half of next
year The revenue results for the second half 2003 will almost certainly be
adversely affected by the current weakness of the dollar, as most of the Group's
sales are dollar denominated. However, as many of the costs, particularly of
input materials, are also dollar denominated, there should also be a favourable
impact on costs.

Future Reporting Arrangements

Results for the year ending 2003 will be published in March 2004 and, as a
consequence of the move to AIM in September 2003, the Company will now move to
six monthly reporting."

Commenting on the successful Placing, Dr Drew Nelson, CEO said

'The successful outcome of the placing and open offer has significantly
strengthened the Group's balance sheet, enabling more favourable and longer term
contracts to be contemplated, together with potential outsourcing arrangements
to be considered by our customers. I look forward to reporting further progress
on qualifications over the coming periods as the semiconductor market continues
to improve.'

For further information, please contact:

IQE plc:
Dr Drew Nelson/Stuart Hall/Chris Meadows         Tel: [phone]

Evolution Beeson Gregory:
Tim Worlledge/Matt Wood                          Tel: [phone]

Buchanan Communications:
Tim Thompson/Nicola Cronk                        Tel: [phone]


Words and expressions defined in the prospectus of the Company dated 7 October
2003 shall, unless the context provides otherwise, have the same meaning in this
announcement.



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            The company news service from the London Stock Exchange

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