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IQE on track to achieve full year financial expectations

Mobile and smart phone revenue shortfalls to be offset by non-wireless revenues

IQE plc, global supplier of advanced wafer products and wafer services to the semiconductor industry, has announced an update on current trading and confirms its expectations for the year ending 31 December 2015.

The Group announces that it is on track to achieve year on year revenue growth, with H2 revenues expected to be up sequentially over H1. The widely reported weakness in the mobile and smartphone markets has impacted wireless wafer sales in the fourth quarter, but this has been offset by higher non-wireless revenues, including from photonics and technology licensing, demonstrating the increasing robustness of IQE's business model.

This has given the Board confidence that financial performance for the full year remains in line with its expectations, which should result in net debt of approximately £25m by 31 December 2015.

Market update

Key wireless customers' market updates have reflected mixed performance in the second half of 2015, and a number of recent company announcements have highlighted broad weakness within the mobile and smartphone segments.  Nevertheless, the outlook for 2016 and beyond remains positive due to increasing global connectivity and the continuing growth in data traffic.

The photonics business has continued to perform strongly, delivering significant double digit revenue growth. This growth is being driven by a wide array of end market drivers including data centres, optical communications, and a broad range of sensing applications.

InfraRed and CMOS++ have also performed well, in line with expectations, and first pilot production revenues were generated from Solar.  During 2015 the Group entered into two joint venture arrangements, in Singapore and the UK.  These ventures have started positively, and IQE has licensed additional IP during H2 to enable the acceleration of the Joint Venture business plans. IQE is continuing to explore additional licensing opportunities to take advantage of the increased IP portfolio it has acquired and developed during the last two years.

As a consequence, the Board remains confident that the Group is on track to achieve its financial expectations for the full year.  The group will report its full year results for 2015 on 22 March 2016.

Dr Drew Nelson, Chief Executive of IQE, said:

"The results reflect continued delivery of our revenue diversification strategy.  Despite areas of weakness in the wireless market during the final quarter, the Group has been able to mitigate the impact through higher revenues in other areas of the business.

"In line with its strategic plans, the Group is continuing to develop a broad IP portfolio through both internal development, and selective transactions such as the recent cREO deal.  These foundations are increasingly enabling growth across the diverse markets for compound semiconductor technologies, including Photonics, Solar, Power, InfraRed and CMOS++.  This is also creating complementary IP licensing opportunities.  As a result, the Board remains confident of continued growth in our business."

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