Slide 1: Full Year 2023 Results Presentation
Full Year 2023 Results Presentation 10 April 2024 Architects of tomorrow
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by IQE plc solely for information purposes and Although IQE plc believes that the expectations, estimates and projections should not be considered to be an offer or solicitation to buy, sell or subscribe for any constituting any forward-looking statemen
Slide 3: 2023 in review
2023 in review Americo Lemos Chief Executive Officer Architects of tomorrow
Slide 4: 2023 | A year in review
2023 | A year in review Weak Grow ing th, High om s as cost-of-liv Inflation, an d a Cost- Macro-economic cession lo bound The Cost-of-Living Crisis of-Living Cri Global re es post-Covid re sis rush Aug 23 The World B higher crisis cgra Reaches Breaking Point Europe grapples with conditions ank, 20
Slide 5: 2023 | A year in review
2023 | A year in review Increasingly positive Inventory excess signs of industry throughout the supply recovery chain Reduction in customer orders H1 H2 H2 Customer demand improved from Q3, accelerated in Q4 Maintained market share Returned to growth from H1 to H2 2023 IQE plc | FY 2023 Results Pres
Slide 6: 2023 | A year in review
2023 | A year in review Manage the Invest Improve temporary for growth profitability downturn ESG IQE plc | FY 2023 Results Presentation 6
Slide 7: 2023 | A year in review
2023 | A year in review Manage the Invest Improve temporary for growth profitability downturn Retained and diversified customer base Strengthened balance sheet Implemented cost-saving measures Improved operational efficiencies IQE plc | FY 2023 Results Presentation 7
Slide 8: 2023 | A year in review
2023 | A year in review Manage the Invest Improve temporary for growth profitability downturn Expanded customer pipeline to deliver on ‘maintain and diversify’ strategy Ramped up additional capacity for GaN Power with qualification for key customers IQE plc | FY 2023 Results Presentation 8
Slide 9: 2023 | A year in review
2023 | A year in review Manage the Investing for Improve temporary growth profitability downturn Standardised and centralised operations to reshape cost base Site consolidation with Pennsylvania facility closed ahead of schedule IQE plc | FY 2023 Results Presentation 9
Slide 10: 2023 | A year in review
2023 | A year in review Manage the Investing for Improve temporary growth profitability downturn ESG TCFD reporting Strengthened and Science-based targets introduced diversified Board and progress senior management IQE plc | FY 2023 Results Presentation 10
Slide 11: FY 2023 Financial Results
FY 2023 Financial Results Jutta Meier Chief Financial Officer Architects of tomorrow
Slide 12: FY 2023 financial highlights
FY 2023 financial highlights Financial performance reflective of temporary industry downturn Revenue Adj. EBITDA Adj. LBIT Adj. operating cashflow £’m £’m £’m £’m 167.5 23.4 15.7 15.7 115.3 14% 4.3 4% 2022 2023 2022 2023 2022 2023 2022 2023 (3.6) (20.2) 1 Adjusted EBITDA and EBIT are non-IFRS measur
Slide 13: FY 2023 segmental revenue
FY 2023 segmental revenue Impact of inventory excess throughout the supply chain Total Wireless Total Photonics Total CMOS++ £53.9m £59.1m £2.3m Down Down Down 29% 33% 20% year-on-year year-on-year year-on-year • High inventory levels caused by • Slowdown in Asian telecom • Elevated inventory levels
Slide 14: H1 vs H2 2023
H1 vs H2 2023 A tale of two halves Revenue Adj. EBITDA Reported EBIT Adj. operating cashflow £’m £’m £’m £’m 21.7% 275.4% 84.6% 165.1% 11.4 63.3 52.0 10.0 4.3 16% H1 H2 H1 H2 H1 H2 H1 H2 (1%) (2.7) (5.7) EBITDA margin (17.5) 1 Adjusted EBITDA and EBIT are non-IFRS measures, may be calculated differe
Slide 15: FY 2023 cashflow, capex and net debt
FY 2023 cashflow, capex and net debt Tight control on spending to navigate macro environment Investment in Cashflow PP&E capex cashflow Adj. net debt intangibles £15.7m £3.1m £12.2m £(2.2)m Adjusted operating 31 December 2023 cashflow Down Up Down £10.1m £1.6m £2.7m £13.0m Net operating cashflow yea
Slide 16: Net debt bridge
Net debt bridge Strengthening the balance sheet £5.0m £29.8m £15.7m - (£4.8m) (£0.4m) (£2.2m) (£5.0m) (£5.7m) (£10.0m) (£4.2m) (£15.0m) (£15.2m) (£20.0m) (£11.6m) (£25.0m) (£6.0m) (£30.0m) t s ax f r t eb m /T / PE e ts y ar ) to he eb td h s te os s en ties Ot td ne c as ion t dj. i re st o f P sal
Slide 17: Cost control and cash preservation
Cost control and cash preservation £30m Placing in May 2023 Revolving Credit facility of $35m (£27.3m) extended with HSBC, with an undrawn balance of $30.0m (£23.4m) available as at the year end Programme underway to drive efficiencies: • Headcount restructuring in 2023 resulting in over 10% reducti
Slide 18: Current trading and outlook - 2024
Current trading and outlook - 2024 H2 recovery to continue throughout 2024 Inventory levels beginning to normalise and customer demand recovering Trading during Q1 in line with Board expectations Revenue and adjusted EBITDA are expected to be within the range of analyst forecasts for FY 20241 1. The
Slide 19: Looking forward
Looking forward Americo Lemos Chief Executive Officer Architects of tomorrow
Slide 20: Favourable industry dynamics
Favourable industry dynamics Unprecedented Growth of AI and Industry investment into decarbonisation forecasting return semiconductor of the global to growth in 2024 manufacturing economy TSMC exp ects up Power ma d: AI’s ma to 25% rev m enue fa b to b enefit fro demand risks cau ssive ene rgy growt
Slide 21: Enabling AI in a Net Zero future
Enabling AI in a Net Zero future Accurate Ultra-low latency Smart sensing networks processing VCSELs, lasers, GaN RF, GaAs HBT Photonics - InP, VCSEL detectors Smart Autonomous 5G/6G Wi-Fi 6/e Data Edge connected vehicles Centre AI Devices Efficient power conversion GaN Power IQE plc | FY 2023 Resul
Slide 22: We have the right strategy
We have the right strategy Maintain Diversify CONNECT SENSE POWER DISPLAY IQE plc | FY 2023 Results Presentation 22
Slide 23: Summary
Summary IQE returned to growth in H2 2023, industry recovery expected to continue throughout 2024 Improving margins and profitability with actions taken to reshape cost base Good progress on diversification strategy with new customer design wins in Power Electronics and Automotive IQE remains well p
Slide 24: WEED
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Slide 25: Financial results appendix
Financial results appendix Architects of tomorrow
Slide 26: Summary financials
Summary financials £’million FY 2023 (£’m) FY 2022 (£’m) Revenue 115.3 167.5 Sales, general & administrative costs (32.5) (31.2) Impairment loss on intangible assets - (66.2) Impairment loss on trade receivables and contract assets 1.8 (2.3) Adjusted EBITDA1 4.3 23.4 Adjusted LBIT (20.2) (3.6) Repor
Slide 27: Adjusted income statement items
Adjusted income statement items 2023 2022 Share based payments £(2.5)m £(0.2)m Share based payments – £(0.0)m £(0.1)m CEO recruitment CEO recruitment £(0.3)m £(0.1)m CFO severance and £(0.5)m - recruitment Restructuring £(4.7)m £(4.2)m Gain on acquisitions £2.4m - Items are pre-tax. IQE plc | FY 202
Slide 28: Balance sheet
Balance sheet As at 31 December 2023 £’million FY 2023 FY 2022 Intangible assets 35.4 37.0 Property, plant & equipment 129.6 127.1 Right of use assets 37.8 41.4 Total current assets 70.7 90.6 Current liabilities* (46.1) (40.2) Bank borrowings due within 1 year (4.2) (6.2) Lease liabilities due withi