IQE plc: Trading Update & Strategic Review Update

IQE plc

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF REGULATION (EU) NO 596/2014 AS IT FORMS PART OF UK DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 ("MAR").

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD BREACH ANY APPLICABLE LAW OR REGULATION

THIS IS AN ANNOUNCEMENT FALLING UNDER RULE 2.4 OF THE CITY CODE ON TAKEOVERS AND MERGERS (THE "CODE") AND DOES NOT CONSTITUTE AN ANNOUNCEMENT OF A FIRM INTENTION TO MAKE AN OFFER UNDER RULE 2.7 OF THE CODE AND ACCORDINGLY THERE CAN BE NO CERTAINTY THAT ANY FIRM OFFER WILL BE MADE, NOR AS TO THE TERMS ON WHICH ANY OFFER WILL BE MADE

Cardiff, UK

8 September 2025

Trading Update and Strategic Review Update

IQE plc (AIM:  IQE, "IQE" or the "Group"), the leading global supplier of compound semiconductor wafer products and advanced material solutions, provides a trading update for the full year ending 31 December 2025.

As previously noted, trading in H1 2025 was impacted by macroeconomic uncertainty and as a result, some end customer demand was fulfilled with existing inventory. The Group has continued to experience weakness in wireless markets, largely as a result of softness in mobile handset sales, and this is expected to persist through 2025. In addition, delays to federal funding cycles in US military and defence sectors are resulting in the deferral of orders into 2026.

Accordingly, revenue for FY 2025 is expected to be between £90.0m to £100.0m, resulting in an adjusted EBITDA position of between £(5.0)m to £2.0m. H1 2025 revenue is expected to be at least £44.0m with an £(0.4)m adjusted LBITDA.

The Group will report its interim results on 23 September 2025.

Strategic Review

The Board continues to believe there is a significant market opportunity for IQE because of the Group's leading position in providing advanced compound semiconductors across several market verticals and to a base of global marque customers. The Board is now expanding the scope of the previously announced Strategic Review to also incorporate the potential sale of the Company and is seeking buyers.

While the Strategic Review process remains ongoing, IQE is progressing negotiations with multiple parties for the sale of the Group's Taiwan operations. Should the sale of Taiwan be concluded, it is expected that the proceeds from such sale will be used to fully repay the Group's Revolving Credit Facility with HSBC Bank and Convertible Loan Notes issued in March 2025, as well as providing IQE with cash to invest in its core operations. The Board continues to be advised by Lazard on the full scope of the Strategic Review.

The Takeover Panel (the "Panel") Executive has granted a dispensation from the requirement of Rules 2.4(a) and 2.4(b) of the Code such that IQE is not required to identify in this announcement any potential offeror with which IQE is in talks, or from which an approach has been received, unless that potential offeror has been specifically identified in any rumour or speculation.

Following this announcement, IQE is now considered to be in an "offer period" as defined by the Code, and the disclosure requirements as set out below will apply.

IQE is in receipt of an approach from a potential offeror at the time of this announcement. There can be no certainty either that an offer will be made nor as to the terms of any offer, if made.

Jutta Meier, Chief Executive Officer of IQE, commented:

"We have updated our expectations for the full year to adjust for the deferral of certain contracts in our Wireless and Photonics segments. This is a result of continued global and macro uncertainty which has impacted the unwinding of customer inventory levels pre-built in 2023 and 2024, the sale of new mobile handsets and the release of budgetary spending across the US military and defence sector.

Looking ahead, while the Strategic Review remains ongoing I am encouraged by the progress we are making and remain confident in our ability to unlock value for all of our stakeholders."

Contacts:

IQE plc

+44 (0) 29 2083 9400

Mark Cubitt

Jutta Meier

Amy Barlow

Lazard (Financial Adviser)

+44 (0) 20 7187 2000
Cyrus Kapadia
Keiran Wilson
Alexander Fiallos

Peel Hunt (Nomad and Joint Broker)

+44 (0) 20 7418 8900

Ben Cryer

Kate Bannatyne

Adam Telling

Deutsche 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

Chloe Francklin: +44 (0)78 3497 4624

White & Case LLP is acting as legal adviser to IQE.

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:

·    Smart Connected Devices

·    Communications Infrastructure

·    Automotive and Industrial

·    Aerospace and Security

As a scaled global epitaxy wafer manufacturer, IQE is uniquely positioned in this market which has high barriers to entry. IQE supplies the global market and is enabling customers to innovate 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 employees across manufacturing locations in the UK, US and Taiwan, and is listed on the AIM Stock Exchange in London.

The person responsible for arranging the release of this announcement on behalf of IQE is Jutta Meier, Chief Executive Officer.

IMPORTANT NOTICES

Lazard & Co., Limited ("Lazard"), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority (the "FCA"), is acting exclusively as financial adviser to IQE and no one else in connection with the Strategic Review and will not be responsible to anyone other than IQE for providing the protections afforded to clients of Lazard nor for providing advice in relation to the Strategic Review or any other matters referred to in this announcement. Neither Lazard nor any of its affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Lazard in connection with this announcement, any statement contained herein or otherwise.

Peel Hunt LLP ("Peel Hunt"), which is authorised and regulated in the United Kingdom by the FCA and is a member of the London Stock Exchange, is acting for IQE in connection with the Strategic Review and will not be acting for any other person (including a recipient of this document) or otherwise be responsible to any person for providing the protections afforded to clients of Peel Hunt or for advising any other person in respect of the P Strategic Review or any transaction, matter or arrangement referred to in this document. Peel Hunt's responsibilities as IQE's nominated adviser and broker under the AIM Rules for Nominated Advisers are owed solely to the London Stock Exchange and are not owed to IQE or to any Director or to any other person in respect of the Strategic Review.

Numis Securities Limited (trading as "Deutsche Numis") ("Deutsche Numis"), which is authorised and regulated in the United Kingdom by the FCA, is acting as Joint Broker to IQE and will not be acting for any other person (including a recipient of this document) or otherwise be responsible to any person for providing the protections afforded to clients of Deutsche Numis or for advising any other person in respect of the Strategic Review or any transaction, matter or arrangement referred to in this document.

DISCLAIMER

Neither the information nor any opinion contained in this announcement constitutes an inducement or offer to purchase or sell, or a solicitation of an offer to purchase or sell, any securities or other investments in IQE or any other company by IQE or any of its affiliates, or the solicitation of any vote or approval, in any jurisdiction. Any offer, if made, will be made solely by certain offer documentation, which will contain the full terms and conditions of any offer, including details of how it may be accepted. This announcement does not consider the investment objective, financial situation, suitability or the particular need or circumstances of any specific individual who may access or review this announcement and may not be taken as advice on the merits of any investment decision. This announcement is not intended to provide the sole basis for evaluation of, and does not purport to contain all information that may be required with respect to, any potential investment in IQE. Any person who is in any doubt about the matters to which this announcement relates should consult an authorised financial adviser or other person authorised under the UK Financial Services and Markets Act 2000.

DISCLOSURE REQUIREMENTS OF THE CODE

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

FORWARD LOOKING STATEMENTS

This announcement contains certain forward-looking statements and information that are based on IQE's beliefs, as well as assumptions made by, and information currently available to, IQE. These statements include, but are not limited to, statements about strategies, plans, objectives, expectations, intentions, expenditures and assumptions and other statements that are not historical facts. When used herein, words such as "anticipate," "believe," "estimate," "expect," "intend," "plan" and "project" and similar expressions (or their negative) are intended to identify forward-looking statements. These statements reflect IQE's current views with respect to future events, are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Further, certain forward-looking statements are based upon assumptions as to future events that may not prove to be accurate. Actual results, performance or achievements may vary materially and adversely from those described herein. There is no assurance or guarantee with respect to the prices at which any securities of IQE or any other company will trade, and such securities may not trade at prices that may be implied herein. Any estimates, projections or potential impact of the opportunities identified by IQE herein are based on assumptions that IQE believes to be reasonable as of the date hereof, but there can be no assurance or guarantee that actual results or performance will not differ, and such differences may be material and adverse. No representation or warranty, express or implied, is given by IQE or any of its officers, employees or agents as to the achievement or reasonableness of, and no reliance should be placed on, any projections, estimates, forecasts, targets, prospects or returns contained herein. Neither IQE nor any of its directors, officers, employees, advisers or representatives shall have any liability whatsoever (for negligence or misrepresentation or in tort or under contract or otherwise) for any loss howsoever arising from any use of information presented in this announcement or otherwise arising in connection with this announcement. Any historical financial information, projections, estimates, forecasts, targets, prospects or returns contained herein are not necessarily a reliable indicator of future performance. Nothing in this announcement should be relied upon as a promise or representation as to the future. Nothing in this announcement should be considered as a profit forecast.

DISTRIBUTION

Not for release, publication or distribution, in whole or in part, directly or indirectly, in, into or from any jurisdiction where to do so would constitute a violation of the relevant laws of that jurisdiction. The distribution of this announcement in certain countries other than the United Kingdom and the availability of any offer to shareholders of IQE who are not resident in the United Kingdom may be restricted by the laws of relevant jurisdictions, and any persons who access it and are subject to the laws of any jurisdiction other than the United Kingdom or shareholders of IQE who are not resident in the United Kingdom are required to inform themselves about and to comply with any such restrictions of relevant jurisdictions. IQE disclaims all responsibility where persons access this announcement in breach of any law or regulation in the country of which that person is a citizen or in which that person is residing or is domiciled.

PUBLICATION OF THIS ANNOUNCEMENT

In accordance with Rule 26.1 of the Code, a copy of this announcement will be made available, subject to certain restrictions relating to persons resident in restricted jurisdictions, at https://www.iqep.com, by no later than 12:00pm (London time) on the business day following this announcement. The content of the website referred to in this announcement is not incorporated into and does not form part of this announcement.