Last year was one of strategic development for IQE (IQE) and 2013 should be a year of delivery. The maker of wafer products for semiconductors has completed a multi-year investment in capacity expansion, achieved a number of technological milestones, and has completed three important acquisitions that should underpin sales growth and reduce the risks associated with drop-offs in demand from key customers.
Strategic progress has come at a price, albeit one that is not evident in the profit and loss account due to the structure of June's acquisition of RF Micro Devices. The purchase is being paid for by giving price discounts to the business's former owner until 2016. So, while the sales are recorded at their full price in the profit and loss statement, the cash cost of the discount showed up as a £8.4m second-half hit to operating cash flow. IQE estimates the total cash payout is likely to run to £54.6m and average about £10m a year on a declining scale. But finance director Phil Rasmussen says these sales will still generate cash, just not much.
Factoring in the acquisition of Kopin Wireless post year-end, net debt is now around £40m, but this should fall to £36.2m by the end of 2013, according to Investec. The broker also forecasts current year adjusted pre-tax profits of £14.7m and EPS of 2.2p, rising to £22.8m and 3.4p, in 2014 (from £8.6m and 1.6p in 2012).
| IQE (IQE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 29p | MARKET VALUE: | £189m | |
| TOUCH: | 28.75-29p | 12-MONTH HIGH: | 38p | LOW: 20p |
| DIVIDEND YIELD: | nil | PE RATIO: | 25 | |
| NET ASSET VALUE*: | 14p* | NET DEBT: | 17% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 60.5 | -1.39 | -0.32 | nil |
| 2009 | 52.7 | 2.06 | 0.47 | nil |
| 2010 | 72.7 | 6.33 | 1.63 | nil |
| 2011 | 75.3 | 6.89 | 1.62 | nil |
| 2012 | 98.0 | 6.13 | 1.16 | nil |
| % change | +30 | -11 | -28 | |
*Includes intangible assets of £54m, or 8p a share | ||||
