REG - IQE PLC - IQE plc: FY 2023 Financial Results
10/04/2024 07:00
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RNS Number : 9409J IQE PLC 10 April 2024
IQE plc
Cardiff, UK
10 April 2024
Full Year 2023 Results
Strategic progress in a challenging market with a return to growth in H2
IQE plc (AIM: IQE, "IQE" or the "Group"), the leading global supplier of
compound semiconductor wafer products and advanced material solutions, today
announces its results for the full year ended 31 December 2023.
Americo Lemos, Chief Executive Officer of IQE, commented:
"I am pleased with the resilience of the business and dedication of our people
despite 2023 being a particularly challenging year for the semiconductor
industry. As forecast, IQE returned to double digit growth in H2 over H1, and
additionally took strategic actions to reshape our cost base as part of our
ongoing commitment to improving margins and profitability. We made good
progress against our diversification strategy following our investment into
GaN capacity, with new customer design wins in the Power Electronics and
Automotive sectors. Buoyed by the ongoing industry recovery, IQE is well
positioned within the global value chain to deliver sustainable growth and
capture opportunities in 2024 and beyond."
FY 2023 Financial Summary
FY 2023 FY 2022 Change
£m
£m
(%)
Revenue 115.3 167.5 (31.1)
Adjusted EBITDA(1) 4.3 23.4 (81.6)
Adjusted loss before tax (23.2) (6.0)
Reported loss before tax (28.8) (75.4) (2)
Adjusted net cashflow from operations 15.7 15.7
Reported net cashflow from operations 10.1 8.9 13.5
Cash capital expenditure(3) 12.2 9.4 29.8
Adjusted net debt(4) (2.2) (15.2)
Cash and cash equivalents 5.6 11.6
Reported Diluted EPS (3.28p) (9.27p)
Adjusted Diluted EPS (2.68p) (0.74p)
1. Adjusted EBITDA is earnings before interest, tax, depreciation,
amortisation and certain non-cash charges, non-operational items and
significant infrequent items set out in Note 4 in the financial statements
section.
2. Figure includes a £62.7m non-cash goodwill impairment.
3. Cash capital expenditure stated is Property, Plant and Equipment cash
capex.
4. Adjusted net debt is calculated as cash less borrowings but excluding lease
liabilities and fair value gains/losses on derivative instruments.
H1 vs H2 2023 Financial Summary
The table below illustrates the significant recovery that IQE experienced in
H2 2023.
H1 2023 H2 2023 Change
£m
£m
(%)
Revenue 52.0 63.3 21.7
Adjusted EBITDA (5.7) 10.0 275.4
Reported operating loss (19.6) (6.2) 68.4
Strategic Highlights
IQE is making strategic progress to maintain and grow its position in the
Connect and Sense markets alongside diversifying into higher growth Power and
Display markets.
Business update:
- Connect
o Protected existing Wireless business whilst expanding the Connect customer
base, engaging Tier 1 OEMs in Asia serving the Android ecosystem.
o Successful qualification of products for WiFi and 4G & 5G handset
applications for emerging markets.
o Launched new VCSEL capability for high-speed optical interconnects used in
Artifical Intelligence (AI) datacentre applications.
- Sense
o High volume production ramp of new VCSEL for advanced 3D Sensing
applications with Tier 1 handset manufacturer
o Successfully qualified second-generation VCSEL products with consumer
smartphone leaders, developing new high-performance 3D sensors.
o Expanded 3D sensing portfolio to include new longer-wavelength products
for higher-performance imaging applications in handset and AR/VR platforms.
- Power
o Deployed GaN Power capacity in the US and UK to serve the global Power
Electronics market utilising proceeds from the Placing in May 2023
o Expansion of diverse customer pipeline, consisting of market leaders
across fabless, foundries and OEMs serving Automotive and emerging datacentre
server power markets, with qualifications ongoing.
- Display
o Continued development of RGB microLED portfolio through engagement with
multiple Tier 1 Display manufacturers.
o Developed new disruptive 8-inch Ge based platform for use as a red emitter
in microLED displays.
o Delivery of the first display grade 8-inch GaAs and Si-based wafer
products will commence in H1 2024, complementing engagements with customers
developing AR/VR format displays.
Board Update
Jutta Meier joined the Board as Chief Financial Officer in January 2024. The
Board also continued to refresh its industry expertise with Bami Bastani and
Maria Marced joining as Non-executive Directors during the year, following the
retirement of Sir Derek Jones. All three bring a wealth of experience from
international semiconductor industry heavyweights including Intel,
GlobalFoundries and TSMC. Harmesh Suniara was another addition to the Board
during the year representing Lombard Odier, a major IQE shareholder, and
adding significant capital markets experience. Female representation on the
Board now stands at an above-average 44%.
Senior Management Update
IQE's Executive Leadership Team was strengthened with the appointment of key
individuals with significant industry experience in 2023. Peter Rabbeni was
appointed as Senior Vice President, Communications Infrastructure &
Security. He was joined in January 2024 by Rina Pal-Goetzen as Vice President
of Government Affairs, focusing on engagement with the US Government,
specifically in regards to CHIPS Act funding.
Environmental, Social and Governance (ESG) update
2023 was a year of progress for IQE's ESG strategy. The Company is developing
frameworks and processes to adopt and align with the Task Force on
Climate-Related Financial Disclosures (TCFD) and will publish its first TCFD
Statement in its 2023 Annual Report. IQE is also focused on developing
emissions targets in accordance with the Science Base Targets initiative
(SBTi), and is on track to submit targets within the 24 month commitment
window.
Current trading and outlook
There are increasingly positive signs that the global semiconductor industry
is recovering from what has been an unprecedented cyclical downturn in terms
of both its extent and duration. IQE saw recovery in H2 2023 which has
continued into Q1 2024, with inventory levels beginning to normalise and
customer demand recovering.
Trading during Q1 has been in line with the Board's expectations and the order
book for the remainder of H1 is strengthening. We expect to see this
improvement continue through 2024, despite persisting uncertainties in the
global economy.
The Group has taken steps to optimise its cost base and will continue to drive
efficiencies in order to improve margins and profitability. Efforts to enhance
the Company's global footprint are ongoing with a focus on refining operations
whilst maintaining a global footprint that offers customers a secure and
resilient supply chain.
Revenue and adjusted EBITDA are expected to be within the range of analyst
forecasts for FY 2024(1).
The Group remains committed to executing its growth and diversification
strategy as it builds on the good progress made in 2023 by expanding the
customer pipeline and focusing on GaN power product qualification with Tier 1
suppliers into automotive OEMs.
1. The analyst range of expectations for FY 2024 revenue are from £133.7m to
£153.7m and for adjusted EBITDA from £11.1m to £16.6m .
FY 2023 Financial Highlights
· Revenue for FY 2023 decreased 31% to £115.3m (FY 2022: £167.5m).
‒ Wireless revenue of £53.9m (FY 2022: £76.0m) was down 29%
year-on-year on a reported basis. This was a result of high inventory levels
in the market and delays to 5G infrastructure deployment.
‒ Photonics revenue of £59.1m (FY 2022: £88.7m) was down 33%
year-on-year on a reported basis. This decrease reflects the slowdown in Asian
telecom infrastructure programmes, as well as high inventory levels due to
weak demand impacting 3D sensing, partially offset by a resilient infrared and
Aerospace and Security performance.
‒ CMOS++ revenue of £2.3m (FY 2022: £2.8m) was down 18% on a
reported basis. This reflected elevated inventory levels caused by weak demand
for consumer goods.
· Adjusted EBITDA of £4.3m (FY 2022: £23.4m), a decline of 81% on a
reported basis, due to underutilisation of manufacturing capacity.
· Adjusted EBITDA margin of 4% (FY 2022: 14%). Positive EBITDA margin
maintained following decisive action to reduce costs.
· Reported operating loss of £25.8m (FY 2022: £73.0m loss including
£62.7m non-cash goodwill impairment) impacted by a reduction in sales volumes
and underutilisation of manufacturing capacity.
· Reported net cashflow from operations of £10.1m (FY 2022: £8.9m),
resulting from controlled working capital management.
· Cash capital expenditure (PP&E) of £12.2m (FY 2022: £9.4m) to
support the Group's strategic diversification and growth strategy. The Group
has a continued focus on research and development with investment in
capitalised technology development of £2.8m (FY 2022: £3.8m).
· Adjusted net debt of £(2.2)m as at 31 December 2023 (FY 2022: net
debt of £15.2m). Successful refinancing in May 2023 including a new Revolving
Credit Facility of $35m (£27.3m), with an undrawn balance of $30.0m (£23.4m)
available to the Group as at the year end.
· Equity raise of £29.8m (net proceeds) completed in May 2023 in order
to strengthen the balance sheet and underpin strategic investment.
· Cost control and cash generation
‒ Headcount restructuring in 2023 resulting in over 10% reduction
‒ Asset optimisation
‒ Non-labour cost reduction
‒ Working capital optimisation
‒ Sale of excess tools resulting from site consolidation.
· Global site optimisation programme
‒ Completed the consolidation of Pennsylvania MBE operations into
North Carolina site with customer qualifications complete and production
ramped.
‒ Continue to work with our key customers to optimise global
footprint.
Results Presentation
IQE will present its FY 2023 Results via webcast at 9:00am today, Wednesday 10
April 2024. If you would like to view this webcast, please register by using
the below link and following the instructions:
https://brrmedia.news/IQE_FY23 (https://brrmedia.news/IQE_FY23)
Contacts:
IQE plc
+44 (0) 29 2083 9400
Americo Lemos
Jutta Meier
Amy Barlow
Peel Hunt (Nomad and Joint Broker)
+44 (0) 20 7418 8900
Paul Gillam
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
ABOUT IQE
http://iqep.com
(https://www.globenewswire.com/Tracker?data=yZf7NKp1JKLALUCxlBuC8wkLnLAqoe5-kjjIlkMIDci9q9W0x_02bwZV-eorSbpLXZxy4zi3xHh-O4FM8nWjeg==)
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 eight manufacturing
locations in the UK, US and Taiwan, and is listed on the AIM Stock Exchange in
London.
Financial Review
The Group reports financial performance in accordance with International
accounting standards in conformity with UK adopted international accounting
standards ('UK adopted IFRS') and provides disclosure of additional
alternative non-IFRS GAAP performance measures to provide further
understanding of financial performance. Details of the alternative performance
measures used by the Group including a reconciliation to reported UK adopted
IFRS GAAP performance measures are set out in note 5 to the financial
statements.
Review of the year
The Group's trading in 2023 has been significantly impacted by the global
semiconductor industry downturn. The industry downturn presented a temporary
but significant challenge to sales volumes in Q1-Q3 2023 prior to a gradual
improvement in market dynamics and customer demand in Q4 2023. Market dynamics
and customer demand is expected to continue to improve throughout 2024. Group
revenue of £115,252,000 (2022: £167,494,000) has decreased by 31.1% and the
Group has reported an operating loss of £25,779,000 (2022: £72,976,000).
During the year the Directors have taken steps to strengthen the Group's
balance sheet, including the renewal of the Group's £27,300,000 ($35,000,000)
multi-currency revolving credit facility provided by HSBC Bank plc and the
successful £31,098,000 equity fundraise. These steps, combined with a number
of cost rationalisation and cash preservation actions implemented by the
Directors have provided the Group with the necessary liquidity to navigate the
semiconductor market downturn and allow the Group to continue investing in its
growth and diversification strategy.
Group revenue of £115,252,000 (2022: £167,494,000) has decreased 31.2% on a
reported basis. The Group's Photonics business segment represents the largest
proportion of the Group's revenue accounting for 51.3% (2022: 52.9%) of total
wafer sales with Wireless representing 46.7% (2022: 45.4%) and CMOS++
representing 2.0% (2022: 1.7%).
Photonics wafer revenues decreased 33.3% to £59,098,000 (2022: £88,637,000).
The decrease in photonics wafer revenues primarily reflects the softness in
the handset market and a slowdown in Asian telecoms infrastructure programmes
partially offset by strong performance in aerospace and security markets for
infrared- related products.
Wireless wafer revenues decreased 29.1% to £53,877,000 (2022: £76,016,000).
The decrease in wireless wafer revenues reflects a decline in wireless GaAs
epi- wafer sales and weakness in GaN epi-wafer sales for 5G infrastructure.
The reduction in wireless GaAs epi-wafer sales in particular, has been
impacted by softness in the broader smartphone handset market and build-up of
inventory in supply chains.
Statutory gross profit decreased from £26,383,000 to £2,328,000. The
decrease in gross profit reflects the reduction in sales and under-utilisation
of capacity experienced across the Group as a result of the semiconductor
industry downturn. Selling, general and administrative ('SG&A') expenses
have increased in the year from £31,211,000 to £32,486,000, excluding the
separately disclosed impairment loss on intangible assets of £nil (2022:
£65,821,000) and the impairment reversal of £1,808,000 (2022: £2,300,000
loss) related to a small number of customer specific receivables where the
Group has successfully cash collected certain old outstanding trade receivable
balances. Adjusted SG&A expenses, which exclude adjustments for share
based payments, restructuring costs, Chief Executive Officer recruitment costs
and Chief Financial Officer severance and recruitment costs have decreased
from £26,780,000 to £26,167,000 (2.3%), primarily reflecting a combination
of labour cost and discretionary expenditure savings implemented as part of
actions to mitigate cost during the year.
Cost rationalisation actions implemented during the year to mitigate the
semiconductor industry downturn and reduction in customer volumes and revenues
include a combination of the optimisation of manufacturing asset utilisation,
including idling reactors to reduce cost and align capacity with lower
customer volumes, the implementation of a Group-wide restructuring programme
and associated reduction in headcount and labour cost, consolidation of the
Group's US molecular beam epitaxy ('MBE') manufacturing capacity and closure
of the Group's manufacturing facility in Pennsylvania and the implementation
of a range of discretionary expenditure savings in areas including travel,
marketing, legal and professional.
As part of the cost rationalisation and global footprint optimisation plan
restructuring costs totalling £4,680,000 (2022: £4,152,000) have been
incurred relating to redundancy costs associated with the group-wide
restructuring programme and labour and site decommissioning costs associated
with the closure of the Group's manufacturing facility in Pennsylvania, USA.
Other significant infrequent costs incurred in the year relate to the new
starter bonus, payable over three years, for the Chief Executive Officer and
severance and recruitment fees following the departure of the former Chief
Financial Officer.
A reported operating loss of £25,779,000 has been incurred (2022:
£72,976,000). The 2022 operating loss was significantly impacted by the
non-cash impairment of goodwill of £62,382,000. An adjusted operating loss of
£20,199,000 in 2023 compares to an adjusted operating loss of £3,557,000 in
2022. The increase in the loss principally reflects the semiconductor industry
downturn experienced within 2023 and the associated reduction in customer
volumes and revenue. The segmental analysis in note 4 reflects the adjusted
operating margins for the primary segments (before central corporate support
costs). Photonics adjusted operating margins decreased from 12.6% in 2022 to a
negative margin of 16.9% in 2023 reflecting the impact of the industry
downturn and significant under-utilisation of capacity. Wireless adjusted
operating margins, despite volume and revenue declines, increased from 6.2% in
2022 to 8.6% in 2023, primarily reflecting a combination of a reduction in
manufacturing capacity and cost linked to the closure of the Group's Singapore
site in 2022, cessation of manufacturing activities at the Group's
Pennsylvania site in 2023 and the positive impact of certain working capital
actions that resulted in the consumption of old aged inventory and the cash
collection of certain previously impaired trade receivables.
Finance costs of £3,023,000 (2022: £2,427,000) reflect £1,810,000 (2022:
£1,099,000) of bank and other interest costs and the interest expense on
lease liabilities of £1,222,000 (2022: £1,328,000). Bank and other interest
costs principally relate to the Group's HSBC Bank plc revolving credit and
asset finance facilities with the increase in interest cost reflecting a
combination of higher levels of facility utilisation and borrowing in H1 2023
and an increase in the interest rate as both the Bank of England Base Rate and
the Sterling Overnight Index Average ('SONIA') interest rate benchmarks have
increased during the year.
The tax charge of £567,000 (2022: £862,000 credit) consists of a current tax
charge of £1,112,000 (2022: £89,000) primarily relating to taxable profits
generated by the Group's Taiwanese operations and a deferred tax credit of
£545,000 (2022: £951,000). Deferred tax asset recognition has been
restricted in the UK to £nil to reflect future forecast profitability, an
assessment that includes the impact of market softness in trading forecasts as
a result of the industry-wide semiconductor downturn whilst US deferred tax
asset recognition has been restricted to £nil to reflect lower future
forecast profitability arising from a combination of market softness, the
Group's consolidation of its US manufacturing operations and the continued
shift in the balance of future forecast manufacturing and hence profits from
the Group's US operations to its UK and Asian operations. The effective tax
rate of 3.6% (2022: 1.1%) applicable to the tax charge of £192,000 (2022:
£798,000) on adjusted items is less than the UK statutory tax rate of 25%
primarily due to the non- recognition of deferred tax assets for current year
UK and US trading losses which include the adjusted Chief Executive Officer
recruitment costs, Chief Financial Officer severance and recruitment costs,
Pennsylvania site closure costs and Group-wide restructuring programme costs.
The decrease in the loss for the year to £29,378,000 (2022: £74,541,000)
principally reflects the impact of the prior year goodwill impairment charge
of £62,382,000. At an adjusted level, the loss for the year has increased to
£23,990,000 (2022: £5,920,000) reflecting a combination of the adverse
underlying trading performance noted above, the impact of adjusted non-cash
and other non-operational items and the acquisition, a subsequent
consolidation of the Group's former joint venture, Compound Semiconductor
Centre Limited ('CSC').
On 22 September 2023, the Group acquired the 50% equity shareholdings of its
joint venture partner CSC taking control of the company and increasing its
equity ownership to 100%. The acquisition was for total cash consideration of
£2,979,000 deferred over a period extending until 1 January 2029 and will
enable the Group to exploit technology and commercial relationships developed
by CSC to create high-volume manufacturing and sales opportunities, directly
align CSC's research and development activities and capabilities with the
Group's strategy and take the necessary steps to restructure CSC's business
operation and consolidated its activities within the Group.
Basic and diluted loss per share has decreased from a loss per share of 9.27p
to a loss per share of 3.28p in the current year with adjusted basic and
diluted loss per share of 2.68p (2022: 0.74p) reflecting the Group's loss at a
statutory and adjusted profit level.
Cash generated from operations increased in the year to £10,074,000 (2022:
£8,873,000) despite the decline in trading performance and profitability of
the Group. The increase in cash generated from operations principally reflects
strong working capital management, particularly in the areas of inventory and
trade receivable management, which combined have contributed to positive
working capital cash inflows of £11,076,000. The Group has continued to
invest in growing capacity to meet demand with capital expenditure of
£12,157,000 (2022: £9,438,000) principally focused in Taiwan, Newport and
Massachusetts to support future growth opportunities, intangible asset
expenditure of £3,113,000 (2022: £4,699,000) focused on a combination of
intellectual property and the Group's multi-year strategic IT transformation
programme and investment in targeted capitalised technology development of
£2,852,000 (2022: £3,795,000).
The increase in cash generated from operations, combined with investing
activity cash costs of £17,959,000 (2022: £10,729,000) and repayment of
lease liabilities of £4,788,000 (2022: £4,926,000), net of the equity fund
raise of £29,708,000 and net repayments of bank borrowings of £18,431,000
(2022: £9,558,000 proceeds), have combined to maintain a positive cash
position of £5,617,000 (2022: £11,620,000) and a decrease in net debt
(excluding lease liabilities and derivative financial instruments) from
£15,248,000 to £2,228,000 as at 31 December 2023.
Equity shareholder funds total £169,785,000 (2022: £175,060,000) with the
movement from 2022 primarily reflecting the loss for the year and funds raised
within the equity fund raise.
Financial Statements
Financial Summary
2023 2022
£'m £'m
Revenue 115.3 167.5
Adjusted EBITDA (see below) 4.3 23.4
Operating loss
• Adjusted* (20.2) (3.6)
• Reported (25.8) (73.0)
Loss after tax
• Adjusted* (24.0) (5.9)
• Reported (29.4) (74.5)
Net cash flow from operations
Adjusted* 15.7 15.7
Reported 10.1 8.9
Free cash flow**
Before adjusted* cash flows (3.1) 4.2
Reported (8.8) (2.6)
Adjusted net debt (2.2) (15.2)
Equity shareholders' funds 169.8 175.1
Basic EPS - adjusted**** (2.68p) (0.74p)
Basic EPS - unadjusted (3.28p) (9.27p)
Diluted EPS - adjusted**** (2.68p) (0.74p)
Diluted EPS - unadjusted (3.28p) (9.27p)
* The adjusted performance measures for 2023 and 2022 are reconciled in note
4. The adjusted performance measures for 2019-2021 are
reconciled in those financial statements.
** Free cash flow is defined as net cash outflow of £5.4m (2022: £0.1m)
before cash inflows from financing activities of £6.6m
(2022: £4.7m) and net interest paid of £3.2m (2022: £2.2m).
*** Adjusted net (debt)/cash is defined as cash less borrowings but excluding
lease liabilities and fair value gains/losses on derivative
instruments.
**** Adjusted EPS measures exclude the impact of certain non-cash charges,
non-operational items and significant infrequent items that
would distort period on period comparability (see note 5).
Consolidated income statement for the year ended 31 December 2023
2023 2022
£'m £'m
Revenue 115.3 167.5
Cost of sales (113.0) (141.1)
Gross profit 2.3 26.4
Selling, general and administrative expenses (32.5) (31.2)
Impairment loss on intangible assets - (66.2)
Impairment reversal/(loss) on trade receivables and contract assets 1.8 (2.3)
Gain on acquisition of remaining interest in CSC 2.4 -
Profit on disposal of intangible assets and property, plant and equipment 0.2 0.7
Other losses - (0.4)
Operating loss (25.8) (73.0)
Finance costs (3.0) (2.4)
Adjusted loss before income tax (23.2) (6.0)
Adjustments (5.6) (69.4)
Loss before income tax (28.8) (75.4)
Taxation (0.6) 0.9
Loss for the year (29.4) (74.5)
Loss attributable to:
Equity shareholders (29.4) (74.5)
(29.4) (74.5)
Loss per share attributable to owners of the parent during the year
Basic loss per share (3.28p) (9.27p)
Diluted loss per share (3.28p) (9.27p)
Adjusted basic and diluted loss per share are presented in note 5.
All items included in the loss for the year relate to continuing operations.
Consolidated statement of comprehensive income for the year ended 31 December
2023
2023 2022
£'m £'m
Loss for the year (29.4) (74.5)
Exchange differences on translation of foreign operations* (8.1) 14.5
Total comprehensive expense for the year (37.5) (60.0)
Total comprehensive expense attributable to:
Equity shareholders (37.5) (60.0)
(37.5) (60.0)
* Items that may subsequently be reclassified to profit or loss.
Items in the statement above are disclosed net of tax.
Consolidated balance sheet as at 31 December 2023
2023 2022
£'m £'m
Non-current assets
Intangible assets 35.4 37.0
Property, plant and equipment 129.6 127.1
Right of use assets 37.8 41.4
Deferred tax assets - -
Total non-current assets 202.8 205.5
Current assets
Inventories 24.6 34.2
Trade and other receivables 38.2 44.8
Cash and cash equivalents 5.6 11.6
Assets held for resale 2.3 -
Total current assets 70.7 90.6
Total assets 273.5 296.1
Current liabilities
Trade and other payables (42.6) (37.6)
Current tax liabilities (0.5) (0.7)
Bank borrowings (4.2) (6.2)
Derivative financial instruments - (0.4)
Lease liabilities (5.8) (4.8)
Provisions for other liabilities and charges (3.0) (1.6)
Total current liabilities (56.1) (51.3)
Non-current liabilities
Trade and other payables (2.2) -
Bank borrowings (3.7) (20.6)
Lease liabilities (40.4) (46.0)
Deferred tax liabilities (0.6) (1.1)
Provisions for other liabilities and charges (0.7) (2.0)
Total non-current liabilities (47.6) (69.7)
Total liabilities (103.7) (121.0)
Net assets 169.8 175.1
Equity attributable to the shareholders of the parent
Share capital 9.6 8.0
Share premium 155.8 154.7
Retained earnings (47.5) (45.2)
Exchange rate reserve 32.4 40.5
Other reserves 19.5 17.1
Total equity 169.8 175.1
Consolidated statement of changes in equity for the year ended 31 December
2023
Share Share premium Retained Exchange Rate reserve Other reserves Total
capital
earnings / (losses)
equity
£'m
£'m £'m
£'m £'m £'m
At 1 January 2023 8.0 154.7 (45.2) 40.5 17.1 175.1
Comprehensive expense
Loss for the year - - (29.4) - - (29.4)
Other comprehensive expense for the year - - - (8.1) - (8.1)
Total comprehensive expense for the year - - (29.4) (8.1) - (37.5)
Transactions with owners
Share based payments - - - - 2.5 2.5
Tax relating to share options - - - - (0.1) (0.1)
Proceeds/(charge) from shares issued 1.6 1.1 (1.3) - 28.4 29.8
Transfer of merger reserve to retained earnings - - 28.4 - (28.4) -
Total transactions with owners 1.6 1.1 27.1 - 2.4 32.2
At 31 December 2023 9.6 155.8 (47.5) 32.4 19.5 169.8
Share Share premium Retained earnings/ Exchange Rate Other reserves Total
capital
reserve
equity
£'m (losses)
£'m
£'m
£'m £'m
£'m
At 1 January 2022 8.0 154.6 29.3 26.0 16.7 234.6
Comprehensive expense
Loss for the year - - (74.5) - - (74.5)
Other comprehensive expense for the year - - - 14.5 - 14.5
Total comprehensive expense for the year - - (74.5) 14.5 - (60.0)
Transactions with owners
Share based payments - - - - 0.3 0.3
Tax relating to share options - - - - 0.1 0.1
Proceeds from shares issued - 0.1 - - - 0.1
Total transactions with owners - 0.1 - - 0.4 0.5
At 31 December 2022 8.0 154.7 (45.2) 40.5 17.1 175.1
Other reserves relate to share based payments.
Consolidated cash flow statement for the year ended 31 December 2023
2023 2022
£'m £'m
Cash flows from operating activities
Adjusted cash inflow from operations 15.7 15.7
Cash impact of adjustments (5.6) (6.8)
Cash generated from operations 10.1 8.9
Interest paid (3.3) (2.2)
Income tax paid (0.9) (0.8)
Net cash generated from operating activities 5.9 5.9
Cash flows from investing activities
Purchase of property, plant and equipment (12.2) (9.4)
Purchase of intangible assets (3.1) (4.7)
Capitalised development expenditure (2.8) (3.8)
Proceeds from disposal of property, plant and equipment and intangible assets 0.6 7.2
Acquisition of subsidiary, net of cash received (0.4) -
Adjusted cash used in investing activities (17.9) (16.8)
Cash impact of adjustments - proceeds from disposal of property, plant and - 6.1
equipment and intangible assets
Net cash used in investing activities (17.9) (10.7)
Cash flows from financing activities
Proceeds from issuance of ordinary shares 31.2 0.1
Expenses associated with issue of ordinary shares (1.4) -
Proceeds from borrowings 9.9 15.8
Repayment of borrowings (28.3) (6.2)
Payment of lease liabilities (4.8) (4.9)
Net cash generated from financing activities 6.6 4.8
Net decrease in cash and cash equivalents (5.4) -
Cash and cash equivalents at 1 January 11.6 10.8
Exchange losses on cash and cash equivalents (0.6) 0.8
Cash and cash equivalents at 31 December 5.6 11.6
Notes to the financial statements for the year ended 31 December 2023
1. General information
IQE plc ('the company') and its subsidiaries (together 'the Group') develop,
manufacture and sell advanced semiconductor materials. The Group has
manufacturing facilities in Europe, United States of America and Asia and
sells to customers located globally.
IQE plc is a public limited company incorporated in the United Kingdom under
the Companies Act 2006. The Company is domiciled in the United Kingdom and is
quoted on the Alternative Investment Market (AIM). The address of the
Company's registered office is Pascal Close, St Mellons, Cardiff, CF3 0LW.
2. Material accounting policies
The principal accounting policies applied in the preparation of these
consolidated financial statements are set out below. These policies have been
consistently applied to all years presented.
2.1 Basis of preparation
The financial statements have been prepared and approved by the Directors in
accordance with UK adopted international accounting standards ("UK adopted
IFRS"). The financial statements have been prepared under the historical cost
convention except where fair value measurement is required by IFRS.
The preparation of financial statements in conformity with IFRS requires the
use of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the Group's accounting
policies.
2.2 Going concern
The Group has experienced weaker customer demand and lower customer orders in
2023 compared to 2022 as a result of the global semiconductor industry
downturn. The industry downturn presented a temporary but significant
challenge to sales volumes in Q1-Q3 2023 prior to a gradual improvement in
market dynamics and customer demand in Q4 2023. Market dynamics and customer
demand is expected to continue to improve, aligned with external market views,
in 2024, ahead of a full market recovery by 2025.
The Directors have taken steps to strengthen the balance sheet of the Group
during 2023 in order to mitigate the financial impact of the semiconductor
industry downturn. Actions taken include:
• The successful refinancing of the Group's £27.3m ($35.0m) multi-currency
revolving credit facility provided by HSBC Bank plc on 16 May 2023. The tenor
of the facility has been extended to 1 May 2026 with quarterly leverage and
interest cover covenant tests applicable to the facility, commencing at
December 2023
• The successful £31.1m equity fund raise completed on 18 May 2023 in order
to ensure that the Company can continue to invest to execute on its strategy,
meet its near-term liquidity requirements and deliver a sustainable balance
sheet position going forward
• The implementation of cost cutting actions, including staff redundancies,
operational efficiencies and reductions in areas of discretionary expenditure
which are under the control of the Directors
• Deferral of capital and intangible asset expenditure under the control of
the Directors
In the twelve months to 31 December 2023, reported revenue declined 31% and
the group made a loss after tax for the year of £29.4m. The liquidity impact
of the loss for the year has been mitigated by a combination of the Group's
successful equity fund raise, careful working capital management and the
deferral of certain capital and intangible asset expenditure resulting in an
improvement in the Group's adjusted net debt position (net debt excluding
lease liabilities and fair value gains/losses on derivative instruments) to
£2.2m (2022: £15.2m) At 31 December 2023 the Group had undrawn committed
funding of £23.4m ($30.0m) available under the terms of the Group's revolving
credit facility.
In assessing the going concern basis of preparation the Directors have
reviewed financial projections to 30 June 2025 ('the going concern assessment
period'), containing both a 'base case' and a 'severe but plausible downside
case'. The review period extends beyond the minimum required 12-month period
from the date of approval of the financial statements to take account of a
minimum liquidity position that is forecast shortly after the 12-month period.
Base Case
The base case is derived from Group's latest Board approved 2024 budget and
2025 forecasts. The base case incorporates an expected improvement in market
dynamics and the impact of cost cutting actions already implemented by the
Board.
The base case was prepared with the following key assumptions:
• Revenue for 2024 in line with current analyst consensus, with a forecast
return to year-on-year growth in 2024 with a full market recovery forecast in
2025
• Commencement of the new PowerGaN business in late 2024 ramping up through
2025 with mid teen £'m revenue forecast in H1 2025. This revenue has been
restricted to current committed capacity and the forecasts do not include
further capital expenditure that would be required to exploit the wider market
opportunity.
• Direct wafer product margins for 2024 and 2025 consistent with 2023
• Labour inflation in 2024 in line with labour market norms
• Cost inflation in 2024 operating and administrative costs in line with the
current inflationary environment
• A high-teen digit £'m of capital expenditure in 2024 and in 2025 which
includes investment in committed Gallium Nitride (GaN) related manufacturing
capacity, enabling diversification into the high-growth power electronics and
advanced display (uLED) markets
• Sale of the Group's freehold manufacturing site in Pennsylvania following
cessation of manufacturing activities in 2023
In the base case the Group is forecast to maintain liquidity headroom and to
comply with its leverage and interest cover banking covenants throughout the
going concern assessment period. Liquidity headroom falls to ~£8.0m in
October 2024 with adjusted net debt of £20.1m (net debt excluding lease
liabilities and fair value gains/losses on derivatives).
Severe but plausible downside case
The severe but plausible downside case was prepared using the following key
assumptions:
• Revenue is assumed at 6% down on the base case for the remainder of H1
2024, 16% down on the base case for H2 2024 and 18% down for 2025 reflecting a
combination of greater uncertainty the further out into the future, a delay in
market recovery and a delay in the new PowerGan business which is forecast to
ramp up in 2025.
• In line with the revenue reduction in both years, there is a reflective
reduction in variable operating costs for 2024 and 2025.
• The removal of the proceeds from sale of the manufacturing site in
Pennsylvania.
• The application of mitigations in the form of further labour savings,
reductions in certain non-manufacturing related discretionary expenditure and
deferred investment in capital expenditure and technology asset development
over and above those reflected in the base case. These costs savings and cash
management actions have already been identified, are in the control of
management and are actionable readily
In the severe but plausible downside case the Group's liquidity is reduced to
less that £1.0m in May 2025 with adjusted net debt of £27.7m (net debt
excluding lease liabilities and fair value gains/losses on derivatives). The
Group is forecast to comply with its leverage and interest cover banking
covenants throughout the going concern assessment period.
Whist acknowledging that under the severe but plausible scenario liquidity
headroom is tight, the Directors believe that the Company and Group will have
adequate cash resources to continue operating for the foreseeable future and
to meet their liabilities as they fall due for the going concern assessment
period, such that the Directors consider it appropriate to adopt the going
concern basis of accounting in preparing the Company and Group consolidated
financial statements.
2.3 Changes in accounting policy and disclosures
a) New standards, amendments and interpretations.
The following new standards, amendments and interpretations have been adopted
by the Group for
the first time for the financial year beginning on 1 January 2023:
• IFRS 17 'Insurance contracts' which establishes the principles for the
recognition, measurement and presentation and disclosure of insurance
contracts and supersedes IFRS 4 'Insurance contracts'.
• Amendments to IAS 1 'Presentation of financial statements' and the
disclosure of accounting policies which requires disclosure of material rather
than significant accounting policies.
• Amendment to IAS 8 'Accounting policies, changes in accounting estimates
and errors' to introduce a new definition for accounting estimates which
clarifies that an accounting estimate is a monetary amount in the financial
statements that is subject to measurement uncertainty.
• Amendment to IAS 12 'Income taxes' to clarify the accounting treatment for
deferred tax on certain transactions with a narrowing of the scope of the
initial recognition exemption so that it does not apply to transactions that
give rise to equal and offsetting temporary differences.
The adoption of these standards, amendments and interpretations has not had a
material impact on the financial statements of the Group or parent company.
b) New standards, amendments and interpretations issued but not effective and
not adopted early
A number of new standards, amendments to standards and interpretations which
are set out below are effective for annual periods beginning after 1 January
2024 and have not been applied in preparing these consolidated financial
statements:
• Amendments to IAS 1 'Presentation of financial statements' on
classification of liabilities which is intended to clarify that liabilities
are classified as either current or non-current depending upon the rights that
exist at the end of the reporting period.
• Amendment to IFRS 16 'Leases' which confirms the initial and subsequent
recognition principles for variable lease payments as a liability in a sale
and leaseback transaction.
• Amendment to IAS 7 'Statement of Cash Flows' and IFRS 7 'Financial
Instruments: Disclosures' related to the disclosure and transparency of
supplier finance arrangements.
• IFRS S1 'General Requirements for Disclosure of Sustainability related
Financial Information' and IFRS S2 'Climate related Disclosures'
The Directors anticipate that at the time of this report none of the new
standards, amendments to standards or interpretations are expected to have a
material effect on the financial statements of the Group or parent company.
3. Segmental analysis
3.1 Description of segments and principal activities
The Chief Operating Decision Maker is defined as the Executive Leadership
Team. The Executive Leadership Team, consisting of the Chief Executive
Officer, Chief Financial Officer, Chief Operations Officer, Chief Technology
Officer, Chief People Officer, Executive VP Global Business Development, SVP
of Communications Infrastructure and Security Business Unit, VP US Sales,
Director of Corporate Marketing, VP US EPI Operations and Substrates, VP Asia
and Europe EPI Operations, Chief of Staff and the Executive VP General Counsel
& company secretary, consider the group's performance from a product
perspective and have identified three primary reportable segments:
• Wireless - this part of the business manufactures and sells compound
semiconductor material for the wireless market which includes radio frequency
devices that enable wireless communications.
• Photonics - this part of the business manufactures and sells compound
semiconductor material for the photonics market which includes applications
that either transmit or sense light, both visible and infrared.
• CMOS++ - this part of the business manufactures and sells advanced
semiconductor materials related to silicon which include the combination of
the advanced properties of compound semiconductors with those of lower cost
silicon technologies.
The Executive Leadership Team primarily use revenue and a measure of adjusted
operating profit to assess the performance of the operating segments. Measures
of total assets and liabilities for each reportable segment are not reported
to the Executive Leadership Team and therefore have not been disclosed.
3.2 Adjusted Operating Loss
Adjusted operating loss excludes the effects of significant non-cash,
non-operational or significant and infrequent items of income and expenditure
which may have an impact on the quality of earnings, such as restructuring
costs, CEO recruitment costs, CFO settlement and recruitment costs and
impairments where the impairment is the result of an isolated, non-recurring
event. Adjusted operating loss also excludes the effects of equity settled
share based payments and the gain on deemed disposal as part of the
acquisition accounting for the group's former joint venture.
Finance costs are not allocated to segments because treasury and the cash
position of the group is managed centrally.
Revenue 2023 2022
£'m £'m
Wireless 53.9 76.0
Photonics 59.1 88.7
CMOS++ 2.3 2.8
Revenue 115.3 167.5
Adjusted operating loss
Wireless 4.6 4.7
Photonics (10.0) 11.1
CMOS++ (2.2) (1.5)
Central corporate costs (12.6) (17.9)
Adjusted operating loss (20.2) (3.6)
Adjusted items (see note 4)
Wireless (1.0) (63.8)
Photonics (2.5) (5.4)
CMOS++ - -
Central corporate costs (2.1) (0.2)
Operating loss (25.8) (73.0)
Finance costs (3.0) (2.4)
Loss before tax (28.8) (75.4)
4. Adjusted performance measures ('APM')
The Group's results report certain financial measures before a number of
adjusted items that are not defined or recognised under IFRS, including
adjusted earnings before interest, tax, depreciation and amortisation,
adjusted earnings before interest, tax, depreciation and amortisation margin,
adjusted operating loss, adjusted loss before income tax and adjusted losses
per share. The Directors believe that the adjusted performance measures
provide a useful comparison of business trends and performance, and allow
management and other stakeholders to better compare the performance of the
Group between the current and prior year, excluding the effects of certain
non-cash charges, non-operational items and significant infrequent items that
would distort period on period comparability. The Group uses these adjusted
performance measures for internal planning, budgeting, reporting and
assessment of the performance of the business.
The tables below show the adjustments made to arrive at the adjusted
performance measures and the impact on the Group's reported financial
performance.
Adjusted Adjusted 2023 Adjusted Adjusted 2022
Results Items Reported Results Items Reported
£'m £'m Results £'m £'m Results
£'m £'m
Revenue 115.3 - 115.3 167.5 - 167.5
Cost of sales (111.3) (1.7) (113.0) (141.0) (0.1) (141.1)
Gross profit/(loss) 4.0 (1.7) 2.3 26.5 (0.1) 26.4
SG&A (26.2) (6.3) (32.5) (26.8) (4.4) (31.2)
Impairment of intangibles - - - - (66.2) (66.2)
Impairment reversal/(loss) on receivables 1.8 - 1.8 (2.3) - (2.3)
Other losses - - - (0.4) - (0.4)
Gains on acquisitions - 2.4 2.4 - - -
Profit on disposal of PPE and intangibles 0.2 - 0.2 (0.6) 1.3 0.7
Operating loss (20.2) (5.6) (25.8) (3.6) (69.4) (73.0)
Finance costs (3.0) - (3.0) (2.4) - (2.4)
Loss before tax (23.2) (5.6) (28.8) (6.0) (69.4) (75.4)
Taxation (0.8) 0.2 (0.6) 0.1 0.8 0.9
Loss for the period (24.0) (5.4) (29.4) (5.9) (68.6) (74.5)
Pre-tax Tax 2023 Pre-tax Tax 2022
Adjustment Impact Adjusted Adjustment Impact Adjusted
£'m £'m Results £'m £'m Results
£'m £'m
Share based payments (2.5) 0.2 (2.3) (0.2) (0.2) (0.4)
Share based payments - CEO recruitment - - - (0.1) - (0.1)
CEO Recruitment (0.3) - (0.3) (0.1) - (0.1)
CFO severance & recruitment (0.5) - (0.5)
Impairment - goodwill - - - (62.7) - (62.7)
Impairment - other intangibles - - - (3.4) 0.7 (2.7)
Gain on deemed disposal of JV 2.4 - 2.4
Restructuring (4.7) - (4.7) (4.2) - (4.2)
Restructuring - profit on disposal of PPE - - - 1.3 0.3 1.6
Total (5.6) 0.2 (5.4) (69.4) 0.8 (68.6)
Current year
• Share based payments - The charge (2022: charge) relates to share based
payments recorded in accordance with IFRS 2 'Share based payment' of which
£1.7m (2022: £0.1m) has been classified within cost of sales in gross profit
and £0.8m (2022: £0.1m) has been classified as selling, general and
administrative expenses in operating loss. No cash has been defrayed in the
year (2022: £nil) in respect of employer social security contributions
relating to unapproved employee share options. Share based payments which
arise each financial year are classified as an APM due to the non-cash charge
being partially outside of the Group's control as it is based on factors such
as share price volatility and interest rates which may be unrelated to the
performance of the Group during the period in which the expense occurred.
• Chief Executive Officer recruitment - The Chief Executive Officer's
starting bonus of £1.0m, of which £0.2m relates to a share-based payment
award and £0.8m relates to a cash award is payable over the first three years
of employment. The charge of £0.3m (2022: £0.2) includes share award and
cash costs associated with the new Chief Executive Officer's starting bonus of
£0.3m (2022: £0.4m), settlement costs and legal fees of £nil (2022: £nil)
associated with the transition of the former Chief Executive Officer to a
non-executive role and a credit of £nil (2022: £0.2m credit) relating to
external recruitment fees. Cash costs defrayed in the period total £0.5m
(2022: £0.7m).
• Chief Finance Officer severance & recruitment - The charge of £0.5m
(2022: £nil) consists of settlement costs and legal fees in relation to the
former Chief Financial Officer and recruitment costs in relation to the newly
appointed Chief Financial Officer. Cash costs defrayed in the period total
£0.5m (2022: £nil).
• Restructuring - The charge of £4.7m (2022: £4.2m) relates to
restructuring costs associated with the announced closure of the Group's
manufacturing facility in Pennsylvania, USA and a Group wide restructuring
programme to reduce labour costs in order to mitigate the impact of the
industry wide semiconductor downturn.
· Restructuring charges of £3.4m (2022: £1.1m) consist of employee
related costs of £1.8m (2022: £1.1m) and site decommissioning costs of
£1.6m (2022: £nil) relating to the announced closure of the Group's
manufacturing facility in Pennsylvania, USA in 2024. The charge was classified
as selling, general and administrative expenses within operating loss. As at
31 December 2023, cumulative restructuring charges of £5.3m have been
incurred. Cash costs totalling £4.0m have been incurred to date with £3.1m
(2022: £0.6m) defrayed in the current year with a further £1.6m expected in
2024.
· Restructuring charges of £1.3m (2022: £nil) relate to labour costs
associated with a group wide restructuring programme and associated employee
redundancies (excluding costs relating to the closure of the group's
manufacturing facility in Pennsylvania). The charge was classified as selling,
general and administrative expenses within operating loss. Cash costs defrayed
in the period total £1.3m (2022: £nil).
• Gain on acquisitions of £2.4m (2022: £nil) relates to the gain
recognised on acquisition of the remaining shares in the Group's joint
venture, CSC, increasing its shareholding to 100%. Cash costs defrayed in the
period total £nil (2022: £nil).
•
• The cash impact of adjusted items in the consolidated cash flow
statement of £5.7m (2022: £6.8m) represent costs associated with the
recruitment of the group's Chief Executive Officer (£0.5m), the recruitment
and severance of the group's Chief Finance Officer (£0.5m), onerous contract
royalty payments related to the Group's cREO™ technology (£0.3m), payment
of employee related costs associated with labour cost reductions within the
Group (£1.3m), payment of employee and site related decommissioning costs
associated with the announced closure of the Group's site in Pennsylvania
(£3.1m) and payment of employee and site related decommissioning costs
associated with the closure of the Group's manufacturing facility in Singapore
(£0.1m).
Prior period
• Restructuring charges of £nil (2022: £3.0m) consist of employee related
costs of £nil (2022: £0.2m), site decommissioning costs of £nil (2022:
£1.5m), asset write downs of £nil (2022: £0.9m) and asset transfer costs of
£nil (2022: £0.4m) relating to the closure of the Group's manufacturing
facility in Singapore in June 2022. The prior period charge was classified as
selling, general and administrative expenses within operating loss. Cash costs
defrayed in the period total £0.1m (2022: £5.1m).
• Restructuring profits on disposal of £nil (2022: £1.3m) consist of the
sale of assets in Singapore following the cessation of trade in 2022 and the
sale of assets in North Carolina to facilitate the consolidation of the
Group's manufacturing operations from Pennsylvania. Proceeds received in the
year total £nil (2022: £6.1m) with a profit on disposal of £nil (2022:
£1.3m) classified within 'Profit on disposal of intangible assets and
property, plant and equipment'.
• Impairment of goodwill - The non-cash charge of £nil (2022: £62.7m)
relates to impairment costs associated with the Wireless CGU of £nil (2022:
£62.4m) and the Photonics CGU of £nil (2022: £0.3m).
• Impairment of other intangibles - The non-cash charge of £nil (2022:
£3.4m) relates to the impairment of certain technology development costs and
intellectual property patent assets.
The prior year non-cash impairment charge of £3.4m relates to the impairment
of distributed feedback laser technology development costs where the Group has
taken the decision to discontinue the development and commercialisation of the
technology.
Adjusted EBITDA (adjusted earnings before interest, tax, depreciation,
amortisation and profit/loss on disposal of PPE and intangibles) is calculated
as follows:
2023 2022
£'m £'m
Loss attributable to equity shareholders (29.4) (74.5)
Finance costs 3.0 2.4
Tax 0.6 (0.9)
Depreciation of property, plant and equipment 13.2 14.5
Depreciation of right of use assets 3.8 4.0
Amortisation of intangible fixed assets 7.7 7.8
(Profit)/loss on disposal of PPE and intangibles* (0.2) 0.7
Adjusted Items 5.6 69.4
Share based payments 2.5 0.2
Share based payments - Chief Executive Officer recruitment - 0.1
Chief Executive Officer recruitment 0.3 0.1
Chief Finance Officer severance & recruitment 0.5 -
Gain on deemed disposal of JV (2.4) -
Restructuring 4.7 4.2
Restructuring - profit on disposal of PPE - (1.3)
Impairment of intangibles - 66.1
Adjusted EBITDA 4.3 23.4
Adjusted EBITDA margin 4% 14%
5. Loss per share
Basic loss per share is calculated by dividing the loss attributable to
ordinary shareholders by the weighted average number of ordinary shares in
issue during the year.
Diluted loss per share is calculated by dividing the loss attributable to
ordinary shareholders by the weighted average number of shares and the
dilutive effect of 'in the money' share options in issue. Share options are
classified as 'in the money' if their exercise price is lower than the average
share price for the year. As required by IAS 33, this calculation assumes that
the proceeds receivable from the exercise of 'in the money' options would be
used to purchase shares in the open market in order to reduce the number of
new shares that would need to be issued.
The Directors also present an adjusted earnings per share measure which
eliminates certain adjusted items. The Directors believe that the adjusted
earnings per share measure provides a useful comparison of performance and
allows management and other stakeholders to better compare the performance of
the Group between the current and prior year, excluding the effects of certain
non-cash charges, non-operational items and significant infrequent items that
would distort period on period comparability. The adjustments are detailed in
note 4.
2023 2022
£'m £'m
Loss attributable to ordinary shareholders (29.4) (74.5)
Adjustments to loss after tax (note 4) 5.4 68.6
Adjusted loss attributable to ordinary shareholders (24.0) (5.9)
2023 2022
Number Number
Weighted average number of ordinary shares 896,744,318 804,466,357
Dilutive share options 10,155,464 8,797,413
Adjusted weighted average number of ordinary shares 906,899,782 813,263,770
Adjusted basic loss per share (2.68p) (0.74p)
Basic loss per share (3.28p) (9.27p)
Adjusted diluted loss per share (2.68p) (0.74p)
Diluted loss per share (3.28p) (9.27p)
6. Cash generated from operations
Group 2023 2022
£'m £'m
Loss before tax (28.8) (75.4)
Finance costs 3.0 2.4
Depreciation of property, plant and equipment 13.2 14.5
Depreciation of right of use assets 3.8 4.0
Amortisation of intangible assets 7.7 7.8
Impairment of intangible assets - 66.2
Inventory write downs 0.5 2.8
Non-cash movement on trade receivable expected credit losses (1.8) 2.3
Non-cash provision movements 1.6 3.1
Gain on deemed disposal of JV (2.4) -
Profit on disposal of fixed assets (0.2) (0.7)
Share based payments 2.6 0.3
Cash (outflow) inflow from operations before changes in working capital (0.8) 27.3
Decrease/(increase) in inventories 7.5 (2.9)
Decrease/(increase) in trade and other receivables 6.6 (5.5)
Decrease in trade and other payables (1.7) (3.9)
Decrease in provisions (1.5) (6.1)
Cash inflow from operations 10.1 8.9
The financial information set out above does not constitute the company's
statutory accounts for the years ended 31 December 2023 or 2022. The financial
information for 2022 is derived from the statutory accounts for 2022 which
have been delivered to the registrar of companies. The auditor has reported on
the 2022 accounts; their report was (i) unqualified, (ii) did not include a
reference to any matters to which the auditor drew attention by way of
emphasis without qualifying their report and (iii) did not contain a statement
under section 498 (2) or (3) of the Companies Act 2006.
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