REG-IQE plc : Settlement of prior year taxes <Origin Href="QuoteRef">IQE.L</Origin>

IqeAnnouncement

20/10/2017 07:05

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Cardiff, UK. 20 October 2017: IQE plc (AIM: IQE, "IQE" or the "Group"), the
leading global supplier of advanced wafer products and wafer services to the
semiconductor industry, announces the settlement of prior years' tax
liabilities. 

The Group recently engaged the services of an international tax firm to assist
with a routine US tax filing for the year ended 2016.  Unexpectedly, this
exercise has identified taxes due in the US relating to the profits of an
overseas subsidiary for the years ending 2013, 2014, 2015 and 2016, which
follow the acquisition of the epitaxy business of Kopin in January 2013. 
This firm has estimated the tax due as approx. £4.2m, and is in the process
of calculating the actual amount, which may take up to 4 weeks.  IQE
immediately initiated the payment of the estimated amount to the relevant tax
authority, and will adjust any over/under payment in due course.  On the
advice of this firm, IQE has also accrued interest due of up to £0.4m.  As a
result of a Group re-organisation initiated in September 2016, but unrelated
directly to this previously advised tax treatment, it is believed that no
similar tax liability arises in 2017. 

IQE has historically used a local independent firm of tax advisors for routine
corporate tax filings, supplemented with the advice of larger firms of
independent tax advisors for tax strategy, planning, and transactional work. 
The original tax structuring of the acquisition of the Kopin epitaxy business
was done in accordance with advice of a large mid-tier US legal and tax firm
working in conjunction with IQE's local independent tax advisor.  IQE used
the same local independent firm to complete the routine tax returns for 2013
to 2015, and supplemented this for 2016 with the international tax firm to
bring expertise around the aforementioned restructuring. The same
international tax firm has supported IQE with its transfer pricing compliance
for the last four years, and in other ad hoc areas as necessary. IQE is
clearly extremely disappointed with the previous professional advice received
and will be pursuing full recompense as a matter of priority with the previous
advisors.

The tax paid was previously unaccrued, and hence this will result in a prior
year adjustment to the comparative figures in the next annual report.  There
is no impact, or additional tax payable, on the expected trading results for
2017. 

Whilst there are no indications of any further potential omissions, the Board
yesterday approved the use of an international independent tax firm to
undertake a complete IQE group tax review.  

The Group has enjoyed a strong Q3 with continuing growth driven largely by the
ongoing strong VCSEL ramp in support of a highly significant mass market
consumer application, and the new Foundry expansion remains on course to open
in H1 2018.  As a result, the Board remains confident the Group is on track
to deliver full year expectations, including that of net debt.

The information contained within this announcement is deemed to constitute
inside information as stipulated under the Market Abuse Regulations (EU) No.
596/2014. Upon the publication of this announcement, this inside information
is now considered to be in the public domain.

CONTACTS
IQE plc +44 (0) 29 2083 9400 
 Drew Nelson 
 Phil Rasmussen 
 Chris Meadows 

Canaccord Genuity + 44 (0) 20 7523 8000 
 Simon Bridges 
 Henry Fitzgerald O'Connor
 Richard Andrews

Peel Hunt +44 (0) 20 7418 8900
 Edward Knight
Nick Prowling
This announcement is distributed by Nasdaq Corporate Solutions on behalf of
Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for
the content, accuracy and originality of the information contained therein.
Source: IQE plc via Globenewswire