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  "documentTitle": "IQE plc (IQE)",
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  "authorName": "Carson Block",
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  "presentationDate": "2018-02-08 00:00:00",
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  "notes": "This is a research note page focusing on forensic accounting analysis.",
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      "text": "This unexplained change in accounting policy raises significant questions about IQE's accounting practices, and historical margins.",
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      "text": "IQE’s response states that its purchases from the joint ventures are “at cash cost” (emphasis added). This also makes IQE’s financials misleading because cost is not reflective of an arms-length arrangement.",
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      "text": "This unexplained change in accounting policy raises significant questions about IQE’s accounting practices, and historical margins. £12.0 million is the precise amount needed to zero out IQE’s equity investment in CSC.",
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      "text": "Despite recording IP licensing revenue in 2015 on transactions with CSC, in our opinion, IQE’s accounting was more consistent with a gain on disposal of assets than licensing revenue.",
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      "text": "The profit arising from license income sales to joint ventures in 2015 represents revenue of £15,310,000 offset by an elimination of unrealised profit of £7,286,000 relating to our retained interest in the Compound Semiconductor Centre Limited joint venture. No such elimination has occurred in 2016.",
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      "text": "“The profit arising from license income sales to joint ventures in 2015 represents revenue of £15,310,000 offset by an elimination of unrealised profit of £7,286,000 relating to our retained interest in the Compound Semiconductor Centre Limited joint venture. No such elimination has occurred in 2016.” — IQE Annual Report disclosure",
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      "text": "Accounting Issue 3 – IQE recognized licensing revenue in an internally inconsistent manner between 2015 and 2016, giving rise to concerns that IQE intended to deceive investors",
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      "text": "Accounting Issue 2 – IQE has its cake and eats it too by selling to CSC at arms-length prices, but buying from it at cash cost, which is anything but arms-length",
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