Interim Results
IFX Power PLC
21 July 2000
IFX Power plc
('IFX' or 'the Group')
Interim Results for the Six Months to 30 June 2000
IFX Power, one of the world's leading providers of power
supply solutions, today announces its interim results for the
six month period to 30 June 2000.
IFX provides power supply solutions to the electronics
industry and operates predominately within the high technology
sector of the market. The Group was formed by the combination
of International Power Sources, Inc. ('IPS') and ForeSight
Electronics, Inc. ('ForeSight'), both US companies and XP PLC
('XP'), a UK company. ForeSight was acquired for cash on 15
May 2000. IFX acquired XP via a share for share exchange on
12 June 2000. IPS was acquired for cash after the period end
on 5 July 2000 following IFX's admission to the Official List
of the UK Listing Authority.
FINANCIAL HIGHLIGHTS
On a pro forma basis (1)
Six months Six months to Change
to 30 June 2000 30 June 1999
£'000
Turnover 48,601 25,502 91%
Adjusted profit
before tax 6,165 3,097 99%
Adjusted earnings
per share 18.60p 9.77p 90%
Dividend 5p 4p 25%
On a statutory basis (2)
Turnover 20,986 7,361 185%
Profit before tax 2,394 959 150%
Earnings per share 13.10p 6.58p 99%
Dividend 5p 4p 25%
(1) The pro forma financial information is calculated on the
basis that IPS, ForeSight and XP were combined on 1 January of
each period presented, which is further described in note 2 to
the interim results. The figures have been adjusted to exclude
the amortisation of goodwill.
(2) The statutory financial information is calculated on the
basis required by the accounting standards and includes the
results of XP throughout the periods presented and the results
of ForeSight from the date of acquisition on 15 May 2000.
* Combination of IPS, ForeSight and XP creates strong new
player in the fragmented mid-tier section of the power
supplies market
* ForeSight reports strong growth as a result of increased
sales to networking and telecommunication customers largely in
the Silicon Valley of California
* IPS and XP businesses produce record turnover and profits
* Pro forma turnover and profits grow by 90 per cent on a
like-for-like basis
* Performance ahead of forecast issued at time of flotation
* All three trading companies continue to gain new
customers
* Interim dividend declared of 5p per share
Larry Tracey, Chief Executive, commented: 'I am pleased to
make this first report as Chief Executive of the Group
following the successful flotation in early July. The
combination of IPS, ForeSight and XP to form IFX has created a
world class power supply business serving three of the fastest
growing electronics markets; California, New England and the
UK.
'On a like-for-like basis revenues and earnings have improved
by 90% over the comparable period last year. Although the
performance of the ForeSight business has been particularly
strong, management has been able to motivate employees across
the Group, many of whom are IFX shareholders, to strive to out
perform.
'Looking forward, it is now our task to obtain the benefits of
integration, particularly in the areas of new product
development and marketing intelligence systems. The Group
will continue to target customers in the telecommunications
and networking infrastructure sectors to further expand our
presence in these high growth markets. Against this
background, we believe it likely that the second half of 2000
will continue to see strong growth.'
Enquiries:
IFX Power plc 0118 984 5515
Larry Tracey, Chief Executive Officer
James Peters, European Managing Director
www.ifxpower.com
Square Mile Communications 020 7601 1000
Kevin Smith or John Stanley
IFX Power plc
('IFX' or 'the Group')
Interim Results for the Six Months to 30 June 2000
REPORT OF THE DIRECTORS
The Board is pleased to report on the performance of the Group
for the six months to 30 June 2000. Turnover and profits have
increased substantially over the same period a year ago on a
like for like basis and have exceeded the forecast in the
prospectus for the July flotation.
Description of the Group and its Markets
The Group provides power supply solutions to the electronics
industry and operates predominately within the mid-tier of the
market. The mid-tier of the market is highly fragmented and
made up of a large number of small to medium sized Original
Equipment Manufacturers who source standard and modified
standard power supplies from several hundred power supply
companies. The Directors believe that this tier accounts for
approximately 30% or $3 billion of the total power supplies
market.
The Group was formed by the combination of IPS, ForeSight and
XP. ForeSight was acquired for cash on 15 May 2000. IFX
acquired XP via a share for share exchange on 12 June 2000.
IPS was acquired for cash on 5 July 2000 following IFX's
admission to the Official List of the London Stock Exchange
and the associated placing that raised approximately £27.2
million for the Group net of expenses.
Trading Performance and Outlook
The Group has made significant progress during the first half
of 2000 in winning customers in all its target markets. The
ForeSight business has been particularly strong as a result of
activity from networking and telecommunication customers
largely in Silicon Valley in California. The IPS and XP
businesses have also produced record turnover and profits.
The end markets the Group serves continue to be buoyant and
the Directors expect these conditions to continue in the
second half of 2000.
Financial Performance
To assist readers of the interim accounts we have prepared pro
forma information which shows the results on a like for like
basis as if the companies had been combined from the beginning
of the applicable accounting period in addition to the
statutory results as required by the accounting standards.
All Group companies performed ahead of the same six month
period a year ago. The Group has won designs with fast growing
customers who have been successful in their end markets. On a
pro forma basis turnover was £48.6M for the six months to 30
June 2000, up 91% on the same period a year ago on a like for
like basis.
Profit before tax and goodwill was £6.2M, up 99% on the same
period a year ago. Earnings per share before goodwill on a pro
forma basis was 18.6 pence, an increase of 90% on the same
period a year ago.
Profit Forecast
The Prospectus dated 27 June 2000 contained forecasts for the
six month periods ending 30 June 2000 for each of the trading
group companies. The performance of each of the trading
companies against those forecasts is set out below:
£ Millions Forecast Actual
IPS Turnover 5.7 5.8
Profit Before tax 1.5 1.6
ForeSight Turnover 32.1 33.7
Profit Before Tax 2.5 2.7
XP Turnover 9.1 9.1
Profit Before Tax 1.5 1.5
Dividend
The Company has declared an interim dividend of 5p for the six
months ended 30 June 2000. The interim dividend will be paid
on 17 October 2000 to shareholders on the register at 4 August
2000.
IFX Power plc
Pro Forma Consolidated Profit and Loss Account (unaudited)
For the six months to 30 June 2000
£'000 Six months to Six months to
30 June 2000 30 June 1999
Turnover 48,601 25,502 +91%
Earnings before interest,
tax and depreciation 6,156 3,118 +97%
Amortisation of goodwill (445) (445) -
Depreciation (168) (181) -7%
Operating profit 5,543 2,492 +122%
Interest receivable and
similar income 282 239 +18%
Interest payable and
similar charges (105) (79) +33%
Profit on ordinary
activities before taxation 5,720 2,652 +116%
Tax on profit on ordinary
activities (2,309) (1,135) +103%
Profit on ordinary
activities after taxation 3,411 1,517 +124%
Dividends payable (1,036) (403) +157%
Retained profit for the period 2,375 1,114 +113%
Basic earnings per share 16.46p 7.56p +118%
Earnings per share adjusted
for goodwill1 8.60p 9.77p +90%
IFX Power plc
Statutory Consolidated Profit and Loss Account (unaudited)
For six months to 30 June 2000
£'000 Six months to Six months to
30 June 2000 30 June 1999
Turnover
Continuing operations 9,116 7,361 +24%
Acquisitions 11,870 - -
Total Turnover 20,986 7,361 +185%
Gross profit 5,874 2,610 +124%
Selling and distribution (2,685) (1,098) +145%
Administrative expenses (447) (366) +22%
Other operating income 15 24 -38%
Operating profit
Continuing operations 1,463 1,035 +41%
Acquisitions 1,110 - -
Total operating profit 2,573 1,035 +149%
Interest receivable and similar income 47 3 +1466%
Interest payable and similar charges (226) (79) +186%
Profit on ordinary
activities before Taxation 2,394 959 +150%
Tax on profit on ordinary
activities (883) (297) +197%
Profit on ordinary
activities after Taxation 1,511 662 +128%
Dividends payable (1,036) (403) +157%
Retained profit for the period 475 259 +83%
Basic earnings per share 13.10p 6.58p +99%
Earnings per share
adjusted for goodwill 13.43p 6.58p 104%
IFX Power plc
Statutory Consolidated Balance Sheet (unaudited)
At 30 June 2000
£'000 At 30 June At 30 June
2000 1999
Fixed assets
Tangible assets 1,133 623
Intangible assets 5,950 -
Own shares 1,380 1,380
Investments 235 152
Total Fixed Assets 8,698 2,155
Current assets
Stocks 9,217 1,060
Debtors 15,679 3,464
Cash at bank and in hand 4,475 195
Total current assets 29,371 4,719
Creditors: amounts falling due
within one year (35,337) (4,887)
Net current liabilities (5,965) (168)
Creditors: amounts falling after
more then one year - -
Provisions for liabilities and charges (62) -
Net assets 2,670 1,987
Capital and reserves
Called up share capital 156 156
Merger reserve 250 250
Profit and loss account 2,264 1,581
Total equity shareholders' funds 2,670 1,987
IFX Power plc
Statutory Consolidated Cash Flow for the six months to 30 June
2000 (unaudited)
£'000 Six months to Six months to
30 June 2000 30 June 1999
Net cash flow from operating
activities 2,767 (658)
Returns on investments and
serving of finance
Interest paid (226) (79)
Interest received 47 3
Net cash outflow from returns
on investments and the
servicing of finance (179) (76)
Taxation
Tax paid (21) (79)
Capital expenditure
Purchase of tangible fixed assets (139) (50)
Sale of investments 376 -
Net cash outflow from capital
expenditure 237 (50)
Free cash flow 2,804 (863)
Purchase of subsidiary undertakings (11,955) -
Equity dividends paid - (403)
Financing
New loans 11,750 1,380
Loan repayments (1,380) -
Net cash flow from financing 10,370 1,380
Increase in cash 1,219 114
Notes to the Interim Results for the six months ended 30 June
2000
1. Basis of preparation
Accounting convention
The financial statements have been prepared under the
historical cost convention.
Basis of consolidation
On 11 May 2000 XP acquired the entire issued share capital of
Forx Inc. ('Forx') a company incorporated in the USA in a
share for share exchange.
On 15 May 2000 Forx acquired the entire issued share capital
of ForeSight for cash.
On 12 June 2000 IFX acquired the entire issued share capital
of XP in a share for share exchange.
The group has accounted for the acquisition of XP and Forx
using the merger method of accounting and the acquisition of
ForeSight using the acquisition method of accounting in
accordance with Financial Reporting Standard 6, 'Acquisitions
and Mergers'. The pro forma consolidated financial information
has also been prepared on this basis.
Goodwill and intangible fixed assets
For acquisitions of a business, where the acquisition method
of accounting is adopted, purchased goodwill is capitalised in
the year in which it arises and amortised over its estimated
useful life up to a maximum of 20 years. The directors regard
20 years as a reasonable maximum for the estimated useful life
of goodwill. Capitalised purchased goodwill in respect of
subsidiaries is included within intangible fixed assets.
Tangible fixed assets
Depreciation is provided on cost in equal annual instalments
over the estimated useful lives of the assets. The rates of
depreciation are as follows:
Plant and machinery - 15-33%
Motor vehicles - 25%
Office equipment - 15-33%
Leasehold improvements - 10%
Long leasehold land and buildings - Term of the lease
Investments
Investments held as fixed assets are stated at cost less
provision for impairment if applicable.
Stocks
Stocks are stated at the lower of cost and net realisable
value. Cost represents materials and appropriate overheads.
Deferred taxation
Deferred taxation is provided at the anticipated tax rates on
differences arising from the inclusion of items of income and
expenditure in taxation computations in periods different from
those in which they are included in the financial statements
to the extent that it is probable that a liability or asset
will crystallise in the future.
Foreign exchange
Transactions denominated in foreign currencies are translated
at the rates ruling at the dates of the transactions. Monetary
assets and liabilities denominated in foreign currencies at
the balance sheet date are translated at the rates ruling at
that date. These translation differences are dealt with in the
profit and loss account.
The results of overseas subsidiary undertakings are translated
in sterling at average rates for the period. The exchange
differences arising as a result of restating retained profits
to closing rates are dealt with as a movement on reserves.
Leases
Rental costs under operating leases are charged to the profit
and loss account in equal instalments over the period of the
leases.
2. Basis of pro forma financial information
The pro forma financial information for the six months ended
30 June 2000 and 1999 have been determined as if the trading
companies IPS, ForeSight and XP were combined from the
beginning of the financial periods concerned. The figures have
been extracted from the unaudited financial statements of the
companies concerned.
The pro forma adjustments reflected in the unaudited proforma
consolidated profit and loss accounts include assumptions made
by the directors that they consider to be reasonable and which
are consistent with the pro forma information presented in the
IFX Prospectus dated 27 June 2000.
3. Segmental analysis
The Group operates substantially in one class of business, the
supply of power supply solutions to the electronics industry.
Analysis of total Group operating profit, net assets, pro
forma turnover and pro forma total Group operating profit by
geographical region is set out below.
Segmental Analysis Pro Forma Basis
£'000's Pro forma basis
Six months to Six months to
30 June 2000 30 June 1999
Turnover
United Kingdom 9,116 7,361
United States 39,485 18,141
Total turnover 48,601 25,502
Group operating profit (before goodwill)
United Kingdom 1,493 1,035
United States 4,495 1,902
Total Group operating profit
(before goodwill) 5,988 2,937
Net interest receivable 177 160
Total Group profit before tax and
goodwill 6,165 3,097
Amortisation of goodwill (445) (445)
Profit on ordinary activities
before taxation 5,720 2,652
Segmental Analysis Statutory Basis
Statutory Basis
£'000 Six months to Six months to
30 June 2000 30 June 1999
Turnover
United Kingdom 9,116 7,361
United States 11,870 -
Total Turnover 20,986 7,361
Group Operating Profit (before goodwill)
United Kingdom 1,500 1,035
United States 1,110 -
Total Group Operating Profit
(before goodwill) 2,610 1,035
Amortisation of goodwill (37) -
Total Group Operating Profit
after goodwill 2,573 1,035
At 30 June 2000 At 30 June 1999
Net assets
United Kingdom 2,434 1,959
Rest of Europe 16 -
United States 6,542 -
Total 8,992 1,959
Elimination of pre-acquisition
profits and investments in
Subsidiary undertakings (6,322) -
Total net assets 2,670 1,959
4.Taxation
£'000's Six months to Six months to
30 June 2000 30 June 1999
United Kingdom 435 297
International Taxation:
Subsidiary undertakings 448 -
Total taxation 883 297
5. Equity Dividends
An interim dividend of 5p (1999 - 4p) per share will be paid
on 17 October 2000 to shareholders on the register of members
on 4 August 2000.
6. Earnings per share
£'000's Six months to Six months to
30 June 2000 30 June 1999
Pro forma basis
Earnings for the financial period
for basic earnings per share 3,411 1,517
Amortisation of goodwill 445 445
Earnings for adjusted earnings per share 3,856 1,962
Weighted average number of shares
(thousands) 20,729 20,080
Statutory basis
Earnings for the financial period
for Basic earnings per share 1,511 662
Amortisation of goodwill 37 -
Earnings for adjusted earnings per share 1,548 662
Weighted average number of shares
(thousands) 11,530 10,063
7. Reconciliation of Operating Profit to net Cash Inflow
from Operating activities
£'000's Six months to Six months to
30 June 2000 30 June 1999
Operating profit 2,573 1,035
Depreciation and amortisation 164 135
(Increase)/decrease in stocks (812) 11
(Increase) in debtors (1,544) (269)
Increase/(decrease) in creditors 2,386 (1,570)
Net cash inflow from operating activities 2,767 (658)
8. Reconciliation of net cash position
£'000's Six months to Six months to
30 June 2000 30 June 1999
Net (overdraft)/cash at 1 January (85) 53
Cash acquired with subsidiary
undertakings 3,289 -
Net overdrafts acquired with
subsidiary undertakings (2,291) -
Increase in cash per cash flow
statement 1,219 114
Net cash at 30 June 2,132 167
Represented by
Cash at bank and in hand 4,475 167
Overdrafts (2,343) -
Net cash at 30 June 2,132 167
9. Borrowings
On 15 May 2000 the Group obtained a finance facility totalling
£11.75 million to acquire the entire share capital of
ForeSight and refinance a loan of £1.38M from Coutts & Co.
This facility was repaid subsequent to the period end from the
proceeds of the Groups placing.
10. Mergers and Acquisitions
The mergers with FORX and XP were completed on 11 May 2000 and
12 June 2000 respectively. The acquisition of ForeSight was
completed on 15 May. The table below sets out certain details
of the assets acquired, purchase consideration and calculation
of goodwill arising or merger reserve as applicable. The
directors do not consider that any fair value adjustments are
necessary.
The acquisition of IPS completed after the balance sheet date,
on 5 July 2000.
£'000's FORX ForeSight XP
Balance sheets at acquisition
Intangible fixed assets - 90 -
Tangible fixed assets - 437 681
Investments - 387 1,560
Cash 28 3,261 2,012
Current assets - 17,229 5,449
Net borrowings - (2,291) (1,700)
Other net liabilities - (12,871) (4,889)
Net assets acquired 28 6,242 3,113
Fair value adjustment - (200) -
Fair value of net assets required 28 6,042 3,113
Merger reserve (17) - 267
Goodwill - 5,892 -
Purchase consideration 45 11,934 156
Satisfied by:
Cash consideration - 11,934 -
Share consideration 45 - 156
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