Preliminary Results
IFX Power PLC
1 February 2001
1 February 2001
IFX Power plc
('IFX' or 'the Group')
Preliminary Results for the Year Ended 31 December 2000
EARNINGS INCREASE BY OVER 100% FOR THE YEAR ENDED 31 DECEMBER
2000
IFX Power plc, one of the world's leading providers of power
supply solutions to the electronics industry, today announces
its preliminary results for the year ended 31 December 2000.
Financial Highlights
On a pro forma basis (1)
Year ended 31 Year ended 31
£ Millions December 2000 December 1999
Turnover 105.9 58.6
Adjusted profit before tax 12.7 6.1
Adjusted earnings per share 40.0p 18.7p
Total dividend 12p 8p
On a statutory basis (2)
Turnover 77.8 15.2
Profit before tax 9.2 2.0
Earnings per share 37.3p 12.2p
Total dividend 12p 8p
(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 financial statements. The figures have been adjusted to
exclude the amortisation of goodwill.
(2) The statutory financial information is calculated on the
basis required by accounting standards and includes the
results of XP throughout the periods presented and the results
of ForeSight and IPS from the date of acquisition on 15 May
2000 and 5 July 2000 respectively.
(3) The dividend for the year ended 31 December 1999
represents the dividend paid to the shareholders of XP for
that period.
Key Achievements
* Revenue growth in excess of 70% on a like for like basis.
* Earnings per share growth in excess of 100% on a like for
like basis..
* Acquired Aston Technologies Inc, a small power supply
business, during December 2000 for $0.9 million to gain
geographic coverage in New Jersey and Philadelphia.
* Entered into a contract to acquire a 25% stake in MPI XP
Power AG, during December for CHF 1.8 million, with an option
to acquire the remaining issued share capital in 5 years time
to achieve sales coverage in Switzerland.
Larry Tracey, Chief Executive Officer, said: 'The year 2000
was a period of strong growth for the Group. The Board will
continue to develop the geographical coverage and product
offering of the Group both organically and by acquisition to
become the world market leader in the supply of power supply
solutions to the mid tier of electronics industry'.
Enquiries:
IFX Power plc (On the day) 020 7601 1000
Larry Tracey, Chief Executive Officer(Thereafter) 0118 976 5087
James Peters, European Managing Director www.ifxpower.com
Duncan Penny, Finance Director
Square Mile BSMG 020 7601 1000
Kevin Smith or John Stanley
Notes to Editors:
IFX Power plc provides power supply solutions to the
electronics industry and operates, predominantly, within the
high technology sector of the market. IFX Power supplies
regulate and distribute electrical power for various
subsystems and components within electronic equipment. IFX
Power was formed by the combination of International Power
Sources, Inc., ForeSight Electronics, Inc. and XP PLC, in July
2000. IFX subsequently floated on the Official List of the UK
Listing Authority in July 2000.
1 February 2001
IFX Power plc
('IFX' or 'the Group')
Preliminary Results for the Year Ended 31 December 2000
CHAIRMANS STATEMENT
I am pleased to report a strong performance from IFX in its
first period as a public company due to the professionalism of
our people.
Financial Results
Sales revenues for the three Group companies, IPS, ForeSight
and XP grew from £58.6 million in 1999 to £105.9 million in
2000, an organic growth rate of over 70%. During this period,
the market for our products was estimated to have increased by
15%. Our global market share increased from 3.5% at the end of
1999 to 5.3% at the year end. It is our opinion that this gain
was at the expense of our smaller competitors who still own
more than 50% of the market.
Profit before tax and goodwill amortisation on a like for like
basis increased from £6.1 million to £12.7 million. The
growth rate is pleasing as is the 28% increase in productivity
as measured by the level of gross margin generated from the
operating expenses incurred. Gross margins reduced from 29.7%
to 27.8%. Action has been taken to regain 1999 levels.
Overall operating profit at 12% was an improvement from the
level of 1999 as we gained efficiencies from our operating
overheads.
Pro forma earnings per share grew from 18.7p in 1999 to 40.0p
in 2000. Useful progress was made during the year on bringing
our tax charge towards that of the companies in our industry
with whom we benchmark. More progress needs to be made in
this important cost area.
We are proposing a final dividend of 7p per share for approval
at the Annual General Meeting, making the total dividend for
the year 12p.
Target Market
IFX's goal is to become the dominant supplier to the mid-tier
of the merchant power supply market in North America and
Europe. We currently rank fourth and the market leader has
almost twice our market share. Achievement of our goal will
benefit all shareholders. Our strategy is to increase sales
and engineering resources in those major regional markets
where we have limited or non-existent coverage. In Northern
California, New England and the United Kingdom we are market
leaders, however these territories represent only 30% of the
North America/Europe market.
We aim to achieve 90% coverage of our target market over the
next two years. Progress last year included opening sales
offices in Germany and Holland and the acquisition of a small
sales company in New Jersey. We also entered a contract to
acquire a 25% stake in a Swiss power supply business with the
option to acquire the remainder of the issued share capital in
five years time.
Products/Customers
Our customers' market capital equipment. This equipment is
mostly sold to industry and commerce to improve productivity.
A growing trend amongst our customer base is for the
manufacture of their products to be sub-contracted to
specialist manufacturing companies.
The communications industries are now at the forefront of the
capital equipment market. Return on investment from the
purchase of their products is often measured in months rather
than years.
The flow of new products in this sector produces new projects
with life cycles of two to three years. In this fast moving
environment time to market is the critical cost factor for our
customers. As the power supply requirements of a new product
are not defined until the design of the equipment is finalised
the ability to react quickly is paramount. Customers seek to
differentiate their products in their markets with the
consequence that the power supply requirements for most
products will be different. IFX's solution is to offer the
most complete range of products in our industry sourced from
over sixty design teams and one hundred factories worldwide.
Our potential customer base in our target market is 75,000
companies. In the past year we traded with approximately 10%
of these companies.
e-tools
The internet has changed our ability to transact with
customers, with suppliers and with each other. The
effectiveness of IFX in identifying customers and their needs
has improved dramatically by developing proprietary software,
which is enabled by the internet.
Our business model is predicated on aggregating product
requirements of 75,000 potential customers and reacting to
this demand on a daily basis. In time our suppliers will
access our databases through the internet to determine their
production schedules. Internally, information is accessible
through the internet real time and data is recorded
electronically. No paper systems exist in the UK and by mid
2001 most other internal Group paper systems will be largely
replaced by our e-tools in all operations.
Steve Robinson was promoted to the board of directors as e-
Business Director on 31 January 2001. Steve has been the
leader of our e-tools team since its inception in 1998. We
measure the success of our e-tools by increased productivity;
our standard is the amount of gross margin added as a ratio of
operating expense. Last year our operating companies
increased productivity by 28%. Further gains are expected over
the next few years.
People
Our people must share in the success of our business. Many of
our people already have equity stakes. Over time we will need
to increase their stakes, and also offer equity to existing
employees who prove their worth to the business. In
exceptional circumstances we will need to attract good people
with the carrot of participation in the increase of the value
of our company. We shall therefore be submitting a share
option plan for your approval at the annual general meeting.
OUTLOOK
Our new product offerings for 2001 are significantly greater
than any previous year. They include new products for
telecommunications, medical, data storage, networking,
broadcast, instrumentation, process control, and mobile
equipment. Our marketing databases to identify new product
requirements are more powerful than ever before and will be
further strengthened by our expansion of sales resources
across our target market, driven by acquisitions and increased
resourcing of our existing regional offices. In January 2001
we opened a sales office in France.
Although there are signs of an economic slow down in the U.S.,
the Board is confident that the Group will achieve further
growth in the coming year.
Ed Kramar
Chairman
1 February 2001
IFX Power plc
Pro Forma Consolidated Profit and Loss Account
For the Year Ended 31 December 2000
£ Millions Year ended 31 Year ended 31
December 2000 December 1999
Turnover 105.9 58.6
Earnings before interest,tax
and depreciation and goodwill
amortisation 12.9 6.3
Amortisation of goodwill (0.9) (0.9)
Depreciation (0.4) (0.4)
Operating profit 11.6 5.0
Interest receivable and
similar income 0.6 0.5
Interest payable and
similar charges (0.4) (0.3)
Profit on ordinary
activities before taxation 11.8 5.2
Profit on ordinary activities
before taxation and goodwill
amortisation 12.7 6.1
Tax on profit on ordinary
activities (4.4) (2.3)
Profit on ordinary
activities after taxation 7.4 2.9
Dividends payable (2.5) (0.4)
-------------------------------
Retained profit for the period 4.9 2.5
===============================
Basic and fully diluted
earnings per share 35.7p 14.3p
Earnings per share adjusted
for goodwill 40.0p 18.7p
IFX Power plc
Statutory Consolidated Profit and Loss Account
For the Year Ended 31 December 2000
£ Millions Note 2000 1999
Turnover
Continuing operations 20.8 15.2
Acquisitions 57.0 -
Total turnover 3 77.8 15.2
========================
Gross profit 22.1 5.2
Selling and distribution (8.5) (2.4)
Administrative expenses (4.9) (0.8)
Goodwill amortisation (0.5) -
Gain on sale/allocation of ESOP shares 1.1 -
Other operating income 0.1 0.1
========================
Operating profit
Continuing operations 4.0 2.1
Acquisitions 5.4 -
Total operating profit 3 9.4 2.1
Interest receivable and similar income 0.2 -
Interest payable and similar charges (0.4) (0.1)
========================
Profit on ordinary activities before taxation 9.2 2.0
Tax on profit on ordinary activities 4 (3.2) (0.6)
Profit on ordinary activities after taxation 6.0 1.4
Dividends payable 5 (2.5) (0.8)
Retained profit for the period 3.5 0.6
========================
Basic and fully diluted earnings per share 6 37.3p 12.2p
Earnings per share adjusted for goodwill 6 40.5p 12.2p
Statement of Recognised Gains and Losses
£ Millions 2000 1999
Profit on ordinary activities after taxation 6.0 1.4
Currency translation differences - -
Total recognised gains relating to the year 6.0 1.4
IFX Power plc
Statutory Consolidated Balance Sheet
At 31 December 2000
£ Millions 2000 1999
Fixed assets
Tangible assets 1.4 0.7
Intangible assets - goodwill 18.2 -
Own shares 0.5 1.2
Investments 0.3 0.2
--------------------------
Total fixed assets 20.4 2.1
Current assets
Stocks 13.4 1.0
Debtors 17.7 4.3
Cash at bank and in hand 5.5 -
--------------------------
Total current assets 36.6 5.3
Creditors: amounts falling due within one year (24.2) (3.7)
--------------------------
Net current assets 12.4 1.6
Creditors: amounts falling after more then one year - (1.4)
--------------------------
Net assets 32.8 2.3
Capital and reserves
Called up share capital 0.2 0.2
Share premium account 27.0 -
Merger reserve 0.2 0.2
Profit and loss account 5.4 1.9
-------------------------
Total equity shareholders' funds 32.8 2.3
IFX Power plc
Statutory Consolidated Cash Flow
For the Year Ended 31 December 2000
£ Millions Note 2000 1999
Net cash flow from operating activities 7 5.4 1.3
---------------------
Returns on investments and serving of finance
Interest paid (0.4) (0.1)
Interest received 0.2 0.1
---------------------
Net cash outflow from returns on
investments and the servicing of finance (0.2) -
Tax paid (3.1) (0.4)
----------------------
Capital expenditure
Purchase of tangible fixed assets (0.7) (0.3)
Sale of tangible fixed assets 0.1 -
----------------------
Net cash outflow from capital expenditure (0.6) (0.3)
Free cash flow 1.5 0.6
Purchase of subsidiary undertakings (26.3) -
Equity dividends paid (1.0) (0.5)
-----------------------
Financing
New shares issued 27.0 -
New loans 11.8 1.3
Loan repayments (13.2) -
Proceeds from sale of ESOP shares 1.3 -
-----------------------
Net cash flow from financing 26.9 1.3
-----------------------
Increase in cash 1.1 1.4
Notes to the Interim Results
For the Year Ended 31 December 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.
On 5 July 2000 IFX acquired the entire issued share capital of
IPS Inc. (IPS) for cash.
The group has accounted for the acquisition of XP and Forx
using the merger method of accounting and the acquisition of
ForeSight and IPS 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 useful life for 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 years ended 31
December 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 financial statements of the companies
concerned.
The pro forma adjustments reflected in the pro forma
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 except for the profit before
tax for 1999 which has been increased by £1.6M to reflect the
drawings made by the selling shareholders of IPS above the
salaries which were paid to them in 2000. This adjustment has
been made to ensure fairer comparability between the two years
presented.
3.Segmental analysis
The Group operates substantially in one class of business,
providing 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
£ Millions Pro forma basis
-------------------------------
Year to 31 Year to 31
December 2000 December 1999
Turnover
Europe 20.8 15.2
United States 85.1 43.4
--------------------------------
Total turnover 105.9 58.6
Group operating profit (before goodwill)
Europe 3.1 2.1
United States 9.4 3.8
---------------------------------
Total Group operating profit
(before goodwill) 12.5 5.9
Segmental analysis statutory basis
Statutory Basis
£ Millions Year to 31 Year to 31
December 2000 December 1999
Turnover
Europe 20.8 15.2
United States 56.9 -
----------------------------------
Total turnover 77.8 15.2
Group operating profit (before goodwill)
Europe 4.0 2.1
United States 5.9 -
----------------------------------
Total group operating profit (before goodwill) 9.9 2.1
Amortisation of goodwill (0.5) -
Total group operating profit after goodwill 9.4 2.1
At 31 December At 31 December
2000 1999
Net assets
Europe 13.4 2.3
United States 32.6 -
---------------------------------
Total 46.0 2.3
Elimination of pre-acquisition
profits and investments in
subsidiary undertakings (13.4) -
---------------------------------
Total net assets 32.6 2.3
4. Taxation
Pro forma basis
£ Millions Year to 31 Year to 31
December 2000 December 1999
United Kingdom 1.3 0.6
International taxation:
Subsidiary undertakings 3.1 -
----------------------------------
Total taxation 4.4 0.6
Statutory basis
£ Millions Year to 31 Year to 31
December 2000 December 1999
United Kingdom 1.1 0.7
International taxation:
Subsidiary undertakings 2.1 1.6
----------------------------------
Total taxation 3.2 2.3
5.Equity dividends
An interim dividend of 5p (1999 - 4p) per share was paid on 17
October 2000. A final divided of 7p (1999 - 4p) is proposed
for approval to be paid on 17 May 2001 to shareholders on the
register of members on 4 May 2001.
6.Earnings per share
£ Millions Year to 31 Year to 31
December 2000 December 1999
Pro forma basis
Earnings for the financial period
for basic earnings per share 7.4 2.9
Amortisation of goodwill 0.9 0.9
----------------------------------------
Earnings for adjusted earnings per share 8.3 3.8
========================================
Weighted average number of shares (thousands) 20,731 20,080
Statutory basis
Earnings for the financial period
for basic earnings per share 6.0 1.4
Amortisation of goodwill 0.5 -
---------------------------------------
Earnings for adjusted earnings per share 6.5 1.4
=======================================
Weighted average number of shares
(thousands) - basic 16,132 11,120
Weighted average number of shares
(thousands) - fully diluted 16,133 11,120
7. Reconciliation of operating profit to net cash inflow
from operating activities
£ Millions Year to 31 Year to 31
December 2000 December 1999
Operating profit 9.4 2.1
Depreciation and amortisation 0.9 0.3
Profit on sale and allocation of
ESOP shares (1.1) -
(Increase)/decrease in stocks (4.7) -
(Increase) in debtors (0.3) (0.8)
Increase/(decrease) in creditors 1.2 (0.3)
----------------------------------
Net cash inflow from operating activities 5.4 1.3
8.Reconciliation of net funds
£ Millions Year to 31 Year to 31
December 2000 December 1999
Net (overdraft)/cash at 1 January - (1.5)
Cash acquired with subsidiary
undertakings 3.2 -
Net overdrafts acquired with
subsidiary undertakings (2.4) -
Increase in cash per cash flow statement 1.1 1.4
-----------------------------------
Net funds at 31 December 1.9 (0.1)
Represented by
Cash at bank and in hand 5.4 -
Overdrafts (3.5) (0.1)
-----------------------------------
Net funds at 31 December 1.9 (0.1)
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 on 7 July 2000 using the proceeds of
the Groups placing.
10. Statutory Accounts
The financial information set out in this announcement does
not constitute the company's statutory accounts for the years
ended 31 December 2000 or 1999. The financial information for
the year ended 31 December 1999 is derived from the IFX
Prospectus dated 27 June 2000 which has been delivered to the
Registrar of Companies. The auditors reported on the accounts
within that prospectus; their report was unqualified and did
not contain a statement under s237(2) or (3) Companies Act
1985. The statutory accounts for the year ended 31 December
2000 will be finalised on the basis of the financial
information presented by the directors in this preliminary
announcement and will be delivered to the Registrar of
Companies following the company's annual general meeting.
This announcement was approved by the directors on 31 January
2001.
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