ipte ra2000 - ok · 22/1 0/2 21 22/ 1/ 0 2/2000 2/ 01 closing price ipte (eur bxs) bel 20...
TRANSCRIPT
Geleenlaan 53600 Genk
Belgium Tel: +32 (0)89 623 000 Fax: +32 (0)89 623 010
www.ipte.com
ANNUAL REPORT 2000
Contents4 Talk with The Chairman
6 Company profile
7 Strategy
8 Structure
10 Milestones / Highlights
11 Board of Directors and Management
12 Report from the Board of Directors
18 Corporate Governance
21 Prospects for the future
22 Personnel
23 Annual Accounts
Investor Relations:
Geleenlaan 53600 Genk
Belgium Tel: +32 (0)89 623 000 Fax: +32 (0)89 623 010
www.ipte.com e-mail: [email protected]
Huub BAREN Hugo CIROUXPresident & CEO CFO
IPTE nv IPTE nv
ANNUAL REPORT 2000
Cover 635X297 OK 27/11/03 15:11 Page 1
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20001999199819971996199519941993
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2000199919981997
410 414
1.106
3.653
Subcontracting
Other
Medical products
Professional products
Telecommunications
Consumer electronics
Computers & peripherals
Automobiles
16%
8%
3%
9%
29%
9%
20%
6%
Key Figures in (EUR 000)
At Dec. 31, At Dec. 31, 2000 % 1999 %
Sales 108.208 100,0 46.974 100,0 Cost of sales (83.671 ) (77,3 ) (34.601 ) (73,6 )
Gross margin 24.537 22,7 12.373 26,4 Research and development expenses (4.343 ) (4,0 ) (2.020 ) (4,3 )General and administrative expenses (4.789 ) (4,4 ) (2.644 ) (5,6 )Selling expenses (7.855 ) (7,3 ) (4.547 ) (9,7 )Amortization of goodwill (793 ) (0,7 ) (396 ) (0,8 )Other income (expense) net 803 0,7 433 0,8
Income from operations 7.561 7,0 3.199 6,8Financial income 1.388 316Financial charges (2.578 ) (1.336 )Other non-operating expenses (net) 155 0,1 (11 ) (0,0 )
Income before taxes 6.527 6,0 2.168 4,6 Income taxes (2.930 ) (2,7 ) (1.061 ) (2,3 )Income after taxes 3.596 3,3 1.107 2,4 Minority interest 57 0,0 (1 ) (0,0 )
Net income of the period 3.653 3,4 1.106 2,4 Basic earnings per share (see 5.3.2) 0,73 0,28
The electronic market
Profit and Loss account for the 12 month period endingDecember 31st 2000 and December 31st 1999.
Sales
Net Income
0,10
0,28
0,73
0,0
0,1
0,2
0,3
0,4
0,5
0,6
0,7
0,8
200019991998
Earnings per share
Balance sheet as of December 31st 2000 and December 31st 1999.
At Dec. 31, At Dec. 31,2000 1999
Current assetsCash and cash equivalents 4.073 1.152Trade receivables 26.393 17.603Inventories 28.614 10.436Other current assets 2.078 417
Deferred taxes 182 93Property plant and equipment 9.472 7.105Intangible fixed assets 2.655 1.399Goodwill 6.738 7.531
Total assets 79.195 45.643
Current liabilitiesFinancial debts 11.635 20.247Trade payables 19.348 8.308Other debts 4.186 4.071
Long term debtsFinancial debts 5.050 8.938Provisions 1.307 893Deferred taxes 1.199 616
Minorities 125 182Shareholders’ equity 36.340 2.482Total liabilities 79.195 45.738
Warrants 182.850
Number of warrants (at 31/12/2000)
Shares 5.476.092
Number of shares (at 31/12/2000)
General meeting 2002 26 April 2002 Results Q1 2001 May 2001Results Q2 2001 August 2001Results Q3 2001 November 2001Annual Results 2001 February 2002
Shareholders’ diary
7.194 shares
Average volume traded (at 31/12/00)
EUR 147.087.831
Stock market capitalisation (at 31/12/2000)
Shares Highest price: 29,65 EURLowest price: 19,20 EURAverage price (accounting average): 24,80 EURPrice at 28/12/00: 26,86 EUR
Stock exchange price
2000 1999 1998Equity 6,63 0,62 0,27Operating profit / loss (EBIT) 7.562 3.199 1.258Current cash flow * 7.288 2.851 903Earnings per share - basic (EPS) 0.73 0.28 0.10Price / Earnings 36,7 n/a n/aPrice / Sales 1,36 n/a n/a
* current cash flow = cash flow before taxation and extraordinary profit / loss
Key figures per share
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Closing Price IPTE (EUR BXS) Bel 20
Production, Design-LayoutCommunication & Finance
Responsible editorHuub Baren
Dit jaarverslag is in verkorte Nederlandse versie beschikbaar.Eine Zusammenfassung von diesen Bericht ist auf Deutsch erhältlich.
Ce rapport annuel est disponible en version française abrégée.
10%
70%
6%
13%
1% Benelux
Western Europe
Eastern Europe
Northern Europe
Asia and America
The turnover can be divided according to:
Region
Volume (000)Closing Price IPTE (EUR BXS)
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IPTE Mission
“To be the leading independent globalautomation partner to the electronics man-
ufacturing industry”
“To deliver high-end contract manufacturing for profes-sional products”
Automation Contract Manufacturing
An international sales organization
EuropeU.S.A./Canada/MexicoLatin AmericaAsia
▲ Sales & Service■ Sales Agents
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CONNECTSYSTEMS
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Talk with the chairman
“Looking back on 2000, did IPTE succeed in its objectives?”“We undoubtedly did. The past year was again
a successful year of significant progress and
very strong growth. Our goals at the beginning
of 2000 were to boost net sales and to further
develop the company. We have accomplished
both things: we doubled sales figures without
acquisitions and through a number of important
orders, we were able to reinforce our market
position in the electronics industry. Last but not
least, we were able to triple our net income.”
“Not to forget that 2000 was also theyear when ITE became IPTE andbecame listed on the Brussels StockExchange.”“In the beginning of last year, we indeed
changed our name to IPTE ( Integrated
Production and Test Engineering). We are
convinced that this new name better reflects
our competences. In addition, 2000 was of
course also the first year for IPTE as a publicly
traded company.”
“IPTE’s main market is the electronicsindustry. I assume that market evolu-tions influence the company’s growth?”“The electronics industry is a booming market
and in 2000 we continued to take advantage of
the favourable market conditions. Our compa-
ny focuses on four key electronics sub-indus-
tries: computers and peripherals, automotive,
consumer electronics and telecommunications.
All of them are fast growers in a market where
the degree of competition is intensifying year
on year. To professionally meet the demands of
this competitive market, electronics manufac-
turers are forced to look for automation. IPTE
capitalizes on this trend. Another influential
market evolution is the trend towards outsour-
cing. More and more electronics manufacturers
decide to subcontract the production and
logistics of electronic devices to focus on their
core activities. With the acquisition of Connect
Systems, we entered into the core subcon-
tracting market and can meet their needs.”
“How does IPTE’s strategy respond tomarket evolution?”“We strive to be a global player that provides
its customers with total solutions. Our products
are highly complementary, enabling us to offer
one-stop shopping. Well-considered acquisi-
tions allow us to further extend and diversify
our product range and expand our geographi-
cal reach in an industry where global presence
is becoming increasingly important. Besides,
acquisitions are a perfect means of acquiring
additional experience and knowledge, which is
Huub Baren
Trends in the electronics market
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a base for the further development of our activ-
it ies. Our strategic approach has proven
successful in the past and we want to continue
this way. Strengthening our presence in the
United States and Asia is the key for the
future.”
“What do you consider last year’s mostimportant milestones?”“First of all, the listing on the Brussels Stock
Exchange, which seemed like a logical step to
support our growth: IPTE started as a private
company, then increased capital through pri-
vate placement and subsequently went public.
Quite some efforts were needed to complete
the listing successfully, but it is clear that we
made the right choice. Despite today’s pes-
simistic trend in the high-tech sector, our
results met expectations. Equally crucial in
2000 were the steps made towards the expan-
sion of our automation activities. The large
order we received in March for the final assem-
bly automation of the production of mobile
phones, enabled us to enter the market of end-
of-line automation. The follow-up order recon-
firms our customers’ confidence in our solu-
tions, as does the order we received from the
leading Canadian RIM.
In June, two strategically important acquisitions
were carried out. We took over the engineers
of the German Montatech, an engineering
company that special izes in production
automation, and signed a letter of intent to
acquire the business operations of ARF Test, a
specialist in the development and production
of solutions for the testing of mobile phones,
based in France. ARF is not consolidated yet,
but the consolidation will take place on January
2001. In addition, the acquisitions of AND
ELEC and of Autoveyer in the beginning of this
year accelerate our expansion in the test and
production engineering services. The agree-
ments of our subsidiary Connect Systems with
leading businesses like Transics, Alcatel and
Flextronics, strengthen our posit ion as a
contract manufacturer.”
“What opportunities does the futurehold for IPTE?”“We are optimistic about our future oppor-
tunities. This optimism is fuelled by an ongoing
expectation of continued strong growth in the
electronics industry and a growing need for
production automation, testing and contract
manufacturing. We anticipate turnover to
increase at least 50% in this current year,
especially in the second half of the year. To
help us reach this target, we will continue striv-
ing for growth in markets such as the United
States and South-East Asia, together with the
expansion of our customer base and the
broadening of our product range. An additional
objective set for 2001 is to improve
prof i tabi l i ty proport ional ly more than the
turnover increases.
In the long term, we are committed to making
IPTE one of the three major global players in
production and test automation. We look for-
ward to maximizing these long-term opportuni-
ties through meticulous execution of both our
internal and external strategies during the com-
ing year. We are excited about the challenge
ahead of us and believe we have the people,
skills and resources to succeed.”
IPTE has doubled its sales figures every year since its start-up.
Full service
Global
Limited
Regional
Consignment
Strategic partnership
Scale / Geographic Presence
CapabilitiesRelationship
Full service
Outsourcing as a solution long-term�relationship based
Overflow capacity short-term�transaction based
OEM market evolution
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Company profile
IPTE develops turnkey systems and services forthe electronics industry. Activities at IPTE arefocused on two business areas. The company isactive in the automation of production, test andtreatment of printed circuit boards (PCB) as wellas final product assembly. In addition, IPTE offerscontract manufacturing of PCB assemblies, cableconfectioning and system assembly. By combin-ing both services, the company can provide itscustomers with one-stop-shopping.
In its short time of existence, the company hasexperienced extraordinary expansion.
The markets in which IPTE is active, have veryhigh growth potential.
The group targets growing segments of the elec-tronics industry such as telecommunications,computers and automotive and consumer elec-tronics. Its major customers, including Alcatel,Ericsson, Flextronics, Motorola, Mitsubishi, Nokia,Philips, SCI, Siemens and Solectron, are all lead-ers in their fields worldwide.
The company operates facilities in nine countriesand on three continents; Europe, America andAsia. In January 2000, IPTE was granted theRoyal Export Award by the Belgian Department ofForeign Affairs. The electronics market, which isIPTE’s main outlet, is characterized by very stronggrowth and continuous technological progress.Enhancements are constantly made both at prod-uct and production level.
The company’s objectives are twofold:1. To be a global independent automation partner
for leading electronics manufacturers.2. To be a local subcontractor for applications in
the electronics industry.
IPTE currently employs over 800 people in differ-ent production units in Europe, the United Statesand Asia. In 2000, turnover amounted to EUR 108 million.
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Non-�captive
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Non-�captive
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Industrial�& Medical�equipment
Other�electronics
Television�Video�Hifi�
Remote control
Consumer�electronics
Airco�Airbag�ABS�GPS
Automotive
Computers�& peripherals
PC�PC-cards�
CD ROM drive�DVD
Telecom
GSM�DECT�PDA
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From the very beginning, IPTE has been a
thriving business through a combination of
organic growth and acquisitions. The compa-
ny’s objective is to continue growing and to
achieve a position of market leadership. The
following are the key elements in our strategy
to further develop our company and build on its
success:
StandardizationAll automation technologies that we develop
are standardized as much as possible. This
allows us to reduce the costs involved in the
creation or new development of lines and con-
sequently provide our customers with state-of-
the-art solutions at very competitive prices. In
addition, this also helps us to continuously
improve the quality of our systems.
Research and developmentIPTE is committed to constant improvements in
techniques and invests in the best available
technical concepts. Year on year, we have
been expanding our know-how and technical
capabilities, evolving from test automation over
production automation towards the designing
of completely automated and integrated pro-
duction lines. Therefore, we rely on a team of
highly qualified staff who have collected an
extensive and thorough technical knowledge
and maintain a close watch on the latest devel-
opments and techniques.
Permanent efforts towards research and devel-
opment of new products, systems and tech-
nologies are of vital importance to strengthen
our position. Therefore, we will continue to
spend more than 4% of our revenues on
research and development.
International expansionIPTE aims inceasingly to accelerate its expan-
sion by reinforcing its commercial and techni-
cal presence in the world. Through acquisi-
tions, we can extend our geographical pres-
ence, expand our in-house know-how and
expertise, attract new customers and broaden
our range of products and systems.
From 1992 onwards, we have tried to build up
a global reach with worldwide coverage, open-
ing up branches in Europe, the United States
and Asia. In the future, we want to expand
considerable financial and personnel resources
to improve our exposure and distr ibution,
especially in the American and Asian markets.
One-stop-shopping The past acquisitions enhanced our position as
a global player in both the production automa-
tion and the subcontracting business. IPTE has
become a total solution provider and system
integrator, offering its customers the manufac-
turing of complete finished products but also
logistics, assembly, testing and packaging, i.e.
a one-stop-shopping concept. The advantages
of this one-stop-shopping concept are twofold:
we provide substantial added value and can
increase profitability.
We aim to consolidate this position through fur-
ther acquisitions and continuous investments
in R&D.
Strategy
«Sales, service and support strategies on aglobal scale are becoming increasingly necessary to maintain competitiveness.»
The starting point of IPTE’s sales is not thesale of an individual piece of equipment, buta solution to the customer’s problem.
AutomationDevelops and manufactures test and produc-
tion systems which it integrates into complete-
ly automated production and assembly lines
(investment goods) for the electronics industry.
Our company originally started off in test
equipment for printed circuit boards (PCBs),
evolved towards production equipment, which
we integrated with the test equipment in inte-
grated production lines, and later developed
towards end-of-l ine production and test
automation systems.
Backed by years of experience in production
and test automation, IPTE is ideally positioned
to provide its customers with turnkey systems
that combine all the different solutions required
in electronic production.
Contract manufacturingOperates as a contract manufacturing and
services company for the electronics industry.
Its activities include the confection of cables
and cable harnesses, PCB assembly and test-
ing, the production of sub-assemblies and final
product assembly. In addition, various related
services are offered.
Connect Systems was acquired two years ago.
The take-over creates synergies from a com-
mercial perspective: the business unit offers
different products to a similar group of cus-
tomers. 8
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Structure Activities at IPTE have been categorized in two
business units: automation and contract manu-
facturing. The two different business units each
combine a number of specific activities for the
electronics industry.
1%
10%
8%
62%
19%
16%
23%
20%
27%
6%
8%
7%
30%
18%
26%
7%
12%
57%
3%
30%
8%
2%
48,8%
51,2%
Sales by activity
Sales by regionAsia and America
Contract manufacturing
Automation
Western Europe
Southern Europe
Eastern Europe
Northern Europe
Subcontracting
Other
Telecommunications
Consumer electronics
Computers & peripherals
Automotive
Medical products
Professional products
Telecommunications
Computers & peripherals
Automotive
Other
Asia and America
Northern Europe
Eastern Europe
Western Europe
Benelux
Sales by market
Sales by region
Sales by market
62%
27%
20%
57%
30%26%
18%
30%
23%
16%
19%
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IPTE milestones/highlights
For IPTE, 2000 was ayear with numerousimportant milestones:
IMPORTANT ORDERS ENHANCED THEGROWTH OF IPTE:- Large orders from Mitsubishi for the final
assembly and test automation of mobile
phones.
- An order from the leading Canadian RIM for
the automation and test of its Personal
Digital Assistants (PDA).
- A follow-up order from Mitsubishi.
OF CONNECT SYSTEMS:- An order from Transics for the production
and assembly of their on-board computer.
- A three-year agreement with Alcatel for the
supply of ADSL cables.
- An order from Flextronics.
ACQUISITIONS REINFORCED OURPOSITION AND INCREASED OURCAPACITIES AND CAPABILITIES:- Acquisition of the engineers of Montatech,
a German engineering company that spe-
cializes in production automation.
- Take-over of the business operations of the
French ARF test, a specialist in the devel-
opment and production of test solutions.
AND OUR COMPANY WAS THRIVINGAND EVOLVING:- ITE was renamed IPTE.
- IPTE was listed on the Brussels Stock
Exchange.
- Our new facility was opened in Genk.
- We captured prizes for our remarkable per-
formances: we were granted a Royal Export
Award and were the first Belgian company
to win the VISION AWARD. VI S I O
N
AW A R D
Management
- Huub Baren CEO
- Hugo Ciroux CFO
- Vladimir Dobosch CCO Automation
- Hans Sanders COO Automation
- Luc Switten CCO Contract Manufacturing
- Florimond Peersman COO Contract Manufacturing
Board of Directors
- Huub Baren * Managing Director, Chairman
- Vladimir Dobosch * Director
- Gilbert Nulens * Director
- Luc Switten * Director
- Stokklinx * (represented by Guy van Dievoet) Director
- Dominique Moorkens Independent Director
* BVBA
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Board of Directorsand Management
Huub Baren Dominique Moorkens
Gilbert Nulens Luc Switten Vladimir Dobosch
Guy van Dievoet
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Report from theBoard of Directors
Introduction
The year 2000 was again a year of strong
growth for IPTE. The company succeeded in
meeting the goals set at the beginning of the
year and doubled sales for the eighth consec-
utive year. A record turnover of EUR 108 million
was posted and the overall profitability of oper-
ations improved further to a net income of EUR
3,6 million. Net income per share rose from
EUR 0,28 in 1999 to EUR 0,73, a 143%
increase. This growth is attributable to the
boom in the electronics industry as well as the
surge in the need for outsourcing, but may also
be explained by significant performances in all
activities.
The listing of IPTE on the Brussels Stock
Exchange in May also marked the year 2000. In
addition, IPTE’s presence in the electronics
industry was strengthened through the realiza-
tion of a number of important acquisitions.
Contracts with leading companies enabled the
company to exploit new growth opportunities
and grow towards leadership position.
Key figures (in EUR 000) Profit and loss accounts for the12 month period ending December 31, 2000 and 1999
At Dec. 31, 2000 % At Dec. 31, 1999 %
Sales 108.208 100,0 46.974 100,0 Cost of sales (83.671 ) (77,3 ) (34.601 ) (73,6 )
Gross margin 24.537 22,7 12.373 26,4 Research and development expenses (4.343 ) (4,0 ) (2.020 ) (4,3 )General and administrative expenses (4.789 ) (4,4 ) (2.644 ) (5,6 )Selling expenses (7.855 ) (7,3 ) (4.547 ) (9,7 )Amortization of goodwill (793 ) (0,7 ) (396 ) (0,8 )Other income (expense) net 803 0,7 433 0,8
Income from operations 7.561 7,0 3.199 6,8Financial income 1.388 316Financial charges (2.578 ) (1.336 )Other non-operating expenses (net) 155 0,1 (11 ) (0,0 )
Income before taxes 6.527 6,0 2.168 4,6 Income taxes (2.930 ) (2,7 ) (1.061 ) (2,3 )Income after taxes 3.596 3,3 1.107 2,4 Minority interest 57 0,0 (1 ) (0,0 )
Net income of the period 3.653 3,4 1.106 2,4 Basic earnings per share (see 5.3.2) 0,73 0,28
Huub Baren, Chairman
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Explanation of the keyfigures
Sales grew very strongly and totalled EUR
108 million, showing an increase of 130%
when compared to 1999. The growth was
attributed to the strong performance of both
the automation activity (up 69%) and the
contract manufacturing activity (up 250%). The
decline in the gross margin is mainly due to the
contract manufacturing in which the gross mar-
gins are significantly lower than automation.
Cashflow (net profit plus depreciation and
receivables) amounted to EUR 7,3 mill ion,
which is 6,73% of sales (6,0% in 1999). The
EBIT was EUR 7,56 million (7,0% of sales –
6,8% in 1999), EBITA totalled EUR 8,57 million
(7,7% of sales – 7,6% in 1999) and EBITDA
amounted to EUR 11,2 million (10,35% of sales
– 10,4% in 1999). The costs of the recent IPO
(EUR 0,8 mil l ion net) have been directly
deducted from shareholders’ equity in accor-
dance with IASC principles.
Selling and administration expenses decreased
from 15,3% in 1999 to 11,7% in 2000. Costs
for research and development amounted to
over 4% of group turnover. The operational
margin on group level rose from 6,8 to 7%.
Net income has increased by 1%, from 2,4% to
3,4% of sales. This improvement is attributable
to the better operational margin, lower financial
expenses (as a result of the IPO in May 2000)
and a reduction of the income tax rate
(from 49% to 46%).
Key figures (in Eur 000) Balance sheets as of December 31, 2000 and 1999
At Dec. 31, 2000 At Dec. 31, 1999
Current assetsCash and cash equivalents 4.073 1.152Trade receivables 26.393 17.603Inventories 28.614 10.436Other current assets 2.078 417
Deferred taxes 182 93Property plant and equipment 9.472 7.105Intangible fixed assets 2.655 1.399Goodwill 6.738 7.531
Total assets 79.195 45.643
Current liabilitiesFinancial debts 11.635 20.247Trade payables 19.348 8.308Other debts 4.186 4.071
Long term debtsFinancial debts 5.050 8.938Provisions 1.307 893Deferred taxes 1.199 616
Minorities 125 182Shareholders’ equity 36.340 2.482
Total liabilities 79.195 45.738
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Report from theBoard of Directors
Automation
IPTE Automation delivers automation and test
solutions to the electronics industry. Today,
IPTE Automation operates facilities in Genk
(Belgium), Fürth (Germany), Luton (United
Kingdom) and Grenoble (France). The group
focuses on four key electronics sub-industries:
telecommunications, computers and peripher-
als, automotive and consumer electronics.
2000 was a year of strong growth. Sales rose
from EUR 30,9 million to EUR 52,3 million,
which is a 69% increase. The gross profit mar-
gin as a percentage remained practical ly
unchanged. Research and development
expenses increased from 6,5% to 7,1% of
sales. Major investments were done in the the
development of a standard cell structure,
which enabled IPTE to extend its product range
from PCB test to complete end-of-line produc-
tion and test automation.
Operating income rose from 6,9% to 9,6%, an
increase of 39%. Net income increased from
2,5% to 4,5% due to improvements in the
operating income and a reduction of financing
costs thanks to the IPO.
Key figures + explanation 12 month period ending Dec. 31 (in EUR 000)
At December 31, At December 31,2000 % 1999 %
Sales 52.249 100,0 30.895 100,0Cost of sales -36.039 -69,0 -21.313 -69,0Gross margin 16.211 31,0 9.582 31,0Research and development expenses -3.692 -7,1 -2.019 -6,5General and administrative expenses -2.868 -5,5 -1.920 -6,2Selling expenses -5.391 -10,3 -3.688 -11,9Other income (expense) net 767 1,5 176 0,6Income from operations 5.028 9,6 2.131 6,9Financial income (expense) -817 -1,6 -846 -2,7Other (net) 155 0,3 -11 0,0Income before taxes 4.365 8,4 1.274 4,1Income taxes -2.013 -3,9 -507 -1,6Net income 2.352 4,5 767 2,5
%
Northern Europe 1Eastern Europe 13Southern Europe 6Western Europe 70Asia and America 10
%
Automotive 16Computers & peripherals 23Telecommunications 27Consumer electronics 20Subcontracting 8Other 6
Sales breakdown by geographical area
Sales breakdown by electronics market segments
Evolution of activities
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Milestones
At the beginning of 2000, a significant order
with a total value of EUR 8 mil l ion with
Mitsubishi was signed for the final assembly
and test automation of the production of
mobile phones. This contract enabled IPTE to
enter the market of end-of-line automation.
Within the same year, the client ordered three
addit ional production and test l ines,
reconfirming its confidence in IPTE. In August
2000, IPTE entered into an agreement with the
Canadian company RIM, a world wide leading
provider of high-tech products for the mobile
communications market and extremely suc-
cessful on the American market, to automate
the tests of the final production process.
The contract represents a breakthrough on the
American market.
In June 2000, IPTE took over the engineers of
Montatech, a German engineering company
special ized in production automation. The
extensive experience of the engineers rein-
forced IPTE know-how. Shortly after this acqui-
sition, IPTE acquired ARF Test, a French com-
pany specialised in the development and pro-
duction of solutions for the testing of radio fre-
quencies of devices and mobiles. In January
2001, IPTE acquired AND ELEC, a French
company specialized in developing and pro-
ducing fixtures used for testing printed circuit
boards.
In February 2001, IPTE signed an agreement to
acquire 51% of Autoveyer, headquartered in
Singapore, a manufacturer of automated board
handling, transport and complete final assem-
bly solutions for the electronics industry.
The benefits of the acquisition are threefold: an
expansion of the product range, larger geo-
graphical presence and an increase of the
engineering capacity.
Evolution of the market and IPTEautomation activities
As an ever-increasing number of people use a
growing amount of electronics in day-to-day
life, the electronics market is booming.
High-tech devices such as mobile phones,
PDAs or DVD-players are no longer a novelty
and consumers are exposed to a fascinating
world of rapidly changing products.
These trends put pressure on the producers of
electronic equipment.
The degree of competition at higher quality and
higher technology end, is intensifying year on
year. Producers of electronics equipment are
vying with each other to provide better and
more innovative products at a more favourable
price-quality ratio, and are striving to keep
pace with the changes required by their cus-
tomers.
In this electronics market, manufacturers are
forced to look for automation. A professional
automation partner helps them to save on
costs and gain on efficiency and productivity.
The IPTE products allow for mass production,
put great emphasis on productivity and effi-
ciency, respect the ‘zero default’ tolerance and
are flexible.
These developments in the electronics market
open up significant prospects for growth for
the IPTE automation activity. The automation
order book at the end of 2000 was worth
EUR 24 million, an increase of 14% when com-
pared to the start of the f inancial year
(EUR 21 million).
Report from theBoard of DirectorsEvolution of activities
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Contract manufacturing
The acquisition of Connect Systems in July
1999 enabled IPTE to expand its range of serv-
ices, by offering PCB assembly, cable confec-
tion, system assembly and contract manufac-
turing services. Connect Systems operates
facilities in Kampenhout, Ieper (Belgium) and
Rijen (The Netherlands).
The main customers are leading companies in
the telecom, professional equipment (digital
printers, medical equipment, pay-terminal,) and
automotive electronics market.
Sales for the contract manufacturing activity
rose by 250%, from EUR 16 million to EUR
56.2 million.
The gross profit margin fell from 17,4% to
14,8%, mainly as a result from a change in the
product mix and the increase of programming
activities, with a lower gross profit margin.
Net income rose by 176% from EUR 0,737 mil-
lion to EUR 2.037 million.
Key figures + explanation12 month period ending Dec. 31 (in EUR 000)
At December 31, At December 31,2000 % 1999 %
Sales 56.167 100,0 16.079 100,0Cost of sales -47.837 -85,2 -13.289 -82,6Gross margin 8.330 14,8 2.790 17,4Research and development expenses -651 -1,2 0 0,0General and administrative expenses -1.923 -3,4 -723 -4,5Selling expenses -2.464 -4,4 -859 -5,3Other income (expense) net 36 0,1 256 1,6Income from operations 3.327 5,9 1.464 9,1Financial income (expense) -372 -0,7 -173 -1,1Other (net) 0 0,0 0 0,0Income before taxes 2.955 5,3 1.291 8,0Income taxes -918 -1,6 -554 -3,4Net income 2.037 3,6 737 4,6
%
Benelux 57Western Europe 3Eastern Europe 30Northern Europe 8Asia and America 2
%
Automotive 7Computers & peripherals 30Telecommunications 18Professional products 26Medical products 7Other 12
Sales breakdown by geographical area
Sales breakdown by electronics market segments
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In 2000, Connect Systems received various
important orders from leading companies,
which fostered growth. In September 2000,
Connect Systems concluded a contract worth
EUR 2,48 million with Transics, a rapidly grow-
ing producer of on board computers for the
transport industry, for the production and
assembly of the new generation Transics on
board computer. One month after receiving this
contract, Connect Systems entered into an
agreement worth EUR 20 million annually with
Alcatel, covering the supply of the new ADSL
cables. The contract will run for at least three
years. In the same month, the group received
an order worth EUR 15 million from Flextronics,
an international company that provides engi-
neering, design, production and distribution
services to multinational OEM’s in the telecom-
munications, networking, computer, consumer
electronics and medical device industries. After
the successful steps made in the expansion of
its automation activit ies, these agreements
strengthen IPTE’s position as a contract manu-
facturer.
Evolution of the Contract manufactur-ing market and of Connect Systems
To a growing extent, electronics manufacturers
and OEM’s tend to outsource more and more
of their production and logistics, in order to
better concentrate on their own product devel-
opment, design and marketing. Contract man-
ufacturers guarantee the most efficient produc-
tion and offer greater flexibility in responding to
the new market demands. In addition, they can
assure ‘just-in-time’ delivery and are ideally
positioned to follow up on technological devel-
opments. Connect Systems capitalizes on this
trend.
It is expected that the trend towards outsour-
cing will be sustained worldwide in the follow-
ing years. This favourable development will
undoubtedly enhance the growth of Connect
Systems. The contract manufacturing order
book at the end of 2000 totalled EUR 35 mil-
lion, a 150% increase by comparison with EUR
14 million at the beginning of the financial year.
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CorporateGovernance
The Board of Directors
The Board of Directors is the highest manage-
ment authority within the company. In addition
to its decision-making duties, the Board is
charged with the responsibility to exercise full
and effective control over the company. The
Board must therefore meet at least six times a
year and on as many other occasions as the
group's interests require.
Without prejudice to its statutory duties, the
Board of Directors is responsible for defining
the group’s strategic objectives and establish-
ing general policy on the basis of proposals
submitted by the management. It is also the
Board of Directors’ responsibility to supervise
the implementation of the pol icy and the
control of the company and to render account
to the shareholders.
The composition of the Board ofDirectors.
The company is managed by a Board of
Directors, which is comprised of a minimum of
five directors, who are either shareholders or
not. They are appointed by the General
Meeting of Shareholders.
On 31 December 2000, the Board of Directors
was made up of six members and was com-
posed as follows:
❍ Huub Baren B.V.B.A., represented by Mr.
Huub Baren (appointed on 4 October
1999, for a six-year term).
Executive Director and Chairman of the
Board of Directors. Dominant shareholder
holding 35 percent of the shares.
❍ Vladimir Dobosch B.V.B.A., represented
by Mr. Vladimir Dobosch (appointed on
7 June 1997 for a six-year term).
Dominant shareholder.
❍ Gilbert Nulens B.V.B.A., represented by
Mr. Gilbert Nulens (appointed on 7 June
1997 for a six-year term). Dominant share-
holder.
❍ Luc Switten B.V.B.A., represented by Mr.
Luc Switten (appointed on 7 June 1997
for a six-year term). Dominant shareholder.
❍ Stokklinx B.V.B.A., represented by Mr.
Guy van Dievoet (appointed on 12 July
1999 for a six-year term). Dominant share-
holder.
❍ Mr. Dominique Moorkens (appointed on
21 April 2001 for a six-year term), chair-
man of the management committee of
Alcopa NV. Independent director.
Each director can be dismissed by the General
Meeting at all times.
Directors who retire or have retired can be re-
appointed. Each Board member can resign by
written notification to the Board of Directors.
There must be a minimum of two independent
directors. The Board of Directors will propose
that the General Meeting to be held on 20 April
2001, appoints Mr. Adri Baan as second inde-
pendent director.
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Working of the Board of Directors
In 2000, the Board of Directors met on the fol-
lowing days:
❍ 03/03/2000
❍ 07/04/2000
❍ 21/04/2000
❍ 19/05/2000
❍ 27/06/2000
❍ 18/07/2000
❍ 29/08/2000
❍ 15/11/2000
Items on the agenda included the approval of
financial data such as the Group Operating
Reports and Management Accounts, sales fig-
ures, monthly reporting and budget monitoring,
monitor ing of subsidiar ies, consol idated
results, review and appraisal of strategic direc-
tions, acquisitions and investment appraisal.
The Board of Directors can only deliberate and
come to a decision if the majority of its mem-
bers, including at least one independent direc-
tor, attend the meeting or is represented.
When the first meeting fails to reach the
requested quorum of Board members, the
Board of Directors is able to legally deliberate
and come to a decision during a following
meeting with the same agenda, irrespective of
whether the requested quorum of Board mem-
bers is reached.
In the event of a tie, the director who chairs the
meeting gives the casting vote.
The daily management must provide the Board
of Directors on a monthly basis Group
Operating Reports and Management Accounts,
sales statistics and an intermediary financial
report (profit-and-loss account and balance
sheet) and on a quarterly basis: a complete
intermediary financial report (profit-and-loss
account, balance sheet, detailed budget moni-
toring, ratio analysis), which is made public to
the general shareholders and public. In addi-
tion, information provided to the Board must
include regular exposure of current acquisition
files. Each director may ask approval to seek
independent professional advice at the
Company’s expense at any time.
Committees formed bythe Board of Directors
The Board of Directors has not established any
separate committees. During the past financial
year, nominations, compensations and audits
were discussed in the presence of all direc-
tors.
The Board of Directors will study the need for
separate committees in 2001 and establish
committees, if required.
Daily management
Mr. Huub Baren has been appointed executive
director for daily management. In addition,
there is a management committee, which is
composed of the executive director, the finan-
cial administrative director, the commercial
director and the production and operations
director. The management committee meets
weekly and its responsibil i t ies include the
preparation of the meetings of the Board of
Directors and the supervision of daily manage-
ment. The remuneration of the management
amounts to EUR 700.000.
By a decision of the Extraordinary General
Meeting, which was held on 3 March 2000 a
warrant plan was drawn up. As part of this
plan, the Board of Directors issued 182.850
warrants given to all personnel, which give the
right to purchase the same amount of shares.
The warrants have a duration of maximum 10
years, starting from the issue day. The warrants
are offered for free and the period of exercise
will start at the end of the third calendar year
following the year when the warrants were
offered at the earliest.
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CorporateGovernance
Policy concerning appropriation
In the past, the company did not pursue any
strictly defined dividend policy. IPTE wants to
conserve cash resources and remain flexible
enough to be able to take advantage of inter-
nal and external expansion opportunit ies.
Accordingly, no dividend will be paid for the
2000 financial year.
Relations with dominantshareholders
The dominant shareholders have entered into a
mutual agreement to determine a mutual sales
right of IPTE shares. They agreed only to sell
IPTE shares, if mutual agreement has been
reached. This agreement is valid for three
years.
Protocol to avoidimproper abuse of information and insidertrading
During the meeting held at November 15,
2000, the Board of Directors of IPTE drew up a
protocol to avoid illegal use of privileged infor-
mation - or to avoid that the impression of ille-
gal use is created - by directors, shareholders,
members of the management and important
employees (insiders).
The protocol consists of a number of prohibi-
tive rules, which are mainly designed to protect
the market as such. The practice whereby
insiders deal in company shares whilst in pos-
session of insider information, affects the mar-
ket. If insiders are allowed to gain profits (or if
only this impression is created) on account of
insider knowledge, investors wil l turn their
backs on the market. As a result, the liquidity
of the shares quoted may decrease seriously
and the company will gain less cash resources.
In addition, the protocol also includes a num-
ber of preventive rules to assure compliance
with legal stipulations and to sustain the com-
pany’s reputation.
The protocol includes the following stringent
procedures:
The person involved undertakes not to deal in
IPTE shares for the period of two months
before the annual results are published.
The person involved undertakes not to deal in
IPTE shares for the period of 21 days before
the quarterly results are published,
The person involved undertakes not to proceed
to buying-in and sales operations within a peri-
od of six months.
The person involved undertakes to inform a
Central Officer about all operations before
these operations can take place.
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Prospects for the futureThe electronics market has very high growthpotential. It is generally expected that also thetrend towards outsourcing will be sustainedworldwide in the following years. IPTE is there-fore very confident concerning business in thefuture. In 2001, the company again expects alarge increase in its turnover and results.
For the year 2001, a consolidated sales budg-et of EUR 160 million has been drawn up,which is a 50% increase when compared to2000. The company anticipates the activitiesautomation and contract manufacturing toequally contribute to this rise in turnover.
On 31 December 2000 IPTE had an order bookof EUR 65 million. The new companies ARFTest and AND ELEC, which have been takenover only recently, will also contribute to theresults from 2001 onwards. Including theorders of these companies, IPTE’s total orderbook for 2001 already contains orders amount-ing to EUR 70 million. The major part of orderswill be delivered during the second quarter ofthe year.
The slow-down in investments, which is takingplace in various segments of the electronicsmarket, will not significantly influence IPTE’sexpansion in the coming year. The group tar-gets different segments of the electronicsindustry (automation of production, base sta-tion automation, PDA test automation, automo-tive test and others). In this way, IPTE is lesssusceptible to evolutions in specific marketsegments.
IPTE also anticipates a further improvement inthe operating current net results in 2001 (whichalready increased from 3,2% in 1999 to 4,1%in 2000).
The combination of the projected growth,amounting to 50%, and a further improvementin profitability will also significantly increaseearnings per share in 2001.
By dynamically developing expansion duringthe previous years, IPTE laid the foundation forfurther future growth, both in turnover and inprofitability. Also in 2001, IPTE will watch outfor opportunities and continue to extend itscustomer base and expand its product range.
IPTE is committed to become a major globalplayer in the segment of the automation of pro-duction and testing in the long term.
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Personnel: IPTE’sgreatest asset
The total payroll for the IPTE group in 2000
leapt from 590 to 862 employees as the result
of a combination of internal growth and acqui-
sitions.
Number of employees IPTE Group
AUTOMATION CONTRACT TOTALMANUFACTURING
Belgium 141 408 549The Netherlands 104 104Germany 164 164France 8 8England 22 22Northern Europe 1 1USA 9 9Asia 5 5
TOTAL 350 512 862
Overview by country
0
100
200
300
400
500
600
245
350
0
100
200
300
400
500
600
345
512
2000
1999
Automation Contract Manufacturing
AnnualAccounts
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AnnualAccountsIntroduction - P. 24
Exchange rates - P. 24
Detailed consolidated financial statements - P. 25
Notes to the Consolidated Financial Statements of the IPTE Group - P. 30
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5. FINANCIAL DATA5.1. Introduction
The selected financial data presented below have been extracted and derived from the IAS consolidat-ed financial statements of IPTE, NV for the years ended December 31, 2000, 1999 and 1998. Theseconsolidated figures have been audited by Arthur Andersen Bedrijfsrevisoren. The consolidated finan-cial data are presented in Euro.
5.2. Exchange rates
Since the introduction of the Euro on January 1, 1999 and in accordance with Belgian law, IPTE, NVprepares its consolidated financial statements in Euro.
Assets and liabilities of group companies expressed in currencies other than Euro are translated atexchange rates in effect at the end of the reporting period, and revenues and expenses are translatedat the average exchange rate during the period. Equity components have been translated at historicalexchange rates. Gains or losses resulting from this translation are reflected in the component ‘cumu-lative translation adjustment’ in the balance sheet as of December 31, 2000.
The year-end exchange rates (used to translate assets and liabilities in the financial statements) are asfollows:
Date BEF/GBP BEF/SGD BEF/SEK BEF/USD
December 31, 2000 64.65 25.03 4.55 42.82December 31, 1999 64.89 24.16 4.71 40.06December 31, 1998 57.18 20.30 4.25 -
The average rate (used to translate revenues and expenses in the financial statements) are as follows:
Year BEF/GBP BEF/SGD BEF/SEK BEF/USD2000 66.65 24.59 4.76 44.541999 61.56 22.49 4.60 38.141998 60.26 20.50 4.55 -
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5.2. Detailed consolidated financialstatements.
5.3.1. Independent Auditor’s Report
To the Shareholders of IPTE, NV:
We have audited the consolidated balance sheet of IPTE, NV and subsidiaries as of December 31,2000 and the related consolidated statement of income, the consolidated statement of cash flows, thenotes and the directors’ report for the year then ended. The consolidated annual accounts have beenprepared under the responsibility of the Board of Directors. The balance sheet total as of December31, 2000 is 79.195 (000) and the profit for the year then ended is 3.653 (000).
We did not audit the financial statements as of December 31, 2000 of certain subsidiaries, which state-ments reflect assets and annual revenues respectively of 13 and 26 percent of the related consolidat-ed totals. Those statements were audited by other auditors whose reports have been furnished to us,and our opinion, insofar as it relates to the amounts included for those entities, is based solely on thereport of the other auditors.
Opinion, without reservation, on the consolidated annual accounts
Our audit was made in accordance with the auditing standards of the Belgian Institute of CompanyAuditors. These require that we plan and perform the audit to obtain reasonable assurance aboutwhether the consolidated annual accounts are free of material misstatement, taking into account Belgianlaw and regulations with respect to the consolidated annual accounts. In accordance with these stan-dards, we have taken into consideration the administrative and accounting procedures and system ofinternal control of the company. We examined, on a test basis, evidence supporting the amounts in theconsolidated annual accounts. We also assessed the valuation rules, the principles of consolidation,significant accounting estimates and the presentation of the consolidated annual accounts as a whole.We received from the management of the company the information and explanations we requested. We believe that these procedures and the reports of other auditors provide a reasonable basis for ouropinion.
In our opinion, based on our audits and the reports of other auditors, the financial statements referredto above present fairly, in all material respects, the financial position, of IPTE, NV and subsidiaries as ofDecember 31, 2000 and the results of their operations and their cash flows for the year ended in accor-dance with the accounting standards issued by the International Accounting Standards Committee.
Additional statements
We complete our report with the following additional statements which do not modify the scope of theabove-mentioned opinion on the annual accounts:- The consolidated directors’ report for the year ended December 31, 2000 is in agreement with theconsolidated annual accounts and includes the information required by the law;- Regardless of formal aspects of minor importance, the consolidated annual accounts are establishedin conformity with applicable law and regulations.The Statutory Auditor,ARTHUR ANDERSENBedrijfsrevisoren
______________Dominique RouxMarch 21, 2001
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5.3.2. Detailed Consolidated Financial Statements (in EUR)
Consolidated Balance Sheets as of December 31
IPTE, NV Dec. 31 Dec. 31 Dec. 312000 1999 1998
AssetsCurrent assets:
Cash and cash equivalents (notes 5.4.3.a) 4.072.907 1.152.047 863.883Trade receivables (notes 5.4.3.b) 26.392.619 17.603.812 7.500.352Other receivables 1.593.748 370.028 557.702Inventories (notes 5.4.3.c) 27.604.239 10.436.163 6.278.052Other current assets 482.720 47.119 20.516
Total current assets 60.146.233 29.609.169 15.220.505Deferred taxes (notes 5.4.3.t) 182.466 93.582 -Property plant and equipment (notes 5.4.3.d) 9.472.488 7.105.612 2.006.827Intangible fixed assets (notes 5.4.3.e) 2.655.847 1.398.977 340.215Goodwill (notes 5.4.3.f) 6.738.275 7.531.014 -Total assets 79.195.309 45.738.354 17.567.547
Liabilities and shareholders’ equityCurrent liabilities:
Bank loans and overdrafts (notes 5.4.3.g) 10.123.606 19.100.060 6.993.531Current portion of long-term debt (notes 5.4.3.i) 1.515.735 1.146.844 215.600Trade payables 19.347.628 8.307.644 6.113.740Accrued expenses, payroll and related taxes and deferred income (notes 5.4.3.h) 4.045.333 4.061.796 1.485.732Other current liabilities 141.997 10.244 137.125
Total current liabilities 35.174.299 32.626.588 14.945.728Long-term debt less current portion (notes 5.4.3.i) 5.049.928 8.938.332 853.962Provisions (notes 5.4.3.j) 1.307.243 893.070 656.462Deferred taxes (notes 5.4.3.t) 1.199.110 615.852 25.493Shareholders’ equity
Shareholders’ capital 339.411 247.894 247.894Legal reserve 33.941 24.789 -Effect valuation financial instruments - 235.800 -Share premium 30.304.699 - -Retained earnings 1.905.103 798.664 408.956Current year’s profit 3.644.292 1.106.439 414.497Cumulative translation adjustment 112.145 68.630 (4.504)
Total shareholders’ equity 36.339.591 2.482.216 1.066.843Minority interests (notes 5.4.3.k) 125.138 182.296 19.059Total liabilities, shareholders’ equity and minority interests 79.195.309 45.738.354 17.567.547
The accompanying notes to these balance sheets form an integral part of these consolidated financialstatements.
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Consolidated Income Statements 12 month period ending December 31
IPTE, NV 2000 1999 1998
Sales 108.208.327 46.974.796 21.312.092Cost of sales (notes 5.4.3.m) (83.670.849) (34.601.800) (14.841.218)
Gross margin 24.537.478 12.372.996 6.470.874Research and development expenses (notes 5.4.3.n) (4.342.831) (2.019.430) (1.403.012)General and administrative expenses (notes 5.4.3.o) (4.788.618) (2.644.237) (1.138.464)Selling expenses (notes 5.4.3.p) (7.854.538) (4.546.852) (2.777.122)Amortization of goodwill (notes 5.4.3.f) (792.739) (396.369) -Other income (expense) net 802.711 432.941 105.455
Income from operations 7.561.463 3.199.049 1.257.731Financial income (notes 5.4.3.s) 1.388.777 316.136 135.240Financial charges (notes 5.4.3.s) (2.578.305) (1.336.029) (445.645)Other non-operating expenses (net) 154.738 (10.560) (179.060)
Income before taxes 6.526.673 2.168.596 768.266Income taxes (notes 5.4.3.t) (2.930.387) (1.061.396) (345.802)Minority interest (notes 5.4.3.k) 57.158 (761) (7.967)
Net income of the period 3.653.444 1.106.439 414.497Basic earnings per share (*) (notes 5.4.3.w) 0.73 0.28 0.10Diluted earnings per share (**) (notes 5.4.3.w) 0.71 - -
(*) taking into account the split of shares of 1 to 2000 and calculated on December 31, 2000 based on the number of shares after IPO.(**) taking into account the number of additional ordinary shares which would have been outstanding assuming the conversion of all warrants into ordinary shares.
The accompanying notes to these income statements form an integral part of these consolidated finan-cial statements.
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Consolidated statement of changes in equity.
Datum Shares Capital Legal Share Profit/loss Cumulative Effect Totalreserve premium carried translation valuation Capital and
forward adjustment financial reservesinstrument
31/12/97 2.000 247.894 0 0 408.956 2.070 0 658.920Net income 24.789 389.708 414.497Cumulative -6.594 -6.594translation adjustment
31/12/98 2.000 247.894 24.789 0 798.664 -4.504 0 1.066.843Net income 1.106.439 1.106.439Cumulative 73.134 73.134translation adjustmentEffect valuation financial instruments (1) 235.800 235.800
31/12/99 2.000 247.894 24.789 0 1.905.103 68.630 235.800 2.482.21603/03/00 Share split of
1 to 2000 3.998.000 022/05/00 IPO 1.194.396 74.052 26.202.660 26.276.71222/05/00 Conversion of 281.696 17.465 4.940.405 -235.800 4.722.070
subordinated loan (1)
22/05/00 IPO costs -838.366 -838.366Net income 9.152 3.644.292 3.653.444Cumulative 43.515 43.515translation adjustment
31/12/00 5.476.092 339.411 33.941 30.304.699 5.549.395 112.145 0 36.339.591
(1) In 1999, the company issued a subordinated convertible loan together 8 warrants, allowing, the warrant-holders to convert the loans into shares. In accordance with IAS, these financialinstruments have been valued at 235.800. At the IPO, the warrant holders exercised their right so that as of December 31, 2000 no such financial instruments were outstanding.
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Consolidated Cash Flow Statements 12 month period ending December 31
IPTE, NV 2000 1999 1998
Cash flows from operating activitiesProfit from operations 7.561.463 3.199.049 1.257.731Adjustments for:
Amortization goodwill 792.739 396.369 -Reserves for uncorrectable receivables and obsolete stock 532.326 481 201.053Depreciation 2.841.929 1.347.850 488.768Provisions 414.173 129.412 238.494
Operating profit before working capital changes 12.142.630 5.073.161 2.186.046Inventories (17.472.703) (1.543.803) (5.021.290)Trade receivables (9.016.506) (1.677.310) (5.592.329)Trade payables 11.039.984 (2.262.396) 3.927.368Accrued expenses, payroll and related taxes and deferred income (16.463) (449.327) 880.219Provisions - 405.573Other receivables (1.223.720) 392.168 (210.114)Other current assets (435.601) 77.185 (11.728)Other payables 131.754 (126.881) 137.125
Cash flow from operating activities (4.850.625) (517.203) (3.299.130)Taxes (2.436.014) (1.138.686) (320.309)Exchange differences 373.931 41.869 26.095Interests (1.252.256) (1.011.778) (260.931)Other (231.693) 16.371 (246.004)
Net cash used in operating activities (8.396.657) (2.609.427) (4.100.279)Cash flows from investing activities
Acquisition of subsidiary, net of cash acquired - (9.873.587) 7.373Investments in intangible assets (1.837.084) (1.157.696) (361.126)Investments in tangible assets (4.628.591) (1.179.664) (1.651.687)Interest received 75.228 1.842 2.467
Cash flows used in investing activities (6.390.447) (12.209.105) (2.002.973)Cash flows from financing activities
Proceeds from issuance of share capital 30.160.416 - -Proceeds/(repayments) from long-term debts (3.888.404) 4.686.762 294.401Proceeds/(repayments) from current portion of longterm debt 368.891 112.901 104.656Proceeds/(repayments) from bank loans and overdrafts (8.976.454) 10.233.899 5.526.187
Net cash provided by financing activities 17.664.449 15.033.562 5.925.244Movement in cumulative translation adjustment 43.515 73.134 (6.574)Increase/(decrease) in cash and cash equivalents 2.920.860 288.164 (184.582)Cash and cash equivalents at the beginning of the period 1.152.047 863.883 1.048.465Cash and cash equivalents at the end of the period 4.072.907 1.152.047 863.883
The accompanying notes to these cash flow statements form an integral part of the consolidated finan-cial statements.
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5.4. Notes to the ConsolidatedFinancial Statements of the IPTEGroup.
5.4.1. General
IPTE NV is a limited liability company incorporated under Belgian law, with subsidiaries in Belgium(Connect Systems NV, Connect Systems International NV and Connectronics, NV), the Nederlands(Connect Systems BV), France (IPTE France SARL), Germany (IPTE GmbH & Co KG; ITE GmbH and IPEGmbH), Singapore (IPTE Asia Pacific Pte Ltd.), the United Kingdom (IPTE (UK) Ltd.), Sweden (IPTENordic AB) and the United States of America (ITE Enterprises Inc. and IPTE America LLC). The com-pany develops and produces testing equipment for consumer electronics (automation business) and isa subcontractor for the electronics industry (contract manufacturing business).
The number of employees at year-end amounted to 862 in 2000, 617 in 1999 and 231 in 1998.
The registered office address of the group is located at Geleenlaan 5, 3600 Genk, Belgium. The finan-cial statements were authorized for issue by the Board of Directors subsequent to there meeting heldon March 20, 2001 in Genk.
5.4.2. Summary of significant accounting policies
The principal accounting policies adopted in preparing the consolidated financial statements of IPTE, NVare as follows:
General
The accompanying financial statements are prepared in accordance with the standards formulated bythe International Accounting Standards Committee (IASC).
For the purpose of the Initial Public Offering in 2000, the company already issued consolidated finan-cial statements of the years ending December 31st, 1999 and 1998.
The promulgated standards IAS 16 (revised 1998), Property, Plant and Equipment, IAS 22 (revised1998), Business Combinations, IAS 28 (revised 1998), IAS 36, Impairment of Assets, IAS 37,Provisions, Contingent Liabilities and Contingent Assets, IAS 38, Intangible Assets, have been adoptedprior to their effective date as encouraged by the IASC. Early adoption as IAS standards did not resultin any adjustments to the prior year financial statements.
The financial statements reflect adjustments made for international reporting to IPTE statutory accounts,which have been prepared using different accounting principles. The preparation of consolidated finan-cial statements requires management to make estimates and assumptions, typically concerning theuseful life of assets and other judgemental areas, which affect the amounts reported in the financialstatements and accompanying notes. Such estimates may differ from actual results incurred.
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Basis of preparation
The accompanying financial statements have been prepared under the historical cost convention. Thecompany’s statutory accounts have been prepared using different valuation principles. These accom-panying financial statements under IAS include certain adjustments made solely to comply with IAS.
List of subsidiaries consolidated as of December 31 (in EUR)
Entity Ownership interestDec. 31 Dec. 31 Dec. 31
2000 1999 1998
Integrated Production and Test Engineering NV Parent companyIntegrated Production and Test Engineering (UK) Ltd. 100 100 100Integrated Production Engineering GmbH 100 100 100IPTE GmbH & Co KG 100 - -ITE GmbH 100 100 100PMS 724 GmbH 100 - -Integrated Production and Test Engineering France SARL 98 98 98Integrated Production and Test Engineering Asia Ltd. 80 80 80Integrated Production and Test Engineering Nordic AB 100 100 100Integrated Test Engineering Enterprises Inc. 100 100 -Integrated Production and Test Engineering America LLC 87,2 87,2 -Connect Systems NV 100 100 -Connectronics NV 88 88 -Connect Systems BV 100 100 -Connect Systems International NV 100 100 -
Cash and Cash Equivalents
Cash includes cash on hand and cash with banks. Cash equivalents are short-term, highly liquid invest-ments that are readily convertible to known amounts of cash with original maturities of three months orless and that are subject to an insignificant risk of change in value.
Receivables
Receivables are stated at face value, after provision for doubtful accounts.
Inventories
Inventories, including work-in-process, are comprised of material, labor and manufacturing overheadsand are valued at the lower of cost and net realisable value, after provision for obsolete items. Net real-isable value is the selling price in the ordinary course of business, less the costs of completion, mar-keting and distribution. Cost is determined primarily according to the FIFO method. For processedinventories, cost includes the applicable allocation of fixed and variable overhead costs. Unrealisableinventory has been fully written off. Management periodically reviews the need for provisions for obso-lete or slow moving items.
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Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation. When assets are soldor retired, their cost and accumulated depreciation are eliminated from the accounts and any gain orloss resulting from their disposal is included in the income statement.
Depreciation is computed on a straight-line basis over the following estimated useful lives:
Buildings 10 – 20 yearsMachinery and equipment 4 – 5 yearsFurniture and office equipment 5 yearsComputer equipment 3 yearsVehicles 4 – 5 years
The useful life and depreciation method are reviewed periodically to ensure that the method and periodof depreciation are consistent with the expected pattern of economic benefits from items of property,plant and equipment.
Expenditures, incurred after the fixed assets have been placed in operation, such as repairs and main-tenance, are charged against income in the period in which the costs are incurred.
Intangible Assets
Intangible assets are measured initially at cost. Intangible assets are recognised if it is probable that thefuture economic benefits that are attributable to the asset will flow to the enterprise; and the cost of theasset can be measured reliably. Intangible assets are amortised on a straight-line basis over the esti-mate of their useful lives.
1. LicensesAmounts paid for licenses are capitalised and then amortised on a straight-line basis over the expect-ed periods of benefit. The expected useful live of licenses is 5 years.
2. Research and Development CostsExpenditures for research and development are charged against income in the period incurred exceptfor project development costs which comply strictly with the following criteria (IAS 38):
❍ the product or process is clearly defined and costs are separately identified and measured reliably;
❍ the technical feasibility of the product is demonstrated;❍ the product or process will be sold or used in-house;❍ a potential market exists for the product or its usefulness in case of internal uses is
demonstrated; and❍ adequate technical, financial and other resources required for completion of the project are avail-
able.
Capitalized development costs are amortised on a straight-line basis over their expected useful lives,varying between 3 to 5 years.
3. GoodwillAmounts paid for the acquisition of a business under the form of assets are capitalized and amortizedover the expected periods of benefit. The expected useful live of goodwill is 5 years.
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Goodwill
The excess of the cost of an acquisition over the Company’s interest in the fair value of the net identi-fiable assets acquired as at the date of the exchange transaction is recorded as goodwill and recog-nised as an asset in the balance sheet. Goodwill is carried at cost less accumulated amortisation andaccumulated impairment losses. Goodwill is amortised on a straight-line basis over a period of 10years.
Provisions
A provision is recognised when, and only when an enterprise has a present obligation (legal or con-structive) as a result of a past event and it is probable (i.e. more likely than not) that an outflow ofresources embodying economic benefits will be required to settle the obligation, and a reliable estimatecan be made of the amount of the obligation. Provisions are reviewed at each balance sheet date andadjusted to reflect the current best estimate. Where the effect of the time value of money is material,the amount of a provision is the present value of the expenditures expected to be required to settle theobligation.
Recognition of revenue
The Group’s activities require specific rules with respect to the recognition of revenue.
The company recognizes revenue from sales of standard products or products which do not belong toany project (see below) upon shipment or delivery, depending on when title and risk of loss are trans-ferred under the specific contractual terms of each sale, which may vary from customer to customer.The company recognises revenue from projects in accordance with IAS 11; revenues form these projects are recognised to the extent that they can be assessed reliably and in function of the progressof the project. Losses on projects are recognised immediately.
Foreign currency translation
The majority of foreign consolidated subsidiaries are regarded as foreign entities since they are finan-cially, economically and organisationally autonomous. Their reporting currencies are the respective localcurrencies. Financial statements of foreign consolidated subsidiaries are translated at year-endexchange rates with respect to the balance sheet, and at average exchange rates with respect to theincome statement. All resulting translation differences are included in “cumulative translation adjust-ment” in equity.
Financial instruments
The company does not have any financial instrument that meets the criteria of hedging as defined underIAS 32.
Employee Benefits
Defined contribution plans
The company provides defined contribution pension plans for some employees. The plan provides forcontributions ranging from 1% to 1,5% of salary. These contributions, partly paid by the employer andpartly paid by the employee, are calculated by an insurance company and the costs are charged toincome in the year to which they relate.
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Government grants
Government grants are deferred and amortised into income over the period necessary to match themwith the related costs that they are intended to compensate. Grants received are treated as deferredincome in the accompanying consolidated financial statements. Income relating to government grantsis recognised as a deduction from the appropriate expense.
The company recognizes government grants if they have reasonable assurance that the grants will bereceived. They are recognized as income on a systematic and rational basis over the periods neces-sary to match them with the related costs. The grants related revenue is recorded net of the relatedexpense in the income statement and as deferred income on the balance sheet.
Income taxes
The IPTE Group applies International Accounting Standard 12. The income tax charge is based on prof-it for the year and considers deferred taxation. Deferred taxes are calculated using the balance sheetliability method. Deferred income taxes reflect the net tax effects of temporary differences between thecarrying amounts of assets and liabilities for financial reporting purposes and the amounts used forincome tax purposes. Deferred tax assets and liabilities are measured using the tax rates expected toapply to taxable income in the years in which these temporary differences are expected to be recov-ered or settled. The measurement of deferred tax liabilities and deferred tax assets reflects the tax con-sequences that would follow from the manner in which the enterprise expects, at the balance sheetdate, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are recognised regardless of when the timing difference is likely toreverse.
A deferred tax liability is recognised for all taxable temporary differences, unless the deferred tax liability arises from goodwill for which amortisation is not deductible for tax purposes.
Deferred tax assets are recognised when it is probable that sufficient taxable profits will be availableagainst which the deferred tax assets can be utilized. At each balance sheet date, the companyreassesses unrecognized deferred tax assets and the carrying amount of deferred tax assets.
Impairment of assets
Property, plant and equipment and intangible assets are reviewed for impairment whenever events orchanges in circumstances indicate that the carrying amount of an asset may not be recoverable.Whenever the carrying amount of an asset exceeds its recoverable amount, an impairment loss is rec-ognized in income. The recoverable amount is the higher of an asset’s net selling price and value inuse. The net selling price is the amount obtainable from the sale of an asset in an arm’s length trans-action while value in use is the present value of estimated future cash flows expected to arise from thecontinuing use of an asset and from its disposal at the end of its useful life. Recoverable amounts areestimated for individual assets or, if it is not possible, for the cash-generating unit. Reversal of impair-ment losses recognized in prior years is recorded when there is an indication that the impairment loss-es recognized for the asset no longer exist or has decreased. The reversal is recorded in income or asa revaluation increase.
Segments
For management purposes the Group is organized on a worldwide basis into 2 major operating busi-nesses: the “production and test automation” business and the “contract manufacturing” business. Thedivisions are the basis upon which the Groups reports its primary segment information. Financial infor-mation is presented in Note 5.4.3.u.
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Contingencies
Contingent liabilities are not recognised in the financial statements. They are disclosed unless the pos-sibility of an outflow of resources embodying economic benefits is remote.
Subsequent events
Post-year-end events that provide additional information about a company’s position at the balancesheet date (adjusting events), are reflected in the financial statements. Post-year-end events that arenot adjusting events are disclosed in the notes when material.
Earnings per share
Basic earnings per share are calculated by dividing the net profit of the year attributable to ordinaryshareholders by the number of shares outstanding at yearend.
Diluted earnings per share are calculated by dividing the net profit of the year attributable to ordinaryshareholders by the average number of outstanding shares of the year, taking into account potentialdilution of shares to issue on the basis of share options.
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5.4.3. Notes
a. Cash and cash equivalents as of December 31Dec. 31 Dec. 31 Dec. 31
2000 1999 1998Cash at bank and in hand 1.315.201 1.152.047 863.883Cash equivalents 2.757.706 - -Total 4.072.907 1.152.047 863.883
Cash equivalents are short-term, highly liquid investments that are readily convertible to known amountsof cash.
A part of the company’s cash balance as of December 31, 2000 served as guarantee for straight loanstaken up with a commercial bank. The restricted cash balance amounts to approximately EUR 1.200.000.
b. Trade receivables as of December 31Dec. 31 Dec. 31 Dec. 31
2000 1999 1998Trade receivables 26.688.647 17.672.141 7.572.168Allowance for doubtful accounts (296.028) (68.329) (71.816)Trade receivables (net) 26.392.619 17.603.812 7.500.352
c. Inventories as of December 31Dec. 31 Dec. 31 Dec. 31
2000 1999 1998Raw materials and supplies, at cost 17.398.613 5.297.406 2.860.892Work in progress, at cost 1.930.410 3.009.138 1.685.670Finished goods, at cost 2.709.092 1.667.191 1.412.939Contracts in progress 6.380.533 972.210 1.099.326Reserve for obsolete stock (814.409) (509.782) (780.755)Net 27.604.239 10.436.163 6.278.052
d. Property, plant and equipment as of December 31Property and Machinery Furniture Fixed asset
buildings and and underequipment vehicles construction Total
Year ended December 2000Cost:Beginning of the period 4.848.948 5.544.968 2.511.922 333.651 13.239.489Additions of the year 2.234.255 1.782.701 1.168.474 5.185.430Retirements (547.795) (684) (121.959) (88.807) (759.245)CTA 7.973 1.776 9.749Transfers 221.000 (111.412) 128.675 (244.844) (6.581)End of the period 6.756.408 7.223.546 3.688.888 17.668.842Accumulated depreciation:Beginning of the period 941.648 3.863.324 1.285.397 43.508 6.133.877Additions of the year 278.523 1.204.625 778.567 2.261.715Retirements (151.397) (687) (47.927) (3) (200.014)CTA (1.556) 2.332 776Transfers 30.518 (22.672) 35.659 (43.505)End of the period 1.099.292 5.043.034 2.054.028 8.196.354Net book value at December 2000 5.657.116 2.180.512 1.634.860 - 9.472.488
The gross carrying amount of all items that are fully depreciated but still in active use is not significant.
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Property and Machinery Furniture Fixed assetbuildings and and under
equipment vehicles construction TotalYear ended December 99Cost:Beginning of the period 546.256 1.328.722 1.144.010 - 3.018.988Additions of the year 284.136 230.901 460.629 244.851 1.220.517Acquired from third parties 4.018.556 3.971.603 996.976 88.800 9.075.935Retirements - (1.108) (93.132) - (94.240)CTA- 14.850 3.439 - 18.289End of the period 4.848.948 5.544.968 2.511.922 333.651 13.239.489Accumulated depreciation:Beginning of the period 105.544 593.106 313.511 - 1.012.161Additions of the year 123.069 616.200 466.139 43.508 1.248.916Acquired from third parties 713.035 2.652.592 542.271 - 3.907.898Retirements - - (37.963) - (37.963)CTA- 1.426 1.439 - 2.865End of the period 941.648 3.863.324 1.285.397 43.508 6.133.877Net book value at December 1999 3.907.300 1.681.644 1.226.525 290.143 7.105.612
e. Intangible fixed assets as of December 31Development Licenses Goodwill Other Total
costsYear ended December 00Cost:Beginning of the period 1.198.558 112.218 269.778 - 1.580.554Additions of the year 1.569.252 90.267 - 172.124 1.831.643Retirements - (1.515) - - (1.515)Transfers - 6.581 - - 6.581CTA285 - - 285End of the period 2.768.095 207.551 269.778 172.124 3.417.548Accumulated depreciation:Beginning of the period 37.661 48.399 95.517 181.577Additions of the year 494.243 27.311 53.966 4.694 580.214Transfers - - - - -CTA81 (171) - - (90)End of the period 531.985 75.539 149.483 4.694 761.701Net book value atDecember 2000 2.236.110 132.012 120.295 167.430 2.655.847
Investments in intangible fixed assets as of December 31,2000 include development costs for newmachines developed by ITE GmbH and IPE GmbH for a net book value of EUR 1,8 million. As the con-ditions of IAS 38 have been met, these development costs have been booked as an asset in the bal-ance sheet.
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Development Licenses Goodwill Other Totalcosts
Year ended December 99Cost:Beginning of the period 61.732 91.348 269.778 - 422.858Additions of the year 1.136.826 20.870 - - 1.157.696End of the period 1.198.558 112.218 269.778 - 1.580.554Accumulated depreciation:Beginning of the period 24.693 16.389 41.561 - 82.643Additions of the year 12.968 32.010 53.956 - 98.934End of the period 37.661 48.399 95.517 - 181.577Net book value December 99 1.160.897 63.819 174.261 - 1.398.977
f. Goodwill as of December 31
The goodwill relates to the acquisition of the Connect Systems Group, consisting of Connect Systems,NV, Connect Systems International NV and its subsidiaries Connect Systems BV and Connectronics,NV and is determined as the difference between the cost of acquisition and the fair value of the identi-fiable assets and liabilities as of the acquisition date. Except for the fair value adjustment of the tangi-ble fixed assets of Connect Systems, NV, there were no important differences between the fair value ofthe assets and liabilities and their respective book values at the acquisition date.
The goodwill amounts to 7.927.383 and is amortised over a period of 10 years as from July 1, 1999onwards. The Board of Director is of the opinion that the business and activities of the acquired com-pany justify this amortization period.
The bookvalue of the goodwill at December 31, 2000 and 1999 was as follows:
Goodwill resulting from the acquisition of the Connect Systems Group (June 30, 1999) 7.927.383Amortization goodwill in 1999 (396.369)Net goodwill at December 31, 1999 7.531.014Amortization of goodwill in 2000 (792.739)Net goodwill at December 31, 2000 6.738.275
g. Bank loans and overdrafts as of December 31
Dec. 31 Dec. 31 Dec. 312000 1999 1998
Secured 1.487.355 19.100.060 6.926.764Unsecured 8.636.251 0 66.767Total 10.123.606 19.100.060 6.993.531
As of December 31, 2000 IPTE, NV has credit lines for a total amount of EUR 38.750.000 at differentBelgian commercial banks. As of December 31, 2000 the following amounts were contracted:
Bank loans and overdrafts 10.123.606Long-term debt (including current portion of long- term debt) 6.565.663Total 16.689.269
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As of December 31, 2000 IPTE, NV has engaged itself to the following financial covenants:- minimum cash-flow coverage on a consolidated basis of 1.25;- minimum gearing-ratio (balance between bank debts and equity) of 2 on a consolidated basis;- minimum solvency-ratio of 20% on a consolidated basis.
Furthermore, IPTE, NV had a compensating balance agreement whereby cash owned was given as aguarantee to cover loans taken up. At the end of 2000, straight loans of USD 1.212.500 and GBP383.000 were taken up.
Following other guarantees were given in order to secure parts of the outstanding debts:
- the commitment not to alienate the business;- mandate to pledge the building and the land up to BEF 100.000.000;- mortgage on different buildings of the company.
h. Accrual expenses, payroll and related taxes and deferred income as of December 31
Dec. 31 Dec. 31 Dec. 312000 1999 1998
Vacation pay accruals 1.180.182 1.039.189 319.570Other social debt 1.128.893 576.943 626.931VAT debt 29.741 290.299 30.149Income taxes 1.174.044 974.925 311.500Withholding taxes 27.923 394.234 159.591Accrued interests 80.478 186.333 -Deferred income - 388.679 -Other 424.072 211.194 37.991Total 4.045.333 4.061.796 1.485.732
i. Long-term debt as of December 31
Dec. 31 Dec. 31 Dec. 312000 1999 1998
Secured debt 4.932.089 4.032.944 1.048.136Unsecured debt 1.633.574 6.052.232 21.426
Subordinated loans - 6.445.232 -Credit institutions 1.487.355 - -Effect valuation of financial instruments - (393.000) -Other 146.219 - 21.426
Total long-term debt 6.565.663 10.085.176 1.069.562Less current maturities (1.515.735) (1.146.844) (215.600)Total 5.049.928 8.938.332 853.962
Repayments of long-term debt on December 31, 2000 are scheduled as follows:2001 1.515.7352002 1.448.0262003 520.4162004 449.7442005 409.358Beyond 2005 2.222.384Total 6.565.663
The subordinated loan outstanding as of December 31, 1999 was converted to equity as a result of theIPO of the company in 2000 (see note 5.4.3.l).
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j. Provisions as of December 31
Warranty Other TotalBalance at December 31,1999 340.031 553.039 893.070New provisions of 2000 554.702 184.316 739.018Provisions reversed in 2000 (266.410) (58.435) (324.845)Balance at December 31 2000 628.323 678.920 1.307.243
Warranty provisionsThe company and its affiliated companies grant a warranty of 1 year on products and projects sold. Forexpected warranty claims the company has set up a total reserve of 628.323 as of December 31, 2000,and respectively 340.031 and 644.067 per December 31, 1999 and 1998. This estimate is based onhistorical warranty costs and based on the assumption that warranty costs will remain at this same level.Over the last years the company did not incur any significant warranty claims.Other provisionsOther provisions should cover risks and contractual commitments existing at balance sheet date.
k. Minority interest as of December 31
Dec. 31 Dec. 31 Dec. 312000 1999 1998
Share in equity 159.958 159.958 11.092Share in the result of the year (57.158) 761 7.967Share in the profit carried forward 18.078 17.317 -Share in CTA 4.260 4.260 -Total 125.138 182.296 19.059
l. Shareholders’ equity and rights attached to the shares as of December 31
As of December 31, 2000 the common stock consisted of 5.476.092 issued and outstanding ordinaryshares without face value. On May 22, 2000 IPTE made a public offering of 1.194.396 new shares. Atthe same time, the company split the existing shares by 2000. The subordinated loan of 4.957.870given by NIB Capital (7/8) and Artesia (1/8) was converted to capital at the same occasion. In compli-ance with IAS the costs of the IPO (EUR 1.397.266) were net of tax effects (EUR 558.900) deductedfrom the share premium account. Each holder of shares is entitled to one vote per share, without prejudice to specific restrictions on theshareholders’ voting rights in the company’s Articles of Association and Belgian Company Laws, includ-ing restrictions for non-voting shares and the suspension or cancellation of voting rights for shareswhich have not been fully paid up at the request of the Board of Directors.Under Belgian Company Laws, the shareholders decide on the distribution of profits and the annualshareholders’ meeting, based on the latest audited accounts of the company. Dividends may be paidin cash or in kind. In 2000, the company gave its personnel the possibility to subscribe to a maximum of 200.000 war-rants. In total 182.850 warrants were subscribed by employees, each giving the right to purchase IPTE,NV shares at a price of EUR 20. Each warrant gives the right to subscribe to one new share. The war-rants are granted for a period of 10 years and can be executed at the earliest in 2004 at the earliest.The execution of such warrants will lead to a dilution of existing shareholders.
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m. Cost of sales 12 month period ending December 31
2000 1999 1998
Purchases of Material 60.940.323 19.670.568 9.507.577Personnel expenses 17.881.039 12.165.057 4.187.690Depreciation 1.623.130 952.584 311.342Repair and maintenance 353.743 208.992 37.647Other 2.872.614 1.604.599 796.962Total 83.670.849 34.601.800 14.841.218
n. Research and development expenses 12 month period ending December 31
2000 1999 1998
Personnel expenses 3.851.106 1.761.046 1.253.216Depreciation 339.837 72.777 25.528Other 151.888 185.607 124.268Total 4.342.831 2.019.430 1.403.012
o. General and administrative expenses 12 month period ending December 31
2000 1999 1998
Personnel expenses 3.310.189 1.923.911 648.154Depreciation 151.141 109.182 29.711Professional fees 570.176 247.694 63.770Other 757.112 363.450 396.829Total 4.788.618 2.644.237 1.138.464
p. Selling expenses 12 month period ending December 31
2000 1999 1998
Personnel expenses 4.274.889 2.404.175 877.896Representation and travel expenses 2.047.833 725.896 677.941Publicity 611.013 404.529 164.310Depreciation 147.607 114.373 51.890Other 773.196 897.879 1.005.085Total 7.854.538 4.546.852 2.777.122
q. Personnel expenses and average number of employees 12 month period ending Dec. 31
2000 1999 1998
Wages and salaries 28.431.518 17.010.099 5.751.863Insurance 255.118 110.585 42.254Other 630.588 325.463 321.842Total 29.317.224 17.446.147 6.115.959
The average number of employees was 726 in 2000, 383 in 1999 and 152 in 1998. The main reasonsfor the increase in the number of employees in 2000 and 1999 were the acquisition of the ConnectGroup in July 1999 and the increased sales activities in 2000.
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r. Depreciation charges 12 month period ending December 31
2000 1999 1998
Tangible fixed assets 2.261.715 1.248.916 418.471Cost of sales 1.623.130 952.584 311.342General and administration costs 151.141 109.182 29.711Selling expenses 147.607 114.373 51.890Research and development costs 339.837 72.777 25.528
Intangible fixed assets 580.214 98.934 70.297Cost of sales 580.214 98.934 70.297
Total depreciation charges 2.841.929 1.347.850 488.768
s. Financial Results-net 12 month period ending December 31
2000 1999 1998
Interest income 75.228 1.842 2.467Exchange differences 1.298.855 287.546 129.968Other 14.694 26.748 2.805Total financial income 1.388.777 316.136 135.240Interest charges 1.252.256 1.011.778 260.931Bank charges 401.084 39.079 61.673Exchange differences 924.924 245.677 103.873Other 41 39.495 19.168Total financial charges 2.578.305 1.336.029 445.645Net financial results (1.189.528) (1.019.893) (310.405)
t. Income taxes 12 month period ending December 31
Income taxes are calculated on the basis of the taxable profit of the individual companies included inthe consolidation. The company recognizes deferred taxes according to IAS 12.The company has decided not to recognize deferred tax assets on the losses carried forward from IPTEAmerica because the conditions of IAS 12 have not been met.
2000 1999 1998
Income taxes of the current year 2.210.660 1.141.676 320.309Income taxes of the prior year 68.153 (2.990) -Deferred taxes 651.574 (77.290) 25.493Total 2.930.387 1.061.396 345.802
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The reconciliation of the effective tax rate to the statutory tax rate is as follows:
2000 1999 1998
Profit before taxes 6.526.673 2.168.596 768.266Non deductible costs
Amortisation of goodwill 792.739 396.369 -Other 9.039 100.960 56.072
Tax savingsInvestment deduction (144.695) (140.409) (23.721)Tax savings for recruiting personnel (4.137) (87.259) (98.166)
Effect of companies reporting losses 1.095.718 459.822 -Effect of consolidation entries (2.724.653) (143.313) 177.120Taxable profit 5.550.684 2.754.766 879.571Income taxes 2.210.660 1.141.676 320.309In % 39,8 % 41,4 % 36,4%
The deferred taxes recognised in the balance sheet are the result of timing differences in the recogni-tion of income and expenses in the annual report on one hand and the fiscal books on the other hand.
Balance at Taxes in Effect Balance at Taxes in Effect Acquisitions Balance atDecember result of valuation Dec. results of valuation of third January
2000 2000 1999 1999 parties 1999
Deferred taxes – assets (182.466) (88.884) - (93.582) (93.582) - - -- Research costs (98.462) 101.596 - (200.058) (200.058) - - -- Inventories (106.476) - 106.476 106.476 - - -- Losses consolidated
companies (84.004) (84.004)Deferred taxes – liabilities 1.199.110 740.458 (157.200) 615.852 16.292 157.200 416.867 25.493
- Tangible fixed assets 616.574 157.922 - 458.652 41.785 - 416.867 -- Inventories 363.203 363.203 - - (25.493) - - 25.493- Financial instruments - (157.200) 157.200 - 157.200 - -
- Capital grants 21.018 21.018- Intangible fixed assets 198.315 198.315
u. Notes to the Cash Flow Statements
Acquired entities Dec. 31, 1999Cash and cash equivalents 39.675Receivables 8.426.631Inventories 2.614.308Property, plant and equipment 5.168.037Other current assets 308.282
Accounts payable and accrued expenses - 7.481.691Short-term and long-term loans -6.481.581Other current liabilities - 607.782
Net assets acquired 1.985.879Goodwill consolidation 7.927.383Purchase price (=cash consideration) 9.913.262Acquired cash - 39.675Net cash effect from acquisition 9.873.587
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v. Segment reporting
The activities of the group are divided into 2 business segments, on one hand the “production and testautomation” business and on the other hand the “contract manufacturing” business.
The income statements for the production and test automation segment are as follows (before amorti-sation of goodwill):
Dec. 31, 2000 % Dec. 31, 1999 %Sales 52.249.369 100,0 30.894.889 100
Cost of sales (36.038.502) (69,0) (21.312.601) (69,0)Gross margin 16.210.867 31,0 9.582.288 31,0
Research and development expenses (3.691.754) (7,1) (2.019.430) (6,5)General and administrative expenses (2.867.995) (5,5) (1.920.294) (6,3)Selling expenses (5.390.561) (10,3) (3.687.914) (11,9)Other income (expense) net 767.211 1,5 176.834 0,6
Operating income 5.027.768 9,6 2.131.484 6,9Financial income (expense) (817.222) (1,6) (846.435) -2,7Other (net) 154.516 0,3 (10.560) -
Income before taxes 4.365.062 8,4 1.274.489 4,1Income taxes (2.012.705) -3,9 (507.164) (1,6)
Net income 2.352.357 4,5 767.325 2,5
The income statements for the contract-manufacturing segment are as follows:
Dec. 31, 2000 % Dec. 31, 1999 %Sales 56.167.168 100,0 16.079.000 100
Cost of sales (47.837.208) (85,2) (13.289.000) (82,6)Gross margin 8.329.960 14,8 2.790.000 17,4
Other operating expensesResearch and development expenses (651.077) (1,2) 0 0,0General and administrative expenses (1.922.854) (3,4) (723.000) (4,5)Selling expenses (2.464.449) (4,4) (859.000) (5,3)Other income (expense) net 35.598 0,1 256.000 1,6
Operating income 3.327.178 5,9 1.464.000 9,1Financial income (expense) (372.306) (0,7) (173.000) -1,1Other (net) 222 0,0 0 0
Income before taxes 2.955.094 5,3 1.291.000 8,0Income taxes (917.682) (1,6) (554.000) (3,4)
Net income 2.037.412 3,6 737.000 4,6
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The balance sheet per segment as of December 31, 2000 is as follows:
Production and Contract test automation manufacturing
AssetsCurrent assets:
Cash and bank deposits 3.868.420 204.488Trade receivables 12.658.592 13.734.027Other amounts receivable 417.155 1.176.592Inventories 13.838.925 14.774.809Other current assets 464.812 17.879
Total current assets 31.247.904 29.907.795Deferred taxes – assets 98.462 84.004Financial fixed assets 28.913.262 -Tangible fixed assets 4.560.359 4.905.957Intangible fixed assets 2.182.824 85.502Goodwill - 6.738.275Intercompany receivables 18.716.819 29.536.290Total assets 85.719.630 71.257.823Liabilities and equityShort-term debts
Bank debts (4.597.494) (5.526.113)Current portion of amounts payable after more than one year (343.201) (1.168.306)Trade debts (7.854.324) (11.493.304)Accrued charges, deferred income,remunerations and taxes (3.316.184) (1.136.890)Other debts (116.464) (28.485)
Total short-term debts (16.227.667) (19.353.098)Amounts payable after more than one year (2.450.357) (2.599.571)Provisions (989.487) (527.091)Deferred taxes – liabilities (479.886) (719.223)Equity (35.995.697) (29.257.129)Minorities (41.418) (83.719)Intercompany payables (29.535.118) (18.717.992)Total liabilities (85.719.630) (71.257.823)
w. Earnings per shareBasic earnings per share are calculated by dividing the net profit for the period attributable to ordinaryshareholders by the weighted average number of ordinary shares outstanding during the period. OnMarch 3, 2000 the Extraordinary General Assembly of Shareholders decided to split each share into2000, which brings the total amount of shares up to 4.000.000. The earnings per share after the splitshows the net profit for the period attributable to ordinary shareholders divided by the number of sharesbeing 4.000.000 shares. The earnings per share as of December 31, 2000 shows the net profit for theperiod attributable to ordinary shareholders divided by 5.476.092 shares.
The Extraordinary General Assembly of Shareholders of March 3, 2000 has decided to grant 200.000warrants ‘B’ to personnel members. In total 182.850 warrants were granted for a period of 10 yearsand can be executed in 2004 at the earliest. The execution of such warrants will lead to a dilution ofexisting shareholders.
2000 1999 1998Net profit available for distribution 3.653.444 1.106.439 414.497Weighted average number of shares - basic 4.984.061 4.000.000 4.000.000Earnings per share – basic 0.73 0.28 0.10Weighted average number of shares – diluted 5.166.911 - -Earnings per share – diluted 0.71 - -
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x. Litigation
Neither the company, nor its subsidiaries are subject to any legal proceeding that can have or may havea negative impact on the consolidated financial position of the company.
y. Commitments
As of December 31, 2000 the company had no material purchase commitments for tangible fixedassets.
z. Related party transactions
Board of DirectorsThe total amount of emoluments to the Board of Directors amount to EUR 625.000 in 2000 and EUR491.000 in 1999. The total amount of shares held by the board of Directors amounted to 2.900.000in 2000 and 3.520.000 in 1999.
PersonnelNo loans are granted to personnel.
aa. Subsequent events
On December 1, 2000 ITE GmbH, a 100 % subsidiary of IPTE NV, has set up a 100 % subsidiary PMS 724Gmbh with a share capital of DEM 50.000.On February 28, 2001 IPTE GmbH has sold the total activities of “Teilfertigung”, the producing of spare partsand “Prototypenbau”, the producing of prototypes and “Exabyte”, the producing of spare parts for one cus-tomer, to PMS 724 GmbH. IPTE will incur a loss of DEM 500.000 with this transaction.
On April 11, 2001 IPTE Gmbh will sell her 100 % subsidiary PMS 724 GmbH to Mr. Emmerich Höltl, the actu-al business manager and to Mr. Huub Baren, Chairman of the Board of Directors and shareholder of IPTE NV.The company will be sold at a price of DEM 50.000, being its share capital.
In accordance with the procedure in article 524 of the Corporate Law, an independent expert has judged thetransaction in order to support the three independent directors with the description and evaluation of the finan-cial consequences of this transaction.
The conclusion of the independent expert is as follows:
“Our decision is based on discussions we had with the management of the different companies and the finan-cial figures that were available. This information was not submitted to any comprehensive examination, not inview of this report, nor by any other auditor.”
“Taken into account the limited profitability and the unstable character of the future activities of PMS 724GmbH, we believe that this transaction will not bring any direct or indirect benefits to the shareholder involvedin this transaction.”
In January 2001, 2 acquisitions were finalised. On January 4, 2001 IPTE acquired 100% of ARF Test (based in Crolles, France) and on January 30,2001 IPTE acquired 100% of AND ELEC (based in Malville, France). Both companies will belong to theautomation division of IPTE.