IFX - BARGAIN and growth/recovery story

www.ifxgroupplc.com

This is a screaming buy on the basis of a bullet-proof balance sheet (cash 60p per share), predicted to return to growth and on a 2005 forward P/E of below 10, in exciting markets which saw growth in its business in the last results. Buy below £1 while you still can..

Motley Fool Posts on the stock: http://boards.fool.co.uk/Message.asp?mid=8543069&sort=whole#8543099

2004 Results Presentation:

http://ifxgroupplc.ifxmarkets.com/PublicArea/IFXGroups/data/downloads/prelims_june_2004.pdf

2004 Annual Report

http://ifxgroupplc.ifxmarkets.com/PublicArea/IFXGroups/data/downloads/IFX_AnnualReport2004.pdf

For comparison last IG Index results as a public company:

http://www.uk-wire.com/cgi-bin/articles/200207220700259156Y.html

IG corporate history

http://www.igindex.co.uk/content/about_ig_index.html

Current share price about 84p.

Cash probably around 60p.

Predicdted earnings for current year (2005) around 6.2p and then 9.55p for 2006

See: http://uk.biz.yahoo.com/z/i/ixf.l.html

Interims announced 30th November for six months ending 30th Sept 04.

Interims should be in-line as AGM statement on 5th August was positive:

IFX Group PLC
05 August 2004

AGM Statement

At the time of the Group's preliminary results announcement in June, the Board
stated that the new financial year had begun more steadily after the difficult
end to the previous year. This steady recovery has since continued as the
operational changes implemented in the previous period have begun to take
effect. This is particularly pleasing given the lacklustre trading conditions
evident in IFX's principal markets in recent months.

The Group has made significant progress in developing both its Equity Products
and Foreign Exchange & Commodities businesses. Consequently, while there is
still much to be done, the Board remains cautiously confident that it can
deliver value for shareholders in these challenging markets.

- Ends -

- Following this announcement CEO Ed Warner doubled his stake by buying £50,000 worth of shares.

-Mr Warner came in in June 2003 after the previous management left the group. It might be considered disappointing that the 2004 results were not too good then. However, it takes time for new management to get its feet under the table.

- The Chariman in the 2004 annual report points to three facots causing the poor results. 1) A slow first half 2) a sudden reversal of the dollar and 3) exceptional reorganisation costs (former management leaving and recruitment of current management).

- With regard to the first IFX does well when there is a trend in the markets it operates as this encourages its client to trade to take advantage of the trend. Clearly we know that there hasn't been any notifable trends recently which has pushed down hedge fund returns. However, the AGM statement notes this - lacklusture conditions' - but still points to encouraging results. The second factor is arguably the result of poor risk management by previous management. The CEO states that following this loss the company will better manage its risks in the future. Thirdly, the exceptional factors are unlikely to reaccur in the near-future.

- Fundamentally the 2004 results presentation is promising in terms of the businesses fundamental growth. FX trading almost doubled and finspreads is growing rapidly. After the results the group also launched a hedge fund CFD produce and previously launched an innovative mini-cfd product.

- All the company needs to do to justify the current share price is to be marginally profitable. Last year it was profitable without goodwill and exceptionals: £0.8m. So there is no reason to believe this cannot be maintained. Especially with the encouraging fundamentals.

- Essentially this is a bet that there is a profitable business here somewhere which justifies the paltry enterprise value attached to it (about £8m given cash of £16m and market cap of £24m). Turnover at around £16m and expected earnings per share of around 6p implies that unless it is in an oversupplied, unprofitable business segment it should easily justify this enterprise value.

- If you believe in the management as I am encouraged to do so. Ed Warner has the perfect CV for this job with experience in lots of experience in investment banking and other areas. He also writes for the Guardian and appears to be relatively tuned in. I like the initiatives he has done so far. The only part of the business I know directly is finspreads which offers spreadbetting. I didn't choose them as my spreadbetting company as they don't cover small stocks but they have some usp's such as a training academy. They market using attractive women which seems a bit cheap but I'm sure it will get the punters in.

I HAVE TAKEN A SPREAD BET ON THE STOCK AT £180 A POINT SO WILL BENEFIT IF YOU BUY JUST SO YOU KNOW. (IRONIC THAT I'M USING A SPREADBETTING COMPANY TO BET ON A RIVAL) BUT REALLY I'M WAITING FOR THE INTERIMS BEFORE TAKING ANY ACTION.

(Historical Accuracy - bought in mid 80's pence and was taken out at about 180p)