Preliminary Results

IFX Power PLC
04 February 2003


                                 IFX Power plc

                             ('IFX' or 'the Group')

            Preliminary Results for the Year Ended 31 December 2002

IFX Power, one of the world's leading providers of power supply solutions to the
mid-tier of the electronics industry, today announces its Preliminary Results
for the year ended 31 December 2002.

FINANCIAL HIGHLIGHTS


£ Millions                                                     Year ended 31                Year ended 31

                                                               30 June 1999                 30 June 1998
                                                               December 2002                December 2001

Turnover                                                       64.0                         86.5
Gross margin                                                   20.4                         25.4
Gross margin %                                                 31.9%                        29.4%
Profit before tax and amortisation of goodwill                 2.2                          4.9
Profit before tax                                              0.7                          3.7
Free Cash Flow                                                 6.6                          2.3
Basic earnings per share                                       0.0p                         13.6p
Earnings per share adjusted for goodwill amortisation          7.3p                         19.3p
(fully diluted)

Dividend per share                                             12.0p                        12.0p



KEY ACHIEVEMENTS

  • Significant outperformance in the power supply sector with positive
    profits.

  • Gross margins improve 2.5% points to 31.9%.

  • Introduced 37 new state of the art 'XP' branded product families up 23%
    from the prior year.

  • Substantially increased the development engineering headcount with the
    acquisition of Switching Systems International.

  • Improved management productivity from investment in IT systems.

  • Strong cash flow enabled dividend to be maintained at 12p per share.

Larry Tracey, Chairman and Chief Executive Officer said:

'The best year yet for achievement by an experienced workforce pushing hard in
the worst market conditions. Progress made this year should benefit employees
and shareholders during the next few years.'




Enquiries:


IFX Power plc

Larry Tracey, Chief Executive Officer                            0118 976 5028

James Peters, European Managing Director

Duncan Penny, Finance Director


www.ifxpower.com



                              CHAIRMAN'S STATEMENT


Business Performance

The economic climate in which we operate continues to be tough. Many companies
in both North America and Europe lack the business confidence to invest in the
capital equipment which our products power. This has resulted in a decline in
our revenues since the exceptional conditions which prevailed in 2000.

Revenues decreased 26% from those achieved in the prior financial year to £64.0
million. Our revenues derived from the networking, datacom and telecom sectors
have more than halved as these industries have experienced difficulties. However
our revenues derived from the medical, industrial and defence sectors have
increased £6 million from the levels achieved in 2001.

Gross margins have improved to 31.9% in 2002 from 29.4% in 2001. This is our
third successive year of gross margin improvement in the face of difficult
markets and generally declining prices. This improvement has resulted from our
continued development of own branded products designed to meet the requirements
of our customers in the markets we serve.

Operating expenses have been cut back to £18.0 million compared with £20.2
million in 2001. During the fourth quarter we scaled back parts of the
continental European organisation. The costs of this restructuring were charged
to operating expenses in the second half of 2002. I therefore expect further
reductions in operating expenses in 2003.

Profit before tax and goodwill amortisation was £2.2 million compared to £4.9
million in 2001. This resulted in fully diluted earnings per share adjusted for
goodwill of 7.3p compared with 19.3p in 2001.

Against this background we have taken action to enable us to increase earnings
and free cash flow in these market conditions. The key elements of our strategy
are:

  • Geographic expansion
  • New product development
  • Moving up the 'value chain'
  • Reduced operating expenses

Geographic expansion

During 2001 we embarked on an aggressive expansion of our sales presence in both
continental Europe and North America in the face of declining end markets. The
high quality power supply sales engineers required to make our business model
successful were more readily available in a downturn and our view was that such
an expansion would not be possible under normal market conditions. In
continental Europe new offices were added in Benelux, Denmark, France, Italy,
Norway, Sweden and Switzerland in addition to the existing UK and German
offices. Our expectations were that these offices would all be profitable in
2002. Unfortunately this was not the case. During Q4 2002 we started to scale
back these operations such that they can break even in 2003. Our revenue from
continental Europe was £6.1 million in 2002 (2001: £0.8 million). These
incremental revenues have almost exactly compensated for the decline in the base
business in the UK which was due to the slow down in our telecomm business.

An expansion of our geographic sales presence in North America has also taken
place. Since the beginning of 2001 we have opened new offices in Colorado,
Georgia, Minnesota, New Jersey, North Carolina, Ohio, Pennsylvania and Texas.
These offices are now profitable. However, the incremental revenues generated
from these offices have not been sufficient to offset the decline in the North
American base business derived from our networking customers. The revenues
generated from our networking customers are down £23 million from 2001.

Despite slower progress than we hoped we are pleased that we now have 90%
coverage of our target geographic market and have incremental revenues of £10
million resulting from these new offices which we otherwise would not have. We
believe that this puts us in a good position versus our competition who have
generally been cutting back their sales resource since 2001.

New Product Development

New product development is vital to the long-term success of our business.
Fragmented requirements of customers in the mid-tier and the lack of resource
devoted to suitable product development for the mid-tier amongst the top tier
players has given us an advantage in this arena.

In 2001 we introduced 30 new product families. In 2002 a further 37 product
families were introduced, all of which are 'XP' branded. New products allow us
to win more of the available business in our tier of the market and allow us to
make significantly higher gross margins while at the same time delivering cost
savings to our customers.

Our knowledge management systems allow us to capture the necessary information
to carefully target our product development and tailor it to the key needs of
the customer base in the mid-tier as well as closely manage the sales force.

Our new engineering capability of over 20 engineers based in Anaheim Southern
California and in New England gives us even greater capability to expand our own
proprietary product range.

Moving up the Value Chain

On 30 April 2002, the Group acquired the business and certain assets of
Switching Systems International ('SSI') for US$8.5 million (approximately £5.9
million) plus expenses. US$1.25 million of this consideration is deferred until
July 2003.

Based in Anaheim, California, SSI operates in, and provides power supply
solutions to, the mid-tier of the electronics industry. SSI has designed its own
proprietary range of configurable power supplies using outsourcing partners as
manufacturers. It also provides value added power supply solutions using these
same products. Value added power solutions are modified standard devices that
can be more easily integrated into the customer's system. Modifications can
involve providing wiring harnesses, thermal management, custom enclosures and
ensuring Electro Magnetic Compatibility. These enhancements aid the design-in
process saving the customer time and therefore money.

SSI's traditional route to market was via manufacturing representatives in the
US. Following the acquisition, these manufacturing representatives have been
replaced by IFX's direct sales force. The acquired business has now been
integrated into XPiQ, Inc., a wholly owned subsidiary of IFX.

The acquisition of SSI is an important step for the Group in that it continues
our move higher up the value chain. With SSI we acquired our own proprietary
configurable product line and a highly skilled design engineering team, capable
of designing products which specifically meet the needs of the customers in the
mid-tier of the market. The gross margins we are able to earn from our own
proprietary products are significantly higher than if we only specify the
product for our manufacturing partners to build.

Early signs from this acquisition are promising. The business is already
profitable having lost money prior to its acquisition by the Group. Our existing
customers are reacting very favourably to the product line and the cost
reductions they can attain by designing it in to their equipment.

In Q4 2002 we received the 'Innovation Award' from Advanced Sterilisation
Products, a division of Johnson and Johnson, for the impact our proprietary
power supply had on the success of their end product.

As a consequence of moving up the value chain we are no longer dealing with
certain of our historic suppliers where their product line conflicts with our
own XP branded offering. This has had some negative affect on our short-term
revenues but the shortfall should be taken up by our own new branded products in
the near future.

Reduced operating expenses

Our knowledge management system has allowed us to flatten the organisational
structure. This has enabled us to significantly reduce the number and cost of
management.

Financial Performance

Strong free cash flow has enabled us to maintain our dividend. We will be
proposing a final divided of 7p per share at our forthcoming Annual General
Meeting.

People

A year ago I announced that we would be splitting the roles of Chairman and
Chief Executive. I am pleased to announce that Duncan Penny will be assuming the
role of Chief Executive with immediate effect. Duncan joined the Group in April
2000 as group finance director. James Peters will be assuming the role of deputy
chairman.

The Group needs to attract and retain the best people in the industry. People
who will continue to drive the business forward and who above all act in our
customers' interests. We have a culture that rewards excellent performance with
profit sharing, sales commissions and with equity participation. Over 100 of our
employees have some sort of equity interest in the Group.

The Group also strives to maintain the technical standard of the sales force,
which it believes to be the best in the industry, by regular product training.

Our customers

The profile of our customers has changed dramatically since the beginning of
2001. The reduction in the networking and telecom related revenues should have
run its course by March 2003. The increase in the industrial and medical
revenues during this period should continue through 2003.

Outlook

Despite the tough market conditions I am proud that we have remained one of the
few profitable power supply companies while at the same time expanding our
geographic coverage and product range. Although I see no signs of any immediate
pick up in the markets we serve, I consider that our increased geographic
coverage, updated product offering and engineering capabilities position us well
for 2003 and beyond.



Larry Tracey

Chairman


                                 IFX Power plc

                      Consolidated Profit and Loss Account

                      For the Year Ended 31 December 2002




£ Millions
                                                            2002               2001
                                                                               Restated

                                                                                    (*)

Turnover                                          Note 2    64.0               86.5

Gross profit                                                20.4               25.4

Selling and distribution                                    (12.2)             (13.3)

Administrative expenses
Research and development                                    (1.7)              (0.4)
Goodwill amortisation                                       (1.5)              (1.2)
Other administration expenses                               (4.1)              (6.5)
Total administrative expenses                               (7.3)              (8.1)
Other operating income                                      0.1                0.1

Group operating profit                            Note 2    1.0                4.1
Share of associates' operating profit                       0.1                0.1
Total operating profit                                      1.1                4.2

Interest receivable and similar income                      0.2                -
Interest payable and similar charges                        (0.6)              (0.5)
Profit on ordinary activities before Taxation               0.7                3.7

Tax on profit on ordinary activities              Note 3    (0.6)              (1.4)

Profit on ordinary activities after taxation                0.1                2.3

Minority interests                                          (0.1)              0.5

Profit attributable to IFX shareholders                     -                  2.8

Dividends payable                                 Note 4    (2.5)              (2.5)

Retained profit for the period                              (2.5)              0.3
Basic earnings per share                          Note 5    0.0p               13.6p

Earnings per share adjusted for goodwill - fully                               
diluted                                           Note 5    7.3p               19.3p
                                                            

* The 2001 tax charge has been decreased by £0.2 million owing to the adoption
of Financial Reporting Standard 19 - Accounting for deferred tax (see Note 10).

Statement of Recognised Gains and Losses

£ Millions                                                                2002              2001

Profit attributable to IFX shareholders                                      -               2.8
Currency translation differences                                         (1.7)               0.2
Total recognised (losses)/gains relating to the year                     (1.7)               3.0
Prior period adjustment (Note 10)                                          0.2                 -
Total recognised (losses)/gains since last annual report                 (1.5)               3.0




                                 IFX Power plc

                      Statutory Consolidated Balance Sheet

                              At 31 December 2002
£ Millions                                                  2002                     2001
                                                                                     Restated
                                                                                           (*)

Fixed assets
Intangible assets - Goodwill                                23.0                     20.0
Tangible assets                                             3.4                      3.0
Own shares                                                  0.4                      0.5
Investments                                                 0.8                      1.5
Total Fixed Assets                                          27.6                     25.0


Current assets
Stocks                                                      7.7                      10.1
Debtors                                                     10.8                     12.6
Cash at bank and in hand                                    4.4                      1.5
Total current assets                                        22.9                     24.2

Creditors: amounts falling due within one year              (11.8)                   (13.0)

Net current assets                                          11.1                     11.2

Total assets less current liabilities                       38.7                     36.2

Creditors: amounts falling due after more then one year     (9.0)                    (3.4)

Net assets                                                  29.7                     32.8

Capital and reserves
Called up share capital                                     0.2                      0.2
Share premium account                                       27.0                     27.0
Merger reserve                                              0.2                      0.2
Profit and loss account                                     1.7                      5.9
Total equity shareholders' funds                            29.1                     33.3
Minority interests                                          0.6                      (0.5)
Total capital and reserves                                  29.7                     32.8

* The 2001 debtors figures has been increased by £0.2 million owing to the
adoption of Financial Reporting Standard 19 - Accounting for deferred tax (see
Note 10).




                                 IFX Power plc

      Statutory Consolidated Cash Flow for the Year Ended 31 December 2002



£ Millions                                                    2002                   2001


Net cash flow from operating activities             Note 6    8.3                    6.5

Returns on investments and servicing of finance
Interest paid                                                 (0.6)                  (0.5)
Interest received                                             -                      -

Net cash outflow from returns on investments and the
servicing of finance                                          (0.6)                  (0.5)


Tax paid                                                      (0.5)                  (2.4)

Capital expenditure
Purchase of tangible fixed assets                             (0.9)                  (1.4)
Sale of tangible fixed assets                                 0.3                    0.1

Net cash outflow from capital expenditure                     (0.6)                  (1.3)

Free cash flow                                                6.6                    2.3

Purchase of subsidiary undertakings                 Note 9    (5.7)                  (7.1)

Purchase of freehold properties                               -                      (0.9)

Equity dividends paid                                         (2.5)                  (2.5)

Financing
New loans                                                     4.8                    3.4

Net cash flow from financing                                  4.8                    3.4

Increase/(decrease) in cash                                   3.2                    (4.8)



Notes to the Interim Results for the Year Ended 31 December 2002

1. Basis of preparation


        The financial statements are prepared in accordance with applicable
        accounting standards. The particular accounting policies adopted are
        described below.

Accounting convention


        The financial statements are prepared under the historical cost
        convention.

Basis of consolidation


        The group has accounted for the acquisition of XP and Forx using the
        merger method of accounting and all other subsidiaries using the
        acquisition method of accounting in accordance with Financial Reporting
        Standard 6, 'Acquisitions and Mergers'.

Goodwill and intangible fixed assets


        For acquisitions of a business, where the acquisition method of
        accounting is adopted, purchased goodwill is capitalised in the year in
        which it arises and amortised over its estimated useful life up to a
        maximum of 20 years. The directors regard 20 years as a reasonable
        maximum for the estimated useful life of goodwill. Capitalised purchased
        goodwill in respect of subsidiaries is included within intangible fixed
        assets.

Tangible fixed assets


        Depreciation is provided on cost in equal annual instalments over the
        estimated lives of the assets. The rates of depreciation are as follows:

        Plant and machinery          - 25 - 33%

        Motor vehicles               -      25%

        Office equipment             -      25 - 33%

        Leasehold improvements       -      10% or over the life of the lease
        if shorter

        Long leasehold land and buildings     -      Term of the lease

Investments

     Investments held as fixed assets are stated at cost less provision for
impairment.

Associates


        In the Group financial statements investments in associates are
        accounting for using the equity method. The consolidated profit and loss
        account includes the Group's share of associates' profits less losses
        while the Group's share of the net assets of the associates is shown in
        the consolidated balance sheet. Goodwill arising on the acquisition of
        associates is accounted for in accordance with the policy set out above.
        Any unamortised balance of goodwill is included in the carrying value of
        the investment in associates.

Stocks


        Stocks are stated at the lower of cost and net realisable value. Cost
        represents material and appropriate overheads based on normal levels of
        activity.

Deferred taxation


        Deferred taxation is provided in full on timing differences that result
        in an obligation at the balance sheet date to pay more tax, or a right
        to pay less tax, at a future date, at rates expected to apply when they
        crystallise based on current tax rates and law. Timing differences arise
        from the inclusion of items of income and expenditure in taxation
        computations in periods different from those in which they are included
        in financial statements. Deferred tax assets are recognised to the
        extent that it is regarded as more likely than not that they will be
        recovered. Deferred tax assets and liabilities are not discounted. Prior
        year figures have been restated to reflect the requirements of Financial
        Reporting Standard 19, resulting in a tax credit of £0.2 million in the
        2001 comparatives.

Foreign exchange and financial instruments


        Transactions denominated in foreign currencies are translated into
        sterling at the rates ruling at the dates of the transactions.

        Monetary assets and liabilities denominated in foreign currencies at the
        balance sheet date are translated at the rates ruling at that date.
        These translation differences are dealt with in the profit and loss
        account.

        The results of overseas subsidiary undertakings are translated into
        sterling at the average rates for the period. The exchange differences
        arising as a result of restating retained profits to closing rates are
        dealt with as a movement on reserves.

        The Group uses financial instruments to reduced exposure to foreign
        exchange risk. The Group does not hold or issue derivative financial
        instruments for speculative purposes.

Leases


        Rental costs under operating leases are charged to the profit and loss
        account in equal annual instalments over the period of the leases.

Pension costs


        The group operates defined contribution pension schemes for its
        employees. Contributions are charged to the profit and loss account as
        they become payable.


2. Segmental analysis

The Group operates substantially in one class of business, providing power
supply solutions to the electronics industry. Analysis of total Group operating
profit, net assets, pro forma turnover and pro forma total Group operating
profit by geographical region is set out below.


Segmental Analysis

£ Millions                                                       Year to 31        Year to 31
                                                              December 2002     December 2001

Turnover
Europe                                                                 21.3              21.1
United States                                                          42.7              65.4
Total Turnover                                                         64.0              86.5

Group Operating Profit (before goodwill)
Europe                                                                (0.6)               1.0
United States                                                           3.1               4.3
Total Group Operating Profit (before goodwill)                          2.5               5.3
Amortisation of goodwill                                              (1.5)             (1.2)
Total Group Operating Profit after goodwill                             1.0               4.1


                                                             At 31 December    At 31 December
                                                                       2002              2002

Net assets
Europe                                                                  2.9               3.4
United States                                                          26.8              29.4
Total net assets                                                       29.7              32.8

3.Taxation
£ Millions                                                 Year to 31 December        Year to 31
                                                                          2002     December 2001

                                                                                      (Restated)
                                                                               R

United Kingdom                                                             0.1               0.8
International Taxation:
Subsidiary undertakings                                                    0.4               0.8
Deferred taxation                                                          0.1             (0.2)
Total taxation                                                             0.6               1.4

4. Equity Dividends


An interim dividend of 5p (2001 - 5p) per share was paid on 17 October 2002. A
final divided of 7p (2001 - 7p) is proposed for approval at the forthcoming
Annual General Meeting to be paid on 22 May 2003 to shareholders on the register
of members on 2 May 2003.

5. Earnings per share
£ Millions                                                       Year to 31 December 2002   Year to 31 December 2001

Earnings for the financial period for Basic earnings per share                          -                        2.8
                                                                                        

Amortisation of goodwill                                                              1.5                        1.2

Earnings for adjusted earnings per share                                              1.5                        4.0

Weighted average number of shares (thousands)                                      20,514                     20,568
                                                                                   
- basic

Weighted average number of shares (thousands)                                      20,646                     20,712
                                                                                   
- fully diluted

6. Reconciliation of Operating profit to net cash inflow from operating
activities
£ Millions                                                      Year to 31                 Year to 31

                                                                December 2002              December 2001

Operating profit                                                1.0                        4.1
Depreciation and amortisation                                   2.3                        1.7
Decrease in stocks                                              4.6                        3.8
Decrease in debtors                                             4.0                        5.3
Decrease in creditors                                           (2.5)                      (8.4)
Other non cash flow movements                                   (1.1)                      -
Net cash inflow from operating activities                       8.3                        6.5

7. Reconciliation of net debt
£ Millions                                                      Year to 31                 Year to 31

                                                                December 2002              December 2001

Net cash at 1 January                                           (6.2)                      1.9
New loan                                                        (4.8)                      (3.4)
Increase/(decrease) in cash per cash flow statement             3.2                        (4.7)
Net debt at 31 December                                         (7.8)                      (6.2)

Represented by
Cash at bank and in hand                                        4.4                        1.5
Overdrafts                                                      (4.0)                      (4.3)
Loan                                                            (8.2)                      (3.4)
Net debt at 31 December                                         (7.8)                      (6.2)


 8. Borrowings


On 22 August 2001 the Group obtained a multi-currency revolving credit facility
from Bank of Scotland totalling £20 million committed for three years at an
interest rate of 1.5% above LIBOR in order to finance acquisitions. At 31
December 2002 £8.2 million had been drawn down under this facility. In addition
to this the Group has a £10 million working capital facility which is repayable
on demand. Both facilities are secured on the assets of the Group.


 9. Acquisitions


    Cash consideration for acquisitions.

    £ Millions                                                          Year to 31                  Year to 31
                                                                   December 2002               December 2001

    Switching Systems International                                5.3                         -
    XPiQ Inc                                                       -                           2.7
    Powerspec                                                      -                           2.7
    Kamuk XP Power ApS                                             -                           0.5
    MPI - XP Power AG                                              -                           0.8
    Others                                                         0.4                         0.5
    Sub total                                                      5.7                         7.2
    Less: cash acquired                                            -                           (0.2)
    Total cash consideration                                       5.7                         7.0


10. Prior year adjustment


    Included in the tax charge for the period ended 31 December 2001 is a credit
    of £0.2 million resulting from the change in the method of accounting for
    deferred tax assets and liabilities following the adoption of Financial
    Reporting Standard 19.


11. General


The financial information set out in this announcement does not constitute the
company's statutory accounts for the years ended 31 December 2002 or 2001. The
financial information for the year ended 31 December 2001 is derived from the
IFX Power plc statutory accounts for the year ended 31 December 2001 which have
been delivered to the Registrar of Companies. The auditors reported on those
accounts; their report was unqualified and did not contain a statement under
s237 (2) or (3) Companies Act 1985. The statutory accounts for the year ended 31
December 2002 will be finalised on the basis of the financial information
presented by the directors in this preliminary announcement and will be
delivered to the Registrar of Companies following the company's annual general
meeting.

This announcement was approved by the directors on 3 February 2003.


                      This information is provided by RNS
            The company news service from the London Stock Exchange