Interim Results Six months ended 30 June 2015 xppower.com xp 1 - PowerPoint PPT Presentation

Interim Results Six months ended 30 June 2015 xppower.com xp 1

Disclaimer This document contains statements about XP Power Limited that are or may be forward-looking statements. Forward-looking statements include statements relating to (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects; (ii) business and management strategies and the expansion and growth of XP Power Limited’s operations and potential synergies; and (iii) the effects of government regulation on business. These forward-looking statements are not guarantees of future performance. They have not been reviewed by the auditors of XP Power Limited. They involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of any such person to be materially different from any results, performance or achievements expressed or implied by such statements. They are based on numerous assumptions regarding the present and future business strategies of such persons and the environment in which each will operate in the future. All subsequent oral or written forward-looking statements attributable to XP Power Limited or any of its shareholders or any persons acting on its behalf are expressly qualified in their entirety by the cautionary statement above. All forward-looking statements included in this document speak only as of the date they were made and are based on information then available to XP Power Limited. Investors should not place undue reliance on such forward-looking statements, and XP Power Limited does not undertake any obligation to update publicly or revise any forward-looking statements. No representation or warranty, express or implied, is given regarding the accuracy of the information or opinions contained in this document and no liability is accepted by XP Power Limited or any of its directors, members, officers, employees, agents or advisers for any such information or opinions. This information is being supplied to you for information purposes only and not for any other purpose. This document and the information contained in it does not constitute or form any part of an offer of, or invitation or inducement to apply for, securities. The distribution of this document in jurisdictions other than the United Kingdom may be restricted by law and persons into whose possession this document comes should inform themselves about, and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of laws of any such other jurisdiction. xppower.com xp XP Power Interim Results 2015 2

Highlights  Encouraging first half despite volatility in the markets  Record order intake of £56.5 million (2014: £51.1 million) up 11% (4% in constant currency)  Record revenues of £53.9 million (2014: £50.2 million) up 7% (1% in constant currency)  Own design revenues increased to £36.2 million (2014: £33.0 million) up 10% representing 67% of total revenue (2014: 66%)  “Green XP Power” product revenue of £11.1 million up 29% representing 21% of total revenue (2014: 17%)  Declared dividend for the half year of 27 pence (2014: 25 pence) up 8%  Investment in additional sales and engineering resources in North America  Acquired a controlling interest in South Korean power converter company xppower.com xp XP Power Interim Results 2015 3

Execution of f Strategy Key Performance Strategy point 2010 2011 2012 2013 2014 1H 2015 indicator o Develop a strong pipeline of Number of new 31 38 19 31 26 13 leading edge products product introductions “Green” product o Expansion of high efficiency £2.8m £5.0m £8.1m £13.7m £18.6m £11.1m “Green” products revenues o Target and increase penetration of key accounts Own design product £44.1m £59.2m £57.6m £64.2m £67.2m £36.2m o Increase contribution of own revenues design products o Manufacture our own Proportion of own 48% 57% 62% 64% 66% 67% design products products o Target and increase Earnings per share 83.7p 106.4p 81.3p 95.1p 101.1p 50.1p penetration of key accounts xp xppower.com XP Power Interim Results 2015 4

Market Data Market (£ Millions) Size Share Rank Asia £650 1.2% - Europe £380 11.1% 1 st (equal) 1 st North America £620 8.3% Total £1,650 6.1% Source: Micro-Tech Consultants XP Revenue Asia Europe North Total % (£ Millions) America Healthcare 0.7 6.0 10.6 17.3 32% Industrial 1.7 13.7 8.6 24.0 45% Technology 1.4 3.5 7.7 12.6 23% Total £3.8 £23.2 £26.9 £53.9 100% 7% 43% 50% 100% xp xppower.com XP Power Interim Results 2015 5

Geographic Split 30 Revenue (£ Millions) 25 20 15 10 5 0 Asia Europe North America 1H12 4.3 20.3 21.9 2H12 3.4 20.5 23.5 1H13 3.2 22.1 23.7 2H13 4.1 21.6 26.4 1H14 3.9 21.7 24.6 2H14 3.7 20.5 26.7 xppower.com xp 1H15 3.8 23.2 26.9 XP Power Interim Results 2015 6

Sector Split 30 25 Revenue (£ Millions) 20 15 10 5 0 1H12 2H12 1H13 2H13 1H14 2H14 1H15 Industrial 21.1 22.6 23.5 23.9 24.8 24.3 24.0 Healthcare 12.7 13.4 14.5 15.8 15.3 15.7 17.3 Technology 12.8 11.3 11.0 12.4 10.1 10.9 12.6 Sequential growth Industrial -10% +7% +4% +2% +4% -2% -1% Healthcare -7% +6% +8% +9% -3% +3% +10% Technology -12% -12% -3% +13% -19% +8% +16% xp xppower.com XP Power Interim Results 2015 7

Sector Dynamics • • 45% of revenue 32% of revenue • • • 23% of revenue Most fragmented sector Grew 13% (year over year) • • • Grew 25% (year over year) Down 3% (year over year) Building a leading position  Good growth after being in the Interesting sub-sectors:  Gains in the “Big 3” but the next doldrums tier driving the growth  Test and measurement  Semi fab grew 17% from $5.8m  High efficiency products well  3D printing to $6.8m received due to high reliability  Industrial printing  New programs driving growth  Corporate approvals with all the  Industrial LED lighting major players  Smart Grid xppower.com xp XP Power Interim Results 2015 8

Own Design Revenue Trend Note: 2015* is six months to 30 June 2015 annualized 120 5% 100 6% 10% 7% 7% 28% Labelled Revenue (£ Millions) 12% 28% 80 29% 33% 31% 40% 60 17% Own Brand 67 % 40 44% 64% 66% 62% Own Design 57% 20 48% 39% 0 2009 2010 2011 2012 2013 2014 2015* Distribution 11.4 11.0 9.9 6.9 7.4 5.9 5.6 Labelled product 29.7 36.7 34.5 29.3 29.5 28.0 29.8 Own design product 26.2 44.1 59.2 57.7 64.2 67.2 72.4 xp xppower.com Average compound annual growth rate of 10% for own brand revenue to 2014 (own design 16%) XP Power Interim Results 2015 9

Revenue from “Green” Products 25.0 20.0 15.0 22.2 10.0 18.6 13.7 5.0 8.1 5.0 2.8 - 2010 2011 2012 2013 2014 2015* Revenue (£ millions) Note: 2015* is six months to 30 June 2015 annualized “Green” products are continuing to gain traction • • Reliability has been the key demand driver for these products so far • Green products remain a major market opportunity xp xppower.com XP Power Interim Results 2015 10

Customers – Selection of f Top 30 • We do business with over 70% of the S&P 500 Equipment Manufacturers • Top 30 customers account for 41% (2014: 40%) of revenue (largest customer 5%) xp xppower.com XP Power Interim Results 2015 11

Case Study y – Audio io and Vid ideo Technology xp xppower.com XP Power Interim Results 2015 12

Typical Product Life Cycle 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Revenue 0.0 0.2 0.9 2.0 3.7 4.6 4.1 6.2 7.4 6.1 6.7 7.1 • Substantial revenue annuity • Design in cycle typically 18 months • 2009 and 2012 dips due to market downturn and not typical xppower.com xp XP Power Interim Results 2015 13

In Income and Expenditure Statement £ Millions 2015 Margin 2014 Margin Change GBP/USD exchange rate 1.52 1.67 Orders 56.5 51.1 +11% Revenue 53.9 100.0% 50.2 100.0% +7% +6% Gross margin 26.6 49.4% 25.0 49.8% Research and development (net) 2.6 2.1 +24% Other operating expenses 11.3 10.6 +7% EBITDA 14.5 26.9% 13.7 27.3% +6% Operating profit 12.7 23.6% 12.3 24.5% +3% Net interest expense 0.1 0.1 - Profit before tax 12.6 23.4% 12.2 24.3% +3% Taxation and minority interest 3.0 2.4 +25% Minority interest - 0.1 - Profit after tax 9.6 17.8% 9.7 19.3% -1% Diluted earnings per share 50.1p 50.5p -1% Dividend per share 27.0p 25.0p +8% xp xppower.com XP Power Interim Results 2015 14

Operating Expenses Reconciliation • As reported in February £ Millions R&D Other Opex Total Opex we are adding additional 2014 – First half 2.1 10.6 12.7 resources in engineering % of revenue 4.2% 21.1% 25.3% and sales in North Foreign exchange 0.1 0.5 0.6 America to drive future Additional people 0.1 0.2 0.3 revenue growth R&D costs 0.2 - 0.2 Amortisation of R&D costs 0.1 - 0.1 2015 – First half 2.6 11.3 13.9 % of revenue 4.8% 21.0% 25.8% xp xppower.com XP Power Interim Results 2015 15