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

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

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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)

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xp xppower.com

Interim Results

Six months ended 30 June 2015

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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

  • perations 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

  • nly 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. XP Power Interim Results 2015

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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

XP Power Interim Results 2015

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Execution of f Strategy

XP Power Interim Results 2015

Key Performance indicator Strategy point 2010 2011 2012 2013 2014 1H 2015

Number of new product introductions

  • Develop a strong pipeline of

leading edge products 31 38 19 31 26 13 “Green” product revenues

  • Expansion of high efficiency

“Green” products £2.8m £5.0m £8.1m £13.7m £18.6m £11.1m Own design product revenues

  • Target and increase

penetration of key accounts

  • Increase contribution of own

design products £44.1m £59.2m £57.6m £64.2m £67.2m £36.2m Proportion of own design products

  • Manufacture our own

products 48% 57% 62% 64% 66% 67% Earnings per share

  • Target and increase

penetration of key accounts 83.7p 106.4p 81.3p 95.1p 101.1p 50.1p

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Market Data

Market (£ Millions) Size Share Rank Asia £650 1.2%

  • Europe

£380 11.1% 1st (equal) North America £620 8.3% 1st Total £1,650 6.1%

XP Power Interim Results 2015

Source: Micro-Tech Consultants

XP Revenue (£ Millions) Asia Europe North America Total % 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%

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Geographic Split

5 10 15 20 25 30 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 1H15 3.8 23.2 26.9 Revenue (£ Millions)

XP Power Interim Results 2015

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Sector Split

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 5 10 15 20 25 30 Revenue (£ Millions)

XP Power Interim Results 2015

Industrial

  • 10%

+7% +4% +2% +4%

  • 2%
  • 1%

Healthcare

  • 7%

+6% +8% +9%

  • 3%

+3% +10%

Technology

  • 12%
  • 12%
  • 3%

+13%

  • 19%

+8% +16% Sequential growth

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  • 45% of revenue
  • Most fragmented sector
  • Down 3% (year over year)

Interesting sub-sectors:

  • Test and measurement
  • 3D printing
  • Industrial printing
  • Industrial LED lighting
  • Smart Grid
  • 32% of revenue
  • Grew 13% (year over year)
  • Building a leading position
  • Gains in the “Big 3” but the next

tier driving the growth

  • High efficiency products well

received due to high reliability

  • Corporate approvals with all the

major players

  • 23% of revenue
  • Grew 25% (year over year)
  • Good growth after being in the

doldrums

  • Semi fab grew 17% from $5.8m

to $6.8m

  • New programs driving growth

Sector Dynamics

XP Power Interim Results 2015

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Own Design Revenue Trend

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 20 40 60 80 100 120 Revenue (£ Millions)

66% 5%

XP Power Interim Results 2015

Average compound annual growth rate of 10% for own brand revenue to 2014 (own design 16%)

Own Design Labelled Own Brand 39% 44% 17% 48% 40% 12% 57% 33% 10% 62% 31% 7% 7% 29% 64% 6% 28% 28% 67% Note: 2015* is six months to 30 June 2015 annualized

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Revenue from “Green” Products

2.8 5.0 8.1 13.7 18.6 22.2

  • 5.0

10.0 15.0 20.0 25.0 2010 2011 2012 2013 2014 2015* Revenue (£ millions)

XP Power Interim Results 2015

  • “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

Note: 2015* is six months to 30 June 2015 annualized

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Customers – Selection of f Top 30

XP Power Interim Results 2015

  • 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%)
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Case Study y – Audio io and Vid ideo Technology

XP Power Interim Results 2015

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Typical Product Life Cycle

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 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 XP Power Interim Results 2015

  • Substantial revenue annuity
  • Design in cycle typically 18 months
  • 2009 and 2012 dips due to market downturn and not typical
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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% Gross margin 26.6 49.4% 25.0 49.8% +6% 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 Power Interim Results 2015

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Operating Expenses Reconciliation

£ Millions R&D Other Opex Total Opex 2014 – First half 2.1 10.6 12.7 % of revenue 4.2% 21.1% 25.3% Foreign exchange 0.1 0.5 0.6 Additional people 0.1 0.2 0.3 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 Power Interim Results 2015

  • As reported in February

we are adding additional resources in engineering and sales in North America to drive future revenue growth

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Summary ry Balance Sheets

£ Millions June 2015 December 2014 June 2014

GBP/USD exchange rate 1.57 1.56 1.69

Cash 3.9 3.8 5.6 Trade and other receivables 21.4 18.0 15.9 Inventories 25.8 25.2 22.6 Total current assets 51.1 47.0 44.1 Property, plant and equipment 15.0 14.4 12.5 Other non-current assets 42.1 41.7 41.1 Total non-current assets 57.1 56.1 53.6 Trade and other current payables 16.5 16.1 14.6 Short term borrowings 4.3 2.5 7.1 Total current liabilities 20.8 18.6 21.7 Deferred consideration 1.8 1.7 1.7 Deferred tax 2.6 2.5 2.1 Net assets 83.0 80.3 72.2 Net cash/(net debt) (0.4) 1.3 (1.5) XP Power Interim Results 2015

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Cash Flo low Statement

£ Millions 2015 First half 2014 First half Operating Profit 12.7 12.3 Amortisation of development costs 0.9 0.7 Depreciation 0.9 0.7 Currency translation losses / (gains) (0.2) (0.5) Change in working capital (3.4) (0.5) Income tax paid (2.4) (2.3) Cash provided by operating activities 8.5 10.4 Capitalised development costs (1.4) (1.2) Interest paid (0.1) (0.1) Free cash flow 7.0 9.1 Opening net debt 1.3 (3.5) Acquisition (net of cash acquired) (0.6)

  • Purchase of property and equipment (net of disposals)

(1.3) (0.9) Dividends (6.9) (6.3) Effects of currency translation on cash / ESOP loans repaid 0.1 0.1 Closing (net debt) (0.4) (1.5) XP Power Interim Results 2015

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Acquisitions

 Acquired a 51% controlling interest in a niche South Korean power converter company for US$2 million in cash in May 2015  Reported historic revenues of $2.7 million and profit after tax of $0.5 million for 2014  Small team but service some blue chip Korean industrial and medical companies  As well as sales they have excellent technical engineering services capabilities to design and build value added power converter assemblies  Gives the Group a new capability in an important market for industrial and medical electronics  Additional acquisition opportunities are continuing to be pursued

XP Power Interim Results 2015

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2015 Outlook

 Economic outlook remains uncertain with volatility between geographies and sectors  Record order intake, a strong backlog and a strong US Dollar gives us continued confidence regarding 2015  While not immune to macro-economic impacts we would expect to grow revenues again in 2015  With a strong balance sheet we continue to look for additional suitable acquisitions to boost growth

XP Power Interim Results 2015