We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Register to chat with like-minded investors on our interactive forums.
| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Xp Power Limited | LSE:XPP | London | Ordinary Share | SG9999003735 | ORD 1P (DI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 16.00 | 1.46% | 1,112.00 | 1,106.00 | 1,112.00 | 1,112.00 | 1,072.00 | 1,072.00 | 3,588 | 10:19:18 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Motors And Generators | 316.4M | -9.2M | -0.3885 | -28.62 | 263.34M |
Hot Features
Premium
TIDMXPP
31 July 2017
XP Power Limited
("XP", "XP Power" or "the Group")
Interim Results for the six months ended 30 June 2017
XP, a world-leading developer and manufacturer of critical power control
components for the electronics industry, today announces its interim results
for the six-month period ended 30 June 2017.
Six months ended Six months
ended
30 June 2017 30 June 2016
(Unaudited) (Unaudited)
Highlights
Order intake GBP93.4m GBP61.6m
Revenue GBP80.2m GBP60.3m
Gross margin 46.9% 49.0%
Interim dividend per share (see Note 8) 31.0p 29.0p
Adjusted
Adjusted operating margin1 21.7% 21.9%
Adjusted profit before tax1 GBP17.3m GBP13.1m
Adjusted profit attributable to equity GBP13.0m GBP10.0m
holders1
Adjusted diluted earnings per share (see
Note 9) 1 67.3p 52.2p
Reported
Operating margin 18.1% 21.6%
Profit before tax GBP14.4m GBP12.9m
Profit attributable to equity holders GBP10.9m GBP9.8m
Diluted earnings per share 56.4p 51.1p
1 Adjusted for intangibles amortisation of GBP0.1 million (1H 2016: GBP0.1
million), GBP2.8 million (1H 2016: GBP0.1 million) of advisory and aborted
acquisitions costs and GBP0.8 million (1H 2016: Nil) tax deduction related to the
aborted acquisitions
· Strong first half performance, with encouraging momentum in orders and
revenues as new design wins enter production, supported by a recovery in
capital equipment markets and Sterling weakness
· Order intake increased by 52% to GBP93.4 million (+35% in constant
currency)
· Revenue increased by 33% to GBP80.2 million (+18% in constant currency)
· Gross margin decreased to 46.9% (1H 2016: 49.0%) due to exchange rate
effects and reallocation of certain manufacturing costs at EMCO in line with
Group policy
· Own-design XP product revenues increased 39% to a record GBP60.5 million
(1H 2016: GBP43.4 million), and now represent 75% of total revenues (1H 2016:
72%)
· Revenues for ultra-high efficiency "Green XP Power" products continue to
grow and are up by 32% to GBP18.8 million (1H 2016: GBP14.2 million) representing
23% of total revenue (1H 2016: 24%)
· Group to break ground on construction of a second manufacturing facility
in Vietnam in the second half of 2017 to expand capacity
· Dividend for the first half of 2017 of 31.0 pence per share (1H 2016:
29.0 pence per share) up 7%
James Peters, Chairman, commented:
"The Group has had a very strong first half. Reported order intake and
revenues for the first six months of 2017 all set new records, assisted by the
weakness of Sterling, a recovery in the capital equipment markets and,
significantly, new design wins entering their production phase.
Our balance sheet is strong and we are in an excellent position to make
selective acquisitions to further broaden our product offering and engineering
capabilities.
While we remain conscious of potential macroeconomic challenges, our strong
order book, combined with designs won in 2016 and prior years entering
production means that the Board now anticipates the Group's performance for the
full year will be comfortably ahead of its existing expectations."
Enquiries:
XP
Power
Duncan Penny, Chief Executive +44(0)7776 178 018
Jonathan Rhodes, Finance Director +44(0)7500 944 614
Citigate Dewe Rogerson +44(0)20 7638 9571
Kevin Smith/Jos Bieneman
Note to editors
XP Power is a leading international provider of essential power control
solutions. Power direct from the electricity grid is unsuitable for the
equipment which it supplies. XP Power designs and manufactures power
converters - components which convert power into the right form for our
individual customers' needs, allowing their electronic equipment to function.
XP Power supplies the healthcare, industrial and technology industries with
this mission critical equipment. Significant, long term investment into
research and development means that XP Power's products frequently offer
significantly improved functionality and efficiency.
For further information, please visit www.xppower.com
31 July 2017
XP Power Limited
("XP", "XP Power" or "the Group")
Interim Results for the six months ended 30 June 2017
INTERIM STATEMENT
Overview
The Group has had a very strong first half of 2017. Our reported order intake
and revenues for the first six months of 2017 all set new records, assisted by
the weakness of Sterling, a recovery in the capital equipment markets and,
significantly, new design wins entering their production phase. The resulting
solid earnings, cashflow generation and our confidence in the Group's outlook
support a further increase in the dividend.
We have continued to execute well against our strategy and, most encouragingly,
we are now seeing the positive effect from design wins on the newer product
introductions. The successful implementation of our strategy continues to drive
market share gains and we are encouraged both by the strength of our order book
and our continued new program wins. Our strong performance is enabling us to
invest part of the cash generated from this revenue growth to expand our
engineering capabilities and fuel our future growth.
Our strategy and value proposition
The Group has applied a consistent strategy of moving up the value chain and
our growth derives in part from the targeting of key account customers. Once
we are approved to supply these larger customers, we have continued to be
successful in gaining a larger share of their business. We also continue to
expand the breadth of our product portfolio, both organically and by
acquisition, in what remains a highly fragmented sector, therefore enabling us
to increase our addressable market.
Our value proposition to customers is to reduce their overall costs of design,
manufacture and operation. We achieve this by providing excellent sales
engineering support and producing new highly reliable products that are easy to
design into the customer's system, consume less power, take up less space and
reduce installation times.
Our vision is to be the first choice power solutions provider, delivering the
ultimate experience for our customers and as a place of work for our people.
Trading and Financial Review
XP Power supplies power control solutions to original equipment manufacturers
("OEMs") who supply the healthcare, industrial and technology markets with high
value, high reliability products. The increasing importance of energy
efficiency for environmental, reliability and economic reasons; the necessity
for ever smaller products; the accelerating rate of technological change; and
the increasing proliferation of electronic equipment, have established a strong
foundation for growth in demand for XP Power's products.
Order intake of GBP93.4 million (1H 2016: GBP61.6 million) was up 52% (35% in
constant currency) and set a new record for the Group. Compared to the same
period a year ago, Asia increased by 79%, Europe increased by 38% and North
America increased by 58%. The average US Dollar to Sterling exchange rate was
1.44 in the first half of 2016 compared with 1.26 in the first half of 2017
representing a 13% weakening of Sterling. This increased the reported order
intake in the first half by approximately GBP10.2 million, or 17%, compared to
the first half of 2016.
Order intake in the first half of 2017 surpassed revenues with a resultant
book-to-bill ratio of 1.16 (1H 2016: 1.02). Overall momentum has continued to
build in the business and we enter the second half of the current year with a
strong order book of GBP70.9 million (December 2016: GBP59.1 million).
Approximately half of the 35% order intake growth (in constant currency) came
from existing programs and half from programs which have entered production
within the last year or so.
Reported revenues grew 33% to GBP80.2 million in the six months to 30 June 2017
compared to GBP60.3 million in the same period a year ago. When adjusting to
constant currency the underlying growth was 18%.
Revenues in North America were GBP43.7 million (1H 2016: GBP30.8 million), up 42%
compared to the same period a year ago. Revenues in Europe were GBP29.4 million
(1H 2016: GBP24.6 million), up 20% on the same period a year ago. Revenues in
Asia were GBP7.1 million (1H 2016: GBP4.9 million), up 45% compared with the same
period a year ago.
The healthcare, industrial and technology sectors all delivered increased
revenue in all three of our regions (Asia, Europe and North America) suggesting
a general market recovery in the capital equipment markets we serve. On a
sector basis, revenues from healthcare grew by 36% to GBP23.8 million (1H 2016: GBP
17.5 million). Industrial revenues increased by 19% to GBP34.3 million (1H 2016:
GBP28.8 million). The standout sector was technology where revenues grew by 58%
year on year to GBP22.1 million (1H 2016: GBP14.0 million) driven by the
semiconductor manufacturing equipment makers who are exhibiting strong and
sustained growth. In terms of overall revenue for the first half of 2017,
industrial represented 43% (1H 2016: 48%), technology represented 27% (1H 2016:
23%) and healthcare represented 30% (1H 2016: 29%). Our customer base remains highly diversified with the largest customer accounting for only 10% of revenue, spread over 120 different programs/part numbers. Margins Gross margin in the first half of 2017 was 46.9% (1H 2016: 49.0%). A number of factors led to a reduction compared to the first half of 2016. Proportionately more of our cost of sales is denominated in US Dollars compared to our revenues. As Sterling weakens, our reported revenues increase due to the translation benefit but so do our cost of sales although at a greater rate. The result is higher gross margins in absolute terms but the gross margin percentage declines. The average exchange rate for converting US Dollars into Sterling in the period was 1.26 in the first half of 2017 (1H 2016: 1.44); a weakening of 13%. We also have revenues in Euro with costs in US Dollars. The average exchange rate for converting Euro into Sterling in the period was 1.17 in the first half of 2017 (1H 2016: 1.30); a 10% weakening of Sterling. We estimate that the effect of a weaker Sterling reduced the gross margin percentage by 110 basis points. In addition, approximately GBP0.8 million of costs were charged to cost of sales in the first half of 2017 whereas the corresponding costs in 2016 were charged to operating expenses. This was a result of the Group's continuous assessment and integration of EMCO since its acquisition in November 2015 which had the effect of reducing the gross margin percentage by approximately 100 basis points. Operating expenses in the first half were GBP20.2 million (1H 2016: GBP16.3 million) after deducting GBP0.1 million of intangibles amortisation (1H 2016: GBP 0.1 million) and GBP2.8 million of advisory and aborted acquisition costs (1H 2016: GBP0.1 million). Again, there is a significant translation effect from the weakening of Sterling versus the US Dollar following the United Kingdom's decision to leave the European Union. We estimate that this translation effect increased reported operating expenses by approximately GBP2.0 million. In addition, we had the full period cost impact of the additional sales and engineering resources added in 2016, plus those further resources added in 2017 to support the growth in the business. We are engaging in ever more complicated programs with many of our key customers. These customers value XP Power's engineering services and power conversion expertise to get them to market more quickly and solve their power-related challenges. Systems are becoming more complex and there is more demand for power conversion solutions that communicate with both the customers' applications and with the outside world as the concept of an Internet of Things promulgates. This area of the market allows us to add more value to our customers' engineering teams and is less crowded with low cost Asian competition. As such, we are reinvesting part of the cash returns generated from our growth to fund further expansion of our engineering capabilities. Gross product development spend was GBP5.5 million (1H 2016: GBP3.8 million), GBP2.0 million of which was capitalised (1H 2016: GBP2.0 million), and GBP1.2 million amortised (1H 2016: GBP1.0 million). Notwithstanding our investment in additional sales, customer support and engineering resources to support future growth, we continue to achieve excellent adjusted operating margins of 21.7% (1H 2016: 21.9%) highlighting the strength of our business model. Taxation The tax charge for the period was GBP3.2 million (1H 2016: GBP2.9 million) which represents an effective tax rate of 22.2% (1H 2016: 22.5%). We have used an effective tax rate of 23% to compute the adjusted earnings per share. We currently expect our future tax rate to be in the range of 22% to 24% depending on the geographic distribution of our future profits. Financial Position Class-leading gross and operating margins and modest capital requirements have resulted in continued strong cash flow. After payment of the 2016 final dividend our net cash was GBP8.0 million at 30 June 2017. This compares with net cash of GBP3.7 million at 31 December 2016 and net debt of GBP6.0 million at 30 June 2016. Product Development New products are fundamental to our revenue growth. The broader our product offering, the more opportunity we have to increase revenues by expanding our available market. As expected, the significant number of new product families introduced over the last three years has yet to have a material impact on our revenues, given the time lag from launch to production. This is due to the lengthy design-in cycles required by customers to qualify the power converter in their equipment, as well as by the requirement to gain the necessary safety agency approvals. XP launched 14 new product families in the first half of 2017 (1H 2016: 27). The relatively high number of new product introductions in 2016 was aided by the introduction of a new labelled product supplier to increase our offering of DC-DC converters. We continue to lead our industry on the introduction of high efficiency, "green" products, with 12 of those new products released in the first half of 2017 being of high efficiency design and/or low stand-by power. Revenue from own design products was GBP60.5 million (1H 2016: GBP43.4 million) up 39% from the same period in 2016 and now represents 75% of total revenue (1H 2016: 72%). With larger customers continuing to reduce the number of vendors they deal with, XP Power's broad product offering, excellent global engineering support, in-house manufacturing capability and industry-leading environmental credentials leave the Group well-placed to secure further preferred supplier agreements. Manufacturing Progress XP Power's move into manufacturing in 2006 has been instrumental in enabling the Group to win approved and preferred supplier status with new Blue Chip customers who value suppliers that have complete control over their supply chain and product manufacture to ensure the highest levels of quality and agility. To supplement our original Chinese manufacturing facility in Kunshan near Shanghai, our Vietnamese manufacturing facility, located in Ho Chi Minh City, began production of its first magnetic components in March 2012 and is now producing the majority of the Group's requirement for magnetics. Producing our own magnetic components in Vietnam is helping us mitigate the continued rise of Chinese labour costs and the appreciation of the Chinese Renminbi. In addition, extending vertical integration to the critical magnetic components used in power converters is seen as an additional value proposition by many of our customers, notably in the healthcare and high reliability industrial sectors. In the fourth quarter of 2014 we began production of the first complete power converters in Vietnam. We now have 259 (1H 2016: 113) part numbers approved for production in Vietnam with more in the pipeline. XP manufactured 693,000 (1H 2016: 550,000) power converters in total during the first half of 2017 and 416,000 (1H 2016: 140,000) of these were produced in Vietnam. We expect the proportion of power converters produced in Vietnam to increase further as we transfer more products to that facility. Kunshan will focus on the higher power, higher complexity products. We intend to break ground and commence construction of a second factory on our existing site in Vietnam in the second half of this year, with production scheduled to come on stream in 2019. We estimate that our existing Asian manufacturing facilities have the capacity to produce approximately US$170 million of end revenue of our own manufactured products. The second facility in Vietnam will add an additional capability of approximately US$130 million of revenue. We estimate the cost of the Vietnam II building and the initial equipment set to be approximately US$6.5 million, of which US$1.9 million will be incurred in the second half of 2017 and the remainder in 2018. Dividend The Company makes quarterly dividend payments. Our strong cash flow and confidence in the Group's prospects have enabled us to increase total dividends for the first half by 7% to 31.0 pence per share (1H 2016: 29.0 pence per share). The first quarter dividend payment of 15 pence per share was made on 10 July 2017. The second quarter dividend of 16 pence per share will be paid on 12 October 2017 to shareholders on the register at 15 September 2017. The compound average growth rate in dividends over the last 10 years has been 14%. Environmental Impact and "Green XP Power" products XP Power has placed improved environmental performance at the heart of its operations both in terms of minimising the impact its activities have on the environment and, as importantly, in its product development strategy. We have developed a class-leading portfolio of green products with efficiencies up to 95% and many of these products also have low stand-by power (a feature to reduce the power consumed while the end equipment is not operational but in stand-by mode). Revenues for these ultra-high efficiency "Green XP Power" products continue to grow and are up by 32% to GBP18.8 million (1H 2016: GBP14.2 million) representing 23% of total revenue (1H 2016: 24%). Brexit The continuing weakness of Sterling versus the US Dollar since the United Kingdom voted to leave the European Union in June 2016 has a material effect on the presentation of our financial results. Approximately 81% of our revenues are denominated in US Dollars and the translation of these revenues into Sterling for reporting purposes has had a beneficial effect. However, the majority of our cost of sales and a large proportion of our operating expenses are also denominated in US Dollars for which the translation into Sterling has a negative impact, thereby significantly dampening any effect on the operating margin.
In terms of the broader economic impacts of Brexit on our business, we do not
consider that they will be material. Our products are made in Asia and are
already imported into Europe where we have warehouses in bothGermany and the
United Kingdom. In the event that the United Kingdom leaves the single market,
we would simply ship more of our product destined for the EU directly into
Germany or another appropriate location.
Acquisitions
As previously announced, the Group is actively seeking acquisitions to broaden
its product offering and engineering capabilities, and further underpin its
future growth. Advisory and abortive acquisitions costs in the period were GBP2.8
million (1H 2016: GBP0.1 million).
We continue to review suitable acquisition opportunities.
Outlook
We have made a very strong start to 2017 and the momentum experienced in the
second half of 2016 has accelerated in the first half of the current year. We
had a strong book-to-bill ratio in the first half of 2017 of 1.16 and a
customer order book of GBP70.9 million. We are confident that our new product
releases and design wins over the last few years are supporting our revenue
growth. While we remain conscious of potential macroeconomic challenges, the
combination of these factors means that the Board now anticipates the Group's
performance for the full year will be comfortably ahead of its existing
expectations.
The Group has a strong balance sheet which places us in an excellent position
to make selective acquisitions to further broaden our product offering and
engineering capabilities. We believe we are now well along the path to
achieving our vision of becoming the first choice power solutions provider to
our existing and target customer base.
Independent review report to XP Power Limited
Report on review of interim financial information
Introduction
We have reviewed the accompanying consolidated condensed financial information
of XP Power Limited ("the Company") and its subsidiaries ("the Group") set out
on pages 9 to 18, which comprise the consolidated condensed balance sheet of
the Group as at 30 June 2017, the consolidated condensed statements of
comprehensive income, changes in equity and cash flows for the 6-month period
then ended and the related notes. Management is responsible for the preparation
and presentation of this consolidated condensed interim financial information
in accordance with International Accounting Standard 34 Interim Financial
Reporting as adopted by the European Union and the Disclosure and Transparency
Rules of the United Kingdom's Financial Conduct Authority. Our responsibility
is to express a conclusion on this interim financial information based on our
review.
Scope of Review
We conducted our review in accordance with International Standard on Review
Engagements 2410, Review of Interim Financial Information Performed by the
Independent Auditor of the Entity. A review of interim financial information
consists of making inquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review procedures.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing and consequently does not enable us to
obtain assurance that we would become aware of all significant matters that
might be identified in an audit. Accordingly, we do not express an audit
opinion.
We have read the other information contained in the half-yearly financial
report, which comprise the "Interim Results" set out on pages 1 to 2, "Interim
Statement" set out on pages 3 to 7 and "Note 14 - Risks and uncertainties" set
out on pages 19 to 20, and considered whether it contains any apparent
misstatements or material inconsistencies with the information in the financial
information.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the accompanying consolidated condensed interim financial
information is not prepared, in all material respects, in accordance with
International Accounting Standard 34 Interim Financial Reporting as adopted by
the European Union and the Disclosure and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
PricewaterhouseCoopers LLP
Public Accountants and Chartered Accountants
Singapore,
XP Power Limited
Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2017
GBP Millions Note Six months ended Six months ended
30 June 2017 30 June 2016
(Unaudited)
(Unaudited)
Revenue 5 80.2 60.3
Cost of sales 6 (42.6) (30.8)
Gross profit 37.6 29.5
Operating expenses 6 (23.1) (16.5)
Operating profit 14.5
13.0
Finance cost 6 (0.1) (0.1)
Profit before income tax 14.4 12.9
Income tax expense 7 (3.2) (2.9)
11.2
Profit after income tax 10.0
Other comprehensive income:
Cash flow hedges (0.6) -
Exchange differences on translation (0.9)
of foreign operations 6.8
Other comprehensive income, net of (1.5) 6.8
tax
Total comprehensive income 9.7 16.8
Profit attributable to:
- Equity holders of the Company 10.9 9.8
- Non-controlling interests 0.3 0.2
11.2 10.0
Total comprehensive income
attributable to:
- Equity holders of the Company 9.4 16.6
- Non-controlling interests 0.3 0.2
9.7 16.8
Earnings per share attributable to Pence per Pence per
equity holders of the Company Share Share
Basic 9 57.2 51.6
Diluted 9 56.4 51.1
Diluted adjusted 9 67.3 52.2
XP Power Limited
Consolidated Balance Sheet
At 30 June 2017
GBP Millions Note At 30 At 31 At 30
June 2017 December June 2016
(Unaudited) 2016 (Unaudited)
ASSETS
Current assets
Cash and cash equivalents 11 11.3 9.2 5.8
Inventories 33.0 32.2 33.6
Trade receivables 23.2 21.5 21.3
Other current assets 2.3 2.4 2.0
Derivative financial instruments - 0.4 -
Total current assets 69.8 65.7 62.7
Non-current assets
Goodwill 37.5 37.7 38.6
Intangible assets 10 15.9 15.3 13.3
Property, plant and equipment 19.5 19.1 17.9
Deferred income tax assets 0.4 0.4 0.4
ESOP loans to employees 0.4 0.7 0.7
Total non-current assets 73.7 73.2 70.9
Total assets 143.5 138.9 133.6
LIABILITIES
Current liabilities
Current income tax liabilities 3.1 3.3 2.3
Trade and other payables 22.2 16.1 14.9
Provision for deferred contingent - 0.5 -
consideration
Borrowings 12 3.3 5.5 9.2
Derivative financial instruments 0.1 0.4 0.3
Total current liabilities 28.7 25.8 26.7
Non-current liabilities
Provision for deferred contingent 1.5 1.5 1.5
consideration
Borrowings 12 - - 2.6
Deferred income tax liabilities 4.6 4.7 4.3
Total non-current liabilities 6.1 6.2 8.4
Total liabilities 34.8 32.0 35.1
NET ASSETS 108.7 106.9 98.5
EQUITY
Equity attributable to equity
holders of the Company
Share capital 27.2 27.2 27.2
Merger reserve 0.2 0.2 0.2
Treasury shares 0.1 (0.5) (0.8)
Hedging reserve (0.3) 0.3 0.1
Translation reserve 2.6 3.5 1.5
Retained earnings 78.0 75.4 69.4
107.8 106.1 97.6
Non-controlling interests 0.9 0.8 0.9
TOTAL EQUITY 108.7 106.9 98.5
XP Power Limited
Consolidated Statement of Changes in Equity
For the six months ended 30 June 2017 (Unaudited)
GBP Millions
Attributable to equity holders of the Company
Share Treasury Merger Hedging Translation Retained Total Non-controlling Total
capital shares reserve reserve reserve earnings interests Equity
27.2 (1.0) 0.2 0.1 (5.3) 67.1 88.3 0.8 89.1
Balance at 1
January 2016
Sale of treasury - 0.1 - - - (0.1) - - -
shares
Purchase of - - - - - - - - -
treasury shares
Employee share - 0.1 - - - - 0.1 - 0.1
option plan
expenses
Dividends paid - - - - - (7.4) (7.4) (0.1) (7.5)
Total - - - - 6.8 9.8 16.6 0.2 16.8
comprehensive
income for the
period
Balance at 30 27.2 (0.8) 0.2 0.1 1.5 69.4 97.6 0.9 98.5
June 2016
27.2 (0.5) 0.2 0.3 3.5 75.4 106.1 0.8 106.9
Balance at 1
January 2017
Sale of treasury - 0.7 - - - (0.3) 0.4 - 0.4
shares
Purchase of - (0.2) - - - - (0.2) - (0.2)
treasury shares
Employee share - 0.1 - - - - 0.1 - 0.1
option plan
expenses
Dividends paid - - - - - (8.0) (8.0) (0.2) (8.2)
Total - - - (0.6) (0.9) 10.9 9.4 0.3 9.7
comprehensive
income for the
period
Balance at 30 27.2 0.1 0.2 (0.3) 2.6 78.0 107.8 0.9 108.7
June 2017
XP Power Limited
Consolidated Statement of Cash Flows
For the six months ended 30 June 2017
GBP Millions Note Six months ended Six months ended
30 June 2017 30 June 2016
(Unaudited) (Unaudited)
Cash flows from operating activities
Total profit 11.1 10.0
Adjustments for
- Income tax expense 3.2 2.9
- Amortisation and depreciation 2.7 2.2
- Finance charge 0.1 0.1
- ESOP expenses 0.1 0.1
- Fair value (gain)/loss on derivative (0.6) 0.3
financial instruments
- Unrealised currency translation (0.5) 3.4
(gain)/loss
Change in the working capital
- Inventories (0.8) (4.9)
- Trade and other receivables (1.6) (3.4)
- Trade and other payables 6.1 0.3
Cash generated from operations 19.8 11.0
- Income tax paid (3.4) (1.8)
Net cash provided by operating activities 16.4 9.2
Cash flows from investing activities
Purchases and construction of property, (2.0) (1.2)
plant and equipment
Capitalisation of research and 6 (2.0) (2.0)
development expenditure
Repayment of ESOP loan 0.3 -
Payment of deferred consideration (0.5) -
Net cash used in investing activities (4.2) (3.2)
Cash flows from financing activities
Repayment of borrowings (2.7) (1.2)
Sale of treasury shares by ESOP 0.7 0.1
Purchase of treasury shares by ESOP (0.2) -
Interest paid - (0.1)
Dividends paid to equity holders of the (8.0) (7.4)
Company
Dividends paid to non-controlling (0.2) (0.1)
interests
Net cash used in financing activities (10.4) (8.7)
Net increase/(decrease) in cash and cash 1.8 (2.7)
equivalents
Cash and cash equivalents at the start of 9.2 4.3
the period
Effects of currency translation on cash (0.3) 0.2
and cash equivalents
Cash and cash equivalents at the end of 11 10.7 1.8
the period
GBP Millions Note Six months ended Six months ended
30 June 2017 30 June 2016
(Unaudited) (Unaudited)
Reconciliation of changes in cash and
cash equivalents to movement in net cash/
(debt)
Net increase/(decrease) in cash and cash 1.8 (2.7)
equivalents
Repayment of borrowings 2.7 1.2
Effects of currency translation (0.2) (0.8)
Movement in net cash/(debt) 4.3 (2.3)
Net cash/(debt) at the start of the 3.7 (3.7)
period
Net cash/(debt) at the end of the period 8.0 (6.0)
XP Power Limited
Notes to the Interim Results for the six months ended 30 June 2017
1. General information
XP Power Limited (the "Company") is listed on the London Stock Exchange
and incorporated and domiciled in Singapore. The address of its registered
office is 401 Commonwealth Drive, Lobby B #02-02, Haw Par Technocentre,
Singapore 149598.
The nature of the Group's operations and its principal activities is to
provide power supply solutions to the electronics industry.
These condensed consolidated interim financial statements are presented
in Pounds Sterling (GBP).
2. Basis of preparation
The condensed consolidated interim financial statements for the period
ended 30 June 2017 have been prepared in accordance with the Disclosure and
Transparency Rules of the United Kingdom's Financial Conduct Authority and with
International Accounting Standards ("IAS") 34 Interim Financial Reporting as
adopted by the European Union.
The condensed consolidated interim financial statements should be read
in conjunction with the annual financial statements for the year ended 31
December 2016 which have been prepared in accordance with International
Financial Reporting Standards ("IFRS") as adopted by the European Union.
3. Going Concern
The directors, after making enquiries, are of the view, as at the time of
approving the financial statements, that there is a reasonable expectation that
the Group will have adequate resources to continue operating for the
foreseeable future and therefore the going concern basis has been adopted in
preparing these financial statements.
4. Accounting policies
The condensed consolidated interim financial statements have been
prepared under the historical cost convention except for the fair value of
derivatives in accordance with IFRS 9 Financial Instruments.
The same accounting policies, presentation and methods of computation
are followed in these condensed consolidated interim financial statements as
were applied in the presentation of the Group's financial statements for the
year ended 31 December 2016.
5. Segmented analysis
The Group operates substantially in one class of business, the provision
of power control solutions to the electronics industry. Analysis of total Group
operating profit, total assets, total revenue and total Group profit before
taxation by geographical region is set out below.
GBP Millions Six months ended Six months ended
30 June 2017 30 June 2016
(Unaudited) (Unaudited)
Revenue
Europe 29.4 24.6
North America 43.7 30.8
Asia 7.1 4.9
Total revenue 80.2 60.3
5. Segmented analysis (continued)
GBP Millions Six months ended Six months ended
30 June 2017 30 June 2016
(Unaudited) (Unaudited)
Total assets
Europe 29.0 26.7
North America 58.0 63.5
Asia 56.1 43.0
Segment assets 143.1 133.2
Unallocated deferred tax 0.4 0.4
Total assets 143.5 133.6
Reconciliation of operating profit by segment to profit after income
tax:
GBP Millions Six months ended Six months ended
30 June 2017 30 June 2016
(Unaudited) (Unaudited)
Europe 7.7 6.0
North America 14.5 10.4
Asia 1.1 1.1
Operating profit by segment 23.3 17.5
Research and development cost (4.7) (2.8)
Finance charge (0.1) (0.1)
Corporate recovery from operating (4.1) (1.7)
segment
Profit before income tax 14.4 12.9
Income tax expense (3.2) (2.9)
Profit after income tax 11.2 10.0
The Group operates in the following regions and countries:
GBP Millions Six months ended Six months ended
30 June 2017 30 June 2016
(Unaudited) (Unaudited)
Revenue
North America 43.7 30.8
United Kingdom 15.0 13.0
Singapore 6.0 4.4
Germany 6.6 5.5
Switzerland 1.5 2.1
Other countries 7.4 4.5
Total revenue 80.2 60.3
6. Expenses by nature
GBP Millions Six months ended Six months ended
30 June 2017 30 June 2016
(Unaudited) (Unaudited)
Profit for the period is after charging/
(crediting):
Amortisation of intangible assets 1.4 1.1
Depreciation of property, plant and 1.3 1.1
equipment
Foreign exchange (gain)/loss (0.4) 0.2
Loss/(gain) on foreign exchange forwards 0.2 (0.2)
Purchases of inventories 36.9 19.3
Changes in inventories 0.8 4.9
Fee payable to the Group's auditor for 0.2 0.2
audit of the Group's accounts
Fee payable to other audit firms for audit - -
related services
Tax fees payable to other firms for - -
services provided to the Group
Rent/lease expense 0.8 0.7
Finance charge 0.1 0.1
Other charges 24.5 20.0
Total 65.8 47.4
Included in the above is net research and development expenditure as follows:
GBP Millions Six months ended Six months ended
30 June 2017 30 June 2016
(Unaudited) (Unaudited)
Gross research and development expenditure 5.5 3.8
Capitalisation of research and development (2.0) (2.0)
expenditure
Amortisation of development expenditure 1.2 1.0
capitalised
Net research and development expenditure 4.7 2.8
7. Taxation
Income tax expense is recognised based on management's best estimate of
the weighted average annual income tax expected for the full financial year.
The estimated effective annual tax rate used for 2017 is 22.2% (2016: 22.5%).
GBP Millions Six months ended Six months ended
30 June 2017 30 June 2016
(Unaudited) (Unaudited)
Singapore corporation tax 2.2 1.3
Overseas corporation tax 1.0 1.6
Total taxation 3.2 2.9
8. Dividends
Amounts recognised as distributions to equity holders of the Company in
the period:
Six months ended Six months ended
30 June 2017 30 June 2016
(Unaudited) (Unaudited)
Pence per GBP Millions Pence per GBP Millions
share share
Prior year 3rd quarter 16.0 3.0 15.0 2.8
dividend paid
Prior year final dividend 26.0 5.0 24.0 4.6
paid
Total 42.0 8.0 39.0 7.4
The dividends paid recognised in the interim financial statements relate to the
third quarter and final dividends for 2016.
The first quarterly dividend of 15 pence per share (2016: 14 pence) was paid on
10 July 2017. A second quarterly dividend of 16 pence per share (2016: 15
pence) will be paid on 12 October 2017 to shareholders on the register at 15
September 2017.
9. Earnings per share
Earnings per share attributable to equity holders of the company arise
from continuing operations as follows:
GBP Millions Six months ended Six months ended
30 June 2017 30 June 2016
(Unaudited) (Unaudited)
Earnings
Earnings for the purposes of basic and 10.9 9.8
diluted earnings per share (profit for the
period attributable to equity shareholders
of the company)
Amortisation of intangibles associated 0.1 0.1
with acquisitions
Cost associated with abortive acquisitions 2.8 0.1
Tax deduction associated with abortive (0.8) -
acquisitions
Earnings for adjusted earnings per share 13.0 10.0
Number of shares
Weighted average number of shares for the 19,052 19,011
purposes of basic earnings per share
(thousands)
Effect of potentially dilutive share 274 182
options (thousands)
Weighted average number of shares for the 19,326 19,193
purposes of dilutive earnings per share
(thousands)
Earnings per share from operations
Basic 57.2p 51.6p
Diluted 56.4p 51.1p
Adjusted 67.3p 52.2p
The effective tax rate applied to derive the diluted adjusted earnings
per share is 23%. This is the rate we currently expect for the year ended 31
December 2017 if there have not been any abortive acquisition costs.
10. Intangible assets
Intangible assets comprises trademarks, brand and technology, customer
contracts, non-contractual customer relationships and development expenditure
capitalised when it meets the criteria laid out in IAS 38 Intangible Assets.
11. Cash and cash equivalents
For the purpose of presenting the consolidated cash flow statement, the
consolidated cash and cash equivalents comprise the following:
GBP Millions Six months ended Six months ended
30 June 2017 30 June 2016
(Unaudited) (Unaudited)
Cash and bank balances 11.3 5.8
Less: Bank overdrafts (0.6) (4.0)
Cash and cash equivalents per 10.7 1.8
consolidated cash flow statement
Reconciliation to free cash flow:
Net cash provided by operating 16.4 9.2
activities
Purchases and construction of (2.0) (1.2)
property, plant and equipment
Capitalisation of research and (2.0) (2.0)
development expenditure
Interest paid - (0.1)
Free cash flow 12.4 5.9
12. Borrowings, bank loans and overdraft
GBP Millions 30 June 2017 31 December 2016 30 June 2016
(Unaudited) (Unaudited)
Non-current - - 2.6
Current 3.3 5.5 9.2
Total 3.3 5.5 11.8
13. Currency Impact
We report in Pounds Sterling (GBP) but have significant revenues and costs as
well as assets and liabilities that are denominated in United States Dollars
(USD). The table below sets out the prevailing exchange rates in the periods
reported.
First half First half % 30 June 31 December 30 June
2017 2016 Change 2017 2016 2016
Average Average Period end Period end Period
end
USD/GBP 1.26 1.44 -12.5% 1.27 1.24 1.33
EUR/GBP 1.17 1.30 -10.0% 1.14 1.19 1.20
Approximately 81% of the Group's revenues are invoiced in USD so the change in
the USD to GBP exchange rate has a significant effect on reported revenue in
GBP. However, as the majority of our cost of goods sold and operating expenses
are also denominated in USD, the change in profit before tax with the USD to
GBP exchange rate is relatively minor. The impact of changes in the key
exchange rates from the first half of 2016 to the first half of 2017 are
summarised as follows:
GBP Millions USD EUR
Impact on revenues 8.1 0.7
Impact on profit before tax 1.5 0.1
Impact on net debt 0.3 -
14. Risks and uncertainties
Like many other international businesses the Group is exposed to a number of
risks and uncertainties which might have a material effect on its financial
performance. These include:
An event that causes a disruption to one of our manufacturing facilities
An event that results in the temporary or permanent loss of a manufacturing
facility would be a serious issue. As the Group manufactures 75% of revenues,
this would undoubtedly cause at least a short term loss of revenues and profits
and disruption to our customers and therefore damage to reputation.
Product recall
A product recall due to a quality or safety issue would have serious
repercussions to the business in terms of potential cost and reputational
damage as a supplier to critical systems.
Shortage, non-availability or technical fault with regard to key electronic
components
The Group is reliant on the supply, availability and reliability of key
electronic components. If there is a shortage, non-availability or technical
fault with any of the key electronic components this may impair the Group's
ability to operate its business efficiently and lead to potential disruption to
its operations and revenues.
Competition from new market entrants and new technologies
The power supply market is diverse and competitive. The Directors believe that
the development of new technologies could give rise to significant new
competition to the Group, which may have a material effect on its business. At
the lower end of the Group's target market, in terms of both power range and
programme size, the barriers to entry are lower and there is, therefore, a risk
that competition could quickly increase particularly from emerging low cost
manufacturers in Asia.
Fluctuations of revenues, expenses and operating results due to an economic
shock
The revenues, expenses and operating results of the Group could vary
significantly from period to period as a result of a variety of factors, some
of which are outside its control. These factors include general economic
conditions; adverse movements in interest rates; conditions specific to the
market; seasonal trends in revenues, capital expenditure and other costs and
the introduction of new products or services by the Group, or by their
competitors. In response to a changing competitive environment, the Group may
elect from time to time to make certain pricing, service, marketing decisions
or acquisitions that could have a short term material adverse effect on the
Group's revenues, results of operations and financial condition.
Dependence on of key customers/suppliers
The Group is dependent on retaining its key customers and suppliers. Should the
Group lose a number of its key customers or key suppliers, this could have a
material impact on the Group's financial condition and results of operations.
However, for the six months ended 30 June 2017, no one customer accounted for
more than 10% of revenue.
Cyber security / Information systems failure
The Group is reliant on information technology in multiple aspects of the
business from communications to data storage. Assets accessible online are
potentially vulnerable to theft and customer channels are vulnerable to
disruption. Any failure or downtime of these systems or any data theft could
have a significant adverse impact on the Group's reputation or on the results
of operations.
Risks relating to regulation, compliance and taxation
The Group operates in multiple jurisdictions with applicable trade and tax
regulations that vary. Failing to comply with local regulations or a change in
legislation could impact the profits of the Group. In addition, the effective
tax rate of the Group is affected by where its profits fall geographically. The
Group effective tax rate could therefore fluctuate over time and have an impact
on earnings and potentially its share price.
14. Risks and uncertainties (continued)
Strategic risk associated with valuing or integrating new acquisitions
The Group may elect from time to time to make strategic acquisitions. A degree
of uncertainty exists in valuation and in particular in evaluating potential
synergies. Post-acquisition risks arise in the form of change of control and
integration challenges. Any of these could have an effect on the Group's
revenues, results of operations and financial condition.
Loss of key personnel or failure to attract new personnel
The future success of the Group is substantially dependent on the continued
services and continuing contributions of its Directors, senior management and
other key personnel. The loss of the services of key employees could have a
material adverse effect on own business.
Exposure to exchange rate fluctuations
The Group deals in many currencies for both its purchases and sales including
US Dollars, Euros and its reporting currency Pounds Sterling. In particular,
North America represents an important geographic market for the Group where
virtually all the revenues are denominated in US Dollars. The Group also
sources components in US Dollars and the Chinese Renminbi. The Group therefore
has an exposure to foreign currency fluctuations. This could lead to material
adverse movements in reported earnings.
15. Directors' responsibility statement
The interim results were approved by the Board of Directors on 31 July
2017.
The Directors confirm that to the best of their knowledge that:
· The unaudited interim results have been prepared in accordance with IAS
34 Interim Financial Reporting as adopted by the European Union; and
· The interim results include a fair view of the information required by
DTR 4.2.7 (indication of important events during the first six months and
description of principal risks and uncertainties for the remaining six months
of the year) and DTR 4.2.8 (disclosure of related party transactions and
changes therein).
The Directors of XP Power Limited are as follows:
James Peters Non-Executive Chairman
Duncan Penny Chief Executive
Mike Laver President, World Wide Sales and
Marketing
Jonathan Rhodes Finance Director
Andy Sng Executive Vice President, Asia
Terry Twigger Senior Non-Executive Director
Peter Bucher Non-Executive Director
Polly Williams Non-Executive Director
31 July 2017
END
(END) Dow Jones Newswires
July 31, 2017 02:00 ET (06:00 GMT)
1 Year Xp Power Chart |
1 Month Xp Power Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
