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XP Power Limited - 2007 Results
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XP Power
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Highlights
• Gross margin improves by 5.1% to 42.2% (2006: 37.1%) resulting
from an increased amount of XP Power intellectual property
• Own brand sales now represent 73% of revenues (2006:66%)
• Improved competitive position due to move to Asia
• Transition of the Company to a manufacturer enables penetration of
larger customers
• Dividend to be increased by 11% to 20p per share
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XP Power
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Income and Expenditure Statement 2007 2006
£ M % £ M %
Revenue 66.3 100% 78.7 100.0%
Gross margin 28.0 42.2% 29.2 37.1%
Development cost (gross) 2.7 4.1% 2.6 3.3%
Capitalised development (0.9) (1.4%) (0.7) (0.9)%
Development cost (net) 1.8 2.7% 1.9 2.4%
Operating expenses 16.8 25.3% 16.7 21.2%
Reorganisation costs 2.4 3.6% 1.0 1.3%
Amortisation 0.3 0.5% 0.3 0.4%
Operating profit 6.7 10.1% 9.3 11.8%
Profit before tax 5.0 7.5% 8.0 10.2%
Pre tax clean (1)
7.7
11.6%
9.3
11.8%
Adjusted diluted earnings per share (2) 31.4p 32.8p
(1) Pre tax clean = Profit before tax plus reorganisation costs and amortisation of goodwill
(2) Adjusted for reorganisation costs and amortisation (2006: restated by 4.2p for payments to minorities)
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XP Power
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Profit and Loss Metrics (% of revenue)
Note: Restructuring costs and amortisation of intangible assets associated with acquisitions added back
0.0%5.0%
10.0%15.0%20.0%
25.0%30.0%35.0%40.0%45.0%
Gross margin 33.5% 35.5% 35.7% 37.1% 42.2%
Operating expenses 27.3% 25.5% 23.8% 23.6% 28.0%
Operating profit 7.0% 10.5% 12.2% 13.5% 14.2%
2003 2004 2005 2006 2007
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XP Power
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Summary Balance Sheets £ Millions 2007 2006
Current assets
Cash 3.6 4.2
Trade and other receivables 13.2 14.7
Inventories 10.5 11.1
Total current assets 27.3 30
Non-current assets
Interests in associates 0.1 0.1
Property plant and equipment 3.4 3.2
Goodwill 29.6 30.1
Other intangible assets 3.2 2.6
ESOP loans to employees 3.0 2.6
Deferred tax 0.4 0.6
Total non-current assets 39.7 39.2
Current liabilities
Trade and other payables 8.0 9.6
Current income tax liabilities 2.4 2.4
Bank loans and overdrafts 2.7 7.6
Provisions for other liabilities 0.1 1.9
Total current liabilities 13.2 21.5
Borrowings 20.3 14.4
Deferred income tax liabilities 1.4 1.4
Provisions for other liabilities 2.3 2.5
Net assets 29.8 29.4
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Cash Flow Statements £ Millions 2007 2006
Cash provided by operating activities 6.9 6.1
Purchases of property plant and equipment (0.9) (1.2)
Capitalised development costs (1.0) (0.9)
Interest expense (1.7) (1.3)
Reorganisation costs 2.4 1.0
Free cash flow 5.7 3.7
Opening net debt (17.8) (15.1)
Free cash flow 5.7 3.7
Acquisitions/deferred consideration (1.4) (1.8)
Sale of treasury shares 0.4 0.4
Dividends (3.8) (3.2)
Reorganisation costs (2.4) (1.0)
Effects of currency translation on cash (0.1) (0.8)
Closing net debt (19.4) (17.8)
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0.0
10.0
20.0
30.0
40.0
Comms 16.0 16.0 17.0 19.0 13.0
Industrial 28.0 33.0 33.0 38.0 35.0
Medical 12.0 13.0 13.0 14.0 14.0
Defense 4.0 5.0 7.0 8.0 4.0
2003 2004 2005 2006 2007
Revenue by Industry (£ Millions)
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Gross Margin Trend and Product Mix
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
Gro
ss m
arg
in (
£ M
illi
on
s)
25.0
35.0
45.0
55.0
65.0
75.0
85.0
%
Gross margin (£ Millions) 25.4 20.4 19.9 23.7 24.8 29.2 28.0
Gross margin % 29.3 31.9 33.5 35.5 35.7 37.1 42.2
Own IP % 30 42 49 55 59 66 73
2001 2002 2003 2004 2005 2006 2007
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Asia update
• Corporate finance in place
• Supply chain management in place
• Design verification testing in place
• China factory 100% ownership
• New design centre in 2008
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Regional Payroll Comparisons
2006 Number of Employees
Total 432
Europe,
36%
N. America,
37% Asia, 27%
2007 Number of Employees
Total 516
Asia, 43%
Europe, 29%
N. America,
28%
2006 Payroll Costs
£13.1M
N. America,
54%
Asia, 4%
Europe,
42%
2007 Payroll Costs
£12.4M
Europe, 38%N. America,
55%
Asia, 7%
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Competitors
Mid Tier Players >$100m
• TDK Lambda* $325m
• Vicor $175m
• Cosel* $160m
• Emerson (Astec & Artesyn) $150m
• XP Power $133m
• Volgen* $110m
• MeanWell $100m
*Principal revenue is in Japan
Source: Management estimates
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Product Overview
DC-DC Converters
AC-DC Power Supplies
Configured Supplies
Added Value Solutions
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New Products – ECL Family
Launched July ‘07
• Lower power industrial AC-DC unit
• Ultra compact size
• Three mechanical formats
• Class II earth
• 10 and 15 Watt series currently available
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New Products – ECM100 multi
Launched Oct 2007
• Industrial & medical approvals
• Compact size - high power density
• Convection cooled
• Unique industry footprint, 2.5” x 4.5”
• Class II earth
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New Products – JCA Family
Launched Dec 2007
• Lower power (2 to 6 Watt) industrial DC-DC units
• Industry standard pin out - smaller package size
• Operating temperature -40oC to +100
oC
• High 1500 VDC isolation
• Ideal for Catalogue distribution
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Outlook
Macro economic situation uncertain
Focus on revenue growth by:
• Improving penetration of target accounts
• Geographic expansion in Asia
• More product introductions
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www.xppower.com