REG-XP Power Ltd: Annual Financial Report <Origin Href="QuoteRef">XPP.L</Origin> - Part 1
22/02/2016 07:10
22 February 2016
XP Power Limited
("XP Power" or "the Group")
Annual Results for the year ended 31 December 2015
XP Power, one of the world's leading developers and manufacturers of critical
power control components for the electronics industry, today announces its
annual results for the year ended 31 December 2015.
Highlights
Year ended Year ended
31 December 31 December Change
2015 2014
Order intake £110.5m £105.1m +5%
Revenue £109.7m £101.1m +9%
Gross margin 49.8% 49.6% +20bps
Adjusted profit before tax1 £25.7m £24.3m +6%
Adjusted profit after tax and minority £20.2m £19.5m +4%
interest1
Adjusted diluted earnings per share1 104.3p 101.1p +3%
Operating cash flow £21.0m £21.8m -4%
Net (debt)/cash (£3.7)m £1.3m
Final dividend per share 24.0p 22.0p +9%
Total dividend per share 66.0p 61.0p +8%
1 Adjusted for one-off costs associated with acquisitions of £0.3 million
(2014: nil)
* Revenues increased by 9% (4% in constant currency) to £109.7 million (2014:
£101.1 million) setting a new record for the Group
* Revenues from XP Power's own-designed products increased by 11% (7% in
constant currency) to £74.6 million (2014: £67.2 million) to reach a record
68% of revenue
* Sales of high efficiency "green" products increased by 27% to £23.6 million
(2014: £18.6 million) representing 22% of revenues
* Record order intake of £110.5 million (2014: £105.1 million) - an increase
of 5% (1% in constant currency)
* Power converter manufacturing at Vietnam facility now at break-even
following ramp-up in production volumes
* Acquisition of EMCO enables the Group to enter the high voltage DC-DC
module market - a significant growth opportunity, with multiple customer
synergies already identified
* Total dividend for the year increased by 8% to 66 pence per share (2014: 61
pence per share)
James Peters, Chairman, commented:
"I am pleased to be reporting on another successful year. 2015 was a record
year for order intake, revenues and the mix of own-designed products, bolstered
by the growth in our high efficiency 'green' product offering. In addition,
our Vietnam manufacturing facility is now at break-even as production volumes
of power converters continues to build.
"Having targeted suitable acquisitions for some time, we are delighted to
welcome EMCO - a successful high voltage DC-DC module manufacturer - to the
Group. EMCO operates in an attractive, high value niche market and, with
significant customer synergies already identified, will add to our growth this
year. We are confident the business will have a bright future as part of XP
Power and are excited about our move into the high voltage arena.
"While early 2016 has seen economic headwinds strengthen in some of our
markets, we consider that the Group remains well positioned, with good momentum
established as our design pipeline continues to grow and a healthy order book.
We are encouraged by the progress made by the Group during 2015 and look
forward to another successful year in 2016."
Enquiries:
XP Power
Duncan Penny, Chief Executive +44 (0)7776 178018
Jonathan Rhodes, Finance Director +44 (0)7500 944614
Citigate Dewe Rogerson +44 (0)20 7638 9571
Kevin Smith/Jos Bieneman
XP Power designs and manufactures power controllers, the essential hardware
component in every piece of electrical equipment that converts power from the
electricity grid into the right form for equipment to function.
XP Power typically designs-in power control solutions into the end products of
major blue chip OEMs, with a focus on the industrial (circa 50% of sales),
healthcare (circa 30% sales) and technology (circa 20% of sales) sectors. Once
designed into a programme, XP Power has a revenue annuity over the life cycle
of the customer's product which is typically 5 to 7 years depending on the
industry sector.
XP Power has invested in research and development and its own manufacturing
facilities in China and Vietnam, to develop a range of tailored products based
on its own intellectual property that provide its customers with significantly
improved functionality and efficiency.
Headquartered in Singapore and listed on the Main Market of the London Stock
Exchange since 2000, XP Power serves a global blue chip customer base from 27
locations in Europe, North America and Asia.
For further information, please visit www.xppower.com
Chairman's Statement
Our Progress in 2015
2015 was another year of significant progress, despite challenging economic
conditions for the industrial electronics markets. Initial indications are that
the market declined in 2015 but, against this backdrop, I am pleased to report
that the Group achieved record levels of order intake and reported revenues.
We expanded the Group with two acquisitions, the larger of which gives us an
exciting foothold in the high voltage DC-DC module market. We also ramped-up
power converter production in our Vietnam facility, giving us a cost advantage
over many of our competitors.
Our business systems have been further upgraded and we have relaunched our
website to provide significant functionality improvements to our customers. In
addition, we have further strengthened our Board, setting the stage for the
next phase of our development.
Results
Our financial performance for the year was encouraging. Revenues were a record
£109.7 million (2014: £101.1 million), an increase of 9% (4% in constant
currency). Order intake was £110.5 million (2014: £105.1 million), setting a
new record for the Group and representing an increase of 5% (1% in constant
currency).
Gross margin improved to 49.8% (2014: 49.6%) due to improved product mix
despite start-up costs associated with power converter production in Vietnam of
approximately £0.3 million and continued labour cost appreciation in China.
Profit before tax was £25.7 million, after adjusting for £0.3 million of
one-off costs associated with acquisitions, an increase of 6% over the £24.3
million reported in 2014. The adjusted diluted earnings per share increased by
3% to 104.3 pence (2014: 101.1 pence).
Acquisitions
On 25 November 2015 we announced the acquisition of the assets and business of
EMCO, a specialist in high voltage DC-DC modules, for a total consideration of
US$11.7 million (£7.7 million) paid in cash on completion.
EMCO is based in Northern California, with manufacturing operations in Nevada,
and supplies the industrial and healthcare sectors with a broad range of
standard, modified and custom high voltage products.
We are delighted to welcome EMCO to the XP Power Group and are excited about
the opportunity of offering its high voltage DC-DC modules suitable for an
array of applications through our well established sales channel. As well as
bringing a number of exciting new customers, this acquisition will enable us to
provide our existing customers with a comprehensive product offering in high
voltage technologies, a market segment with robust demand fundamentals and one
in which we did not previously specialise. We are confident that EMCO will
have a very successful future as part of XP Power.
Strengthening Our Board
We continued the process of strengthening our Board of Directors during the
year.
Terry Twigger joined our Board with effect from 1 January 2015. Terry is the
Senior Non-Executive Director, Chairman of the Audit Committee and a member of
the Nominations Committee and Remuneration Committee. As the former CEO of
Meggitt PLC, Terry has a wealth of international and public company experience
in the engineering sector, including numerous successful acquisitions.
I am also pleased to welcome Polly Williams, who joined our Board on 1 January
2016 as a Non-Executive Director. Polly, a chartered accountant, is a former
partner at KPMG LLP and holds a number of Non-Executive Directorship roles,
including at Jupiter Fund Management plc, TSB Group plc and Daiwa Capital
Markets Europe Ltd. Polly will chair XP Power's Remuneration Committee and is a
member of the Audit Committee.
Following these new appointments John Dyson will not be offering himself for
re-election at the forthcoming Annual General Meeting. I would like to take
this opportunity to thank John for his significant contribution to XP Power
over the last 16 years.
With these latest appointments, we consider that the Board now has the
appropriate experience and capabilities to take our Company to the next level
of its development.
Dividend
Our continued strong financial performance, strong cash flows and confidence in
the Group's long term prospects have enabled us to increase dividends
consistently over a sustained period. In line with our progressive dividend
policy, the Board is recommending a final dividend of 24 pence per share for
the fourth quarter of 2015. This dividend will be payable to members on the
register on 11 March 2016 and will be paid on 4 April 2016.
When combined with the interim dividends for the previous quarters, the total
dividend for the year will be 66 pence per share (2014: 61 pence), an increase
of 8%.
The compound average growth rate of our dividend has been 15% per annum over
the last five years.
Our People and Our Values
The success of an organisation is dependent on the people and talent within it.
We have significant strength and depth within our Company, with the majority of
our executives having impressive lengths of service, and we have now gained new
talent with the acquisition of EMCO. We also conducted an employee cultural
survey to assess our people's perspective of our strengths and where we can
improve. I was pleased that one of the main findings from our 2015 employee
survey was that our employees are proud to be part of our Company, highlighting
the significant engagement we have with our colleagues.
During 2015 we undertook an exercise to identify and distil the key aspects of
the XP Power culture that has made our Company successful over a long period of
time. Core values of integrity, knowledge, flexibility, speed and customer
focus were identified as the key ingredients. These characteristics are part of
our DNA and have been responsible for driving our performance and customer
service commitment over the long term.
Sustainability
Sustainability is extremely important to our people and our customers. We punch
well above our weight in this regard and set ourselves the aspirational goal of
leading our industry regarding environmental and sustainability matters. This
is reflected in the work we have done to produce a portfolio of ultra-high
efficiency products which consume less energy, use less material and do not
contain substances which are harmful to the environment. These XP "Green" Power
products grew at an impressive rate of 27% in 2015 and represented 22% of total
revenue for the 2015 financial year.
Our Vietnam facility is the most environmentally friendly factory in the
industry with a well-insulated building envelope, incorporating ultra-efficient
air conditioning, low energy lighting, water capture and recycling, as well as
a solar panel array. This is not only important to our customers but resonates
with our employees.
We are building a sustainable business that can grow and prosper in the long
term through providing genuine value to our customers, treating and rewarding
our people appropriately, and adhering to our business ethics.
Outlook
We are encouraged by the stronger order intake experienced in the fourth
quarter of 2015 following the weakness we saw in the North American order
intake in the third quarter and by the progress of the integration of EMCO.
Despite the mixed global economic picture, we have positive momentum and
therefore expect further growth in revenues in 2016.
We now have a high voltage product offering, which we believe we can grow using
our direct sales channel and approved supplier status with our existing
customer base. We also have a strong balance sheet and a business model that
provides excellent cash generation to fund our existing needs and targeted
acquisitions to further broaden our product offering and engineering
capabilities.
James Peters
Chairman
Operating and Financial Review
Review of our year
While the market for industrial electronics remained challenging in 2015, we
continued to execute our strategy successfully. We reported record order intake
and revenues in the year, as well as delivering our highest ever level of own
designed/own manufactured product revenues.
We also completed a key acquisition taking us into a new product area. The
acquisition of EMCO expands our product offering into the arena of high voltage
DC-DC modules and we are extremely excited about this growth opportunity.
We have ramped up production volumes of power converters at our Vietnam
facility, giving us a cost advantage over many of our competitors. From an
operational perspective we have also further enhanced our business systems and
reduced the lead times of some of our key products by applying lean
manufacturing principles. In December 2015 we launched our revamped website to
provide much greater functionality and a richer customer experience.
We remain excited by the future prospects for our business.
Strategic progress
We continue to execute a well-defined strategy which has enabled our Company to
take market share consistently over many years. This strategy can be
summarised as follows:
* Development of a strong pipeline of leading-edge products;
* Expansion of our range of high efficiency "green" products;
* Targeting key accounts and increasing the penetration of existing key
accounts;
* Enhancing our value proposition to our customers by becoming a
manufacturer;
* Increasing the contribution of our own designed/manufactured products; and
* Leading our industry on environmental matters.
When we review this list the clear evidence is that we continue to make
significant progress. We have the broadest, most up to date portfolio of
products in the industry, many of which are class leading in terms of
efficiency and low stand-by power. Our portfolio of XP "Green" Power products
grew an impressive 27% in 2015 to £23.6 million (2014: £18.6 million),
demonstrating how enthusiastically these products are now being adopted by our
customers. We also continue to see revenues from our own designed/manufactured
products grow at a faster rate than our other products.
We consider that our transition from a sales distribution company, through the
addition of a design capability, to designer and manufacturer is now complete.
We are clearly recognised as a designer and manufacturer by key customers in
the industrial, healthcare and technology markets. Revenues from our
own-designed products set a new record of £74.6 million in the year,
representing 68% of revenue (2014: 66%). We expect further growth in this area
in 2016.
As we have gained preferred or approved supplier status with numerous blue chip
companies, we are being exposed to new opportunities in new product areas. Our
Company is an attractive partner to larger blue chip customers who are keen to
reduce costs by dealing with a smaller number of key suppliers. Our broad range
of products, excellent customer service, low cost Asian manufacturing
capability and engineering support on three continents makes us an ideal
strategic partner to these companies. We have established this position with
our standard product offering but now see attractive opportunities for these
larger customers to engage in custom designs. We have already deployed more of
our engineering services resource into these areas but also see opportunities
for further acquisitions where our customer relationships and supplier
approvals at key customers can be combined with acquired custom engineering
expertise.
As we look forward, we see further opportunities to capitalise on our customer
relationships and large direct sales channel by further expanding our product
offering. Our acquisition of EMCO is an excellent example of this. EMCO
specialises in high voltage DC-DC converters or modules. We supply AC-DC power
converters to many customers that are also using these high voltage products
and our AC-DC converter solution may often, in fact, be providing the DC power
to the high voltage modules in the customer's system. Until now we have not had
access to this high voltage technology and the acquisition opens up a
significant growth opportunity in an attractive niche market characterised by
numerous small players.
Productivity will be a key focus area for us moving forward. We have excellent
customer service and operating margins, demonstrating that we have an efficient
and effective business model. As our organisation grows geographically and in
complexity, we are striving to retain and build on the core values of
knowledge, flexibility and speed that have underpinned our success to date. We
have continued to upgrade our systems and have employed new talent with
experience in complex operations and lean process techniques.
Marketplace
In 2015, during the second half in particular, we have seen a number of
interesting changes in the revenue profile of the different geographies and
sectors which we serve.
Since 2012 we have seen consistent growth in our North American business. In
2013 revenues grew 9% to $78.4 million; in 2014 revenues grew a further 8% to
$84.9 million. In 2015 revenues only grew 1% to $85.5 million and that growth
essentially came from the addition of EMCO, which contributed revenues of $0.8
million from 25 November 2015. The weakness came entirely from the industrial
sector which declined 18%, although this was almost entirely compensated for by
an impressive 31% growth in the technology sector. After a number of
challenging years the technology sector in North America has bounced back
strongly. Technology represented 30% of revenues in North America in 2015
(2014: 23%), offsetting the weakness in the industrial sector which represented
31% of revenues in 2015 (2014: 39%). Order intake during the third quarter of
2015 was noticeably weak at only $17.3 million but orders rebounded to $23.6
million in the fourth quarter, giving us greater confidence for 2016.
Our Asian business continued to grow despite the widely reported slow-down in
China. Asian revenues grew 9% in 2015 to $13.7 million (2014: $12.6 million).
The customers driving this increase generally have demand for their end
products outside of the emerging markets. Asia followed a similar pattern to
North America, with the technology and healthcare sectors demonstrating much
stronger growth than industrial. Healthcare revenues showed very strong growth
of 24% in Asia. Technology revenues also grew robustly at 16% whereas
industrial revenues were flat.
Our European business grew by 7% to £45.1 million (2014: £42.2 million) having
declined in the prior year. This was despite the translational effect of a
comparatively weak Euro. The industrial business in Europe grew by 6% but could
not outpace the effect of new customer programmes within healthcare, which grew
by 11% in 2015.
The geographic split of reported revenue was maintained year-on-year. Overall,
North America represented 51% of revenue (2014: 51%), Asia represented 8% of
revenue (2014: 8%) and Europe represented 41% of revenue (2014: 41%). The
average exchange rate for the US Dollar compared to Sterling was 1.54 in 2015
versus 1.65 in 2014, representing a 6.7% strengthening of the US Dollar. This
caused North America and Asia revenues to be inflated due to translation.
The overall picture by sector reflects the narrative above. Industrial
represented 44% of revenue (2014: 49%), healthcare represented 31% of revenue
(2014: 31%) and technology represented 25% of revenue (2014: 20%). All our
products are designed into capital equipment so our revenues will always be
affected by capital equipment cycles; however, our exposure to a large number
of end markets helps mitigate the cyclicality in any particular sector,
producing an underlying resilience in our business model.
We continue to perform well against our traditional established competition.
Our broad standard product offering and excellent customer service delivered by
the largest direct sales force in our industry is a compelling proposition. We
expect our competition to emerge from Asia as companies with low cost
manufacturing and engineering capabilities attempt to tap into areas of the
industrial and healthcare markets in Europe and North America. As a result we
need to ensure we continue to drive down our manufacturing costs and maintain
our reputation as the experts in power to mitigate this threat.
Expanding our global operations
In May 2015 we acquired a 51% stake in a value-added distributor of power
products in South Korea for a cash consideration of US$2.1 million. The company
has been distributing XP Power's products since 2008 and, although it is a
niche player, South Korea is an interesting market for industrial electronics.
Importantly, the company has an excellent engineering services capability which
enables it to customise power solutions to make them easier to integrate into
the customer's end equipment.
We also set up a sales office in Israel early in 2015. Although typical
design-in cycles from identification of an opportunity to realising the first
revenue are around 18 months, we are already identifying good opportunities in
this high technology market.
We continue to actively seek acquisitions that will enable us to expand our
product portfolio and engineering capabilities.
Research and Development
We have continued to invest in research and development to further expand our
portfolio of products and the size of our addressable market. We increased our
design engineering resource and capabilities during the year in both our North
American and United Kingdom design centres, including the introduction of a
firmware capability for which we are seeing increasing demand. We released 22
new product families in 2015 (2014: 26) with 17 of these classified as
ultra-high efficiency.
New product releases included the GCS265 and GCS350 series which extend our
popular GCS180 and GCS250 product families upwards in power. These new ranges
offer high efficiency at a lower price point and have been enthusiastically
received by our customers.
With the acquisition of EMCO we gained a new design centre of talented
engineers in Northern California specialising in high voltage DC-DC modules.
These products are used in a multitude of applications including semiconductor
manufacturing, healthcare, industrial printing, electrostatic precipitation,
detection, analytical devices and many others. This is an exciting new area for
us and our sales team is already identifying new opportunities for these
products within our existing customer base.
Manufacturing
In 2015 we produced 1.4 million power converters compared with 1.3 million in
2014. Production volumes of magnetics windings at our Vietnam facility have
continued to ramp-up and in 2015 we produced 4.3 million windings compared to
3.6 million in 2014. In the fourth quarter of 2014 we started to produce the
first pre-production samples of complete power converters in Vietnam. We are
pleased to report that power converter production in Vietnam has continued to
build and totalled 0.2 million units in 2015. This addition of a second
manufacturing site adds much needed capacity and also enhances our cost
competitiveness as production costs in Vietnam are significantly lower than our
existing Chinese facility.
The quality from Vietnam has been excellent and we are pleased with the
progress made at this facility and excited by its future potential.
We continue to make process improvements in our manufacturing facilities, where
we are applying more lean process principles. Our internal yields continue to
improve and we have redesigned some of our processes to reduce product lead
times to provide an even better service to our customers and reduce our freight
costs.
Enhancing our digital presence
In December 2015 we launched our completely revamped website at xppower.com.
The new mobile-optimised site is specifically designed to improve interaction
and the overall user experience. Site enhancements include additional product
selector tools, a rapid datasheet finder, and more comprehensive company
information covering topics such as standards certification, conformance to
environmental specifications and quality assurance information.
The product section has been extended to include high voltage power modules
following the recent completion of the EMCO acquisition.
The site provides localised content in French, German, Italian and Chinese.
Distribution
In the first quarter of 2014 we announced that we had been accepted as a
supplier to Digikey, the electronic components distributor, in addition to our
existing arrangements with Premier Farnell/Newark. These are excellent channels
to service smaller customers and to gain widespread brand recognition for our
products. 2015 was therefore the first full year of the Digikey arrangement and
we are pleased that this has provided excellent growth in this channel,
enabling us to reach even more customers.
Systems Development
Efficient and robust systems are essential in order for us to manage an
international business with a highly diverse customer base. In 2014 we upgraded
our Customer Relationship Management Systems across all three regions. This has
allowed us to collaborate and share information much more effectively and
provide even better customer service. From the beginning of January 2015 we
replaced our North America business systems with SAP and are now running the
same Enterprise Resource Management System across all three geographies, which
further enhances the speed and capability of our internal reporting.
We also began running the EMCO sales through SAP from the beginning of 2016 so
we can now see the entire sales business real time on one consolidated system.
This integrated approach ensures that we have the robust systems and reporting
necessary to support our future growth.
Revenue and order intake
Revenues grew 9% over the prior year (4% in constant currency) to £109.7
million (2014: £101.1 million), setting a new record for the Group. Order
intake grew by 5% (1% in constant currency) to £110.5 million (2014: £105.1
million), also setting a new record for the Group. Revenues from our own
designed product - a key indicator of our strategic progress - grew by 11% (or
approximately 7% in constant currency) to £74.6 million (2014: £67.2 million),
representing 68% of revenue (2014: 66%) and setting another new record.
Margins
Gross margin showed modest improvement to 49.8% (2014: 49.6%), largely due to
product mix and despite start-up costs associated with power converter
production in Vietnam of approximately £0.3 million and continued labour cost
inflation in China. Operating margins declined from 24.2% in 2014 to 23.3%
primarily as a result of the one-off costs associated with acquisitions of £0.3
million (2014: nil) as well as the extra resource added to our engineering and
sales functions to drive future revenue growth.
Profit before tax was £25.4 million (2014: £24.3 million). After adding back
one-off costs associated with acquisitions of £0.3 million (2014: nil),
adjusted profit before tax was £25.7 million, an increase of 6% over that
reported in 2014.
Taxation
The tax charge for the year was £5.5 million (2014: £4.8 million), which
represents an effective tax rate of 21.7% (2014: 19.8%). The effective rate is
primarily determined by how our profits are distributed geographically. We
expect a slight increase in the effective tax rate again in 2016, when it is
likely to be in the range of 24% to 25%.
Earnings per share
Basic earnings per share increased by 2% to 103.7 pence compared to 102.1 pence
in 2014. Diluted earnings per share increased by 2% to 102.8 pence compared
with 101.1 pence in 2014. After adding back one-off costs associated with
acquisitions of £0.3 million, adjusted diluted earnings per share was 104.3
pence, an increase of 3% over the 101.1 pence achieved in 2014.
Cash flow, funding and net cash
Our high margin business model and modest capital requirements continue to
produce excellent free cash flows.
Net debt at the end of 2015 was £3.7 million compared with a net cash position
of £1.3 million at the end of 2014. This net debt position was after returning
£12.0 million to shareholders in the form of dividends and paying £9.3 million
to finance our 2015 acquisitions.
In order to finance the acquisition of EMCO, the Group took out a US$12.0
million term debt facility with Bank of Scotland PLC. The facility is repayable
in equal quarterly instalments of US$1.7 million commencing in June 2016 and
ending in December 2017. The facility is priced at LIBOR plus a margin of
0.95%.
In September 2015 the Group renewed its annual working capital facility at a
level of US$12.5 million (2014: US$15.0 million). This facility stepped down to
US$10.0 million from 1 January 2016, then reduces to US$7.5 million from 1
April 2016 and to US$5.0 million from 1 July 2016. Interest chargeable under
this facility is priced at the Bank of England base rate plus a margin of 1.5%.
At 31 December 2015, £0.6 million of the working capital facility, representing
7%, was drawn down. Bank of Scotland PLC provides the facility.
Dividends
The attractive cash generative quality of our business model has enabled us to
pursue a very progressive dividend policy over a sustained period of time.
Our policy is to increase dividends progressively whilst maintaining an
appropriate level of cover. This year's financial performance in terms of both
profitability and cash flow has enabled us to recommend a final dividend of 24
pence per share which together with the quarterly dividends already paid gives
a total dividend for the year of 66 pence per share (2014: 61 pence per share),
an increase of 8%. Dividend cover for the year was 1.6 times.
Derivatives
The Group's financial instruments consist of cash, money market deposits,
overdrafts, and various other items such as trade receivables and trade
payables that arise directly from its business operations.
The Group uses forward currency contracts to convert Sterling and Euro long
positions to cover the US Dollar short positions in its parent company. The
Group had £11.3 million of forward currency contracts outstanding at 31
December 2015 (2014: £12.4 million).
Outlook for 2016
While we recognise a number of economic headwinds with the potential to impact
our business in 2016 - notably slowing growth rates in China and North America
- we consider that we remain well positioned in our marketplace. We have good
momentum as our design pipeline continues to grow, order intake in the fourth
quarter of 2015 was strong at £30.0 million and we entered 2016 with a healthy
order book.
In addition, following the acquisition of EMCO, we are excited by the prospects
for our new high voltage DC-DC module product line, which will provide
additional revenues this year. The combination of these factors gives us
confidence that we should see further revenue growth in 2016.
We remain confident in the long term prospects for our Company.
XP Power Limited
Consolidated Statement of Comprehensive Income for the Financial year ended 31
December 2015
£ Millions Note 2015 2014
Revenue 2 109.7 101.1
Cost of sales (55.1) (51)
Gross profit 54.6 50.1
Expenses
Distribution and marketing (22) (20.6)
Administrative (1.2) (0.7)
Research and development (5.8) (4.3)
Operating profit 25.6 24.5
Finance cost (0.2) (0.2)
Profit before income tax 2 25.4 24.3
Income tax expense 3 (5.5) (4.8)
Profit for the year 19.9 19.5
Profit attributable to:
Equity holders of the Company 19.7 19.4
Non-controlling interests 0.2 0.1
19.9 19.5
Earnings per share attributable to equity holders of the
Company (pence per share)
- Basic 5 103.7 102.1
- Diluted 5 102.8 101.1
XP Power Limited
Consolidated Balance Sheet
As at 31 December 2015
£ Millions Note 2015 2014
ASSETS
Current Assets
Cash and cash equivalents 4.9 3.8
Inventories 28.7 25.2
Trade receivables 17.5 16.0
Other current assets 2.4 1.7
Derivative financial - 0.3
instruments
Total current assets 53.5 47.0
Non-current assets
Goodwill 36.3 30.6
Intangible assets 11.9 9.9
Property, plant and 16.1 14.4
equipment
Deferred income tax assets 0.4 0.3
ESOP loan to employees 0.7 0.9
Total non-current assets 65.4 56.1
Total assets 118.9 103.1
LIABILITIES
Current liabilities
Current income tax liabilities 1.2 1.7
Trade and other payables 14.6 14.4
Borrowings 6 4.0 2.5
Total current liabilities 19.8 18.6
Non-current liabilities
Provision for deferred contingent 7 1.5 1.7
consideration
Borrowings 4.6 -
Deferred income tax liabilities 3.9 2.5
Total non-current liabilities 10.0 4.2
Total liabilities 29.8 22.8
NET ASSETS 89.1 80.3
EQUITY
Equity attributable to equity holders of
the Company
Share capital 27.2 27.2
Merger reserve 0.2 0.2
Treasury shares (1.0) (1.1)
Hedging reserve 0.1 0.6
Translation reserve (5.3) (6.3)
Retained earnings 67.1 59.6
88.3 80.2
Non-controlling interests 0.8 0.1
TOTAL EQUITY 89.1 80.3
XP Power Limited
Consolidated Statement of Cash Flows
For the financial year ended 31 December 2015
£ Millions 2015 2014
Cash flows from operating activities
Profit for the year 19.9 19.5
Adjustments for
- Income tax expense 5.5 4.8
- Amortisation and depreciation 3.8 3.1
- Finance cost 0.2 0.2
- ESOP expenses 0.1 0.1
- (Gain)/Loss on fair valuation of derivative (0.2) 0.6
financial instruments
- Unrealised currency translation loss 1.0 1.2
Change in working capital, net of effects from
acquisitions:
- Inventories (2.8) (4.8)
- Trade and other receivables (1.5) (0.9)
- Trade and other payables (0.2) 1.7
- Provision for liabilities and other charges (0.1) (0.1)
- Income tax paid (4.7) (3.6)
Net cash generated from operating activities 21.0 21.8
Cash flows from investing activities
Acquisition of a subsidiary, net cash of cash acquired (0.6) -
Acquisition of a business, net cash of cash acquired (7.7) -
Purchases and construction of property, plant and (2.5) (2.9)
equipment
Research and development expenditure capitalised (2.9) (2.9)
Proceeds from disposal of property, plant and equipment - 0.1
ESOP loans repaid 0.2 0.1
Net cash used in investing activities (13.5) (5.6)
Cash flows from financing activities
Proceeds from borrowings/(repayment of borrowings) 8.0 (7.3)
Sale of treasury shares 0.3 0.1
Purchase of treasury shares by ESOP (0.3) (0.3)
Interest paid (0.1) (0.1)
Dividend paid to equity holders of the Company (12.0) (10.8)
Dividend paid to non-controlling interests (0.2) (0.2)
Net cash used in financing activities (4.3) (18.6)
Net increase/(decrease) in cash and cash equivalents 3.2 (2.4)
Cash and cash equivalents at beginning of financial year 1.3 3.8
Effects of currency translation on cash and cash (0.2) (0.1)
equivalents
Cash and cash equivalents at end of financial year 4.3 1.3
Notes to the Annual Results Statement
For the year ended 31 December 2015
1. Basis of preparation
These financial statements are presented in Pounds Sterling and have been
prepared using the accounting principles incorporated within International
Financial Reporting Standards (IFRS) as adopted by the European Union.
2. Segmental reporting
The Group is organised on a geographic basis. The Group's products are a single
class of business; however the Group is also providing sales by end market to
assist the readers of this report.
The geographical segmentation is as follows:
£ Millions 2015 2014
Revenue
Europe 45.1 42.2
North America 55.7 51.3
Asia 8.9 7.6
Total Revenue 109.7 101.1
Segment result
Europe 6.7 7.6
North America 14.6 13.6
Asia 1.4 1.7
Segment result 22.7 22.9
Research and development (5.8) (4.3)
Finance cost (0.2) (0.2)
Corporate recovery from operating segment 8.7 5.9
Profit before income tax 25.4 24.3
Income tax expense (5.5) (4.8)
Profit for the year 19.9 19.5
Analysis by end market
The revenue by end market was as follows:
Year to 31 December 2015 Year to 31 December 2014
North North
£ Millions Europe America Asia Total Europe America Asia Total
Technology 6.7 16.8 3.3 26.8 6.5 11.9 2.6 21.0
Industrial 27.1 17.6 3.9 48.6 25.5 19.9 3.7 49.1
Healthcare 11.3 21.3 1.7 34.3 10.2 19.5 1.3 31.0
Total 45.1 55.7 8.9 109.7 42.2 51.3 7.6 101.1
3. Income taxes
£ Millions 2015 2014
Singapore corporation tax
- current year 1.6 1.2
Overseas corporation tax
- current year 2.8 3.3
- adjustment in respect of prior year (0.2) (0.3)
Current income tax 4.2 4.2
Deferred income tax
- current year 0.8 0.6
- adjustment in respect of prior year 0.5 -
Income tax expense 5.5 4.8
The differences between the total income tax expense shown above and the amount
calculated by applying the standard rate of Singapore income tax rate to the
profit before income tax are as follows:
£ Millions 2015 2014
Profit before tax 25.4 24.3
Tax on profit at standard Singapore tax rate of 4.3 4.1
17%
Tax incentives (0.7) (0.8)
Higher rates of overseas corporation tax 1.7 1.7
Deduction for loss/(gain) on employee (0.1) 0.1
share options
Adjustments in respect of prior year 0.3 (0.3)
Income tax expense 5.5 4.8
4. Dividends
Amounts recognised as distributions to equity holders in the period
2015 2014
Pence per £ Pence £
share Millions per Millions
share
Prior year third quarter 14.0 * 2.7 13.0 2.5
dividend paid
Prior year final dividend 22.0 * 4.2 19.0 3.6
paid
- More to follow, for following part double click ID:nPRrM2BEFbRecent news on XP Power
See all newsREG-XP Power Ltd: Result of AGM
AnnouncementREG-XP Power Ltd: Q1 Trading Update
AnnouncementREG-XP Power Ltd: Annual Financial Report
AnnouncementREG-XP Power Ltd: Holding(s) in Company
AnnouncementREG-XP Power Ltd: Holding(s) in Company
Announcement