Annual Results 2015 xppower.com xp 1
Disclaimer This document contains statements about XP Power Limited that are or may be forward-looking statements. Forward-looking statements include statements relating to (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects; (ii) business and management strategies and the expansion and growth of XP Power Limited’s operations and potential synergies; and (iii) the effects of government regulation on business. These forward-looking statements are not guarantees of future performance. They have not been reviewed by the auditors of XP Power Limited. They involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of any such person to be materially different from any results, performance or achievements expressed or implied by such statements. They are based on numerous assumptions regarding the present and future business strategies of such persons and the environment in which each will operate in the future. All subsequent oral or written forward-looking statements attributable to XP Power Limited or any of its shareholders or any persons acting on its behalf are expressly qualified in their entirety by the cautionary statement above. All forward-looking statements included in this document speak only as of the date they were made and are based on information then available to XP Power Limited. Investors should not place undue reliance on such forward-looking statements, and XP Power Limited does not undertake any obligation to update publicly or revise any forward-looking statements. No representation or warranty, express or implied, is given regarding the accuracy of the information or opinions contained in this document and no liability is accepted by XP Power Limited or any of its directors, members, officers, employees, agents or advisers for any such information or opinions. This information is being supplied to you for information purposes only and not for any other purpose. This document and the information contained in it does not constitute or form any part of an offer of, or invitation or inducement to apply for, securities. The distribution of this document in jurisdictions other than the United Kingdom may be restricted by law and persons into whose possession this document comes should inform themselves about, and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of laws of any such other jurisdiction. xppower.com xp XP Power Annual Results 2015 2
Highlights • Strong results in a year the market is reported to have declined – weakness in North America industrial offset by a strong performance in technology and healthcare • Record order intake of £110.5 million (2014: £105.1 million) up 5% (1% in constant currency) • Record revenues of £109.7 million (2014: £101.1 million) up 9% (4% in constant currency) • Own design revenues increased to £74.6 million (2014: £67.2 million) up 11% (7% in constant currency) to 68% of total revenue (2014: 66%) • High efficiency “Green XP Power” product revenue up 27% to £23.6 million (2014: £18.6 million) representing 22% of total revenue (2014: 17%) • Total dividend for the year of 66 pence (2014: 61 pence) up 8% • Invested in additional sales and engineering resources in North America • Acquired the assets and business of EMCO High Voltage xppower.com xp XP Power Annual Results 2015 3
Execution of Strategy Key Performance Strategy point 2010 2011 2012 2013 2014 2015 Indicator o Develop a strong pipeline of Number of new 31 38 19 31 26 22 product introductions leading edge products “Green” product o Expansion of high efficiency £2.8m £5.0m £8.1m £13.7m £18.6m £23.6m “Green” products revenues o Target and increase Top 30 customers 35% 38% 39% 40% 40% 44% penetration of key accounts percentage of revenue o Manufacture our own Own design product £44.1m £59.2m £57.6m £64.2m £67.2m £74.6m products revenues o Increase contribution of own Proportion of own 48% 57% 62% 64% 66% 68% design products design products o Target and increase Adjusted diluted 83.7p 106.4p 81.3p 95.1p 101.1p 104.3p Earnings per share penetration of key accounts Acquisitions will become a strategy point XP Power Annual Results 2015 4
Market Data Market 2015 (£ Millions) Size Share Asia £740 1.2% Europe £390 11.6% North America £620 9.0% Total £1,750 6.3% Source: Micro-Tech Consultants and XP Power Management XP Revenue Asia Europe North Total % (£ Millions) America Healthcare 1.7 11.3 21.3 34.3 31% Industrial 3.9 27.1 17.6 48.6 44% Technology 3.3 6.7 16.8 26.8 25% Total £8.9 £45.1 £55.7 £109.7 100% 8% 41% 51% 100% xp xppower.com XP Power Annual Results 2015 5
Sector Dynamics • 44% of revenue • • 25% of revenue 31% of revenue • Down 1% (year on year) • • Grew 28% (year on year) Grew 11% (year on year) driven by North America • Good growth after being in the Building a leading position • Most fragmented sector doldrums Gains in the “Big 3” but the next Semi fab grew 12% from $11.7m Interesting sub-sectors: tier driving our growth to $13.4m Test and measurement High efficiency products well New programs like Avid driving 3D printing received due to high reliability growth Industrial printing Corporate approvals with all the Industrial LED lighting major players Smart Grid xppower.com xp XP Power Annual Results 2015 6
Revenue by Geography (£M) 55.7 51.3 50.1 49.0 45.4 45.4 45.1 44.8 43.7 42.2 41.4 40.8 31.9 30.8 9.2 8.9 7.7 7.6 7.3 5.6 4.6 NORTH AMERICA EUROPE ASIA 2009 2010 2011 2012 2013 2014 2015 XP Power Annual Results 2015 7
Revenue by Sector (£M) 49.1 48.5 47.4 46.9 2009 2010 2011 2012 2013 2014 2015 43.7 42.2 34.3 31.0 30.3 30.1 28.7 26.9 26.8 26.6 26.1 24.1 23.4 22.8 21.0 19.8 18.8 INDUSTRIAL HEALTHCARE TECHNOLOGY Growth 2009 2010 2011 2012 2013 2014 2015 Industrial -21% +48% +11% -7% +8% +3% -1% Healthcare +31% +15% +17% -2% +16% +2% +11% Technology +4% +42% +12% -20% -3% -10% +28% 8
Own Design Revenue Trend 120 4% 100 6% 10% 7% 7% 28% Labelled Revenue (£ Millions) 12% 80 28% 29% 33% 31% 17% 60 40% Own Brand 68% 40 44% 66% 64% Own Design 62% 57% 44% 48% 20 39% 0 2009 2010 2011 2012 2013 2014 2015 Third party 11.4 11.0 9.9 6.9 7.4 5.9 4.8 Labelled product 29.7 36.7 34.5 29.3 29.5 28.0 30.3 Own design product 26.2 44.1 59.2 57.7 64.2 67.2 74.6 Average compound annual growth rate of 11% for own brand revenue to 2015 (own design 19%) XP Power Annual Results 2015 9
Revenue from “Green” Products 25.0 20.0 15.0 23.6 10.0 18.6 13.7 5.0 8.1 5.0 2.8 - 2010 2011 2012 2013 2014 2015 Revenue (£ millions) % of revenue • “Green” products are continuing to gain traction • Reliability has been the key demand driver for these products so far • Green products remain a major market opportunity XP Power Annual Results 2015 10
Customers – Selection of Top 30 • We do business with over 70% of the S&P 500 Equipment Manufacturers • Top 30 customers account for 44% (2014: 40%) of revenue (largest customer 7%) XP Power Annual Results 2015 11
Case Study Outdoor Communication Structures • Outdoor high speed wi-fi access points • Installation in major US city • USB device charging ports • Touch screen web browsing • Large scale digital advertising • Power challenges Extreme temperatures Moisture and dust No fans xp xppower.com XP Power Annual Results 2015 12
Vietnam Manufacturing Facility 483 employees First new product launch direct to Vietnam – ALM65 series First customer audit and successful approval of factory process qualification Audited for EICC compliance XP Power Annual Results 2015 13
Magnetics Highlights 4.3 million magnetic parts manufactured in 2015 - an 18% increase from 2014 Record month in December with 0.5 million parts manufactured Inductor production line 28 transformer production lines 654 part numbers approved for mass production with 105 pending >98% First Pass Yield XP Power Annual Results 2015 14 Transformer production lines
Vietnam Power Converter Highlights • >172,000 power converters manufactured in 2015 • First Pass Yield >99% • 70 part numbers approved for mass production xp xppower.com Preparation Stations Power converter production line Final Test Stations 15
Typical Product Life Cycle Revenue (£ Millions) 7.4 7.1 6.7 6.2 6.1 5.4 4.6 4.1 3.7 2.0 0.0 0.2 0.9 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 • Substantial revenue annuity ECM40/60 Series • Design in cycle typically 18 months • 2009 and 2012 dips due to market downturn and not typical xp xppower.com XP Power Annual Results 2015 16
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