Trading Update and COVID-19 Impact

3 April 2020

XP Power Limited
(“XP Power”, “the Group” or “the Company”)

Update on Q1 Trading and COVID-19 Impact

XP Power, one of the world's leading developers and manufacturers of critical power control components to the electronics industry, is today issuing a trading update for the first quarter ended 31 March 2020 and a further update on the impact of COVID-19.

COVID-19

We are continuing to monitor the global situation in respect of COVID-19 closely.  The health, safety and well-being of our colleagues remains our first priority and we are providing our teams our full support, following all public health advice, and complying with all government directives.

All our manufacturing facilities are currently operational, and we are following all epidemic prevention and control measures in line with government guidelines. Manufacturing volumes in China have recovered strongly from the lows seen in February as production colleagues have returned to work, and production capacity is expected to return to normal levels during Q2.  Our factories in Vietnam have continued to manufacture as normal with minimal impact from COVID-19.  To date, component supply has been resilient, but we are monitoring supply chains closely.

Current trading

Trading in Q1 2020 has been in line with the Board’s expectations. Order intake continues to be strong with all sectors seeing order intake growth, with exceptional demand in Healthcare.  Revenue growth has been encouraging, despite the extended shutdown of our manufacturing facility in China and the associated supply chain challenges we have experienced. The book to bill ratio, which tracks the relationship between orders received and completed sales, and which is an indicator of future revenue growth, was 1.49 for the first quarter (2019: 1.16 times) driven particularly by the demand from Healthcare customers.

£ Millions	Q1 2020	Q1 2019	Change	Change in constant currency
Orders	73.1	54.6	+34%	+33%
Revenue	49.1	46.9	+5%	+4%
Book to Bill	1.49	1.16	+0.33

Financial position

Net debt at 31 March 2020 was £45.3 million compared to £41.3 million at 31 December 2019. The Group currently has immediately available committed liquidity of c.£50 million through bank facilities and cash balances.

The Group renewed its financing in November 2019 with a committed revolving credit facility of US$120m, with a US$60m accordion option. The facility is provided by HSBC UK Bank PLC, J.P. Morgan Securities PLC and DBS Bank Ltd with a four-year term up to November 2023. The Group retains strong liquidity and is trading very comfortably within its financial covenants. 

Cash management, dividend

In light of the increased level of uncertainty created by COVID-19, the Group is taking a prudent approach to its financial planning and is managing cash tightly.  As such, the Board has decided to withdraw the resolution to approve the final dividend for 2019 of 36 pence per share at the forthcoming AGM. The total cash outflow from the 2019 final dividend was expected to be £6.9 million. The Group pays a quarterly dividend and understands the importance of dividends to shareholders. We intend to resume payments as soon as possible.

Outlook

While trading in the first quarter has been resilient, with some pull forward of demand and exceptional order strength in Healthcare, the global effort to combat COVID-19 creates a high level of uncertainty about the Group’s performance in the balance of the year. To date, order intake has remained robust and the Group has a substantial backlog to fulfil, with shipments weighted towards the second half.  While we remain encouraged by the strength of our order book, the extent of disruption to the global economy from the impact of COVID-19 is currently impossible to predict, introducing a significant element of uncertainty into the outlook for 2020 as a whole.  

Longer term, the Board believes XP Power to be very well positioned to grow ahead of its end markets supported by strong cash generation and a robust balance sheet.  

Enquiries:

XP Power 
Duncan Penny, Chief Executive Officer  [phone]
Gavin Griggs, Chief Financial Officer  [phone]

Citigate Dewe Rogerson                   
Kevin Smith/Jos Bieneman   [phone]

Note to editors

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 power control solutions into the end products of major blue-chip OEMs, with a focus on the Industrial Electronics (circa 45% of revenue), Healthcare (circa 23% of revenue), Semiconductor Equipment Manufacturing (circa 19% of revenue) and Technology (circa 13% of revenue) 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 is a constituent of the FTSE 250 Index. XP Power serves a global blue-chip customer base from 29 locations in Europe, North America and Asia. 

For further information, please visit xppower.com