XP Power Ltd Trading Update and COVID-19 Impact
03 April 2020 - 5:00PM
UK Regulatory
TIDMXPP
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.
GBP 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 GBP45.3 million compared to GBP41.3 million at 31
December 2019. The Group currently has immediately available committed
liquidity of c.GBP50 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 GBP6.9
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 +44 (0)118 976 5515
Gavin Griggs, Chief Financial Officer +44 (0)118 976 5515
Citigate Dewe Rogerson
Kevin Smith/Jos Bieneman +44 (0)20 7638 9571
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
END
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