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Tuesday 01 March, 2022


Annual Results for the year ended 31 December 2021

1 March 2022

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

Annual Results for the year ended 31 December 2021

XP Power, one of the world's leading developers and manufacturers of critical power control solutions for the Industrial Technology, Healthcare and Semiconductor Manufacturing Equipment sectors, announces its annual results for the year ended 31 December 2021.

Year ended 31 December 2021 Year ended 31 December 2020 % change actual exchange rates % change constant exchange rates
Order intake £343.4m £258.0m 33% 43%
Revenue £240.3m £233.3m 3% 10%
Gross margin 45.1% 47.2% (210)bps (200)bps
Final dividend per share 36.0p 36.0p -
Total dividend per share 94.0p 74.0p 27%
Adjusted operating profit1 £45.1m £46.0m (2)% 5%
Adjusted profit before tax1 £43.8m £44.3m (1)% 7%
Adjusted diluted earnings per share1 176.3p 198.4p (11)%
Operating profit £29.7m £37.4m (21)% (14)%
Profit before tax £28.4m £35.7m (20)% (13)%
Diluted earnings per share 113.8p 160.3p (29)%
Operating cash flow £36.4m £45.6m (20)%
Net debt £24.6m £17.9m 37%

1 For details on adjusted measures refer to note 2 of the consolidated financial statements.

· Order intake increased by 33% to £343.4 million driven by all three sectors – continued momentum in the Semiconductor Manufacturing Equipment sector, a strong recovery in Industrial Technology and normalisation of demand from our Healthcare customers following the exceptional COVID-19-related demand in 2020

· Product supply to customers maintained despite COVID-19 lockdowns, component shortages and logistics challenges, underlining the Group’s resilience and supply chain flexibility

· Reported revenue grew 3% to £240.3 million and 10% on a constant currency basis, compared to a strong 2020 comparator which included an estimated £15 - £20 million benefit related to exceptional COVID-19 Healthcare shipments

· Gross margin decreased by 210bps to 45.1% with H1 gross margin 46.6% reducing to 43.5% in H2 as a result of increased freight costs due to higher utilisation of air freight and temporary higher production costs incurred at our Vietnam factory as it continued to operate during the national COVID-19 lockdown. 

· Adjusted profit before tax of £43.8 million has grown 7% on a constant currency basis (down 1% as reported) with statutory operating profit 21% below the prior year.  The key difference between adjusted and statutory results being the costs associated with the ongoing legal case in North America

· Net debt of £24.6 million an increase of 37% compared to 2020, with another year of strong underlying cash generation despite supply chain challenges and certain non-recurring costs

· Proposed final dividend for 2021 of 36 pence per share (2020: 36 pence per share). Total dividend for 2021 94 pence per share (2020: 74 pence per share).  

The Group enters 2022 with a record order book of £217.0 million (2020: £124.1 million), representing c.80% of analyst consensus 2022 revenue including impact from acquisitions as at 25 February 2022.

James Peters, Chair, commented:

“Our clear strategy and strong execution has helped us navigate well through what have been challenging markets of recent years, with 2021 being no exception. The strength of our results is testament to the business resilience and the efforts and dedication of our people and business partners and I would like to put on record my thanks to all of them.  Despite the challenges we delivered record constant currency orders and revenues in 2021, while maintaining strong cash generation. The Group also continued to invest in people, product and systems during the year, and this provides the platform for further growth in 2022 and beyond. The new financial year has started positively with our record order book offering greater visibility than normal.”


XP Power   

Gavin Griggs, Chief Executive Officer  +44 (0)118 976 5155

Oskar Zahn, Chief Financial Officer    +44 (0)118 976 5155

Citigate Dewe Rogerson 

Kevin Smith/Jos Bieneman  +44 (0)20 7638 9571

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. Power controllers are critical for optimal delivery in challenging environments but are a small part of the overall customer product cost.

XP Power typically designs power control solutions into the end products of major blue-chip OEMs, with a focus on the Industrial Technology (circa 38% of sales), Healthcare (circa 23% sales) and Semiconductor Manufacturing Equipment (circa 39% 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 five to seven years depending on the industry sector. 

XP Power has invested in research and development and its own manufacturing facilities in China, North America, 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

Chair’s Statement

Our Progress in 2021 

We made further strategic progress in 2021 and have produced a robust set of results in what continued to be a difficult global environment characterised by ongoing challenges resulting from COVID-19. A key priority since the start of the pandemic has been to protect the health and wellbeing of our colleagues and we continued this focus as we navigated the issues we faced in 2021.  These impacts were compounded by the global supply chain challenges and component shortages faced by our industry worldwide, particularly in the fourth quarter. I would like to thank all colleagues for their ongoing commitment and adaptability during this difficult period.

The clear highlight of the year was our record order book which underlines the strength of demand for XP Power’s products. Revenues were above those achieved for 2020 and we delivered robust profitability and strong cash conversion despite the difficult global backdrop.

We saw continued momentum in the Semiconductor Manufacturing Equipment sector, a recovery in Industrial Technology from the impact of the pandemic shutdowns in 2020 and a normalisation of demand in Healthcare as customers re-focused on innovation after the COVID-19 related spike in demand for critical care equipment demand during 2020.

Our strong cash generation and confidence in the Group’s long-term prospects supported the continuation of our progressive dividend policy throughout 2021. The Board is proposing a final dividend of 36p for 2021 (2020: 36p) which would, if approved by shareholders, bring the total 2021 dividend per share to 94p (2020: 74p).

Our Board 

In January 2021 Gavin Griggs succeeded Duncan Penny as Chief Executive Officer and in May 2021 Oskar Zahn joined as Chief Financial Officer.  The new senior team, supported by the strong Executive Leadership team we have throughout the business, have navigated successfully through a challenging period. We have confidence that under the new leadership the Group will deliver further growth in shareholder value.

After almost 35 years with the Group, and with XP Power performing well, I believe the time is right to begin implementing our succession plans for the position of Board Chair. I am delighted that Jamie Pike also the Chair of Spirax-Sarco Engineering plc, is joining the Board in March 2022 as Non-Executive Director and Chair designate and I look forward to working closely with him in the period until I retire from the Board, which is currently planned to be on or before the date of  the AGM in 2023.

Our People and Our Values 

The success of any organisation is dependent on its culture and the people and talent within it. The Board continues to engage with the Executive Leadership Team and colleagues throughout the Group to ensure we are continuing to identify and develop our key people and bringing new talent and capabilities into the business to help underpin our growth ambitions. We made a number of important hires in engineering, manufacturing and product management during the year as we look to further enhance our capabilities in these critical areas and to support the growth ambitions we have for the Group.

I am proud of what our people have achieved in 2021 and I know from our engagement with them that they are proud to be part of the XP Power team. 


Sustainability has been a long-term focus for XP Power and we are committed to reducing our environmental footprint and in 2021 our progress was recognised by ASM, a key customer, when we received its inaugural PRISM award, for sustainability. We have set Company targets to reduce CO2 emissions intensity by a minimum of 3% per annum over the short and medium term and an aspiration to achieve carbon neutrality by 2040.  During 2021 the focus has been on building on our platform to ensure sustainability is fully embedded in XP Power.  We have re-launched our Sustainability Council reinforcing our internal sustainability structure.  The Board and senior management have undertaken sustainability training to raise our internal capability and develop the next stage of our strategy.

Strategy Review 

The Group has consistently executed a clear strategy which has successfully delivered meaningful value creation for all stakeholders and this focus continued through 2021.

We recently completed our annual review of our strategy which confirmed it remains appropriate. We continue to evolve individual elements to improve their effectiveness and to ensure it takes account of changes in the operating environment.  Today, we are one of a few power companies in the world with the breadth of product portfolio across power and voltage spectrum.  We remain focused on growth, both organically and inorganically, and despite many years of strong performance we still have relatively low market shares in the markets we operate in and the sectors we focus on.  Going forward we will use our product portfolio and engineering services capabilities to provide customers with power solutions and continue to increase our market share.  

Our strategy continues to deliver sustainable long-term earnings growth through revenue growth and market share gains in our target sectors and customers. This success is demonstrated by our consistent performance and resilience over the cycle in the sectors in which we operate. We are confident we can continue to develop market leading products and, encouraged by the potential of our product and sales backlog and pipeline, to continue to deliver organic growth. 

The Group’s strong financial liquidity ensures we have sufficient resources to support targeted acquisitions to enhance our product portfolio and expand our addressable market. We completed the acquisition of two German based High Voltage businesses in January 2022.  They are highly complementary to our existing high voltage portfolio and significantly enhance our capabilities in this attractive area. We will continue to maintain a highly disciplined approach to acquisitions ensuring targets enhance our existing portfolio and will complement our organic growth. 


We delivered a robust performance in 2021 despite facing significant external challenges, particularly in the second half, demonstrating, once again, the resilience of our business model and quality of our people.

For 2022, despite the ongoing challenges and uncertainty that remain in relation to our supply chain, component shortages and inflationary pressures, the record order book and the positive demand backdrop, across all our sectors, provides us with confidence for our prospects. We remain excited about our longer-term outlook.

James Peters


Performance: Operational Review

Review of our year

The Group delivered a robust performance in a year in which the ongoing challenges brought about by COVID-19 were compounded by component shortages and disruption to global logistics.  All of our facilities continued to operate throughout the period while ensuring the safety and wellbeing of our people and we made good strategic progress despite the challenges of navigating through the COVID-19 pandemic. We have continued to invest in the business through this challenging period, adding capacity, developing new products and increasing our global workforce.  Our success is down to the tenacity and commitment of the XP Power team globally.

The Semiconductor Manufacturing Equipment sector performed strongly throughout 2021. The performance was underpinned by a combination of increased end market demand and our market share gains from design wins on new tools. These ongoing design wins are being supported by the development of closer relationships with our customers. The Industrial Technology sector experienced a healthy rebound, beginning in early 2021, driven by pent-up demand following the 2020 slowdown linked to the pandemic. Demand from our Healthcare customers normalised as they switched from critical care equipment used to treat patients with COVID-19 to more normal demand patterns, supporting product innovation. While Healthcare demand was below the exceptional levels seen in 2020 it was comfortably ahead of 2019. Demand across all sectors was strong and this, combined with the lengthening of lead times in supply chains, has resulted in our order book being at record levels as we entered 2022.

Our diversified manufacturing footprint and supply chain is recognised as an important strategic differentiator by our key customers, many of whom are otherwise concerned about USA/China trade relations and general supply chain resiliency. In the last couple of years we have been able to demonstrate this resilience with product shipments continuing in very challenging conditions. Continuing shipments to customers were the priority. As an example, during 2020, our Vietnam facility allowed us to maintain product supply to our customers while production at our Chinese factory was impacted by COVID-19 restrictions imposed by the Chinese government.  In H2 2021, Vietnam experienced a surge in COVID-19 infections and enforced its own strict lockdown. Our Vietnam facility was allowed to continue operating through this period but at reduced levels of throughput as the number of employees on site was reduced by circa 50%, and as we faced the peak period of component challenges.  During this period, we were able to flex our supply chain and increased production in China.

Global supply chains came under significant additional pressure in 2021 and this impacted both our financial performance for the year but also the service we could provide to our customers.  Many components have been in short supply as the COVID-19 restrictions limited production and as demand spiked as the global economy re-opened.  Semiconductors were the first components to be impacted and saw the most severe availability gaps.  Supply issues and material shortages also impacted other components critical to the manufacture of XP Power’s products.  These included standard components such as multilayer ceramic capacitors (MLCC), transistors, diodes and resistors. While our strong supplier relationships and higher levels of “safety stocks” ensured we were able to limit the impact, increasing lead times and shortages in the second half reduced our potential revenue and profits for the year.  We are managing the situation proactively; we have redesigned some products where shortages have been significant and we continue to pay premiums to market prices to secure and expedite supply.  Supply of some components remains tight, driven by inventory depletion through multiple layers in the supply chain which is creating volatility in supply and lead times. We expect this situation to continue during the first half of 2022.

A second supply chain challenge we faced related to global logistics. With air travel below pre-pandemic levels and challenges around port handling during the pandemic, both air and sea freight have had tight supply leading to increased transit times and significant cost increases.  Following the end of COVID-19 restrictions in Q4 2021, production from our Vietnam facility ramped back up to previous levels to fulfil the pent-up customer demand. We also shipped a higher proportion of product by air rather than by ocean freight to meet customer commitments, which was our priority.  This resulted in significantly higher freight costs in this period but we expect these to normalise in H1 2022.

During 2021 we continued to develop our Enterprise Resource Planning (ERP) system despite the global travel restrictions.  We plan to deploy the second phase of this project within our supply chain and at our Asian manufacturing sites in the first half of 2022.  This project has been slightly delayed due to COVID-19 restrictions, but its deployment, de-risked by the first phase roll-out, will further strengthen our supply chain and improve efficiency.

Expansion of our product portfolio by acquisition remains an important element of our growth strategy. Subsequent to the year-end we were delighted to complete the acquisitions of FuG Elektronik GmbH (FuG) and Guth High Voltage GmbH (Guth), for circa £32.8m.  They are two complementary German businesses operating in the high voltage market segment.  The acquisitions strengthen our position in the important German market, adding speciality high voltage capabilities one near Munich and the other near Stuttgart.  The acquired businesses are an excellent fit with our existing operations, adding wholly new and highly complementary product portfolios and technical capabilities to the Group. We expect to grow the acquired businesses’ revenues significantly by selling FuG and Guth’s products through our existing industry leading sales teams and distribution network.  It also allows us to access new areas within the important Industrial Technology and Semiconductor manufacturing sectors.

Balance sheet and liquidity

The Group benefits from strong financial liquidity with significant flexibility to invest to support organic growth, and to increase inventory and working capital to adapt to the higher levels of demand and uncertainty in the supply chain.

Our balance sheet remains strong, with circa £77 million of available liquidity and net debt to EBITDA of 0.44 times as at 31 December 2021. 

As mentioned above, on 31 January 2022, XP Power completed the acquisition of FuG and Guth

from Dr Simon Consulting GmbH for a cash consideration of €39.0 million.


The Group delivered revenue growth of 3% in 2021 with revenue of £240.3 million (2020: £233.3 million) or 10% growth at constant currency.

Order intake was up 33% on a reported basis to £343.4 million (2020: £258.0 million which included £15 - £20 million of COVID-19 related orders). Orders and revenue for 2021 represent a full year, book-to-bill ratio of 1.43 (2020: 1.11). The Group had a record order book of £217.0 million on 31 December 2021 (31 December 2020: £124.1 million), providing excellent visibility for 2022 and underpinning prospects for the year.

Marketplace: Sector Dynamics

The Semiconductor Manufacturing Equipment sector remains an exciting and important area for XP Power with excellent long-term growth prospects. Revenue from these customers increased by 34% to £93.3 million (2020: £69.6 million) or 46% growth at constant currency. We believe we not only benefited from ongoing demand but also from market share gains as a number of new programme wins, driven by technology advances, entered production. Revenue from Semiconductor Manufacturing Equipment sector customers represented 39% of overall revenue (2020: 30%). Our Radio Frequency (“RF”) and high-voltage and high-power products, combined with our low voltage portfolio and engineering services offering, has made us an attractive supplier to this market. The new higher power and higher voltage products we now offer allow us to service considerably more of the opportunities in this sector, significantly expanding our addressable market. The recent acquisitions of FuG and Guth further strengthen our position in this market adding access to new sub sectors including lithography.

Investment in semiconductor manufacturing capacity is growing rapidly worldwide as the industry responds to a structural supply shortage and to meet demand for ever more technologically sophisticated semiconductors. Demand for semiconductor manufacturing equipment remains strong and Wafer Fabrication Equipment (WFE) capex grew by c.40% in 2021, with further growth forecast in 2022. In total there were c.59 new semiconductor manufacturing facilities announced in 2021 with WFE spend of $300 billion expected in the next few years. The latest generation of semiconductor logic and memory devices are becoming more capital intensive to manufacture as they become multi-layered, and as dimensions continue to shrink. This plays to XP Power’s strengths as one of the few companies in the world that can offer the whole spectrum of power and voltage required for semiconductor manufacture, and an ability to combine these into a complete power solution, making us a compelling partner to the manufacturers of these state-of-the-art tools.  Our two largest customers operate within this sector and we are growing revenues with both of them, as well as diversifying into a wider global customer base.

Revenue from the Industrial Technology sector increased by 3% on a constant currency basis (declined by 3% as reported) to £92.0 million (2020: £94.4 million) and represented 38% (2020: 40%) of overall revenue. Demand in Industrial Technology remains robust, with supply chain challenges having a major impact during 2021.  The sector is extremely diversified with few of these customers making it into our top 30 customer list by revenue. Applications in this sector vary significantly and are principally driven by new and emerging electronic technologies and high growth niches rather than traditional areas such as industrial machinery, automotive or mining. Typical drivers of our revenue in this sector include analytical instruments, test and measurement equipment, robotics, displays, industrial printing, renewable energy, and smart grid. Industrial Technology is a resilient, highly diversified, long term growth market for XP Power with innovation a key driver of growth. Our Distribution business, which represents 10% (2020: 10%) of our overall revenue and is exposed to a very diverse range of end markets, is also included within our Industrial Technology sector.  Distribution has remained an attractive growth market where we have been increasing market share with existing customers and adding new distributors to expand geographic reach and increase our market penetration to small and mid-tier customers.

Revenue from Healthcare customers declined 15% at constant currency (down by 21% as reported) to £55.0 million (2020: £69.3 million) representing 23% of overall revenue (2020: 30%). In 2020 we experienced exceptional demand of £15-20 million directly related to the COVID-19 pandemic and other applications were down significantly. In 2021, demand for critical care products has normalised and we have seen a recovery in our growth markets such as robotic surgical tools, dentistry, endoscopy and medical imaging, and we are working with a number of customers on innovative solutions to challenges they are facing.  We have delivered ongoing growth after adjusting for the one-off impact in 2020. Healthcare remains an attractive market for XP Power given the long term demand growth dynamics, the safety critical nature of products, the breadth of our medical product range and the high level of customer service required by blue chip medical device manufacturers. Healthcare customers are demanding in terms of quality and reliability, making our value proposition very attractive to them. We provide mission critical power solutions for numerous applications in the healthcare arena and understand the many special requirements and regulatory approvals that a medical power solution must meet. In normal circumstances Healthcare tends to be much less cyclical than the other sectors we address which adds resilience to our diversified business model.

Marketplace: North America

Our North America revenue was US$194.5 million in 2021 (2020: US$180.4 million), an increase of 8%. North America represented 59% of overall revenue (2020: 61%).

Order intake in North America was US$270.2 million (2020: US$194.5 million), an increase of 39% resulting in a healthy book-to-bill ratio of 1.38.

Marketplace: Europe

Our European revenue grew by 3% to £67.3 million (2020: £65.6 million). While Europe benefited from significantly higher demand for critical healthcare products it was also most impacted by the decline in the Industrial Technology sector due to COVID-19. Europe represented 28% of overall revenues (2020: 28%).

Order intake in Europe was £93.1 million (2020: £73.7 million), an increase of 26%, resulting in a strong book-to-bill ratio of 1.38.

Marketplace: Asia

Asian revenues were US$43.8 million (2020: US$33.8 million), an increase of 30%, with strong growth in Healthcare and Semiconductor Manufacturing Equipment, offset by weakness in Industrial Technology. Asia represented 13% of overall revenue (2020: 11%). Our Asia business is benefitting from new design wins with the RF and high-voltage product portfolios. We expect these design wins to contribute to revenue in 2022 and beyond as they enter production.

Order intake in Asia was US$74.8 million (2020: US$39.6 million), an increase of 89%, resulting in a book-to-bill ratio of 1.71.

Our Strategy and Value Proposition

Our vision is to be the first-choice power solutions provider, delivering the ultimate experience for our customers and making XP Power a great place to work. Over time we have expanded our product portfolio up the power and voltage scale to enhance our margins and provide our customers with a broader offering to solve their power problems. We have also added RF technology and increased our engineering resource to provide enhanced engineering services capabilities and deliver a complete power solution to our key customers. We are now one of very few providers who can offer customers a complete spectrum of power and voltage capabilities and package several power converters into an overall solution customised to the customer’s application. This makes us an extremely attractive partner to our key customers and is a key driver of our market share gains.

We have followed a consistent strategy which has enabled us to produce strong results over a sustained period. The fundamental element of this strategy is targeting key accounts where we can add value and gain more of the customer’s available business, combined with moving the product line up in power, voltage, and complexity. Although this strategy continues to remain appropriate and effective, we constantly challenge and refine it, as we have done so again in 2021.

Our strategy can be summarised as follows:

· Develop a market leading range of competitive products, organically and through selective acquisitions;

· Target accounts where we can add value;

· Increase penetration of those target accounts;

· Build a global end to end supply chain that balances high efficiency with market leading customer responsiveness; and

· Lead our industry on environmental matters.

The industry wide challenges we have faced in recent years have not diverted us from our strategic path and we continue to invest for the medium and long term in new product development, new capabilities and capacity.  We continued to execute well against our strategy in the period, gaining further design wins with our newer product introductions, particularly in higher power applications, and through our increased focus on engineering solutions. 

Acquisitions have been a key part of our growth strategy expanding our product portfolio and addressable market. The FuG and Guth acquisitions completed in January 2022 are the latest examples of this strategy in action.

Our value proposition to customers is to solve their power problems, reduce their overall cost of design, manufacture and operation and help them get their product to market as quickly as possible.  We achieve this by providing excellent sales engineering support and producing new highly reliable products that are easy to design into the customer’s system, consume less power, take up less space and reduce installation times.

Looking forward, whilst our strategy is clearly effective and adding shareholder value, it will continue to evolve, building further organisational and supply chain agility to better serve our customers and further enhance execution. We will also increase our focus on people and development to ensure we are able to continue to grow our business. 


XP Power’s main production facilities are located in China and Vietnam.  We proactively manage the sites to optimise our supply chain and provide resilience of supply for our customers.  Our total Asian manufacturing capacity is more than US$350 million per year. During 2021, we invested in additional equipment in Vietnam to expand capacity with a new surface mount line, and additional test and burn-in facilities, to meet our current and future levels of demand and to support the transfer of more products into Vietnam from China and our North American manufacturing facilities, as we seek to benefit from lower production costs and increase supply chain resilience and flexibility.

Vietnam is now qualified to produce a total of 2,708 different low voltage products (2020: 2,616), with the ongoing transfer of production capabilities.  In addition, the factory is now qualified on 810 different high voltage modules and we are increasing the number of customer solution products that are capable of being manufactured in Vietnam.

The dual supply capability has benefited our customers through the COVID-19 pandemic and also as they seek to navigate changes in trade relations between China and the USA.  The US Government implemented Section 301 tariffs at a rate of 10% from September 2018 and increased these to 25% in May 2019 which remains in place.  The ability to manufacture in Vietnam has become a compelling value proposition to our customers wherever they are located. A number of customers have already informed us that they will no longer design-in products manufactured in China due to concerns over China/USA trade tensions irrespective of the tariff situation. We expect this important strategic capability of having production facilities in both Vietnam and China to enable us to win more design slots with key customers.  The benefit of dual supply has been highlighted as China was in lockdown in 2020 and then Vietnam in 2021, and we were able to effectively redirect production to maintain a continuity of supply for our customers.

As the business continues to grow, we will require further production capacity and we will commence construction of a new manufacturing facility in North West Malaysia in 2022 to increase capacity to meet the demand from across the Group. We expect to commission this new facility in 2023. Our overall objective is to provide a resilient and flexible supply chain with the capability to manufacture the majority of products in China, Vietnam and the new third location to provide enhanced business continuity planning. The increased level of capital expenditure that the Group will incur during the construction will be phased in line with the facility and this will initially be spread across 2022 and 2023.

We also have three smaller, more technically specialist manufacturing facilities in North America.  These include a customer focused engineering services facility in California, a site in New Jersey focused on high voltage products and an RF focused facility in Massachusetts.  These facilities have continued to operate throughout 2021 except for short periods where decontamination was required following COVID-19 cases. High demand for RF and HV products has led to some supply challenges and we are increasing capacity to meet the demand levels.

We monitor market dynamics closely, working through our supply partners and maintain a level of safety stocks of key components. Throughout the year, we have seen significant supply issues for certain components and increased safety stocks to manage through any future supply issues although this became increasingly challenging in H2 2021.  We have also designed out some particularly problematic components using our engineering team.  While the level of shortages has peaked and has since reduced, we do expect some ongoing issues in 2022.

Research and Development

New products are fundamental to our longer term revenue growth.  The broader our product offering, the higher the probability that we will have a product which will work in the customer’s application with or without a modification by our engineering team.  By expanding into RF power in 2017 and high voltage in 2018 and 2022, we estimate that our addressable market has increased from around US$2.7 billion to approximately US$6.0 billion.

The design-in cycles required by our customers to qualify the power converter into their equipment and to gain the necessary safety agency approvals are lengthy.  Typically, we see a period of around 18 months, or even longer in Healthcare, from first identifying a customer opportunity to receiving the first production order.  Revenue will then start to build, often peaking a number of years later.  The positive aspect of this characteristic is that our business has a strong annuity base where programmes typically last five to seven years.  Another aspect of this model is that the many new products we have introduced over the last three years have yet to make a meaningful impact on our revenue, creating a significant benefit for future years as they enter production.

We continue to move our product portfolio up the power and voltage scale and away from our historic low-power/low voltage offering, to protect our margins and expand our addressable market. RF power is a long-term opportunity and is a market which contains many interesting and significant niches beyond the Semiconductor Manufacturing Equipment sector including medical equipment, induction and dielectric heating, and industrial lasers and we are expanding our RF development resources. In tandem, we have directed more of our internal product development resources away from low-power/low voltage applications and are servicing demand in the low-power segment with more third-party products designed to our specifications and quality standards.

Engineering Solutions

As well as growing our product offering, we have continued to expand our engineering solutions groups, particularly in Asia and North America. As we continue to move our capabilities up to higher power and higher voltages, we are becoming an increasingly attractive partner for customers whose applications are becoming more and more demanding. These demands include not only power delivery and management, but also sophisticated connectivity involving software and firmware which enables the customer’s application to control the power solution and the power solution to communicate back to the application. As the world becomes more connected and the fourth industrial revolution gains traction, we expect this trend to gather pace. Customers place a high value on our engineering solutions capabilities which differentiate us from many of our competitors.

Our engineering solutions groups work closely with the customer’s engineering teams to provide these customised solutions. Speed and proximity to the customer are critical as the power solution is often one of the last parts of the system to be designed, so it is invariably one of the gating items to get the end product to market. This is an area where XP Power adds significant value to its customers, and we are seeing increasing demand for these services.

We are one of the few power companies that can offer its customers a full range of solutions across the voltage and power spectrum and provide the engineering services to package these together to provide a complete power solution, including communication with the customers’ application through firmware. This is a powerful proposition which makes us an ideal partner for many customers and greatly expands our addressable market.


We are acutely aware of the increasing concerns our people, customers, suppliers, governments, and shareholders have around climate change and sustainability issues in general. We have taken a lead in our industry in developing and promoting high efficiency products which consume less energy and therefore help reduce carbon emissions over their lifetime in use. We established a Sustainability Committee as early as 2009 and set ourselves the bold goal of becoming the leader in our industry regarding sustainability matters. We have consistently incorporated sustainability factors into our decision making and have adopted environmentally responsible practices in our facilities. In particular, we believe that our Vietnamese production facility is the most environmentally friendly in our industry with its efficient building envelope, building management system, water recycling and solar panel array.

We determined many years ago that one of the biggest impacts we could have on the environment was designing and promoting “XP Green Power” products which consume, and therefore waste, less energy over their operational lifetimes. This results in significant and ongoing reductions in CO2 emissions generated by our customers’ equipment. “XP Green Power” products generated revenues of £36.2 million in 2021, which was broadly in line with last year and represented 15% of total revenue.

Sustainability also resonates with our employees. We have adopted energy and water-saving practices throughout the Group and have a network of passionate environmental representatives who promote best practices and raise awareness of sustainability issues, including social ones, across our global workforce. 

In 2020 we engaged with our employees and key customers and suppliers to better understand their material areas of focus and concern regarding sustainability matters. We have also endeavoured to better understand the priorities of our shareholders. The results of this engagement allowed us to build the topics which are most important to our stakeholders into our sustainability strategy. We were encouraged to discover that the most material interests of our stakeholders align very closely with those of the executive management. These topics include product responsibility, attracting and retaining talent, health and safety, employee welfare, reducing emissions, diversity and inclusion.

We are committed to the long-term sustainable success of XP Power in all its aspects. In 2021 we started the end-to-end mapping of our business including Scope 1, 2 and 3 emissions and are committed to a proactive strategy to reduce these in absolute terms.   We plan to complete this exercise in 2022.

We have set Company targets to reduce CO2 emissions intensity by a minimum of 3% per annum over the short and medium term and an aspiration to achieve carbon neutrality by 2040. During 2022 we will develop further strategies to bring this date forward.

Gavin Griggs 

Chief Executive Officer

Performance: Financial Review

The Group has delivered another robust performance in 2021 against the backdrop of continued COVID-19 restrictions and the resulting impact on supply chain capacity.

Statutory Results 

Revenue was £240.3 million (2020: £233.3 million), representing growth of 10% at constant currency (3% on a reported basis). Statutory operating profit was £29.7 million (2020: £37.4 million), a decrease of 14% at constant currency (21% as reported) compared to the prior year, with operating margins at 12.4% (2020: 16.0%). Net finance costs were £1.3 million (2020: £1.7 million), resulting in profit before tax of £28.4 million (2020: £35.7 million) and an income tax expense of £5.4 million (2020: £4.0 million) equivalent to an effective tax rate of 19.0% (2020: 11.2%). Basic earnings per share were 115.8 pence (2020: 163.0 pence), a decrease of 29%.

Adjusted Results 

Throughout this results announcement, adjusted and other alternative performance measures are used to describe the Group’s performance. These are not recognised under International Financial Reporting Standards (IFRS) or other generally accepted accounting principles (GAAP).

When reviewing XP Power’s performance, the Board and Management team focus on adjusted results rather than statutory results. There are a small number of items that are included in statutory results that are one-off in nature or not representative of the Group’s performance, so they are excluded from adjusted results. The tables in Note 2 show the full list of adjustments between statutory operating profit and adjusted operating profit, between statutory profit before tax and adjusted profit before tax, and between statutory profit after tax and adjusted profit after tax at Group level for both 2021 and 2020. 

Revenue Performance 

The Group’s revenue performance was primarily driven by growth in the Semiconductor Manufacturing Equipment sector, which increased 46% at constant currency (34% as reported) to £93.3 million (2020: £69.6 million). This was offset by the Healthcare sector which was, as expected, down 15% at constant currency (21% as reported) to £55.0 million (2020: £69.3 million) as the one-off benefit of £15-£20m of equipment sales directly linked to COVID-19 in 2020 was not repeated. Encouragingly, demand for critical care product has normalised and we have seen a recovery in our more traditional markets. The Industrial Technology sector increased by 3% at constant currency but declined 3% as reported to £92.0 million (2020: £94.4 million) as it was constrained by supply chain challenges.

Our North America region continued to benefit from the growth in demand for Semiconductor Manufacturing Equipment, increasing revenue by 8% to US$194.6 million from US$180.4 million in 2021. This growth was despite not seeing the repeat of the sales directly linked to COVID-19 which was predominantly in North America in 2020. Europe delivered growth of 3% to £67.3 million (2020: £65.6 million), as growth from Semiconductor Manufacturing and Industrial Technology sectors was offset by a small decrease in the Healthcare sector. Asia revenue grew by 30% to US$43.8 million (2020: US$33.8 million), driven by continued growth in the Semiconductor Manufacturing Equipment sector. Asia now contributes 13.2% of Group revenues (2020: 11.4%).

Gross Profitability 

Gross margin decreased to 45.1% (2020: 47.2%), primarily because of COVID-related restrictions at our manufacturing sites in H2. This caused significantly reduced capacity and efficiency, along with the availability of key components and higher logistics costs with a greater proportion of air freight, impacting deliveries towards the end of the year.  H1 gross margin of 46.6% reduced to 43.5% in H2. Additionally, a benefit of £0.6 million received in 2020 as a grant related to COVID-19 from the Singaporean government as part of the Jobs Support Scheme was not repeated in 2021. We believe the impact on gross margins to be temporary.

Adjusted Operating Expenses and Margins 

A slight increase in operating expenses in 2021 was more than offset by foreign exchange gains of £2 million, resulting in adjusted operating expenses decreasing by 2% to £63.2 million. Resulting adjusted operating margin decreased to 18.8% (2020: 19.7%) as a result of lower gross margins.

Finance Cost 

Net finance cost decreased by 24% to £1.3 million (2020: £1.7 million) due to lower effective interest rates.

Adjusted Profit Before Tax 

The Group generated adjusted profit before tax and specific items of £43.8 million, representing an improvement of 7% at constant currency (a decrease of 1% as reported) compared to last year. 

Specific Items

In 2021, the Group incurred £15.4 million (2020: £8.6 million) of specific items. This was predominantly legal costs of £10.1 million (2020: £0.4 million) relating to a non-customer-related legal dispute in North America (see Legal below), £2.8 million of amortisation of intangible assets relating to previous business combinations (2020: £3.2 million), and ERP implementation costs of £2.1 million (2020: £1.9 million). The ERP implementation is expected to be completed in H1 2022, and remaining costs will continue to be classified as specific items.


As reported last year, in September 2020, Comet Technologies USA Inc., Comet AG, and YXLON International (collectively “Comet”) filed a lawsuit against XP Power LLC, alleging trade secret misappropriation relating to RF match and generator technology. The lawsuit is still ongoing, and the Group has incurred legal costs of £10.1 million in 2021 (2020: £0.4 million). XP Power believes there is no merit to this lawsuit and is vigorously defending claims brought against it by Comet. A jury trial for this lawsuit is currently set to begin on March 14, 2022. The Group expects to incur further legal costs until this matter is resolved, the magnitude of which cannot currently be estimated with any certainty. No provision in relation to the dispute has been recognised as the amount of outflow, if any, cannot be estimated reliably. Further information about the matter and its possible outcomes are not provided as such disclosures could be detrimental to the interests of the company in this dispute.

Profit Before Tax 

Profit before tax of £28.4m was 13% lower at constant exchange rates than 2020 mainly due to the legal costs associated with the lawsuit in North America noted above.


The effective tax rate on adjusted profit before tax increased by 770bps to 19.2% (2020: 11.5%), within our guidance range, as the one-off impacts in 2020 of employee share option awards and utilisation of tax losses were not repeated.

The effective tax rate on statutory profit before tax increased by 780bps to 19.0% (2020: 11.2%).

Going forward, XP Power expects the effective tax rate to be approximately 17–20%, depending predominantly on the regional mix of profits. 

Research and Development (R&D)

Gross R&D expenditure was £16.8 million, representing 7% of revenue; an increase of 6% over prior year. Innovation is a key part of the Group’s strategy and, as a result, R&D investment is expected to continue to grow as the Group extends its engineering capabilities with a particular focus on RF and high-power, high-voltage product development activities.

The Group capitalised £8.3 million of R&D costs (2020: £7.7 million), which reflects the development of new products as the Group expands its product portfolio.  In 2022 we are expecting this investment to increase to c.£10 million.

Capital Expenditure

The Group continued to invest in its infrastructure, both through the upgrade of our ERP system and capital investment at our manufacturing facilities to expand capacity and improve operational performance. £13.6 million (2020: £7.2 million) was incurred on capital expenditure during 2021.

We expect 2022 to be an abnormally high year of expenditure before returning towards historic levels. The expenditure is necessary to meet our longer-term growth plans and will generate attractive returns. We plan to invest c.£18 million during the new financial year, with the main investments related to maintenance and expansion of our existing manufacturing facilities, investment in required new manufacturing capacity in Asia to meet long term demand. The completion and upgrade of our ERP system is expected to be c.£4 million.

Earnings Per Share

Basic earnings per share decreased to 115.8p (2020: 163.0p) and adjusted diluted earnings per share decreased by 11% to 179.4 pence and 176.3 pence respectively (2020: 201.8 pence and 198.4 pence).

Cash Flow 

The Group continues to be highly cash generative, with net cash from operations of £36.4 million (2020: £45.6 million), representing cash conversion of 122% (2020: 122%). Within working capital, inventory increased through investment in raw materials and safety stocks to manage supply issues and the customer demand backlog. On an adjusted basis, excluding specific items, the cash conversion is 111% (2020: 117%).

Free cash flow before acquisitions, dividends and repayment of borrowings was £12.5 million (2020: £31.3 million).

The Group finished 2021 with net debt of £24.6 million (2020: £17.9 million), comprising cash and cash equivalents of £9.0 million and gross debt of £33.6 million. The increase in net debt during 2021 was a result specific items, offset by the continued strong cash conversion.

Capital Allocation

The Group will continue its disciplined approach to capital allocation, prioritising the maintenance of a strong balance sheet and sufficient committed facilities, while continuing to focus on investing in the business to drive organic growth. Where opportunities are in line with the Group’s strategy and meet management’s strict criteria to deliver value to shareholders, the Group will continue to review acquisition opportunities.

The year’s cash flow performance and continued good liquidity has enabled the Board to recommend a final dividend of 36 pence per share for the fourth quarter of 2021. This dividend will be payable to members on the register on 25 March 2022 and will be paid on 28 April 2022. When combined with the interim dividends for the previous three quarters, the total dividend for the year will be 94 pence per share (2020: 74 pence).

The Group plans to operate in a range of between 1 - 2x net debt to adjusted EBITDA in the medium term.

Foreign Exchange

The Group reports its results in sterling, but the US dollar continues to be our principal trading currency, with approximately 87% (2020: 85%) of our revenues denominated in US dollars. The average sterling to US dollar exchange rate increased by 8% from 1.28 to 1.38 resulting in a £3.2m adverse impact on adjusted operating profit.


For 2022, despite the ongoing challenges and uncertainty that remain in relation to our supply chain, component shortages and inflationary pressures, the record order book and the positive demand backdrop, across all our sectors, provides us with cautious optimism for our prospects. We remain excited about our longer-term outlook

Oskar Zahn

Chief Financial Officer

XP Power Limited
Consolidated Statement of Comprehensive Income for the  financial year ended 31 December 2021

£ Millions Note 2021 2020
Revenue 2 240.3 233.3
Cost of sales (132.0) (123.2)
Gross profit 108.3 110.1
Other Income * 0.6
Distribution and marketing (47.8) (52.4)
Administrative (14.0) (5.0)
Research and development (16.8) (15.9)
Operating profit 29.7 37.4
Finance charge (1.3) (1.7)
Profit before tax 28.4 35.7
Income tax expense 3 (5.4) (4.0)
Profit after tax 23.0 31.7
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations 0.9 (3.6)
0.9 (3.6)
Items that will not be reclassified subsequently to profit or loss:
Currency translation differences arising from consolidation   *   *
Other comprehensive profit/(loss) for the year, net of tax 0.9 (3.6)
Total comprehensive income for the year 23.9 28.1
Profit attributable to:
Equity holders of the Company 22.6 31.5
Non-controlling interests 0.4 0.2
23.0 31.7
Total comprehensive income attributable to:
Equity holders of the Company 23.5 27.9
Non-controlling interests 0.4 0.2
23.9 28.1
Earnings per share attributable to equity holders of the Company (pence per share)
- Basic earnings per share 5 115.8 163.0
- Diluted earnings per share 5 113.8 160.3

*Balance is less than £100,000.

The accompanying notes form an integral part of these financial statements.

XP Power Limited
Consolidated Balance Sheet
As at 31 December 2021

£ Millions  Note   2021   2020
Current assets
Corporate tax recoverable 2.9 3.8
Cash and cash equivalents  9.0 13.9
Inventories 74.0 54.2
Trade receivables 30.8 30.2
Other current assets 5.0 4.6
Derivative financial instruments  * 0.3
Total current assets 121.7 107.0
Non-current assets
Goodwill 52.5 52.2
Intangible assets 56.3 46.6
Property, plant and equipment 30.2 28.4
Right-of-use assets 8.3 5.1
Deferred income tax assets 3.2 2.9
ESOP loan to employees * *
Total non-current assets 150.5 135.2
Total assets 272.2 242.2
Current liabilities
Current income tax liabilities 2.4 4.9
Trade and other payables 44.7 28.2
Derivative financial instruments 0.1 0.1
Lease liabilities 1.6 1.5
Accrued consideration * -
Borrowings 6 0.2 -
Total current liabilities 49.0 34.7
Non-current liabilities
Accrued consideration 1.3 1.0
Borrowings 6 33.4 31.8
Deferred income tax liabilities 9.4 6.7
Provisions 0.2 0.1
Lease liabilities 6.5 3.4
Total non-current liabilities 50.8 43.0
Total liabilities 99.8 77.7
NET ASSETS 172.4 164.5
Equity attributable to equity holders of the Company
Share capital 27.2 27.2
Merger reserve 0.2 0.2
Share option reserve 5.6 4.1
Treasury shares reserve * (0.1)
Translation reserve (2.9) (3.8)
Other reserve 4.4 3.6
Retained earnings 137.0 132.6
171.5 163.8
Non-controlling interests 0.9 0.7
TOTAL EQUITY 172.4 164.5

*Balance is less than £100,000.

The accompanying notes form an integral part of these financial statements.

XP Power Limited
Consolidated Statement of Changes in Equity
For the financial year ended 31 December 2021

Attributable to equity holders of the Company 
£ Millions Share  capital Share option reserve Treasury shares reserve Merger reserve Translation reserve
Total Non-
controlling interests
Total equity
Balance at
1 January 2020
27.2 3.9 (0.5) 0.2 (0.2) (0.8) 108.4 138.2 0.7 138.9
Exercise of share options - (1.2) 0.4 - - 4.3 - 3.5 - 3.5
Employee share option plan expenses - 1.5 - - - - - 1.5 - 1.5
Tax on employee share option plan expenses - (0.1) - - - - - (0.1) - (0.1)
Dividends paid - * - - - - (7.3) (7.3) * (7.3)
Future acquisition of non-controlling interest - - - - - (0.1) - (0.1) - (0.1)
Acquisition of subsidiary - - - - - 0.2 - 0.2 (0.2) -
Exchange difference arising from translation of financial statements of foreign operations - * - - (3.6) - * (3.6) * (3.6)
Profit for the year - - - - - - 31.5 31.5 0.2 31.7
Total comprehensive income for the year - * - - (3.6) - 31.5 27.9 0.2 28.1
Balance at
31 December 2020
27.2 4.1 (0.1) 0.2 (3.8) 3.6 132.6 163.8 0.7 164.5
Exercise of share options - (0.5) 0.1 - - 1.0 - 0.6 - 0.6
Employee share option plan expenses - 1.5 - - - - - 1.5 - 1.5
Tax on employee share option plan expenses - 0.5 - - - - - 0.5 - 0.5
Dividends paid - - - - - - (18.2) (18.2) (0.2) (18.4)
Future acquisition of non-controlling interest - - - - - (0.2) - (0.2) - (0.2)
Exchange difference arising from translation of financial statements of foreign operations - * - - 0.9 - * 0.9 * 0.9
Profit for the year - - - - - - 22.6 22.6 0.4 23.0
Total comprehensive income for the year - * - - 0.9 - 22.6 23.5 0.4 23.9
Balance at
31 December 2021
27.2 5.6 * 0.2 (2.9) 4.4 137.0 171.5 0.9 172.4

*Balance is less than £100,000.

The accompanying notes form an integral part of these financial statements.

XP Power Limited
Consolidated Statement of Cash Flows
For the financial year ended 31 December 2021

£ Millions Note   2021   2020
Cash flows from operating activities
Profit after tax 23.0 31.7
Adjustments for:
  - Income tax expense 3 5.4 4.0
  - Amortisation and depreciation 13.2 14.0
  - Finance charge 1.3 1.7
  - Equity award charges, net of tax 1.5 1.5
  - Fair value loss on DFI 0.3 0.5
  - Loss on disposal of property, plant and equipment * *
  - Loss on disposal of intangible assets - 1.2
  - Unrealised currency translation (gain)/loss (0.1) 0.2
  - Provision for doubtful debts * 0.4
Change in working capital, net of effects from acquisitions:
  - Inventories (19.0) (12.3)
  - Trade and other receivables (1.1) 2.7
  - Trade and other payables 16.1 3.3
  - Provision for liabilities and other charges * *
Cash generated from operations 40.6 48.9
Income tax paid, net of refund (4.2) (3.3)
Net cash provided by operating activities 36.4 45.6
Cash flows from investing activities
Purchases and construction of property, plant and equipment (5.5) (4.0)
Capitalisation of research and development expenditure (8.3) (7.7)
Capitalisation of intangible software and software under development (8.1) (3.2)
Proceeds from disposal of property, plant and equipment * 0.1
Repayment of ESOP loans * *
Payment of accrued consideration - (0.6)
Net cash used in investing activities (21.9) (15.4)
Cash flows from financing activities
Proceeds from borrowings 3.7 -
Repayment of borrowings (2.9) (20.7)
Principal payment of lease liabilities (1.7) (1.7)
Proceeds from exercise of share options 0.6 3.5
Interest paid (0.9) (1.3)
Dividend paid to equity holders of the Company (18.2) (7.3)
Dividend paid to non-controlling interests (0.2) *
Net cash used in financing activities (19.6) (27.5)
Net (decrease)/increase in cash and cash equivalents (5.1) 2.7
Cash and cash equivalents at beginning of financial year 13.9 11.2
Effects of currency translation on cash and cash equivalents * *
Cash and cash equivalents at end of financial year 8.8 13.9
*Balance is less than £100,000.

The accompanying notes form an integral part of these financial statements.

Notes to the Annual Results Statement

For the year ended 31 December 2021

1.  Basis of preparation

This financial information is presented in Pounds Sterling and has been prepared in accordance with the provisions of the Singapore Financial Reporting Standards (International) (“SFRS(I)”) and International Financial Reporting Standards (“IFRS”) as adopted by the International Accounting Standards Board (“IFRS as adopted by the IASB”).

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 information in respect of sales by end market to assist the readers of this report.

The revenue by class of customer and location of the design win is as follows:

Year to 31 December 2021 Year to 31 December 20201
North North
£ Millions Europe America Asia Total Europe America Asia Total
Semiconductor Manufacturing Equipment 3.0 75.2 15.1 93.3 1.8 60.6 7.2 69.6
Industrial Technology 43.7 37.1 11.2 92.0 42.8 37.4 14.2 94.4
Healthcare 20.6 28.9 5.5 55.0 21.0 43.2 5.1 69.3
Total 67.3 141.2 31.8 240.3 65.6 141.2 26.5 233.3

1 Prior year comparatives were reclassified to ensure consistency with 2021 presentation.

Revenues of £40.2 million (2020: £32.1 million) are derived from a single external customer in the

Semiconductor Manufacturing Equipment sector.

Reconciliation of segment results to profit after tax:
£ Millions 2021 20201
Europe 20.3 18.2
North America 46.1 48.7
Asia 10.0 8.4
Segment results 76.4 75.3
Research and development (16.0) (14.9)
Manufacturing (3.6) (3.1)
Corporate cost from operating segment (11.7) (11.3)
Adjusted operating profit 45.1 46.0
Finance charge (1.3) (1.7)
Specific items (15.4) (8.6)
Profit before tax 28.4 35.7
Income tax expense (5.4) (4.0)
Profit after tax 23.0 31.7

1 Prior year comparatives were reclassified to ensure consistency with 2021 segmental presentation.

Reconciliation of adjusted measures

Adjusted measures

The Group presents adjusted operating profit and adjusted profit before tax by adjusting for costs and profits which management believes to be significant by virtue of their size, nature, or incidence or which have a distortive effect on current year earnings. Such items may include, but are not limited to, costs associated with business combinations, gains and losses on the disposal of businesses, fair value movements, restructuring charges, acquisition related costs and amortisation of intangible assets arising from business combinations.

In addition, the Group presents an adjusted profit after tax measure by adjusting for certain tax charges and credits which management believe to be significant by virtue of their size, nature, or incidence or which have a distortive effect.

The Group uses these adjusted measures to evaluate performance and as a method to provide shareholders with clear and consistent reporting. See below for a reconciliation of operating profit to adjusted operating profit, profit before tax to adjusted profit before tax and profit after tax to adjusted profit after tax.

(i)  A reconciliation of operating profit to adjusted operating profit is as follows:

 £ Millions 2021 2020
Operating profit 29.7 37.4
Adjusted for:
Acquisition costs 0.1 0.3
Costs related to ERP implementation 2.1 1.9
Amortisation of intangible assets due to business combination 2.8 3.2
Legal costs 10.1 0.4
Restructuring costs - 2.3
Fair value adjustments on DFI 0.3 0.5
15.4 8.6
Adjusted operating profit 45.1 46.0

(ii)  A reconciliation of profit before tax to adjusted profit before tax is as follows:

Profit before tax (“PBT”) 28.4 35.7
Adjusted for:
Acquisition costs 0.1 0.3
Costs related to ERP implementation 2.1 1.9
Amortisation of intangible assets due to business combination 2.8 3.2
Legal costs 10.1 0.4
Restructuring costs - 2.3
Fair value adjustments on DFI 0.3 0.5
15.4 8.6
Adjusted PBT 43.8 44.3

(iii)  A reconciliation of profit after tax to adjusted profit after tax is as follows:

Profit after tax (“PAT”) 23.0 31.7
Adjusted for:
Acquisition costs 0.1 0.3
Costs related to ERP implementation 2.1 1.9
Amortisation of intangible assets due to business combination 2.8 3.2
Legal costs 10.1 0.4
Restructuring costs - 2.3
Fair value adjustments on DFI 0.3 0.5
Non-recurring tax benefits1 (3.0) (1.1)
12.4 7.5
Adjusted PAT 35.4 39.2

Adjusted for tax on specific items relating to completed acquisitions of £10,058 (2020: £0.1 million), costs related to ERP implementation of £0.3 million (2020: £0.3 million), legal costs of £2.6 million (2020: £0.1 million), restructuring costs of £nil (2020: £0.5 million) and fair value adjustments on DFI of £0.1 million (2020: £0.1 million)

3.  Income taxes

£ Millions 2021 2020
Singapore corporation tax
-  current year 1.1 4.5
-  under/(over) provision in prior financial year 0.1 (0.1)
Overseas corporation tax
-  current year 1.2 0.5
-  over provision in prior financial year * (1.4)
Withholding tax 0.1 0.1
Current income tax 2.5 3.6
Deferred income tax
-  current year 2.6 (0.1)
-  under provision in prior financial years 0.3 0.5
Income tax expense 5.4 4.0

Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions at the balance sheet date.

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  2021 2020
 Profit before income tax 28.4 35.7
Tax on profit at standard Singapore tax rate of 17% (2020: 17%) 4.8 6.1
Tax incentives (0.7) (0.6)
Higher rates of overseas corporation tax 1.1 0.5
Deduction for employee share options (0.3) (1.2)
Non-deductible expenditure 0.2 0.3
Non-taxable income (0.1) (0.2)
Under/(over) provision of tax in prior financial years 0.4 (1.0)
Withholding tax 0.1 0.1
Income tax expense  5.4 4.0

4.  Dividends

Amounts recognised as distributions to equity holders in the period:

2021 2020
Pence per
£ Millions Pence per
£ Millions
Prior year third quarter dividend paid 20.0* 3.9 20.0 3.8
Prior year final dividend paid 36.0* 7.1 - -
First quarter dividend paid 18.0^ 3.5 - -
Second quarter dividend paid 19.0^ 3.7 18.0* 3.5
Total 93.0 18.2 38.0 7.3

* Dividends in respect of 2020 (74.0p).

^ Dividends in respect of 2021 (94.0p).

The third quarter dividend of 21.0 pence per share was paid on 17 January 2022. The proposed final dividend of 36.0 pence per share for the year ended 31 December 2021 is subject to approval by Shareholders at the Annual General Meeting and has not been included as a liability in these financial statements. Subject to shareholder approval, the dividend will be paid on 28 April 2022 to members on the register at the record date of 25 March 2022, the ex-dividend date will be 24 March 2022. The last date for election for the share alternative to the dividend under the Company’s Dividend Reinvestment Plan is 5 April 2022.

5.  Earnings per share

The calculations of the basic and diluted earnings per share attributable to the ordinary equity holders of

the Company are based on the following data:

2021 2020
£ Millions
Earnings for the purposes of basic and diluted earnings per share
(profit attributable to equity holders of the Company)
22.6 31.5
Earnings for earnings per share 22.6 31.5
Number of shares
Weighted average number of shares for the purposes of basic earnings per share (thousands) 19,514 19,326
Effect of potentially dilutive share options (thousands) 344 327
Weighted average number of shares for the purposes of dilutive earnings per share (thousands) 19,858 19,653


Earnings per share from operations
Basic 115.8p 163.0p
Basic adjusted* 179.4p 201.8p
Diluted 113.8p 160.3p
Diluted adjusted* 176.3p 198.4p

*Reconciliation to compute the adjusted earnings from operations is as per below:

£ Millions
Earnings for the purposes of basic and diluted earnings per share
(profit attributable to equity holders of the Company) 22.6 31.5
Amortisation of intangible assets due to business combination 2.8 3.2
Acquisition costs 0.1 0.3
Non-recurring tax benefits (3.0) (1.1)
Costs related to ERP implementation 2.1 1.9
Legal costs 10.1 0.4
Restructuring costs - 2.3
Fair value adjustments on DFI 0.3 0.5
Adjusted earnings 35.0 39.0

6.  Borrowings

The Group’s debt is sourced from a Revolving Credit Facility (“RCF”) provided by HSBC UK Bank PLC, J.P. Morgan Securities PLC, and DBS Bank Ltd. The Group’s facilities expire in October 2024. The Group also converted US$30 million of accordion to committed facilities, increasing the facility to US$150 million, with a further US$30 million accordion option. The facility has no fixed repayment terms until maturity. The revolving loan is priced at US LIBOR plus a margin of 1.0% for the utilisation facility and a margin of 0.4% for the unutilised facility.

The borrowings are repayable as follows:

£ Millions 2021 2020
On demand or within one year 0.2 -
In the second year - -
In the third year 33.4 -
In the fourth year - 31.8
Total 33.6 31.8

Management assessed all loan covenants have been complied with as at 31 December 2021.

7.  Contingent Liabilities

As reported last year, in September 2020, Comet Technologies USA Inc., Comet AG, and YXLON International (collectively “Comet”) filed a lawsuit against XP Power LLC, alleging trade secret misappropriation relating to RF match and generator technology. The lawsuit is still ongoing, and the Group has incurred legal costs of £10.1 million in 2021 (2020: £0.4 million). XP Power believes there is no merit to this lawsuit and is vigorously defending claims brought against it by Comet. A jury trial for this lawsuit is currently set to begin on March 14, 2022. The Group expects to incur further legal costs until this matter is resolved, the magnitude of which cannot currently be estimated with any certainty. No provision in relation to the dispute has been recognised as the amount of outflow of economic benefits, if any, cannot be estimated reliably. Further information about the matter and its possible outcomes are not provided as such disclosures could prejudice seriously the position and interests of the company in this dispute.

8.  Principal risks and uncertainties

Board Responsibility

The Group has well established risk management processes to identify and assess risks. The Group’s principal risks are regularly reviewed by the Board and are mapped onto a risk universe from which

risk mitigation or reduction can be tracked and managed. This helps facilitate further discussions regarding risk appetite and draws out the risks that require a greater level of attention.

An event that causes a disruption to one of our manufacturing facilities

An event that results in the temporary or permanent loss of a manufacturing facility would be a serious issue. As the Group manufactures approximately 80% of revenues, this would undoubtedly cause at least a short-term loss of revenues and profits and disruption to our customers and therefore damage to reputation.

Risk mitigation – We now have two facilities (China and Vietnam) where we are able to manufacture the majority of our power converters and we have disaster recovery plans in place for both facilities. However, not all power converter series can be produced in both facilities. We will commence construction of a new manufacturing facility in a third country in 2022 to increase capacity to meet the demand from across the Group. We expect to commission this new facility in 2023.

We have undertaken a risk review with manufacturing management to identify and assess risks which could cause a serious disruption to manufacturing, and then identified and implemented actions to reduce or mitigate these risks where possible.

Fluctuations of revenues, expenses, and operating results due to an economic downturn or external shock

The revenues, expenses and operating results of the Group could vary significantly from period to period because of a variety of factors, some of which are outside its control. These factors include general economic conditions; adverse movements in interest rates; inflation, conditions specific to the market; seasonal trends in revenues, capital expenditure and other costs; and the introduction of new products or services by the Group, or by their competitors. In response to a changing competitive environment, the Group may elect from time to time to make certain pricing, service, marketing decisions or acquisitions that could have a short-term material adverse effect on the Group’s revenues, results of operations and financial condition.

Risk mitigation – Although not immune from an economic shock or the cyclicality of the capital equipment markets, the Group’s diverse customer base, geographic spread and revenue annuities reduces exposure to this risk.

The Group’s business model is not capital intensive and the strong profit margins lead to healthy cash generation which also helps mitigate risks from these external factors.

The Group benefits from good order exposure 12 months out allowing it to recognise market changes and mitigate the impact.

Risk associated with Supply Chain

The Group is dependent on retaining its key suppliers and on their ability to meet their obligations to the Group. Supply chain may also be affected by external events, such as the impact on our Chinese supply chain at the outbreak of the COVID-19 virus.

Risk Mitigation - We conduct regular audits of our key suppliers and in addition keep large amounts of safety inventory of key components, which we also regularly review. We also dual source our components where possible to minimise dependency on any single supplier.

Cyber-security/Information systems failure

The Group is reliant on information technology in multiple aspects of the business from communications to data storage. Assets accessible online are potentially vulnerable to theft and customer channels are vulnerable to disruption. Any failure or downtime of these systems or any data theft could have a significant adverse impact on the Group’s reputation or on the results of operations.

Risk mitigation – The Group has a defined Business Impact Assessment which identifies the key information assets; replication of data on different systems or in the Cloud; an established backup process in place as well as a robust anti-malware solution on our networks.

Internally produced training materials are used to educate users regarding good IT security practice and to promote the Group’s IT policy.

A cyber assessment carried out by the outsourced internal auditor resulted in recommendations that are being implemented to further mitigate cyber risk and safeguard the Group’s assets.

Dependence on key customers

The Group is dependent on retaining its key customers. Should the Group lose a number of its key customers or key suppliers, this could have a material impact on the Group’s financial condition and results of operations. However, for the year ended 31 December 2021, no single customer accounted for more than 17% of revenue.

Risk mitigation – The Group mitigates this risk by providing excellent service. Customer complaints and non-conformances are reviewed monthly by members of the Executive Leadership team.

Product recall

A product recall due to a quality or safety issue would have serious repercussions to the business in terms of potential cost and reputational damage as a supplier to critical systems.

Risk mitigation – We perform 100% functional testing on all own-manufactured products and 100% hi-pot testing, which determines the adequacy of electrical insulation, on own-manufactured products. This ensures the integrity of the isolation barrier between the mains supply and the end user of the equipment. We also test all the medical products we manufacture to ensure the leakage current is within the medical specifications.

Where we have contracts with customers, we always limit our contractual liability regarding recall costs.

Competition from new market entrants and new technologies

The power supply market is diverse and competitive. The Directors believe that the development of new technologies could give rise to significant new competition to the Group, which may have a material effect on its business. At the lower end of the Group’s target market, in terms of both power range and programme size, the barriers to entry are lower and there is, therefore, a risk that competition could quickly increase, particularly from emerging low-cost manufacturers in Asia.

Risk mitigation – The Group reviews activities of its competition, in particular product releases, and stays up to date with new technological advances in our industry, especially those relating to new components and materials. The Group also tries to keep its cost base competitive by operating in low-cost geographies where appropriate.

The general direction of our product roadmap is to move away from lower complexity products and to increase our engineering solutions capabilities so reducing the inherent market competitiveness.

Risks relating to regulation, compliance and taxation

The Group operates in multiple jurisdictions with applicable trade and tax regulations that vary. Failing to comply with local regulations or a change in legislation could impact the profits of the Group. In addition, the effective tax rate of the Group is affected by where its profits fall geographically. The Group’s effective tax rate could therefore fluctuate over time and have an impact on earnings and potentially its share price.

Risk mitigation – An outsourced internal audit function has been introduced to provide risk assurance in targeted areas of the business and recommendations for improvement. The scope of these reviews includes behaviour, culture, and ethics.

The Group hires employees with relevant skills and uses external advisers to keep up to date with changes in regulations and to remain compliant.

As the proportion of our own-manufactured products has increased, the reliance on suppliers for third party product has been mitigated proportionally. There has been a shift from a finished goods risk to a raw materials risk.

Risk Mitigation - We conduct regular audits of our key suppliers and in addition keep large amounts of safety inventory of key components, which we also regularly review. We also dual source our components where possible to minimise dependency on any single supplier.

Strategic risk associated with valuing or integrating new acquisitions

The Group may elect from time to time to make strategic acquisitions. A degree of uncertainty exists in valuation and in particular in evaluating potential synergies. Post-acquisition risks arise in the form of change of control and integration challenges. Any of these could influence the Group’s revenues, results of operations and financial condition.

Risk mitigation – Preparation of robust business plans and cash projections with sensitivity analysis and the help of professional advisers if appropriate.

Post-acquisition reviews are performed to extract “lessons learned”.

Exposure to exchange rate fluctuations

The Group deals in many currencies for both its purchases and sales including US Dollars, Euro, and its reporting currency Pounds Sterling. In particular, North America represents an important geographic market for the Group where virtually all the revenues are denominated in US Dollars. The Group also sources components in US Dollars and the Chinese Yuan. The Group therefore has an exposure to foreign currency fluctuations. This could lead to material adverse movements in reported earnings.

Risk mitigation – The Group reviews balance sheet and cash flow currency exposures and where considered appropriate, uses forward exchange contracts to hedge these exposures.

The Group does not hedge any translation of its subsidiaries’ results to Sterling for reporting purposes.

Loss of key personnel or failure to attract new personnel

The future success of the Group is substantially dependent on the continued services and continuing contributions of its Directors, senior management, and other key personnel. The loss of the services of key employees could have a material adverse effect on own business.

Risk mitigation – The Group undertakes performance evaluations and reviews to help it stay close to its key personnel as well as annual employee engagement surveys. Where considered appropriate, the Group also makes use of financial retention tools such as equity awards.

8.   Responsibility Statement

The Directors confirm to the best of their knowledge and believe that this condensed set of financial statements:

- Gives a fair view of the assets, liabilities, financial position, and profit of the Group; and

- Includes a fair review of the information required by the Disclosure and Transparency Rules.

9.  Other information

XP Power Limited (the “Company”) is listed on the London Stock Exchange and incorporated and domiciled in Singapore. The address of its registered office is 401 Commonwealth Drive, Lobby B, #02-02, Haw Par Technocentre, Singapore 149598. With effect from 7 February 2022, the address of registered office has changed to 19 Tai Seng Avenue, #07-01, Singapore 534054.

The financial information set out in this announcement does not constitute the Company’s statutory accounts for the years ended 31 December 2020 or 2021. The financial information for the year ended 31 December 2020 is derived from the XP Power Limited statutory accounts for the year ended 31 December 2020, which have been delivered to the Accounting and Corporate Regulatory Authority in Singapore. The auditors reported on those accounts; their report was unqualified. The statutory accounts for the year ended 31 December 2021 will be finalised based on the financial information presented by the Directors in this earnings announcement and will be delivered to the Accounting and Corporate Regulatory Authority in Singapore following the Company’s Annual General Meeting.

Whilst the financial information included in this earnings announcement has been computed in accordance with SFRS(I) and IFRS as adopted by the IASB, this announcement does not itself contain sufficient information to comply with SFRS(I) and IFRS as adopted by the IASB. The Company expects to publish full financial statements that comply with SFRS(I) and IFRS as adopted by the IASB.

This announcement was approved by the Directors on 28 February 2022.

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