Xp Power Share News (XPP)

Wed, 21st Feb 2007 07:55

(Adds detail on move to Asia, comment, outlook)

LONDON (AFX) - Power supply solutions provider XP Power PLC saw its pretax profit before exceptional items for the year ending 31 Dec 2006 rise to 9.3 mln stg from 7.7 mln stg in the same period in 2005.

The group's revenues for the year increased by 13.2 pct to 78.7 mln stg compared to 69.5 mln stg last time. The company's earnings per share also rose -- to 32.2 pence from 30.7 pence in 2005.

XP is set to pay its shareholders a total dividend of 18 pence per share, 2 pence up on last year's dividend.

The company also confirmed its plans to relocate the group's headquarters to Asia. The firm's board has approved a corporate reorganisation to introduce a new Singapore-domiciled company to be known as XP Power Singapore.

'We are embarking on a plan that will make the group more Asia centric. A circular and prospectus containing proposals to move the group's headquarters to Singapore has been sent to shareholders today,' said the company's executive chairman, Larry Tracey in a statement.

Tracey said that around 6.1 mln stg or 7.8 pct of XP's total revenue was shipped to Asia, adding the majority of the group's products are assembled on the continent and a move to Singapore makes sense for the company.

'For some time, we have seen a trend developing where our customers' design engineering work is performed in Europe or North America yet the customer builds their product in Asia,' said Tracey. 'Therefore, a requirement exists for XP to provide logistical and technical support in Asia.'

XP opened its joint venture manufacturing facility in Kunshan, China, last year. Now that the facility is fully operational, the group expects to reduce its component material and running costs, thereby maintaining its increase in gross margins in 2007.

With the discontinuation last year of 12 mln stg of annualised sales of third-party lines, the majority of XP's products are now its own intellectual property and Tracey hopes this will lead to significant improvements for the group in 2007 and beyond.

'Gross margin improvements, due to a higher mix of our own IP product and the impact of manufacturing in China, will mean that we should be able to report improved gross margin again in 2007,' he said.

r.jones@thomson.com

rj/vlb/rj/wj

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