Our model is to sell directly to our key customers, offering excellent service and support combined with a broad range of class-leading products
Our model is to sell directly to our key customers where we can add genuine value, offering excellent service and support combined with class-leading products.
We have carved out a leading position in our industry. An up-todate, high efficiency product offering, delivered to our customers by the largest and most technically competent sales engineering team in the industry, backed up by highly-skilled power systems engineers, combined with the safety and reliability benefits of world-class manufacturing provide a compelling value proposition to our customers.
Having evolved from a sales and marketing background as a specialist distributor of power conversion products, then moving into design and then later into manufacturing, we have a unique understanding of our customers and the market compared to much of our competition. We are now expanding our engineering solutions group to further enhance the value we can deliver to our key customers.
The management of our supply chain is critical to our success. Quality and reliability are paramount to our customers who often provide critical healthcare or industrial systems. For that reason, we need excellent suppliers with high quality standards.
We have a rigorous approval process which looks at all aspects of a supplier before we engage with them. This not only includes a prospective supplier’s quality systems and standards, but also their financial viability and, of course, their environmental performance and treatment of their people.
We are a full member of the Responsible Business Alliance (RBA) and have adopted the RBA Code of Conduct throughout our organisation. This not only deals with environmental standards but also treatment of people, health and safety and business ethics.
Our customers demand excellent quality and security of supply and strong corporate social responsibility standards.
Our sales process is generally a technical sale, between XP Power sales engineer and customer design engineer. Our customers are typically experts in their field, whether it is a drug delivery device, a piece of complex factory control machinery or a high-end communications device operating in a harsh environment. They will approach a company such as ours to recommend and assist them to design a power converter into their end system to allow it to function.
Generally, with larger customers it is not possible to engage on a specific opportunity until we are on an approved or preferred vendor list. This will involve qualification by the customer’s technical, quality and purchasing teams and may often involve a physical audit of our quality systems and a factory audit.
A new design programme is identified at a customer where we are an approved or preferred vendor. This is typically quite late in the customer’s development cycle as they will not usually know the total power requirement of their system until they have a working prototype.
An XP Power sales person will work with the customer to understand the requirements including the power requirements at different voltages, communication required between the power converter and end system, any specific safety agency requirements and the physical dimensions. XP Power will then advocate a solution and provide a quotation to the customer. This solution could be a modification of one of our standard products.
One or more samples are provided to the customer for them to evaluate in their system. This is a critical stage of the sale and we often find that the first company providing a sample that works in the equipment will win the design slot. Speed is therefore critical. Our power systems engineers will often work closely with the customer at this stage to assist them with any issues they might experience such as dealing with electrical noise.
The power converter is approved for use in the customer system following the customer’s technical evaluation and external safety agency approval. This is generally the longest part of the sales cycle as the technical and safety evaluation are very time consuming for the customer. XP Power will often add value by providing technical assistance during this stage and it is not unusual for us to have a technical power systems engineer working directly with the customer.
The customer commences production of their product and XP Power’s revenue stream starts. This is typically around seven years depending on the application and end market.
We have successfully transitioned the business from a specialist distributor, to designer, to design manufacturer ascending the value chain to grow our revenues and margins
As in any business the most important asset is our people. We have a large and highly technically trained sales force. Our customers deal directly with a sales engineer that can solve their power conversion problems. We do not put our key customers through distribution channels. We also provide global support.
Our Executive Leadership Team, located on three different continents, is not only talented but given a relatively young average age has an impressive average length of service. The breadth and depth of experience and collective teamwork of our people deliver genuine value to our customers.
We have the broadest, most up-to-date product offering in the industry with over 250 product families in our portfolio. Our products are specific to the requirements of the various industries and applications we target. Our philosophy is to provide highly flexible products which are easy to modify. This saves our customers the cost, time and risk of pursuing a fully customised solution. Our product portfolio has been enhanced with high voltage modules following the acquisition of EMCO in November 2015 and Radio Frequency power from Comdel in September 2017.
We have design engineering teams on three continents - this allows us to release a high number of innovative new products required by this highly diversified market. These products often have class-leading energy efficiency and small footprints to meet the ever-higher demands of our key customers. Additional engineering service teams in Germany, North America, Singapore and the UK are able to provide value added services close to our key customers. We are able to provide modified product solutions which allow the customer to more easily integrate the power converter into their equipment, therefore delivering a cost saving.
Environmental considerations are becoming increasingly important to our customers. There is strong demand for products that consume less material, including harmful chemicals, and power converters that consume less energy. Our product portfolio reflects this with many products having class-leading efficiencies and low stand-by power consumption.
Our Asian manufacturing bases in China and Vietnam are not only low cost but best-in-class. This capability is instrumental to winning new programmes with larger blue-chip customers that require the ultimate in quality and reliability. We also offer highly competitive lead times and flexible logistics arrangements.
Our stringent quality standards ensure the ultimate in quality and reliability. This is vital to our customers. This starts from the design phase right through to production and after sales support.
Although the time from identification of a customer programme can be very long (typically 18 to 30 months), once the product is designed into our customers’ equipment we enjoy an on-going revenue annuity for a large number of years. Typically, this is around seven years but can be longer or shorter depending on the industry sector and particular application. Our pipeline of programme wins with significant customers continues to build.
"Green" product revenue (£ million)
Our business model and clear strategy, consistently applied, has resulted in long-term growth and profitability and also strong free cash flow. This has enabled us to adopt a progressive approach to the dividend which is paid quarterly.
Ten year dividend history (pence per share)
The compound average growth rate of the dividend per share has been 9% over the last five years and 15% over the last ten years.