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 customers are at the heart of what we do
Our model is to sell directly to our key customers, offering excellent service and support combined with class leading products.
We have carved out a leading position in our industry. An up-to-date, 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 come from a sales and marketing background in our former incarnation as a distributor, then moved into design and then later into manufacturing, we have a unique understanding of our customers and the market compared to much of our competition.
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.
Our sales process is a technical sale, from XP Power sales engineer to 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 come to a company such as ours to recommend and help them design in a power converter to power their end system.
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 being qualified by the customer's technical, quality and purchasing teams and may often involve a physical audit of our quality systems and a factory audit.
Our sales cycle proceeds in defined steps as follows:
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 until they have a working prototype system.
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 specification. 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 of the essence.
The power converter is approved for use in the customer system following their 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.
As in any business, the most important asset is our people. We have the largest, most technically trained sales force in the industry. Our customers deal directly with a sales engineer who can solve their power conversion problems. We do not put our key customers through distribution channels. We also provide global support.
Our executive management 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 11 person executive management team have an average age of less than 45 and average length of service of over 15 years. 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. Our products are specific to the requirements of the various industries we serve. 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.
We have design engineering teams on three continents - this allows us to release the high volume of innovative new products required by this highly diversified industry. 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 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 standby 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 ongoing 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.
Revenue lifecycle from ECM40/60 product family
"Green" product revenue
Lifetime CO2 emission savings from "green" products
Our business model and clear strategy, consistently applied, has resulted in long term growth, profitability and strong free cash flow. This has enabled us to adopt a progressive approach to the dividend, which is paid quarterly.
10 year dividend history (pence per share)