Year at a Glance
Y e a r e n d e d 3 1 D e c e m b e r 2 0 0 3
Significantly improved financial performance
Diluted earnings per share adjusted for goodwill amortisation and profit on sale of own shares
grows 70% to 12.4 pence per share. Basic earnings per share increased from 0.0 pence
to 7.0 pence
Gross margins improved by a further 1.6% points to 33.5% - the fourth year of successive
improvement
Strong free cash flow and increased profitability enabled dividend to be maintained at 12p per share
Introduction of own brand XP product range now materially complete
Continental European operations report first operating profit
(cid:3) New design wins and the introduction of further own branded product families to underpin
prospects in 2004
Inspiring our people to be
The Experts in Power delivering
genuine value to our customers.
XP Power plc Annual Report and Accounts 2003
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Background to the Group, its Products and MarketsY e a r e n d e d 3 1 D e c e m b e r 2 0 0 3
The Group
The Group provides power supply solutions to the
electronics industry. Power supplies take the relatively
high voltage alternating current supply from the mains
and convert it into various lower voltage, stable direct
current outputs that are required to drive electronic
equipment.
Products
As we are not constrained by our own factory, we
are able to offer over 5,000 standard products, this,
combined with our engineering services group and
custom design facility, allows us to offer the industry’s
largest range of power solutions. These products range
from AC to DC power supplies, DC to DC converters,
through to secure power systems. The Group also
provides ancillary products such as filters and fans
necessary for meeting electro magnetic compatibility
(EMC) legislation and thermal management.
The need for our customers to differentiate their
product from that of their competitors gives rise to a
vast number of power supply requirements to satisfy
the endlessly increasing combinations of voltages at
different power levels.
Market
The world merchant market can be split into three
distinct tiers:
The use of 3D computer design allows us to quickly generate
a proposal with no financial commitment from the customer.
We can now satisfy approximately
70% of all requirements with our
own products.
The Group specifies and designs its own products
as well as providing other manufacturers’ products.
We have a design engineering team with over
20 engineers based in Southern California and
New England. Our products are manufactured for
us by a number of manufacturing partners
throughout the world.
Upper-Tier: consists of a small number of large
original equipment manufacturers (OEMs) who typically
source custom power supplies in high volumes.
Mid-Tier: our target market, which is highly
fragmented, is made up of a large number of small to
medium sized OEMs who source standard and modified
standard power supplies.
Lower-Tier: small volume customers such as
maintenance, education and research establishments
who we service via catalogue companies.
Competition ranges from numerous small custom
manufacturers, mid-tier manufacturers and distributors
of Asian manufacturers. Consolidation continues to
occur in the industry as scale, time to market, shorter
product life cycles and design costs make it harder for
the small custom manufacturers to compete.
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XP Power plc Annual Report and Accounts 2003
Y e a r e n d e d 3 1 D e c e m b e r 2 0 0 3
Customers
Engineering Services
Our customers can be characterised as having expertise
in their particular industry, whether it be in
communications, medical, industrial or defence
electronics - our key areas of focus - they generally do
not have in-house power supply expertise. XP’s
technical sales force provides this expertise; assisting
our customers’ engineers to design in a suitable power
supply from our extensive range of products that meets
both the customer’s cost target and technical
requirements.
Equipment design involves meeting the relevant safety
standards that apply to an industry such as particular
medical or telecom standards as well as EMC legislation
and thermal performance. Our customers may also
require non-standard output voltages or want the
power supply in a format that makes it easier and
therefore more cost effective to integrate into their
equipment. This may involve incorporating several
power supplies into one chassis, adding signals, special
housings, thermal and EMC management and specific
cable harnesses or connectors.
Photo Therapeutics worked with our engineers
Photo Therapeutics worked with our engineers
to source a suitable power supply for their
to source a suitable power supply for their
innovative skin cancer treatment.
innovative skin cancer treatment.
Our
engineering
services group
offer pre
and post
application
support.
World Merchant Market
$7.5Bn
1,000 customers (Spend >$1M)
$4.9Bn
20 Manufacturers
100,000 customers
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