14th Jun 2012 07:00
Premier Farnell plc 14 June 2012
Results for the First Quarter of the 53 week Period Ending 3February 2013Key Financials £m Q1 12/13 Q1 11/12 Q1Continuing operations £m £m Growth (a)(unaudited)Total revenue 241.0 252.5 -5.0%Adjusted operating profit (b) 26.0 28.5 -8.6%Restructuring costs / gain on (7.5) 17.8business disposal (b)Total operating profit 18.5 46.3 -60.2%
Adjusted profit before tax (b) 20.9 24.1 -13.3% Total profit before taxation 13.4 41.9 -68.0% Adjusted earnings per share (b) 4.1p 4.7p -12.8% Basic earnings per share 2.6p 8.9p -70.8% Free cash flow (c)
21.8 6.6 230.3%
Sales per day maintained at stable levels since Q3 last year;
continued focus on margin and costs
Financial highlights
- Continued delivery of industry leading return on sales with first quarter at 10.8% (2011/12: 11.3%), and underlying operating profit for the quarter of £26.0m (2011/12: £28.5m).
- Stability in sales per day (SPD) maintained for the thirdconsecutive quarter, despite contracting markets, resulting in a year on yeardecline of 5.0% in the quarter against strong comparator growth of 8.3% lastyear.
- Both Europe and Asia Pacific showed strong sequential growth of 2.1% and 8.5%, respectively with Asia Pacific returning to year on year growth. North America was 2.7% lower, sequentially, as we continued our strategic transformation away from commodity MRO.
- Following investment in our high service proposition, first quarter gross margin increased by 0.7% on the fourth quarter to 39.8% (2011/12: 40.7%) and above our long term average.
- Overhead costs for the first quarter were 29.0% of sales (2011/12: 29.4%) representing a year on year reduction of £4.3m, with focus on cost efficiency through the remainder of the year.
- Operating cash flow conversion in the quarter was strong at 116.5%(e) (2011/12: 61.1%) giving free cash flow of £21.8m for the quarter reducing net debt to £212.3m (Q4 2011/12: £237.1m).
Strategic highlights
- Global MDD eCommerce penetration increased by 2.4 percentage points year on year to 56.1%.
- Continued progress as a digital enterprise, with 2.7m visits inthe quarter to our element14 community as it played an important role in theglobal launch of Raspberry Pi which will add in excess of 60,000 new customersfor the second quarter.
- Continued growth in our active customer base of 2.1% in the first quarter.
- International growth markets contributed 23.2% of total sales within which first quarter sales to our emerging markets increased by 6.5% year on year giving three year compound growth of 48.0%.
- Following the launch in Q3 of version six of CadSoft EAGLE, our design engineering software, CadSoft product sales increased by 95.4% year on year in the first quarter.
- Our new multi-lingual, pan-European outboundtelesales call centre in Krakow, Poland, is on track for a phased launchfollowing its opening on 28th May. As previously announced, £7.5m ofexceptional costs, principally in relation to this project, were incurred inthe quarter and will be recovered over a 3-4 year payback period.- On 24th May the Group announced the resignationof Harriet Green after six years as Chief Executive Officer and theappointment of Laurence Bain. Laurence joined the Company in 2002 and has beenChief Operating Officer since July 2002. He has played a key role in thedevelopment and delivery of the Group's strategy.Commenting on the results, Laurence Bain, GroupChief Executive, said:`'Global quarterly sales per day have beenmaintained at a stable level since the decline in the global electronics andtechnology markets that impacted us in June last year. In the first quarter wesaw sequential growth in both Europe and Asia Pacific and a reduction in theAmericas as that business continues its progression from commodity tostrategic MRO and EDE. Although at this stage of the cycle EDE markets remainchallenging, MRO sales per day continued to progress on a year on year basis.Sales in May were stable against Q1 resulting in an improved yearon year performance of -2.4%. We continue to manage costs carefully andmaintain gross margin stability whilst investing in support of our strategyand our people. As comparators become easier from the middle of the year andwith the benefit of a 53rd week we expect growth to return in the second half.However as we have limited forward visibility and in light of the economicoutlook we remain cautious.
With continued focus on providing great service to the engineering community, our multichannel strategy, led by the web and growth in emerging markets, I believe that the Group will go from strength to strength.''
For further information, contact:
Premier Farnell plcLaurence Bain, Chief Executive Officer +44 (0) 20 7851 4100Nicholas Cadbury, Chief Financial OfficerThomas Churchill, Investor RelationsFTI ConsultingAndrew Lorenz +44 (0) 20 7269 7291
Premier Farnell's announcements and presentations are published at www.premierfarnell.com together with business information and links to all other Group web sites.
The 2012 Annual Report and Accounts are now available online.The results for the second quarter and first half of the 53 week financial year ending 3 February 2013 will be announced on 13 September 2012.
Notes:
(a) Throughout this statement, in order to reflect underlying business performance, sales growth is based on sales per day for continuing businesses at constant exchange rates and for like periods, and growth in operating profit is calculated at constant exchange rates, unless otherwise stated.
(b) Current year adjusted operating profit, profit before tax, and earnings per share in the table above exclude restructuring costs of £7.5m before taxation. In the prior year, adjusted operating profit, profit before tax, and earnings per share, exclude the gain on sale of TPC Wire & Cable (pre-tax gain of £17.8m). References in this statement relate to adjusted numbers unless otherwise stated.
(c) Free cash flow comprises total cash generated from operations,excluding cash flows related to restructuring, less net capital expenditure,interest, preference dividends and tax payments. Free cash flow also excludesnet proceeds from the sale of businesses.
(d) SIA data from Semiconductor Industry Association publication, PMI data from relevant published source in each market.
(e) Total cash generated from operations, excluding cash flows related to restructuring, as a percentage of adjusted operating profit.
Premier Farnell plcFIRST QUARTER STATEMENT Results for the First Quarter of the 53 week Period Ending 3 February 2013Premier Farnell, the leading multi-channel, highservice distributor supporting millions of engineers and purchasingprofessionals globally, announces its results for the first quarter of the 53week financial period ending 3 February 2013.
Chief Executive's Operational Overview
Indicators of the industrial and technologymarkets globally remain highly uncertain, PMIs continuing below 50 in mostmarkets and global SIA data fluctuating from month to month with a 7.9%decline in the three months to March improving to a 2.9% decline for the threemonths to April. In this environment we are focused on what we can control andin the first quarter have delivered a third quarter of global sales stability,continued industry leading return on sales, gross margin stability, resolutecost control and effective cash generation. Through the year as our year onyear comparators become less demanding, we will continue to focus on thedelivery of each quarter's results and our longer term strategy.
Sales
First quarter sales per day were stable from thefourth quarter of last year despite a seasonal reduction from our `other' MDDbusinesses, CPC and MCM of 4.9%. Sales per day have now been stable for threequarters. On a year on year basis, first quarter sales per day declined by5.0%, against strong growth of 8.3% last year.Once again Europe, as our most strategicallyadvanced region, has outperformed its markets with sequential sales growthfrom the fourth quarter of 2.1% despite a reduction in Eurozone manufacturingPMIs from 48.8 in January to 45.9 April, with the UK having declined by 1.6 to50.5 over the same period. A year on year decline of 7.3% for our Europeanbusiness against record comparators compares favourably with a reduction inSIA data of 14.4% over the same period and DMASS data of 15.0% in the firstcalendar quarter. UK sales per day for the quarter declined by 7.1% againstprior year growth of 16.3%.Through the current challenging market conditionsthat show a 0.4% decline in SIA data for the three months to April (improvedfrom the 5.7% decline in the three months to March) our MDD Americas businesshas continued its strategic transformation from a commodity MRO focusedbusiness to one focused on the web, EDE and strategic MRO segments. Thismovement from commodity MRO saw a sequential decline of 2.7% in first quartersales per day and a decline of 7.6% year on year.Asia Pacific's first quarter sales per day grewby 8.5%, sequentially, from the fourth quarter and returned to year on yeargrowth for the first time in five quarters. This represents a continuedoutperformance of SIA data for Asia Pacific which shows a decline of 1.4% forthe three months to April, (improved from a decline of 7.6% in the 3 months toMarch) and is reflective of manufacturing PMIs now having been below 50 forsix consecutive months in China and having again fallen significantly inAustralia to 43.9.
First quarter sales per day from Emerging Markets grew by 6.5% year on year - now giving 48.0% compound growth over three years.
Gross margin
The value our customers obtain from ourproposition continues to be reflected in our gross margin. Whilst continuingto be influenced by the mix of EDE and MRO inherent in this phase of theeconomic cycle, Group gross margin increased sequentially in the first quarterby 0.7% to 39.8%, and has now returned above our long term average havingincreased by 1.2% over 2 quarters.
Costs
In uncertain sales markets the group continues toactively manage its cost base both strategically, as the achievement of keymetrics progresses, particularly progress to the web, and tactically, inresponse to sales volumes. First quarter overheads reduced from 29.4% of saleslast year to 29.0% this year - representing a year on year reduction of £4.5m(at constant exchange rates) for the quarter.We will continue to manage costs as we transitionto the web and shape our business to the environment. We will also continue toinvest in our strategy, particularly in our customers' web experience, withthe launch of a new web platform which is on track for a phased launch tocommence later in the year, and in our people. Whilst our focus on costefficiency remains absolute, we anticipate that costs will increase in thesecond half of the year as growth driven incentives return and expenditure onour web platform and data management solutions increase.Employee consultation concluded positively on theplanned implementation of a pan European outbound telesales and telemarketingoperations into a consolidated multi-lingual, best practice call centre inKrakow, Poland, as outlined in our fourth quarter results and implementationis now proceeding on plan following its opening on 28th May. As reported inour fourth quarter statement, a £7.5m exceptional cost, principally in respectof this project implementation, is being recognised in the first quarter. Thecash effect of this charge will be recognised across each quarter of thecurrent year reflecting phased go-live from the second quarter. The costs ofimplementation are expected to have a 3-4 year payback period.
Return on Sales
Focus on the implementation of our strategy,gross margin and cost management has allowed the Group to deliver industryleading return on sales throughout the period since our strategy began, withGroup return on sales of 10.8% for the quarter.Over the last three years of our strategy, firstquarter underlying operating profit has grown by 14.1% pa compound.Our MDD Americas business saw a year on yeardecline in first quarter sales of 7.6%. In the quarter the business madeaccelerated progress out of certain lower margin segments within MRO. Thisapproach led to an improvement at gross margin level, however, resulted in ashort term reduction in operating margin with a return on sales in the firstquarter of 7.7%, compared to 9.1% in the first quarter last year. The businessis now in a stronger strategic shape to benefit from the return of EDE growthand first quarter profitability has now increased by 33.5% pa compound overthe last three years of the strategy.With Asia Pacific returning to year on year salesgrowth and focus on cost reduction in Europe in the first quarter, Europe andAsia Pacific return on sales improved sequentially from the fourth quarter by0.3% to 16.6%. Whilst returns have been influenced by economic conditions inboth regions, the strategic positioning in these regions continues to progressand with our significant infrastructural investments in Asia Pacific in recentyears, there is confidence that we will benefit from market improvements andmarket share growth. First quarter underlying operating profit has increasedby 16.5% compound over the last three years of our strategy.Macroeconomic uncertainty and risks associated with the euro areconstantly under review and do impact on our earnings. Our operating profit issensitive to fluctuations in the GBP:Euro exchange rate by approximately £0.5mpa per 1 cent fluctuation. Sensitivity to GBP:USD is £0.25m per 1 centfluctuation.
Cash Flow / Balance Sheet
Our continued focus on cash generation as wemanage our working capital to reflect a lower sales environment has allowed usto deliver operating profit cash conversion of 116.5% for the quarter (Q12011/12: 61.1%) following on from the 157.3% achieved in the fourth quarter.
This performance combined with our robust balance sheet, gives comfort over our ability to maintain dividends in more challenging markets whilst maintaining progress in the gradual reduction of our net debt position.
In the first quarter net debt reduced by £18.9m,excluding the benefit of exchange rates, to £212.3m (Q4:2011/12 £237.1m).
Strategy
Whilst global economic and market conditions remain uncertain andchallenging we remain focused on managing the implementation of our strategictransformation. Our strategy has delivered industry leading returns throughoutits implementation - and continues to do so now at the point in the economiccycle that is least favourable to our EDE focus.As was the case in 2010, before the recovery in the industrial andtechnology markets we serve, we continue to actively attract customers,potential customers and market intelligence through our web and communityenvironments. In the first quarter we participated in the global launch ofRaspberry Pi - a product that will have a slightly dilutive impact on grossmargin in the second quarter. However, with Raspberry Pi product being shippedto over 60,000 new customers in the second quarter the potential forassociated sales is positive. This contributed to over 2.7 million visits tothe Element14 community in the quarter - a record high.
Through focus on the fundamentals of high service distribution whilst further developing our global proposition to EDE and strategic MRO customers, we increased our active customer base by a further 2.1% in the quarter (excluding Raspberry Pi) demonstrating continued market share gains in our targeted market segments whilst accelerating the exiting of some non strategic segments - particularly in the Americas.
We continue to make progress towards our goal of being a digital enterprise with eCommerce penetration in the first quarter of 56.1%, up 2.4% on the prior year and 0.8% on the fourth quarter. The launch of our new web platform commencing later in the current year will bring exciting new functionality that will significantly enhance our proposition.
Since its launch in December, version six of CadSoft EAGLE, our design engineering software, has performed spectacularly with first quarter year on year CadSoft SPD growth of 95.4%.
Other Distribution Businesses
First quarter sales at CPC grew 5.8% maintainingthe strong performance of last year in highly challenging market conditions.Growth continues to be driven by web focused customer acquisition and theintroduction of new products sourced globally. Web sales grew by 8.1% in thequarter.
Whilst challenging market conditions continue for MCM, increased collaboration with CPC has allowed first quarter growth of 3.8%. This has been achieved through increased focus on the web, targeted product segments and new product introductions.
Industrial Products Division (IPD)
Domestic market conditions have continued to be challenging forAkron Brass but are showing early signs of stabilising. It has a significantshare of its home market in North America and is continuing to give focus tothe development of international markets whilst broadening its product rangeand reaching into new industrial markets at home and abroad. Sales per dayincreased by 5.5% year on year. International growth and continued increase indomestic US market share provide a strong foundation for further progress asUS markets recover and international sales continue to grow.
The Board
On 24 May 2012 the Company announced theresignation of Harriet Green as Chief Executive Officer and the appointment ofLaurence Bain, its Chief Operating Officer as Chief Executive Officer witheffect from 12th June 2012. Laurence has played a key role in the developmentand delivery of the strategy to date and will provide continuity and focus onexecution. Prior to joining Premier Farnell, Laurence worked at Motorola for18 years, latterly as Vice President and Chief Operating Officer for thePersonal Communications Sector in Europe, Middle East and Africa, a $3billionenterprise.
The group would like to thank Harriet for her strong leadership and contribution during her six years as Chief Executive Officer. She has transformed the company to become a global, high service, web business, consistently delivering industry leading returns across the economic cycles whilst building an excellent team thus ensuring robust management succession. The company is now in a considerably stronger position and can look to the future with confidence. We wish Harriet well for the exciting opportunity ahead of her.
Outlook
Global quarterly sales per day have beenmaintained at a stable level since the decline in the global electronics andtechnology markets that impacted us in June last year. In the first quarter wesaw sequential growth in both Europe and Asia Pacific and a reduction in theAmericas as that business continues its progression from commodity tostrategic MRO and EDE. Although at this stage of the cycle EDE markets remainchallenging MRO sales per day continue to progress on a year on year basis.Sales in May were stable against Q1 resulting in an improved yearon year performance of -2.4%. We continue to manage costs carefully andmaintain gross margin stability whilst investing in support of our strategyand our people. As comparators become easier from the middle of the year andwith the benefit of a 53rd week we expect growth to return in the second half.However as we have limited forward visibility and in light of the economicoutlook we remain cautious.
Three Year Success Metrics - Our performance against our three year success metrics is as follows:
Key Performance Indicators Goal Achieved in Q1Sales per day growth 6-8% -5.0%Gross margin % Stability 39.8% 10.8% (MDDReturn on sales % 12%-15% 12.1%)Return on net operatingassets % >30% 36.4%Working capital as a % ofsales
Analysis by Segment
Marketing and Distribution Division (MDD) - (including Newark, Farnell-element14 Europe, element14 Asia Pacific, CPC and MCM)
Q1 12/13 Q1 11/12 Q1 £m £m growthRevenue 224.8 237.5 -5.7%Adjusted operating profit* 27.2 30.1 -9.2%Adjusted operating margin% 12.1% 12.7%
* Current year adjusted to exclude impact of £7.5m restructuring costs
MDD Americas - (Newark)
Q1 12/13 Q1 11/12 Q1 £m £m growthRevenue 90.0 96.3 -7.6%Adjusted operating profit 6.9 8.8 -23.2%Adjusted operating margin% 7.7% 9.1%
* Current year adjusted to exclude impact of £0.6m restructuring costs
MDD Europe and Asia Pacific - (Farnell-element14 Europe and element14 Asia Pacific)
Q1 12/13 Q1 11/12 Q1 £m £m growthRevenue 109.6 117.7 -6.3%Adjusted operating profit* 18.2 19.4 -4.8%Adjusted operating margin% 16.6% 16.5%
* Current year adjusted to exclude impact of £6.9m restructuring costs
Revenue by region Q1 12/13 Q1 11/12 Q1 £m £m growthUK 30.2 31.9 -7.1%Rest of Europe (incl 62.9 70.0 -7.4%exports)Asia Pacific 16.5 15.8 0.3%
Other Distribution Businesses - (CPC and MCM)
Q1 12/13 Q1 11/12 Q1 £m £m growthRevenue 25.2 23.5 5.3%Operating profit 2.1 1.9 12.4%Operating margin % 8.3% 8.1%
Industrial Products Division - (Akron Brass)
Q1 12/13 Q1 11/12 Q1 £m £m growthRevenue 16.2 15.0 5.5%Adjusted operating profit* 2.4 2.2 7.0%Adjusted operating margin% 14.8% 14.7%
* Prior year adjusted to exclude impact of the gain on sale of TPC Wire & Cable of £17.8m.
Financial Results
Note: References below to adjusted profit, cashand ratios exclude the impact of reorganisation costs incurred in the currentquarter, and in the first quarter of the prior year excludes the gain on thesale of the TPC Wire & Cable (TPC) business.
Revenue
Sales for the first quarter were £241.0m. Sales in the prior year were £252.5m, resulting in a first quarter sales per day decline of 5.0% at constant exchange rates.
The average exchange rate for the US dollaragainst sterling was $1.59 (2011/12: $1.62) and the average exchange rate forthe Euro against sterling was Euro 1.20 (2011/12: Euro 1.14).
Margins and Operating Profit
Gross margin for the first quarter was 39.8%, compared with gross margin of 40.7% in the first quarter of the prior year. First quarter gross margin increased 0.7% on the prior quarter and is above our long term average of 39.6%.
Adjusted net operating expenses reduced by £4.3m(£4.5m at constant exchange rates) compared to the prior year and were 29.0%of sales compared with 29.4% in the first quarter of the prior year. Adjustedoperating profit was £26.0m (2011/12: £28.5m), producing an operating marginof 10.8% compared with 11.3% in the first quarter of the prior year, and 10.9%in the previous quarter.Total net operating expenses in the currentquarter includes £7.5m of reorganisation costs relating primarily to theimplementation of a single outbound telesales and telemarketing centre ofexcellence for all European markets in Krakow, Poland. In the prior year,total net operating expenses included the pre-tax gain on the sale of the TPCbusiness of £17.8m. Including these one-off items total operating profit was£18.5m compared to £46.3m in the prior year.
Foreign Currency Impact
A one cent movement in the exchange rate betweenthe US dollar and sterling impacts the Group's operating profit byapproximately £250,000 per annum, and a one cent movement in the exchange ratebetween the Euro and sterling impacts the Group's operating profit byapproximately £500,000 per annum.There was a detrimental impact on adjustedoperating profit of £0.1m from the translation of overseas results comparedwith the prior year.Finance Costs
Net finance costs in the first quarter were £5.1m (2011/12: £4.4m). This comprises net interest payable of £4.0m (2011/12: £3.3m), which was covered 6.5 times by adjusted operating profit, and a net charge of £1.1m (2011/12: £1.1m) in respect of the Company's convertible preference shares.
Finance costs (including Preference Shares) would be expected toreduce by approximately £1.0m per quarter from Q1 levels on repayment of theGroup's 2013 USPP Notes. These notes are due for repayment in July 2013. Earlyrepayment this year would attract a one-off charge that would offset theongoing benefit in the current year.
Profit Before Tax
Adjusted profit before tax in the first quarterwas £20.9m (2011/12: £24.1m), a decrease of 13.3% on the previous year.Total profit before tax (including one-off items)in the quarter was £13.4m (2011/12: £41.9m).
Tax
The effective tax rate of the group is 27.5% of profit before tax after adding back preference dividends charged within finance costs. The underlying effective tax rate of 27.5% is unchanged from the prior year.
Earnings Per Share
Adjusted earnings per share for the first quarterare 4.1p (Q1 2011/12: 4.7p). Basic earnings per share (after the net impact ofone-off items) are 2.6p (Q1 2011/12: 8.9p).
Cash Flow and Net Financial Liabilities
The first quarter cash conversion of adjustedoperating profit into adjusted operating cashflow of 116.5% (2011/12: 61.1%)represents a strong performance as our working capital requirements arerealigned with our lower sales.As we continue to manage our inventory to supportkey initiatives, total cash generated from operations in the first quarter was£29.4m (2011/12: £17.4m) or £30.3m (2011/12: £17.4m) excluding the impact ofrestructuring costs. Free cash flow for the quarter, being total cashgenerated from operations, excluding cash flows related to restructuring, lessnet capital expenditure, interest, preference dividends and tax payments, andexcluding net proceeds from the sale of businesses was £21.8m, (2011/12:£6.6m). Our free cash flow to sales ratio in the quarter was 9.0%.Net financial liabilities at the end of the firstquarter were £212.3m (29 January 2012: £237.1m), including £62.0m (29 January2012: £61.8m) attributable to the Company's preference shares. This representsa ratio of net debt to EBITDA of 1.7. The impact of exchange rates in theperiod was to reduce net financial liabilities by £5.9m, principally inrelation to our US$ denominated private placement loan notes.Premier Farnell's financial position remainsrobust with good liquidity and strong free cash flow. At the quarter end, ourheadroom on bank borrowings was £180m under facilities in place until October2016. This headroom, combined with our net cash position of £136.7m, gives usa secure funding position.Condensed Consolidated IncomeStatement For the first quarter ended 29April 2012 2012/13 2011/12 2011/12 First First Full quarter quarter year unaudited unaudited audited Notes £m £m £m Continuing operationsRevenue 2 241.0 252.5 973.1Cost of sales (145.0) (149.7) (588.1)Gross profit 96.0 102.8 385.0Net operating expenses- before restructuring costs andgains on disposalof businesses (70.0) (74.3) (277.7)- restructuring costs 2 (7.5) - (2.8)
- gains on disposal of businesses 2 - 17.8 18.9 Total net operating expenses
(77.5) (56.5) (261.6)Operating profit- before restructuring costs andgains on disposalof businesses 2 26.0 28.5 107.3- restructuring costs 2 (7.5) - (2.8)- gains on disposal of businesses 2 - 17.8 18.9Total operating profit 2 18.5 46.3 123.4Finance income 0.1 - 0.1Finance costs- interest payable (4.1) (3.3) (14.6)- preference dividends (0.9) (0.9) (3.5)- premium on redemption ofpreference shares (0.2) (0.2) (0.8)Total finance costs (5.2) (4.4) (18.9)Profit before taxation 13.4 41.9 104.6Taxation 3 (3.9) (9.7) (27.7)Profit for the period attributable toordinary shareholders 9.5 32.2 76.9 Earnings per share 4Basic 2.6p 8.9p 21.2pDiluted 2.6p 8.7p 20.9p Ordinary dividendsInterim - proposed 4.4pFinal - proposed 6.0pPaid 10.4pImpact on shareholders' funds(£m) 37.8 Condensed Consolidated Statement ofComprehensive Income For the first quarter ended 29 April2012 2012/13 2011/12 2011/12 First First Full quarter quarter year unaudited unaudited audited £m £m £m Profit for the period attributable toordinary shareholders 9.5 32.2 76.9 Net exchange adjustments (1.0) (0.8) 0.4Recycling of cumulative translationadjustments on disposal of subsidiaryundertaking - (0.8) (0.8)Actuarial losses on pensions and otherpost-retirement obligations (4.7) - (10.0)Deferred tax credit on actuarial losses onpensions and other post retirementobligations 1.2 - 2.5Deferred tax charge on share basedpayments - - (2.3)Net fair value (losses)/gains on cashflow hedges (1.6) (1.8) 2.2Other comprehensive expense for theperiod (6.1) (3.4) (8.0) Total comprehensive income for theperiod attributable to ordinaryshareholders 3.4 28.8 68.9 The accompanying notes form an integral part ofthis unaudited condensed consolidated financialinformation. Condensed ConsolidatedBalance Sheet As at 29 April 2012 29 April 1 May 29 January 2012 2011 2012 unaudited unaudited audited Notes £m £m £mASSETSNon-current assetsGoodwill 34.2 34.5 34.3Other intangible assets 27.1 23.7 26.9Property, plant and equipment 55.4 54.2 57.4Deferred tax assets 11.5 13.9 10.5Total non-current assets 128.2 126.3 129.1 Current assetsInventories 214.4 209.5 214.5Financial assets 5 1.3 - 2.3Trade and other receivables 140.4 151.0 139.5Current tax receivable 1.0 - 1.0Cash and cash equivalents 5 136.7 53.7 116.9Total current assets 493.8 414.2 474.2 LIABILITIESCurrent liabilitiesFinancial liabilities 5 (2.1) (3.2) (1.3)Trade and other payables (126.8) (121.9) (113.4)Current tax payable (19.2) (31.0) (15.6)Total current liabilities (148.1) (156.1) (130.3) Net current assets 345.7 258.1 343.9 Non-current liabilitiesFinancial liabilities 5 (348.2) (277.3) (355.0)Retirement and other post-employmentbenefits (47.3) (34.6) (43.8)Deferred tax liabilities (6.2) (3.5) (6.4)Total non-current liabilities (401.7) (315.4) (405.2) NET ASSETS 72.2 69.0 67.8 EQUITYOrdinary shares 18.5 18.4 18.5Equity element of preference shares 10.4 10.4 10.4Share premium 31.2 29.0 31.1Capital redemption reserve 4.4 4.4 4.4Hedging reserve (0.2) (2.6) 1.4Cumulative translation reserve 18.6 18.4 19.6Retained earnings (10.7) (9.0) (17.6)TOTAL EQUITY 72.2 69.0 67.8 Consolidated Statement of changes inEquity For the first quarter ended 29 April2012 2012/13 2011/12 2011/12 First First Full quarter quarter year unaudited unaudited audited £m £m £m
Total equity at beginning of period 67.8
38.4 38.4 Profit for the period 9.5 32.2 76.9Other comprehensive expense (6.1) (3.4) (8.0)Total comprehensive income 3.4 28.8 68.9 Transactions with owners:Ordinary dividends paid - - (37.8)
Ordinary share capital subscribed 0.1
0.5 2.7Purchase of ordinary shares - - (5.8)Share-based payments 0.9 1.3 1.4
Total transactions with owners 1.0
1.8 (39.5)
Total equity at end of period 72.2
69.0 67.8
The accompanying notes form an i ntegral part of this unaudited condensed consolidated financial information.
Condensed Consolidated Statementof Cash Flows For the first quarter ended 29 April2012 2012/13 2011/12 2011/12 First First Full quarter quarter year unaudited unaudited audited Notes £m £m £m Cash flows from operating activitiesOperating profit 18.5 46.3 123.4Less: gain on disposal of businessesincluded in arriving at operating profit
- (17.8) (18.9)Restructuring:- net income statement impact 7.5 - 2.8- cash impact (0.9) - (2.2)Non cash impact of restructuring 6.6 - 0.6Depreciation and amortisation 4.6 4.6 18.2Changes in working capital (0.5) (16.2) (13.6)Additional funding for post retirementdefined benefit plans (0.8) (0.8) (3.4)Other non-cash movements 1.0 1.3 1.7Total cash generated from operations 29.4 17.4 108.0Interest received 0.1 - 0.1Interest paid (1.4) (1.4) (11.0)
Dividends paid on preference shares - - (3.5)Taxation paid (2.3) (4.0) (26.9)Net cash generated from operatingactivities
25.8 12.0 66.7
Cash flows from investing activitiesNet inflow from disposal of businesses(net of tax paid) - 25.5 23.2Proceeds from sale of property, plantand equipment - - 1.3Purchase of property, plant andequipment (1.1) (3.2) (10.4)Purchase of intangible assets(computer software) (3.8) (2.2) (12.6)Net cash (used in)/generated frominvesting activities
(4.9) 20.1 1.5
Cash flows from financing activitiesPurchase of ordinary shares - - (5.8)Issue of ordinary shares 0.1 0.5 2.7New borrowings 0.2 - 174.6Repayment of borrowings - (12.0) (118.9)
Dividends paid to ordinary shareholders - - (37.8)Net cash generated from/(used in)financing activities
0.3 (11.5) 14.8
Net increase in cash, cash equivalentsandbank overdrafts 21.2 20.6 83.0Cash, cash equivalents and bank overdrafts atbeginning of period 116.9 33.4 33.4Exchange (losses)/gains (1.4) (0.3) 0.5Cash, cash equivalents and bankoverdrafts at end of period
136.7 53.7 116.9
Reconciliation of net financial liabilitiesNet financial liabilities at beginning ofperiod (237.1) (262.9) (262.9)Net increase in cash, cash equivalents andbank overdrafts 21.2 20.6 83.0(Increase)/decrease in debt (0.2) 12.0 (55.7)Premium on redemption of preferenceshares (0.2) (0.2) (0.8)Derivative financial instruments (1.6) (1.9) 3.2Amortisation of arrangement fees (0.3) (0.4) (2.1)Exchange movement 5.9 6.0 (1.8)Net financial liabilities at end of period 5
(212.3) (226.8) (237.1)
Notes
1 Basis of preparation
The unaudited condensed consolidated financial information in this report has been prepared based on International
Financial Reporting Standards (IFRSs), as adopted by the European Union, and applying the accounting policies
disclosed in the Group's 2012 Annual Report and Accounts on pages 122 to 125 except as described below.
There are no new standards or amendments to standards that are mandatory for the first time in the current financial
year which have had a significant impact upon the Group.
This condensed consolidated financial information does not comprise statutory accounts within the meaning of Section
434 of the Companies Act 2006. The report of the auditors on those accounts was unqualifiied and did not contain any
statement under Section 498 of the Companies Act 2006. Copies of the Company's 2012 Annual Report and Accounts are
available from Premier Farnell plc, 150 Armley Road, Leeds, LS12 2QQ, England or from the Company's website at
www.premierfarnell.com. Segment2 information 2012/13 First quarter 2011/12 First quarter unaudited unaudited Before Restructuring After Before Restructuring Gains After restructuring costs restructuring restructuring costs on restructuring costs costs and gains disposal and gains on disposal of of businesses on disposal businesses of businesses £m £m £m £m £m £m £m RevenueMarketingand DistributionDivisionAmericas 90.0 - 90.0 96.3 - - 96.3EuropeandAsia Pacific 109.6 - 109.6 117.7 - - 117.7OtherDistributionBusinesses 25.2 - 25.2 23.5 - - 23.5TotalMarketingandDistributionDivision 224.8 - 224.8 237.5 - - 237.5IndustrialProductsDivision 16.2 - 16.2 15.0 - - 15.0 241.0 - 241.0 252.5 - - 252.5 OperatingprofitMarketingandDistributionDivisionAmericas 6.9 (0.6) 6.3 8.8 - - 8.8EuropeandAsia Pacific 18.2 (6.9) 11.3 19.4 - - 19.4OtherDistributionBusinesses 2.1 - 2.1 1.9 - - 1.9TotalMarketingandDistributionDivision 27.2 (7.5) 19.7 30.1 - - 30.1IndustrialProductsDivision 2.4 - 2.4 2.2 - 17.8 20.0HeadOfficecosts (3.6) - (3.6) (3.8) - - (3.8) 26.0 (7.5) 18.5 28.5 - 17.8 46.3 Before Restructuring Gains After restructuring costs on restructuring and gains disposal and gains on disposal of of businesses on disposal Of businesses businesses £m £m £m £m RevenueMarketing andDistributionDivisionAmericas 369.1 - - 369.1Europe andAsia Pacific 443.1 - - 443.1OtherDistributionBusinesses 99.4 - - 99.4TotalMarketing andDistributionDivision 911.6 - - 911.6IndustrialProductsDivision 61.5 - - 61.5 973.1 - - 973.1 Operating profitMarketing andDistributionDivisionAmericas 31.3 (0.3) 1.1 32.1Europe andAsia Pacific 71.0 (2.2) - 68.8OtherDistributionBusinesses 9.3 (0.1) - 9.2TotalMarketingandDistributionDivision 111.6 (2.6) 1.1 110.1IndustrialProductsDivision 9.5 - 17.8 27.3Head Officecosts (13.8) (0.2) - (14.0) 107.3 (2.8) 18.9 123.4
During the quarter the Group concluded employee consultation processes to proceed with the planned implementation of a
single outbound telesales and telemarketing centre of excellence for all European markets in Krakow, Poland. £7.5m of
exceptional costs have been recognised principally in relation to this project in the first quarter.
3 Taxation
The taxation chargere presents aneffective tax rate for the 2012/13financial year on profit before
taxation and preference dividends of 27.5% (2011/12: 27.5% before tax on gains from business
disposals).
4 Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to ordinary shareholders
for the period by the weighted average number of ordinary shares in issue during the period, excluding
those shares held by the Premier Farnell Executive Trust. For diluted earnings per share, the weighted
average number of ordinary shares in issue is adjusted to assume issue of all dilutive potential
ordinary shares, being those share options and awards with a non-market based performance condition
granted to employees where the exercise price is less than the average market price of the Company's
ordinary shares during the period, and those shares with a market based performance condition based on
the current estimate of the number of shares that will vest under the performance criteria.
Reconciliations of earnings and the weighted average number of ordinary shares used in the
calculations are set out below. 2012/13 2011/12 First quarter unaudited First quarter unaudited Basic per Diluted per Basic per Diluted per Earnings share amount share amount Earnings share amount share amount £m pence pence £m pence penceEarningsper shareProfit attributable toordinary shareholders 9.5 2.6 2.6 32.2 8.9 8.7Restructuring costs 7.5 2.1 2.0 - - -Tax attributable torestructuring costs (2.1) (0.6) (0.6) - - -Gains on disposal ofbusinesses - - - (17.8) (4.9) (4.8)Tax on gains ondisposal ofbusinesses - - - 2.8 0.7 0.7Profit attributable toordinaryshareholders beforegains on disposal ofbusinesses andrestructuring costs 14.9 4.1 4.0 17.2 4.7 4.6 Number Number Weighted averagenumber of shares 363,712,522 362,271,261Dilutive effect ofshare options 4,494,620 8,483,771Diluted weightedaverage number ofshares 368,207,142 370,755,032 2011/12 Full year audited Basic per Diluted per Earnings share amount share amount £m pence penceEarnings per shareProfit attributable toordinary shareholders 76.9 21.2 20.9Restructuring costs 2.8 0.7 0.7Tax attributable torestructuring costs (0.7) (0.2) (0.2)Gains on disposal ofbusinesses (18.9) (5.2) (5.1)Tax on gains ondisposal of businesses 3.2 0.9 0.9Profit attributable to ordinaryshareholders before gains ondisposal of businesses andrestructuring costs 63.3 17.4 17.2 Number Weighted averagenumber of shares 363,091,496Dilutive effect ofshare options 4,952,153Diluted weighted average numberofshares 368,043,649
Earnings per share excluding gains on disposal of businesses and restructuring
costs have been provided in order to facilitate year on year comparison.
Net financial5 liabilities 29 April 1 May 29 January 2012 2011 2012 unaudited unaudited audited £m £m £m Cash and cashequivalents 136.7 53.7 116.9Unsecured loansand overdrafts (287.4) (216.2) (294.2)Net financial liabilities beforepreferenceshares and derivatives (150.7) (162.5) (177.3)Preference shares (62.0) (61.2) (61.8)Derivative financial instruments(net) 0.4 (3.1) 2.0Net financialliabilities (212.3) (226.8) (237.1) Net financial liabilities areanalysed in the balancesheet as follows: Current assetsCash and cashequivalents 136.7 53.7 116.9Derivativefinancial instruments 1.3 - 2.3 138.0 53.7 119.2 CurrentliabilitiesOther loans (1.2) (0.1) (1.0)Derivative financialinstruments (0.9) (3.1) (0.3) (2.1) (3.2) (1.3) Non-currentliabilitiesBank loans (18.6) (97.9) (18.9)5.9% US dollar GuaranteedSenior Notes payable 2013 (98.4) (94.8) (100.8)3.0% US dollarGuaranteed SeniorNotes payable 2016 (52.7) - (54.0)5.2% US dollar Guaranteed SeniorNotes payable 2017 (18.6) (18.1)
(19.1)
4.4% US dollar Guaranteed SeniorNotes payable 2018 (36.0) -
(37.0)
4.8% US dollar Guaranteed SeniorNotes payable 2021 (56.4) - (57.8)Other loans (5.5) (5.3) (5.6)Preferenceshares (62.0) (61.2) (61.8) (348.2) (277.3) (355.0)
At 29 April 2012, the Group's syndicate bank facilities totalled £200 million expiring in October 2016. Based on these
facilities, the headroom on bank borrowings at 29 April 2012 was £180 million.
6 Exchange rates
The principal average exchange rates used to translate the Group's overseas
profits were as follows: 2012/13 2011/12 2011/12 First First Full quarter quarter year US dollar 1.59 1.62 1.60Euro 1.20 1.14 1.15
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