5th Jun 2008 07:00
5 June 2008 Results for the First Quarter ended 4 May 2008 of the Financial Year ending 1 February 2009Key Financials ‚£m Q1 2008/9 Q1 2007/8 Q1 growth Continuing operations ‚£m ‚£m (unaudited)Revenue 199.3 183.6 6%(a)Operating profit 24.2 22.2 6%(a)Profit before tax 24.0 17.5 37%Adjusted profit before tax(b) 20.4 17.5 17%Earnings per share - total 4.9p (0.4)p - - continuing operations 4.9p 3.3p 49%
Adjusted earnings per share (b)
- total 3.9p (0.4)p - - continuing operations 3.9p 3.3p 18%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.
(b) Adjusted profit before tax and adjusted earnings per share exclude the gain on the purchase and cancellation of preference shares in the quarter of ‚£3.6m (Q1 2007/8: nil).
Strategic Highlights
- Another quarter of financial and strategic progress with MDD sales growing 6.9%, continuing our track record of consistent delivery as we transform and grow the business in line with our target of 6 to 8%.
- Robust MDD North American growth reflecting the progress of our strategic initiatives.
- Double digit sales growth in mainland Europe continuing.
- Strategy delivering at all levels - significant service andfranchise additions to complement further our EDE proposition, continuing tobuild leading edge multi-channel and eCommerce capabilities with web sales up31% year on year.
- Internationalisation plans show positive impact as anticipated - 57% sales growth in Greater China, 60% sales growth in Eastern Europe and first full quarter of trading for the new Indian business.
Financial Highlights
- Gross margin at 40.1%, an increase of 0.3 percentage points on the first quarter of last year, representing the tenth quarter of gross margin stability.
- Operating margin of 12.1%, in line with the first quarter of last year and compares with 11.8% achieved in the full year last year.
- Profit before tax up 37.1% and earnings per share from continuing operations up 48.5%. Adjusted profit before tax (excluding the gain on the purchase and cancellation of preference shares) up 16.6% and adjusted earnings per share up 18.2%.
- Continued strong cash performance with cash generated from continuing operations in the quarter representing 91.3% of operating profit compared with 87.4% in the first quarter of last year.
Commenting on the results, Harriet Green, Chief Executive Officer, said:
"These results represent another quarter of progress strategically andfinancially, against a market backdrop which is broadly unchanged to that seenat the end of the fourth quarter, building on our established record of thelast ten quarters. The diversity and depth of our customer base, combined withthe robustness of the strategy, the growth opportunities inherent in ourtarget markets, and our consistent operational delivery, underpin ourconfidence that the group is positioned to make further progress this year".
For further information, contact:
Harriet Green, Chief Executive Premier Farnell +44 (0) 20 7851 4100 Officer
plc Mark Whiteling, Chief FinancialOfficerRichard Mountain Financial +44 (0) 20 7269 7121 Dynamics (UK)
A conference call with Harriet Green and Mark Whiteling will take place on 5 June at 8:30am UK time. To obtain dial-in details please call Elaine Ryman at Financial Dynamics on the above number. The conference call will be recorded and made available on the Group web site later that day.
Premier Farnell's announcements and presentations are published at www.premierfarnell.com together with business information, the 2008 Annual Report and Accounts, and links to all other Group web sites.
The results for the second quarter of the financial year to 1 February 2009 will be announced on 11 September 2008.
Premier Farnell plcFIRST QUARTER STATEMENTResults for the First Quarter ended 4 May 2008of the Financial Year ending 1 February 2009
Premier Farnell plc, the leading multi-channel, high service distributor supporting millions of engineers and purchasing professionals globally, announces its results for the first quarter ended 4 May 2008.
Note: 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.
Chief Executive's Operational Overview
We have made a solid start to the new financial year with another quarter ofboth financial and strategic progress, firmly establishing our track recordfor consistently delivering results and providing a good basis for growththrough the rest of the year. Our performance in our major markets is drivenby our strategic focus and our increasingly segmented approach, targeting thefaster growing and more profitable market segmentsAs we enter the second year of our three year plan to transform PremierFarnell, the pace of change is accelerating as we continue to drive forprofitable growth by focusing on the fast growing global EDE segment(estimated at 6-8%pa), taking business via the web, internationalising ourbusiness model and maintaining our commitment in the profitable MRO marketsegments. Performance against the key indicators we set at the outset of ourstrategic journey continues to move in the right direction with overall salesper day growth of 6% against the prior year, continued gross margin stability,web sales up 31% and sales from developing markets at 18% of total revenue forthe quarter. There is still much scope for further improvement and our focusin these areas will continue.We saw further robust growth in North America during the quarter with Newarksales growth of 6.4% on the prior year. Mainland Europe, where thetransformation of our business is most advanced once again reported doubledigit sales growth, assisted by the addition of a further 50,000 new productsto the catalogue and extensive investment in staff training. Our development into Eastern Europe continues to exceed expectations with particularly strong progress in web sales. Total UK sales grew 4.4% with Farnell UK continuing to improve as the changes we made last year take effect. The arrival of new leadership will ensure this pace continues. CPC had a strong quarter as customer acquisition continued through high profile marketing campaigns and the sponsorship of the Gadget Show. Asia Pacific performance continues to fuel our growth plans for the region and reaffirm the importance of our investment, delivering sales growth of 12.6% in the first quarter.Our relentless EDE focus has continued in the quarter with agreements to addten new franchises. Most notably we have secured an agreement with Altera tobecome their high service distributor in Asia Pacific and Europe. This highlyprestigious win with Altera, the inventor and pioneer of programmable logictechnology, which is a critical technology for design engineers, resulted froma highly successful multi-channel new product introduction campaign in Europein the fourth quarter of last year. This campaign, coupled with our strategicinvestments in the Asia Pacific region in terms of people, inventory, systemsand infrastructure, convinced Altera that our new product, technology seedingand customer acquisition capabilities were compelling and differentiating. Wealso secured global agreements with NXP (formerly Philips Semiconductor) andNumonyx, the memory joint venture between STMicroelectronics and Intel.As a service business our people are a key element in the flawless executionof our strategy. In order to further support our EDE customers we now havemore than 170 engineers employed globally in customer facing roles, almostdouble the amount employed before we began targeting this segment. Theseengineers engage everyday with EDE customers in order to greater understandtheir technical requirements and to provide a more comprehensive serviceoffering to our growing EDE customer base. Additionally, we are now offeringhundreds of our employees an extensive technical training programme that willfurther improve our ability to service the highly specialised requirements ofthe EDE segment and we have launched a live chat technology that allows ourtechnical staff to answer any question that a design engineer may have, 24hours a day, 7 days a week.As we continue to focus on the specialised needs of the different marketsegments our targeted marketing efforts are ongoing, most recently leveraginga comprehensive global Technology First marketing campaign focused on EDEs.This program featured powerful on-line and multi-channel marketing, promotingnew products to the design engineer segment, resulting in customer acquisitionand driving a 35% growth in the small customer segment at Newark alone.The web is critical to our future and its importance continues to grow. Wehave taken a leadership position with a number of major suppliers to establishourselves as their web centric vendor of choice, as we focus on content,commerce and community. Our web capabilities continue to materially influenceour proposition and first quarter web sales delivered 31% growth on the prioryear, continuing our trend of increasing web sales. The increase in sales hasbeen driven by strong search engine marketing and optimisation programmes,whilst functional enhancements have been focused on improving the onlinecustomer experience. Implementation of high performance eCommerce tools andreporting software supported the growth in online revenue with thecontribution of eCommerce activity in the MDD Europe and Asia Pacific divisionreaching over 40% of total sales. We launched a live customer feedback systemthat will help drive our continued innovation and evolution to delivercustomer expectations. Further web developments will allow customers toincreasingly access and manage all of their multi-channel interactions with usthrough online tools.Our Innovation Lab is now fully operational. Focused on introducing leadingedge web innovation to improve the user experience for all customer segmentson our transactional websites and to further develop our community websites,the Innovation Lab will work together with our customers, suppliers andinternal stakeholders, to ensure that all enhancements create a compellinguser experience. The development of our community websites is on track, as wecontinue to find ways to differentiate our service offering and give ourcustomers access to the best information, and tools to enhance theircreativity and collaboration.The internationalisation of our business model continues to yield significantbenefits as customer acquisition in our focus segments continues to grow.During the quarter we achieved 18% of our sales from developing markets,showing progress towards our 20% target. China's focus on EDE has delivered57% growth in the quarter with promising signs that this will continue as wefurther differentiate our offering in the Greater China market. Our recentlyacquired business in India is now fully integrated into Farnell India and thefirst quarter of trading met our expectations. Our multi-channel capabilitiesare fully operational and we are about to launch a locally priced website andcatalogue to drive further growth. We have attracted some experienced industrytalent locally to strengthen and grow the new operation. Eastern Europe'ssales for the quarter grew by 60% with an increasing number of new customerstrading with us daily. Our web presence has been an important factor in ourgrowth and we are further enhancing our web sites to improve customerattraction. We have expanded our local resources during the quarter.
Sales from the IPD Division were down slightly year on year, reflecting in part the tough comparator but also the slowdown in certain key home markets. Operating margins remained strong in the quarter and the division's focus remains on new products and new markets as the drivers of future growth.
Premier Farnell has taken a lead role globally in supporting environmentallegislation and takes our own corporate social responsibility commitmentsseriously with an aggressive three year carbon reduction plan for thebusiness. We participate in the leading Business in the Community CR Indexalongside other leading organisations and have just received recognition asone of the top 10 highest movers in the index for this year, now scoring 88%.Additionally, as part of our strategic focus to increase our sales to the EDEcustomer segment and our commitment to CSR initiatives, we have recentlylaunched our second annual Live EDGE competition, supporting environmentaldesigns for the global environment.
Our first quarter has shown positive growth in all major geographies and we expect to make further progress this year.
Financial Results
Revenue
Sales for the quarter from continuing operations were ‚£199.3million (2007/8: ‚£183.6 million or ‚£188.0 million at constant exchange rates).Sales per day from continuing operations increased 6.0% on the prior year withthe MDD Division achieving sales growth of 6.9%, in line with our strategictarget of between 6% and 8%. The average exchange rate for the US dollaragainst sterling was $1.99 (Q1 2007/8: $1.97) and the average exchange ratefor the Euro against sterling was Euro 1.29 (Q1 2007/8: Euro 1.48).
Margins and Operating Profit
The gross margin from continuing operations for the quarter was 40.1%, anincrease of 0.3 percentage points on the first quarter of last year. Thisrepresents the tenth consecutive quarter of gross margin stability whichcontinues to differentiate us in the industry. Operating profit fromcontinuing operations was ‚£24.2 million (2007/8: ‚£22.2 million). Operatingmargin was 12.1%, in line with the performance achieved in the first quarterof the prior year, and compares with 11.8% achieved in the full year lastyear. Operational gearing for the quarter was 12.4%. There was a beneficialimpact on operating profit of ‚£0.6 million from the translation of overseasresults compared with the prior year, primarily as a result of the relativestrength of the euro. At constant exchange rates, the increase in operatingprofit compared with the prior year was 6.1%, slightly above the sales growthachieved.
A one cent movement in the exchange rate between the US dollar and sterling impacts the Group's operating profit by approximately ‚£250,000 per annum, and a one cent movement in the exchange rate between the euro and sterling currently impacts the Group's operating profit by approximately ‚£100,000 per annum.
Finance Costs
Net finance costs in the quarter were ‚£0.2 million (2007/8: ‚£4.7million). This comprises net interest payable of ‚£2.7 million (2007/8: ‚£2.8million), which was covered 9.0 times by operating profit, and a net credit of‚£2.5 million (2007/8: charge of ‚£1.9 million) in respect of the Company'sconvertible preference shares.
During the quarter, the Company purchased and cancelled 1,784,302 preference shares for a total cash consideration of ‚£23.1 million. This resulted in a benefit to finance costs in the quarter of ‚£3.6m, being the difference between the book value and fair value of the debt element of the preference shares at the date of purchase.
Profit Before Tax and Taxation Charge
Profit before tax from continuing operations in the quarter was‚£24.0 million (2007/8: ‚£17.5 million), an increase of 37.1% on the prior year.Excluding the gain on the purchase and cancellation of preference shares,profit before tax was ‚£20.4 million (2007/8: ‚£17.5 million), an increase of16.6% on the prior year.
The taxation charge from continuing operations for the quarter was at an effective rate of 29.0% of profit before tax, preference dividends and the gain on the purchase of preference shares (2007/8: 29.5%).
Return on Net Operating Assets
The return on net operating assets for the quarter was 30.4% (2007/8: 28.7%), remaining above our strategic target.
Earnings per Share
Total earnings per share for the quarter were 4.9 pence (2007/8: loss pershare of 0.4 pence reflecting the impact of discontinued operations). Earningsper share from continuing operations for the quarter were 4.9 pence (2007/8:3.3 pence), an increase of 48.5% on the prior year, with the increasereflecting the improvement in operating profit and the gain on the purchaseand cancellation of preference shares. Excluding the gain on the purchase andcancellation of preference shares, earnings per share from continuingoperations were 3.9 pence, an increase of 18.2% on the prior year.
Cash Flow and Net Financial Liabilities
Net cash generated from continuing operations in the quarter was‚£22.1 million (2007/8: ‚£19.4 million), representing 91.3% (2007/8: 87.4%) ofoperating profit. Working capital increased 3.0%, well below the increase insales. Excluding the cost of purchasing the Company's preference shares (‚£23.1million) and the cost of purchasing ordinary shares by the Premier FarnellExecutive Trust (‚£2.7 million), net cash inflow was ‚£14.8 million (2007/8: netcash inflow of ‚£10.4 million before the proceeds from business disposals). Netfinancial liabilities at the end of the quarter were ‚£237.3 million (29 April2007: ‚£243.8 million), including ‚£59.3 million (29 April 2007: ‚£103.4 million)attributable to the Company's preference shares.
Operations
Marketing and Distribution Division (MDD)
MDD comprises: Newark, Farnell, MCM and CPC.
Continuing Q1 2008/9 Q1 2007/8 Q1 growthbusinesses ‚£m ‚£mRevenue 181.4 165.1 6.9%Operating profit 23.6 21.4 7.3%Operating margin% 13.0% 13.0%First quarter sales grew 6.9% on the prior year in line with our targetedgrowth of between 6% and 8%, as we continue to build on the momentum gained inthe fourth quarter of last year. Operating margin of 13.0% was in line withthe prior year despite our continued investment in the strategy. There was abeneficial impact on operating profit in the quarter from the translation ofoverseas results of ‚£0.6million, due primarily to the relative strength of theEuro.The investment in high performance eCommerce tools in the second half of lastyear continues to help us drive the on-line customer experience, with websales in the quarter up 31% and total eCommerce sales now accounting for 31%of total MDD sales in the quarter.
The Americas
Newark and MCM.
Q1 2008/9 Q1 2007/8 Q1 growth ‚£m ‚£mRevenue 86.2 80.9 6.0%Operating profit 8.5 7.9 6.3%Operating margin% 9.9% 9.8%
First quarter sales were up 6.0% with the implementation of the strategy driving momentum as we continue to transition the business. Statistics from the Semiconductor Industry Association (SIA) showed a similar growth in billings in the Americas for the same period. Operating margin of 9.9% was slightly above the first quarter of the prior year.
The continued focus on our strategic initiatives resulted in Newark's salesgrowing 6.4% in the quarter. This was supported by the drive to acquire newEDE customers through a "Technology First" marketing campaign, which featuredpowerful catalogue and on-line marketing, and a multi-channel branchengagement programme promoting 7,000 new products to the design engineersegment. This campaign targeted new and emerging accounts with sales from thesmall customer segment up 35% in the quarter.Web sales in the Americas in the quarter continued to show significant growth,up 36% year on year, with Newark up 41%, driven by continued search engine marketing andoptimisation programmes, and email marketing campaigns. Functionalenhancements are being continuously implemented to improve the customerexperience.MCM's first quarter sales grew slightly despite the decline in activity in theNorth American housing market which continues to impact on the home securityand home entertainment segment of the business. This was mitigated by bothon-line and off-line marketing campaigns and renewed targeting of existingcustomers and prospecting for new customers.
Europe and Asia Pacific
Farnell and CPC.Continuing Q1 2008/9 Q1 2007/8 Q1 growthbusinesses ‚£m ‚£mRevenue 95.2 84.2 7.7%Operating profit 15.1 13.5 7.9%Operating margin% 15.9% 16.0%Sales were up 7.7% in the quarter and operating profit increased 7.9% on lastyear despite our continued revenue investment in the Eastern Europe and AsiaPacific regions as we pursue the many opportunities in our internationalmarkets.
Revenue by region Q1 2008/9 Q1 2007/8 Q1 Growth
Continuing ‚£m ‚£m %businessesUK (including 46.3 44.3 4.4%exports)Mainland Europe 40.0 32.7 10.9%Asia Pacific 8.9 7.2 12.6%
In mainland Europe, Farnell continued its double digit sales growth performance with first quarter sales up 10.9%. This was supported by the launch in both Europe and the UK of fully revised catalogues with over 50,000 new products included, together with training of over 250 customer facing staff in order to support our EDE proposition. Progress in Eastern Europe continues to exceed our expectations, with sales growth in the quarter of 60.0%, supported by further web enhancements.
The Division's UK sales (including export) were up 4.4% on the prior year.CPC's sales grew 4.2% driven by the success of its 2008 catalogue, new directmail initiatives and an ongoing focus on expanding the customer base throughhigh profile marketing activities and increased brand awareness. Our progresson improving the sales performance of the Farnell brand in the UK continues,with the impact of the definitive steps we said we would take towards the endof last year helping to drive first quarter year on year sales growth of 3.1%.This compares to the negative growth seen in the second half of last year of-1.0%. This performance also continued to be better than the market trendsreported by the Association of Franchised Distributors of ElectronicComponents (AFDEC) which reported a sales decline in the UK for the sameperiod of -3.7% excluding Farnell.Web sales for the division grew 30% in the first quarter, aided by our highperformance eCommerce tools and reporting software, enabling us to continuallyimprove our eCommerce offering to meet customer needs. Total eCommerce salesin the quarter accounted for 40% of total sales for the division.Our Asia Pacific region continues to accelerate, with first quarter salesgrowth of 12.6%. The transition of the China business from its previouslymainly MRO, lower margin customer base to become more focused on the growing,higher margin EDE segment, drove sales growth of 57.0% in the quarter.Expansion of the customer base is gaining momentum, reflecting the strongservice proposition, including next day delivery to over 95 Chinese cities andour Mandarin and English websites available to customers in the region. OurIndian business, which was acquired at the very end of last year, is now fullyintegrated in to the division and is trading in line with our expectations. Itis now able to offer multi-channel capabilities, and will be launching alocally priced website during the second quarter. We have recruitedexperienced management to drive this business forward in a market ofsignificant opportunity. In our Australian and New Zealand markets, sales inthe quarter declined 1.8% reflecting the impact of the exposure to globalcompetition.
Industrial Products Division (IPD)
IPD comprises: Akron Brass, TPC Wire & Cable and Cadillac Electric.
Q1 2008/9 Q1 2007/8 Q1 growth ‚£m ‚£mRevenue 17.9 18.5 -2.9%Operating profit 3.5 3.5 -Operating margin% 19.6% 18.9%First quarter sales for Akron Brass and TPC Wire & Cable, whichtogether represent 93% of the IPD Division, were flat year on year reflectingthe tougher comparator at Akron Brass. Cadillac Electric sales, whichrepresent 7% of total IPD sales and 0.6% of group sales, declined 30% in thequarter reflecting the planned wind down of specific trading activity. Theoperating margin for IPD improved on the prior year to 19.6%.
Akron Brass
Sales at Akron Brass declined 0.8%, reflecting the strong firstquarter of last year which benefited from an acceleration of orders from NorthAmerican fire equipment manufacturers, driven by changes in regulatoryrequirements. Growth in the fire apparatus market was partly offset by lowerorder levels in the industrial and school bus markets. Our focus remains ondeveloping new product opportunities in the ambulance, industrial, fire andinternational markets. Operating margins remained strong in the quarter.
TPC Wire & Cable
TPC's first quarter sales grew 2.8% reflecting continued success in the non-automotive markets including steel, energy and non-automotive manufacturing, which more than offset the expected, tougher automotive manufacturing segment. The business continued to control costs effectively and maintained its margins.
Cadillac ElectricCadillac Electric's sales in the quarter were ‚£1.2m (0.6% of groupsales) a decline on the prior year of ‚£0.6m reflecting the planned wind downof specific trading activity. As we have done successfully in other businessesthat were performing below our expectations, we will be taking definitiveaction to reshape this business. Cadillac Electric made a small operatingprofit last year.
Outlook
These results represent another quarter of progress strategically andfinancially, against a market backdrop which is broadly unchanged to that seenat the end of the fourth quarter, building on our established record of thelast ten quarters. The diversity and depth of our customer base, combined withthe robustness of the strategy, the growth opportunities inherent in ourtarget markets, and our consistent operational delivery, underpin ourconfidence that the group is positioned to make further progress this year.This press release contains certain forward-looking statements relating to thebusiness of the Group and certain of its plans and objectives, including, butnot limited to, future capital expenditures, future ordinary expenditures andfuture actions to be taken by the Group in connection with such capital andordinary expenditures, the expected benefits and future actions to be taken bythe Group in respect of certain sales and marketing initiatives, operatingefficiencies and economies of scale. By their nature forward-lookingstatements involve risk and uncertainty because they relate to events anddepend on circumstances that will occur in the future. Actual expendituresmade and actions taken may differ materially from the Group's expectationscontained in the forward-looking statements as a result of various factors,many of which are beyond the control of the Group. These factors include, butare not limited to, the implementation of initiatives supporting the Group'sstrategy, the implementation of cost-saving initiatives to offset currentmarket conditions, continued use and acceptance of eCommerce programs andsystems, the ability to expand into new markets and territories, theimplementation of new sales and marketing initiatives, changes in demand forelectronic, electrical, electromagnetic and industrial products, rapid changesin distribution of products and customer expectations, the ability tointroduce and customers' acceptance of new services, products and productlines, product availability, the impact of competitive pricing, fluctuationsin foreign currencies, and changes in interest rates and overall marketconditions, particularly the impact of changes in world-wide and nationaleconomies.Condensed Consolidated Income StatementFor the 13 weeks ended 4th May 2008 2008/9 2007/8 2007/8 First First Full quarter quarter year (13 weeks) (13 weeks) (53 weeks) unaudited unaudited audited Notes ‚£m ‚£m ‚£m Continuing operationsRevenue 2 199.3 183.6 744.7Cost of sales (119.3) (110.5) (449.2)Gross profit 80.0 73.1 295.5Net operating expenses (55.8) (50.9) (207.5)Operating profit 2 24.2 22.2 88.0
Finance income (interest receivable)
0.2 0.1 0.9Finance costs- interest payable (2.9) (2.9) (11.7)- preference dividends (0.9) (1.6) (5.6)
- premium on redemption of preference shares (0.2) (0.3) (1.3)- gain on purchase of preference shares
3.6 - 0.9Total finance costs (0.4) (4.8) (17.7)Profit before taxation 24.0 17.5 71.2Taxation 3 (6.2) (5.6) (21.4)
Profit after taxation from continuing operations 17.8 11.9 49.8Loss after taxation from discontinued operations - (13.5) (13.5)Profit/(loss) for the period (attributable to ordinary shareholders)
17.8 (1.6) 36.3 Earnings per share 4Basic 4.9p (0.4)p 10.0pDiluted 4.9p (0.4)p 9.9p Earnings per share from continuing operations 4Basic 4.9p 3.3p 13.7pDiluted 4.9p 3.3p 13.6p Ordinary dividendsInterim - proposed 4.0pFinal - proposed 5.2pPaid 9.0p
Impact on shareholders' funds (‚£m) 32.7
Condensed Consolidated Statement of Recognised Income and Expense For the 13 weeks ended 4th May 2008
2008/9 2007/8 2007/8 First First Full quarter quarter year (13 weeks) (13 weeks) (53 weeks) unaudited unaudited audited Notes ‚£m ‚£m ‚£m
Profit/(loss) for the period
17.8 (1.6) 36.3
Net exchange adjustments 1.6 0.3 6.6Actuarial losses on pensions and other post-retirement obligations - - (1.8)Deferred tax credit on actuarial losses - - 0.8Net gains not recognised in the income statement 6
1.6 0.3 5.6
Total recognised income/(expense) for the period
19.4 (1.3) 41.9
Condensed Consolidated Balance SheetAs at 4th May 2008 4th May 29th April 3rd February 2008 2007 2008 unaudited unaudited audited Notes ‚£m ‚£m ‚£mASSETSNon-current assetsGoodwill 31.1 30.3 31.1Other intangible assets 19.9 21.3 20.1
Property, plant and equipment 54.7 54.7
55.2Retirement benefit assets 53.8 56.4 53.4Deferred tax assets 0.2 0.3 0.2Total non-current assets 159.7 163.0 160.0 Current assetsInventories 159.9 151.1 154.5Trade and other receivables 127.0 115.2 121.2Cash and cash equivalents 5 38.9 33.4 37.6Total current assets 325.8 299.7 313.3 LIABILITIESCurrent liabilitiesFinancial liabilities 5 (2.2) (4.3) (3.0)Trade and other payables (91.2) (83.9) (84.3)Current tax payable (25.6) (30.7) (22.2)Total current liabilities (119.0) (118.9) (109.5) Net current assets 206.8 180.8 203.8 Non-current liabilitiesFinancial liabilities 5 (274.0) (272.9) (288.7)
Retirement and other post-employment benefits (21.3) (28.9)
(22.0)Deferred tax liabilities (32.0) (30.1) (33.0)Total non-current liabilities (327.3) (331.9) (343.7) NET ASSETS 39.2 11.9 20.1 EQUITYOrdinary shares 18.2 18.2 18.2
Equity element of preference shares 10.5 18.4
15.2Share premium 23.0 22.2 23.0Capital redemption reserve 4.4 1.4 2.6Hedging reserve (2.1) (0.3) (2.9)
Cumulative translation reserve 5.3 (2.6)
3.7Retained earnings (20.1) (45.4) (39.7)SHAREHOLDERS' FUNDS 6 39.2 11.9 20.1Condensed Consolidated Cash Flow StatementFor the 13 weeks ended 4th May 2008 2008/9 2007/8 2007/8 First First Full quarter quarter year
(13 weeks) (13 weeks) (53 weeks)
unaudited unaudited audited
Notes
‚£m ‚£m ‚£m
Cash flows from operating activitiesOperating profit from continuing operations 24.2 22.2 88.0Depreciation and amortisation 4.2 4.8 19.1Changes in working capital (5.8) (7.2) (4.7)Additional pension scheme funding (UK defined benefit plan) (0.7) (0.7) (3.1)Other non-cash movements 0.2 0.3 (1.5)Cash generated from continuing operations 22.1 19.4 97.8Cash generated from discontinued operations - (0.3) (1.2)Total cash generated from operations
22.1 19.1 96.6Interest received 0.2 0.2 0.9Interest paid (1.4) (1.6) (11.8)
Dividends paid on preference shares - - (5.6)Taxation paid (2.6) (3.3) (23.1)Net cash generated from operating activities
18.3 14.4 57.0
Cash flows from investing activitiesAcquisition of business - - (0.6)Disposal of business - 25.8 24.4Proceeds from sale of property, plant and equipment - - 1.9Purchase of property, plant and equipment (1.2) (2.4) (7.1)Purchase of intangible assets (computer software) (2.3) (2.2) (10.4)Net cash (used in)/generated from investing activities
(3.5) 21.2 8.2
Cash flows from financing activitiesIssue of ordinary shares - 0.6 1.4Purchase of ordinary shares (2.7) - (2.5)Purchase of preference shares
(23.1) - (17.7)New bank loans 12.3 - 32.1Repayment of bank loans - (27.8) (29.3)
Dividends paid to ordinary shareholders - - (32.7)Net cash used in financing activities
(13.5) (27.2) (48.7)
Net increase in cash, cash equivalents and bank overdrafts 1.3 8.4 16.5Cash, cash equivalents and bank overdrafts at beginning of period 37.6 21.3 21.3Exchange losses - (0.2) (0.2)Cash, cash equivalents and bank overdrafts at end of period
38.9 29.5 37.6
Reconciliation of net financial liabilitiesNet financial liabilities at beginning of period (254.1) (281.3) (281.3)Net increase in cash, cash equivalents and bank overdrafts 1.3 8.4 16.5(Increase)/decrease in debt (12.3) 27.8 (2.8)Decrease in preference shares 26.8 - 18.5Premium on redemption of preference shares (0.2) (0.3) (1.3)Derivative financial instruments 0.8 (0.2) (2.8)Exchange movement 0.4 1.8 (0.9)Net financial liabilities at end of period 5
(237.3) (243.8) (254.1)
Notes
1 Basis of preparation
The unaudited condensed consolidated financial
information in this report has been prepared in
accordance with International Financial Reporting
Standards (IFRSs) and applying the accounting policies
disclosed in the Group's 2008 Annual Report and
Accounts on pages 74 to 77.
The Group's 2008 statutory accounts have been filed
with the Registrar of Companies. The auditors' report
on these accounts was unqualified and did not include a
statement under Section 237(2) or (3) of the Companies
Act 1985. Copies of the Group's Annual Report and
Accounts are available from Premier Farnell plc, 150
Armley Road, Leeds, LS12 2QQ, or on the Company's
website at www.premierfarnell.com.
The financial year ending 1st February 2009 is a 52
week accounting period compared to the financial year
ended 3rd February 2008 which was a 53 week accounting
period.2 Segment information 2008/9 2007/8 2007/8 First First Full quarter quarter year (13 weeks) (13 weeks) (53 weeks) unaudited unaudited audited ‚£m ‚£m ‚£m Revenue Marketing and Distribution Division Americas 86.2 80.9
326.7
Europe and Asia Pacific 95.2 84.2
344.2
Total Marketing and Distribution Division 181.4 165.1 670.9
Industrial Products Division 17.9 18.5 73.8 199.3 183.6 744.7 Operating profit
Marketing and Distribution Division
Americas 8.5 7.9
31.0
Europe and Asia Pacific 15.1 13.5
53.4
Total Marketing and Distribution Division 23.6 21.4 84.4
Industrial Products Division 3.5 3.5 14.8 Head Office costs (2.9) (2.7) (11.2) 24.2 22.2 88.0 3 Taxation
The taxation charge represents an effective tax rate for the period on profit before tax,
preference dividends and gain on purchase of preference shares of 29.0% (2007/8: 29.5%), being
the estimated effective rate of taxation for the financial year ending 1st February 2009.
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 granted to
employees where the exercise price is less than the average market price of the Company's
ordinary shares during the period.
Reconciliations of earnings and the weighted average number of ordinary shares used in the
calculations are set out below. 2008/9 2007/8 2007/8 First quarter (13 weeks) First quarter (13 weeks) Full year (53 weeks) unaudited unaudited audited Basic per Basic per Basic per share share share Earnings amount Earnings amount Earnings amount ‚£m pence ‚£m pence ‚£m penceEarnings per shareProfit/(loss)attributable toordinaryshareholders 17.8 4.9 (1.6) (0.4) 36.3 10.0Gain on purchase ofpreferenceshares (3.6) (1.0) - - (0.9) (0.3)Profit/(loss)attributable toordinaryshareholdersbefore gain onpurchase ofpreferenceshares 14.2 3.9 (1.6) (0.4) 35.4 9.7 Earnings pershare fromcontinuingoperationsProfitattributable toordinaryshareholders 17.8 4.9 11.9 3.3 49.8 13.7Gain on purchase ofpreferenceshares (3.6) (1.0) - - (0.9) (0.3)Profitattributable toordinaryshareholdersbefore gain onpurchase ofpreferenceshares 14.2 3.9 11.9 3.3 48.9 13.4 Number Number Number Weightedaverage numberof shares 363,049,627 363,688,697 363,476,320Dilutive effect ofshare options 2,799,928 1,502,987 1,913,997Diluted weightedaverage numberof shares 365,849,555 365,191,684 365,390,317
Earnings per share before the gain on purchase of preference shares have been provided in order to facilitate year on year comparison.
5 Net financial liabilities 4th May 29th April 3rd February 2008 2007 2008 unaudited unaudited audited ‚£m ‚£m ‚£m Cash and cash equivalents 38.9 33.4 37.6 Unsecured loans and overdrafts (214.8) (173.5)
(202.9)
Net financial liabilities before
preference shares and derivatives (175.9) (140.1)
(165.3)
Preference shares (59.3) (103.4)
(85.9)
Derivative financial instruments (2.1) (0.3)
(2.9)
Net financial liabilities (237.3) (243.8)
(254.1)
Net financial liabilities are analysed
in the balance sheet as follows:
Current assets Cash and cash equivalents 38.9 33.4 37.6 Current liabilities Bank overdrafts - (3.9) - Other loans (0.1) (0.1) (0.1) Derivative financial instruments (2.1) (0.3) (2.9) (2.2) (4.3) (3.0) Non-current liabilities Bank loans (98.1) (54.3) (85.7)
5.3% US dollar Guaranteed Senior
Notes payable 2010 (33.3) (33.0)
(33.5)
5.9% US dollar Guaranteed Senior
Notes payable 2013 (80.3) (79.5) (80.7) Other loans (3.0) (2.7) (2.9) Preference shares (59.3) (103.4) (85.9) (274.0) (272.9) (288.7)
6 Consolidated statement of changes in shareholders' equity
2008/9 2007/8 2007/8 First First Full quarter quarter year (13 weeks) (13 weeks) (53 weeks) unaudited unaudited audited ‚£m ‚£m ‚£m
Shareholders' funds at beginning of period 20.1 12.0 12.0 Profit/(loss) for the period 17.8 (1.6) 36.3 Net gains and losses recognised directly in equity 1.6 0.3 5.6 Ordinary dividends paid - - (32.7) Ordinary shares issued - 0.6 1.4
Purchase of ordinary shares (2.7) - (2.5) Purchase of preference shares (note 7): - reduction in equity element (4.7) - (3.2) - gain arising on equity element 4.7 - 3.1 - deferred tax 0.8 - 0.6 Share-based payments 0.8 0.8 2.3 Derivative financial instruments 0.8
(0.2) (2.8)
Shareholders' funds at end of period 39.2 11.9 20.1
During the quarter, the Premier Farnell Executive Trust acquired 1,445,952
of the Company's ordinary shares, through purchases on the London Stock
Exchange for a total cash consideration of ‚£2.7 million, in order to meet
future obligations under the Company's performance share plan. This amount
has been deducted from shareholders' equity. 7 Purchase of preference shares During the quarter the Company purchased and cancelled 1,784,302 of its preference shares at a total cash cost of ‚£23.1 million. Based on the book value and fair value of the instrument at the date of purchase, the financial liability element of the preference shares was reduced by ‚£26.8 million and the equity element by ‚£4.7 million. A gain of ‚£3.6 million was recognised in the income statement being the difference between the book value and fair value of the financial liability element at the date of purchase. The gain arising from the difference between the book value and fair value of the equity element of ‚£4.7 million was recognised as a movement in retained earnings. A deferred tax credit of ‚£0.8 million arose which is also recognised as a movement in retained earnings. A transfer from retained earnings of ‚£1.8 million to non-distributable reserves was made in order to maintain the legal nominal value of share capital. In the prior year, the Company purchased and cancelled 1,236,500 of its preference shares at a total cash cost of ‚£17.7 million, resulting in a gain of ‚£0.9 million (‚£0.2 million in the second quarter and ‚£0.7 million in the fourth quarter) being recognised in the income statement. At 4th May 2008, the Company had 3,989,419 preference shares in issue (3rd February 2008: 5,773,721).8 Exchange rates
The principal average exchange rates used to translate the Group's overseas profits were as follows:
2008/9 2007/8 2007/8 First FFirst Full quarter quarter year US dollar 1.99 1.97 2.00Euro 1.29 1.48 1.44
vendorRelated Shares:
PFL.L