31st May 2006 07:00
Premier Farnell plc31 May 2006 Results for the First Quarter, ended 30 April 2006 of the Financial Year ending 28 January 2007 Reported under International Financial Reporting Standards (IFRS). Q1 2006/7 Q1 2005/6 Q1 2005/6 ‚£m ‚£m ‚£m at CER* Revenue 225.4 196.4 204.9 Operating profit 22.0 17.5 18.5 Profit before tax 16.3 12.3 13.0 Earnings per share 3.1p 2.3p 2.5p Sales Growth¢â‚¬ 10.0% *Constant exchange rates Highlights * Marketing and Distribution Division (MDD) sales per day in first quarter up 11.8% in the Americas, up 4.1% in the UK and up 13.7% in mainland Europe, with further market share gains across the UK and Europe ¢â‚¬ * Stable gross margin performance of 39.6%, compared to an underlying gross margin of 39.5% in the fourth quarter 2005/6** * Growth in operating profit of 25.7%, to ‚£22.0million, or 18.9% at CER, significantly ahead of sales growth * Improvement in operating margin to 9.8% (Q1 2005/6: 8.9%) * Earnings per share up 35% year-on-year, to 3.1p * Return on net operating assets up to 26.8% (Q1 2005/6: 22.0%) Commenting on the results, Harriet Green, Group Chief Executive, said:"The Group has started the year well, increasing profits significantly througha combination of sales growth, continued stability in gross margins and robustcost control."The positive momentum that we saw build towards the end of last year carriedover into the first quarter, which also tends to have seasonally stronger salesthan the fourth quarter. Sales in North America grew well, and in mainlandEurope we outperformed the market, growing sales by 13.7%. Our UK businesses inaggregate performed well, with sales 4.1% ahead of the prior year. Inparticular, Farnell InOne in the UK grew its sales by 7.0%. The leadingposition our electronics distribution businesses have established ahead of theimplementation of the EU RoHS Directive on 1 July 2006 provided sales growthand underpinned market share gains in the quarter.""In my first weeks I have been visiting our facilities and I am delighted tohave joined a Group that is in good health. The Group's ability to manageeffectively the complex logistics associated with fulfilling millions of highlymixed orders to millions of customers is a core strength. It is a tribute tothe strong sense of customer service ingrained within employees across theGroup. At this early stage, I also see a number of opportunities for furtherimprovement, including the development of new markets, customers, products andour people. When combined with rigorous focus, efficiencies from seamlessprocesses and selective reinvestment to improve our customer proposition, theyoffer potential for the future. I am driving a strategic review to assess theseand other opportunities open to the Group. This will be conducted by themanagement team, with some external expertise, and I intend to set out our fullbusiness agenda in the late autumn.""The Group has performed well in the first quarter, our seasonally strongestperiod, through a combination of sales growth, continued stability in grossmargins and robust cost control. This combination will remain a priority of themanagement team. Accordingly, I believe that we will make progress for the yearas a whole.** Underlying gross margin is stated before the impact of the RoHS inventoryprovision taken in the fourth quarter of 2005/6¢â‚¬ percentage changes in salesComparison of sales for specific periods is affected by three variables: 1. Changes in exchange rates used to translate the overseas sales in different currencies into sterling; 2. Differences in the number of working days; 3. Disposal or acquisition of businesses. Throughout this statement, in order to reflect underlying business performance,percentage changes in sales are based on sales per day for continuingbusinesses at constant exchange rates and for like periods, unless otherwisestated.For further information, contact:Harriet Green, Group Chief Premier Farnell plc +44 (0) 20 7851 Executive 4100 James Garthwaite, Group Director, Communications Richard Mountain Financial Dynamics +44 (0) 20 7269 (UK) 7291 Brian Rafferty / John Sutton Taylor Rafferty (NA) + 1 212 889 4350 A conference call with Sir Peter Gershon, Chairman, and Harriet Green will takeplace on 31 May at 8:30am UK time. To obtain dial-in details please callRichard Mountain (UK or mainland Europe) at Financial Dynamics or John Sutton(US) at Taylor Rafferty on the above numbers. The call will be recorded and beavailable 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 2006 Annual Reportand Accounts, and links to all other Group web sites.The results for the second quarter of the financial year to 28 January 2007will be announced on 7 September 2006.Premier Farnell plc FIRST QUARTER STATEMENT Results for the First Quarter, ended 30 April 2006 of the Financial Year ending 28 January 2007 Premier Farnell, the leading global marketer and distributor of electronic,maintenance, repair and operations (MRO) and specialist products and services,today announces its results for the first quarter ended 30 April 2006. Theseare reported in accordance with International Financial Reporting Standards(IFRS).Note: percentage changes in salesComparison of sales for specific periods is affected by three variables: 1. Changes in exchange rates used to translate the overseas sales in different currencies into sterling; 2. Differences in the number of working days; 3. Disposal or acquisition of businesses. Throughout this statement, in order to reflect underlying business performance,percentage changes in sales are based on sales per day for continuingbusinesses at constant exchange rates and for like periods, unless otherwisestated.Financial Results * Revenue Group sales for the quarter were ‚£225.4million (2005/6: ‚£196.4million). Salesper day increased 10.0% on the prior year, or 8.7% before acquisitions made inthe prior year.In the quarter, the average exchange rate for the US dollar against sterlingwas $1.76: ‚£1 (Q1 2005/6: $1.91). At constant exchange rates, the salesincrease in the first quarter was ‚£20.5million. * Margins and Operating Profit The Group's gross margin for the quarter of 39.6% was in line with theunderlying margin in the fourth quarter of 2005/6 of 39.5%, before the RoHSinventory provision. It was below the 40.2% achieved in the first quarter of2005/6, following the margin reduction experienced in the second and thirdquarters of 2005/6.Operating profit was ‚£22.0million (2005/6: ‚£17.5million), producing anoperating margin of 9.8% (2005/6: 8.9%). At constant exchange rates, theincrease in operating profit compared to the prior year was ‚£3.5million.This compares with an underlying operating profit in the fourth quarter 2005/6of ‚£19.6million, before charging the RoHS inventory provision of ‚£6.6millionand ‚£3.9million of reorganisation costs relating to the restructuring ofBuckHickman InOne. * Finance Costs The net interest payable for the quarter of ‚£3.7million (2005/6: ‚£3.2million)was covered 5.9 times by operating profit. The Group's debt is largelydenominated in US dollars and the interest charge was therefore affected by thetranslation effect of the relatively strong US dollar in the quarter. Includedin finance costs for the quarter is a charge of ‚£2.0million (2005/6: ‚£2.0million) in respect of the Company's convertible preference shares. * Profit Before Tax and Taxation Charge Reported profit before tax for the quarter was ‚£16.3million (2005/6: ‚£12.3million). At constant exchange rates, profit before tax grew at 25.4%year-on-year, significantly ahead of the rate of sales growth achieved.The taxation charge for the quarter was at an effective rate of 29.0% of profitbefore tax and preference dividends (2005/6: 27.0%). * Return on Net Operating Assets Return on net operating assets for the quarter was 26.8% (2005/6: 22.0%). * Earnings per Share Earnings per share for the first quarter were 3.1p (2005/6: 2.3p). * Balance Sheet and Cash Flow Net cash generated from operations of ‚£18.2million in the quarter was 83% ofoperating profit (2005/6: ‚£13.0million, 74% of operating profit). Workingcapital increased by ‚£8.5million during the quarter due to the increased saleslevels and normal seasonal increase in receivables. Net cash flow during thequarter was ‚£14.1million (2005/6: ‚£8.5million). Net financial liabilities atthe end of the quarter were ‚£311.2million, including ‚£110.5million attributableto the Company's preference shares. The Group has $155million of 7.2% seniornotes which fall due in June of this year. These will be refinanced as plannedby drawing on existing committed bank facilities that were arranged in May2005.OperationsMarketing and Distribution Division (MDD)MDD comprises: Newark InOne; Farnell InOne; BuckHickman InOne; MCM, an InOneCompany and CPC. Q1 2006/7 Q1 2005/6 Q1 2005/6 ‚£m ‚£m ‚£m at CER* Revenue 196.0 172.3 179.5 Operating profit 20.7 17.2 18.0 Operating margin% 10.6% 10.0% 10.0% Sales Growth¢â‚¬ 9.1% *Constant exchange ratesIn the quarter, sales were up 9.1% on the prior year and operating marginsincreased.eCommerce sales grew during the quarter, up 28% on the prior year. eCommercesales accounted for 17% of sales in the Americas and 26% of those in the Europeand Asia Pacific region.RoHS Legislation (Restriction of the use of certain Hazardous Substances)In preparation for the European Union's RoHS Directive, the division wasactively marketing on the web some 72,000 RoHS-compliant products in Europe,and 79,000 in North America by the end of the quarter. The conversion ofproducts in the portfolio is on track and, at Farnell InOne, will be completedbefore 1 July 2006, the date on which the EU Directive takes effect.During the quarter, steady progress was made in managing out non-compliant andpotentially obsolete inventory arising as a result of the migration to RoHScompliant stock, in line with plan.Active marketing throughout the quarter continued to promote the differentiatedRoHS-related services that Farnell InOne and Newark InOne offer. As a result,both businesses continued to enjoy growing brand awareness, and a rapidincrease in the number of visits to their web sites. There has been increaseddemand for Farnell InOne's Bill-of-Material (`BOM') conversion services. Theseare now typically able to convert the majority of non-compliant components on aBOM to an appropriate compliant version within 48 hours. The division can alsooffer availability of many of the compliant components then required. That theleading position these businesses have established provided sales growth and,in the case of Farnell InOne, underpinned market share gains both in the UK andin Mainland Europe in the quarter.Supplier relationshipsIn the period, the Group extended its franchise with Texas Instruments in theUS and Europe to the Asia Pacific region. In addition, an agreement was signedallowing the Group to distribute ST Microelectonics' products worldwide, and aGlobal agreement with Coto Technology was also signed. Together, theseagreements represent an important extension to the Group's product portfolio toelectronics design engineers.The AmericasNewark InOne and MCM, an InOne Company. Q1 2006/7 Q1 2005/6 Q1 2005/6 ‚£m ‚£m ‚£m at CER* Revenue 88.6 72.7 79.3 Operating profit 8.3 6.6 7.3 Operating margin% 9.4% 9.1% 9.2% Sales Growth¢â‚¬ 11.8% *Constant exchange ratesIn the quarter, sales rose 11.8% with the operating margin increasing to 9.4%despite a decline in gross margin of 1.0 percentage point. compared to thefirst quarter of the prior year. Gross margin was sustained at the levelachieved in the fourth quarter through promotion of higher margin products andthe focus on core markets and accounts. Encouragingly, the division continuesto see an increase in the proportion of total sales to new and smallercustomers.Sales through eProcurement partnerships were up 13% relative to those in theprior year as sales to national and global accounts remained steady. Thisresulted from the business' continued focus on margin disciplines. During theperiod, a number of new eProcurement implementations went live, including thosefor Astra Zeneca and Arizona State University. In addition, Newark InOne'seProcurement offering was strengthened by the introduction of XML invoicing,which can reduce manual intervention, processing time and save administrativecosts. Newark InOne is one of the only distributor in its industry supportingthis process.Feedback during the quarter from customers and suppliers suggests that NewarkInOne's reputation in the North American market continues to improve, partly asa result of the leadership position it has achieved relating to RoHS. In April,it launched a comprehensive catalogue of RoHS compliant products, following thesuccess of Farnell InOne's in September 2005. It is the only catalogue in theNorth American market exclusively containing RoHS compliant products andcarries endorsements from key suppliers regarding Newark InOne's approach toRoHS compliance. An interactive version of the catalogue has been launched onNewark InOne's web site. Sales over the web grew 20% in the quarter.MCM grew sales 13.4% in the quarter following the launch of a new web site andthe restructuring of sales and marketing teams towards the end of last year.Sales from operations in Mexico once again grew well, whilst those in Brazilwere slightly down against a particularly strong performance in the prior year.Europe and Asia PacificFarnell InOne, BuckHickman InOne and CPC. Q1 2006/7 Q1 2005/6 Q1 2005/6 ‚£m ‚£m ‚£m at CER* Revenue 107.4 99.6 100.2 Operating profit 12.4 10.6 10.7 Operating margin% 11.5% 10.6% 10.7% Sales Growth¢â‚¬ 7.2% *Constant exchange ratesSales were up 7.2% in the quarter with improving market conditions and furthermarket share gains evident in the UK and Mainland Europe. Operating marginimproved to 11.5% as costs remained tightly controlled.Revenue by region Q1 2006/7 Q1 2005/6 SPD Growth ‚£m ‚£m % UK (including exports) 69.1 66.0 4.1% Mainland Europe 30.4 26.6 13.7% Asia Pacific 7.9 7.0 7.1% The division's UK sales (including exports) in the quarter increased 4.1% yearon year, helped by strong sales at Farnell InOne and CPC.Sales through the Farnell InOne brand in the UK rose 7.0% in the quarter as thebusiness continued to take market share, assisted by increased advertising ofits leading RoHS proposition and by effective marketing. Its average ordervalue increased for the second quarter in a row as sales of RoHS-compliantproducts increased and the underlying market returned to growth.Following the announcement of restructuring proposals for BuckHickman InOne inJanuary, the conversion of its branches to the new model commenced in April andis progressing according to plan. Sales through the BuckHickman InOne brandwere down 0.4% during the quarter. The business continues to focus onvalue-adding relationships and the reduction of lower quality sales. Forexample, shortly before the quarter-end, BuckHickman InOne secured a three-yearagreement to supply Metronet Rail with hand tools and personal protectiveequipment.CPC's sales rose 7.6% as the business launched more new direct mailpublications, including a bulk offer mailer, to attract specific customersegments. CPC's competitive own brand range continues to be extended throughAsian product sourcing.In mainland Europe, markets continued to improve and Farnell InOne gainedfurther market share as sales rose 13.7%. Sales in all mainland Europeanmarkets displayed double digit growth over the prior year, helped by acontinued acceleration in sales of RoHS-compliant products and continuingstrong sales to corporate accounts. During the quarter, a new format one-volumecatalogue was launched across mainland Europe with an extended print run. Thecatalogue includes pan-European ranges that are increasingly being marketed inmultiple countries.During the quarter, the Europe and Asia Pacific region generated record levelsof traffic over its web sites and sales through them were up 62% year-on-year.Sales via eProcurement agreements were up 16%.Sales growth in Asia was 29.3% in the quarter, driven by strong growth inSingapore. Our offices across Asia have experienced increasing customerinterest in RoHS-related information and compliant products. In addition, anelectronic tools catalogue was launched across the region to address themaintenance, repair and operations (`MRO') market.In Australia, sales were below of those in the prior year. Since the launch ofa new catalogue in the fourth quarter, the performance of the business hasshown a gradual improvement in a market that is becoming increasingly exposedto global competition.Industrial Products Division (IPD) Q1 2005/6 Q1 2005/6 Q1 2005/6 ‚£m ‚£m ‚£m at CER* Revenue 29.4 24.1 25.4 Operating profit 3.7 2.7 2.9 Operating margin% 12.6% 11.2% 11.4% Sales Growth¢â‚¬ 16.0% *Constant exchange ratesSales rose 16.0%, or 5.5% excluding the effect of the acquisition of Weldon inJune 2005. Operating profit was ahead of last year, helped by the contributionfrom Weldon and an improved performance from the Kent business year-on-year.Akron BrassSales at Akron Brass were up 32.2%, or up 4.5% excluding the effect of theacquisition of Weldon in June 2005. Growth came from new products and thewinning of international project business outside the traditional fire-fightingsector.TPC Wire & CableTPC achieved sales growth of 20.1% in the quarter, helped by further success indiversifying into new non-automotive markets and the effect of increasingcopper costs on prices. The business continues to increase sales to foreignautomotive manufacturers located in North America, however conditions amongstindigenous North American automotive manufacturers, which now only account forapproximately a quarter of TPC's sales, remain difficult. Despite the impact ofcontinued raw material cost pressures, the business has successfully maintainedmargin through the effective management of the supply chain.KentSales at Kent grew 7.1% in the first quarter, representing a strong performancein a slow underlying market. The business benefited from a sharper sales focusand the actions taken to reduce costs in the third quarter of last year.OutlookThe Group has performed well in the first quarter, our seasonally strongestperiod, through a combination of sales growth, continued stability in grossmargins and robust cost control. This combination will remain a priority of themanagement team. Accordingly, I believe that we will make progress for the yearas a whole.Sir Peter GershonChairman31 May 2006This 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-looking statementsinvolve risk and uncertainty because they relate to events and depend oncircumstances that will occur in the future. Actual expenditures made andactions taken may differ materially from the Group's expectations contained inthe forward-looking statements as a result of various factors, many of whichare beyond the control of the Group. These factors include, but are not limitedto, actions taken in response to enactment of RoHS legislation, theimplementation of cost-saving initiatives to offset current market conditions,continued use and acceptance of e-commerce programs and systems and the impacton other distribution systems, the ability to expand into new markets andterritories, the implementation of new sales and marketing initiatives, changesin demand for electronic, electrical, electromagnetic and industrial products,rapid changes in distribution of products and customer expectations, theability to introduce and customers' acceptance of new services, products andproduct lines, product availability, the impact of competitive pricing,fluctuations in foreign currencies, and changes in interest rates and overallmarket conditions, particularly the impact of changes in world-wide andnational economies.CONSOLIDATED INCOME STATEMENT For the 13 weeks ended 30th April 2006 2006/7 2005/6 2005/6 First First Full quarter quarter year unaudited unaudited audited Notes ‚£m ‚£m ‚£m Revenue 2 225.4 196.4 814.0 Cost of sales - before RoHS inventory provision (136.1) (117.5) (490.9) - RoHS inventory provision - - (6.6) Total cost of sales (136.1) (117.5) (497.5) Gross profit 89.3 78.9 316.5 Net operating expenses - before reorganisation costs (67.3) (61.4) (250.9) - reorganisation costs - - (5.3) Total net operating expenses (67.3) (61.4) (256.2) Operating profit - before RoHS inventory provision and 22.0 17.5 72.2reorganisation costs - RoHS inventory provision - - (6.6) - reorganisation costs - - (5.3) Total operating profit 2 22.0 17.5 60.3 Finance income (interest receivable) 0.1 0.1 0.4 Finance costs - interest payable (3.8) (3.3) (14.4) - preference dividends (1.7) (1.7) (6.7) - premium on redemption of preference (0.3) (0.3) (1.5)shares Total finance costs (5.8) (5.3) (22.6) Profit before taxation 3 16.3 12.3 38.1 Taxation 4 (5.2) (3.8) (7.0) Profit for the period (attributable to 11.1 8.5 31.1ordinary shareholders) Earnings per share 5 Basic 3.1p 2.3p 8.6p Diluted 3.0p 2.3p 8.6p Ordinary dividends Interim - proposed 4.0p Final - proposed 5.0p Paid 9.0p Impact on shareholders' funds (‚£m) 32.6 All activities in both the current and previous year relate to continuing operations. CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE For the 13 weeks ended 30th April 2006 2006/7 2005/6 2005/6 First First Full quarter quarter year unaudited unaudited audited Notes ‚£m ‚£m ‚£m Profit for the period 11.1 8.5 31.1 Net exchange adjustments - 0.2 (4.5) Actuarial losses on pensions and other - - (8.2)post-retirement obligations Deferred tax on actuarial losses - - 2.4 Net gains/(losses) not recognised in the 8 - 0.2 (10.3)income statement Total recognised income for the period 11.1 8.7 20.8 Effect of change in accounting for 8 (111.0)preference shares (including deferred tax of ‚£4.7m) Total recognised expense since prior year (90.2)CONSOLIDATED BALANCE SHEET As at 30th April 2006 30th 1st May 29th April 2005 January 2006 unaudited 2006 unaudited audited Notes ‚£m ‚£m ‚£m ASSETS Non-current assets Goodwill 49.9 47.5 50.0 Other intangible assets 24.0 27.1 27.5 Property, plant and equipment 66.5 67.1 67.3 Retirement benefit asset 51.2 44.1 52.0 Deferred tax assets 0.4 0.4 0.3 Total non-current assets 192.0 186.2 197.1 Current assets Inventories 164.9 158.9 163.2 Trade and other receivables 147.4 135.4 142.8 Cash and cash equivalents 6 47.7 34.8 40.5 Total current assets 360.0 329.1 346.5 LIABILITIES Current liabilities Financial liabilities 6 (86.0) (0.5) (92.8) Trade and other payables (98.4) (89.7) (93.9) Current tax payable (34.1) (42.3) (29.5) Short-term provisions 7 (3.1) (0.1) (3.2) Total current liabilities (221.6) (132.6) (219.4) Net current assets 138.4 196.5 127.1 Non-current liabilities Financial liabilities 6 (272.9) (331.3) (277.8) Retirement and other post-employment (38.2) (27.8) (38.5)benefits Deferred tax liabilities (24.2) (21.7) (25.2) Other provisions 7 (0.9) (0.9) (1.1) Total non-current liabilities (336.2) (381.7) (342.6) NET (LIABILITIES)/ASSETS (5.8) 1.0 (18.4) EQUITY Ordinary shares 18.1 18.1 18.1 Equity element of preference shares 19.9 19.9 19.9 Share premium 21.1 20.3 20.5 Capital redemption reserve 0.8 0.8 0.8 Hedging reserve (0.1) - (0.2) Cumulative translation reserve (2.3) 2.4 (2.3) Retained earnings (63.3) (60.5) (75.2) TOTAL EQUITY 8 (5.8) 1.0 (18.4)SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOWS For the 13 weeks ended 30th April 2006 2006/7 2005/6 2005/6 First First Full quarter quarter year unaudited unaudited audited Notes ‚£m ‚£m ‚£m Cash flows from operating activities Operating profit 22.0 17.5 60.3 Exceptional items: - income statement impact - - 11.9 - cash impact (0.3) - (2.0) Net impact of exceptional items (0.3) - 9.9 Depreciation and amortisation 5.2 5.1 21.0 Changes in working capital (before (8.5) (9.9) (10.9)exceptional items) Other non-cash movements (before (0.2) 0.3 (1.0)exceptional items) Cash generated from operations 18.2 13.0 79.3 Interest received 0.2 0.1 0.4 Interest paid (0.5) (0.2) (14.3) Dividends paid on preference shares - - (6.7) Taxation paid (2.5) (2.3) (14.3) Net cash from operating activities 15.4 10.6 44.4 Cash flows from investing activities Purchase of businesses - - (7.6) Proceeds from sale of property, plant 0.3 - 1.1and equipment Purchase of property, plant and (1.2) (1.4) (5.8)equipment Purchase of intangible assets (computer (1.1) (0.8) (5.7)software) Net cash used in investing activities (2.0) (2.2) (18.0) Cash flows from financing activities SEC de-registration costs - - (0.3) Issue of ordinary shares 0.7 0.1 0.1 New bank loans - - 22.7 Repayment of bank loans (2.0) - (8.3) Dividends paid to shareholders - - (32.6) Net cash used in financing activities (1.3) 0.1 (18.4) Net increase in cash, cash equivalents 12.1 8.5 8.0and bank overdrafts Cash, cash equivalents and bank 35.6 27.2 27.2overdrafts at beginning of period Exchange (losses)/gains (0.6) (1.3) 0.4 Cash, cash equivalents and bank 47.1 34.4 35.6overdrafts at end of period Reconciliation of net financial liabilities Net financial liabilities at beginning (330.1) (200.7) (200.7)of period, as previously reported Implementation of accounting for financial instruments in accordance with IAS 39: - reclassification of preference shares - (106.3) (106.3) Net financial liabilities at beginning (330.1) (307.0) (307.0)of period, as restated Net increase in cash, cash equivalents 12.1 8.5 8.0and bank overdrafts Decrease/(increase) in debt 2.0 - (14.4) Premium on redemption of preference (0.3) (0.3) (1.5)shares Derivative financial instruments 0.1 - (0.2) Exchange movement 5.0 1.8 (15.0) Net financial liabilities at end of 6 (311.2) (297.0) (330.1)period NOTES 1 BASIS OF PREPARATION The unaudited consolidated financial information in this report has been prepared applying the accounting policies disclosed in the Group's 2006 Annual Report and Accounts on pages 33 to 36. The Group's 2006 Annual Report and Accounts, on which the Company's auditors, PricewaterhouseCoopers LLP, have given an unqualified opinion in accordance with Section 235 of the Companies Act 2005, is available on the Company's website at www.premierfarnell.com or from 150 Armley Road, Leeds, LS12 2QQ. 2 SEGMENT INFORMATION 2006/7 2005/6 2005/6 Full First First year quarter quarter audited unaudited unaudited ‚£m ‚£m ‚£m Revenue Marketing and Distribution Division Americas 88.6 72.7 310.0 Europe and Asia Pacific 107.4 99.6 396.4 Total Marketing and Distribution 196.0 172.3 706.4 Division Industrial Products Division 29.4 24.1 107.6 225.4 196.4 814.0 Operating profit Marketing and Distribution Division Americas - before RoHS inventory provision and 8.3 6.6 27.1 reorganisation costs - RoHS inventory provision - - (4.2) - reorganisation costs - - (0.7) 8.3 6.6 22.2 Europe and Asia Pacific - before RoHS inventory provision and 12.4 10.6 41.5 reorganisation costs - RoHS inventory provision - - (2.4) - reorganisation costs - - (4.4) 12.4 10.6 34.7 Total Marketing and Distribution 20.7 17.2 56.9 Division Industrial Products Division 3.7 2.7 14.1 Head Office costs - before reorganisation costs (2.4) (2.4) (10.5) - reorganisation costs - - (0.2) (2.4) (2.4) (10.7) 22.0 17.5 60.3 3 PROFIT BEFORE TAXATION Profit before taxation is stated after charging/(crediting): 2006/7 2005/6 2005/6 Full First First year quarter quarter audited unaudited unaudited ‚£m ‚£m ‚£m Share-based payments 0.8 0.7 2.1 Defined benefit pension schemes (net) (0.5) (0.3) (2.5) Severance costs (Group Chief Executive) - - 0.5 RoHS inventory provision - - 6.6 Reorganisation costs - - 5.3 In the year ended 29th January 2006, a provision of ‚£6.6 million was made in the fourth quarter for obsolete and slow moving non-compliant inventory as a result of the European Union's Directive relating to the Restriction of the use of certain Hazardous Substances (RoHS). Reorganisation costs in the year ended 29th January 2006, comprised ‚£1.4 million charged in the third quarter for severance costs relating to the Group's redundancy programme, and ‚£3.9 million charged in the fourth quarter relating to the restructuring of the BuckHickman InOne business. 4 TAXATION The taxation charge includes provision at an effective rate for the period on profit before tax and preference dividends of 29.0% (2005/6: 27.0%), being the estimated effective rate of taxation for the year ending 28th January 2007. 5 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. Earnings and the weighted average number of ordinary shares used in the calculations are set out below. 2006/7 2005/6 2005/6 Full First First year quarter quarter audited unaudited unaudited ‚£m ‚£m ‚£m Profit attributable to ordinary 11.1 8.5 31.1 shareholders Number Number Number Weighted average number of shares 363,031,849 362,703,208 362,729,711 Dilutive effect of share options 2,008,556 259,748 376,557 Diluted weighted average number of 365,040,405 362,962,956 363,106,268 shares 6 NET FINANCIAL LIABILITIES 30th April 1st May 29th 2006 2005 January unaudited unaudited 2006 audited ‚£m ‚£m ‚£m Cash and cash equivalents 47.7 34.8 40.5 Unsecured loans and overdrafts (248.3) (224.8) (260.2) Net financial liabilities before (200.6) (190.0) (219.7) preference shares and derivatives Preference shares (110.5) (107.0) (110.2) Derivative financial instruments (0.1) - (0.2) Net financial liabilities (311.2) (297.0) (330.1) Net financial liabilities are analysed in the balance sheet as follows: Current assets Cash and cash equivalents 47.7 34.8 40.5 Current liabilities Bank overdrafts (0.6) (0.4) (4.9) 7.2% US dollar Guaranteed Senior Notes (85.2) - (87.6) payable 2006 Other loans (0.1) (0.1) (0.1) Derivative financial instruments (0.1) - (0.2) (86.0) (0.5) (92.8) Non-current liabilities Bank loans (36.1) (23.2) (37.9) 7.2% US dollar Guaranteed Senior Notes - (81.2) - payable 2006 5.3% US dollar Guaranteed Senior Notes (36.3) (34.6) (37.3) payable 2010 5.9% US dollar Guaranteed Senior Notes (87.4) (83.2) (89.8) payable 2013 Other loans (2.6) (2.1) (2.6) Preference shares (110.5) (107.0) (110.2) (272.9) (331.3) (277.8) At 30th April 2006, the Group had unutilised committed five year bank facilities of ‚£160.7 million which expire in 2010. 7 PROVISIONS 30th April 1st May 29th 2006 2005 January unaudited unaudited 2006 audited ‚£m ‚£m ‚£m Current: - reorganisation costs 3.0 - 3.1 - dilapidation costs 0.1 0.1 0.1 Non-current: - reorganisation costs - - 0.2 - dilapidation costs 0.9 0.9 0.9 4.0 1.0 4.3 8 CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY 2006/7 2005/6 2005/6 Full First First year quarter quarter audited unaudited unaudited ‚£m ‚£m ‚£m Total equity at beginning of year, as (18.4) 102.5 102.5 previously reported Implementation of accounting for financial instruments in accordance with IAS 32 and IAS 39: - reclassification of preference shares - (106.3) (106.3) as debt - associated deferred tax - (4.7) (4.7) Total equity at beginning of year, as (18.4) (8.5) (8.5) restated Profit after taxation 11.1 8.5 31.1 Net gains and losses recognised directly - 0.2 (10.3) in equity Ordinary dividends declared - - (32.6) Ordinary shares issued 0.6 0.1 0.3 Share-based payments 0.8 0.7 2.1 Derivative financial instruments 0.1 - (0.2) SEC de-registration costs - - (0.3) Total equity at end of year (5.8) 1.0 (18.4) 9 EXCHANGE RATES The principal average exchange rates used to translate the Group's overseas profits were as follows: 2006/7 2005/6 2005/6 Full First First year quarter quarter US dollar 1.76 1.91 1.80 Euro 1.45 1.46 1.46ENDPREMIER FARNELL PLCRelated Shares:
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