31st May 2007 07:00
Premier Farnell plc
31 May 2007 Results for the First Quarter ended 29 April 2007 of the Financial Year ending 3 February 2008
Key Financials ‚£m Q1 2007/ Q1 2006/7 Q1
8 (restated) growth Continuing operations (a) ‚£m ‚£m at CER (b) Sales 183.6 188.6 4%¢â‚¬ Operating profit 22.2 22.1 8% Profit before tax 17.5 16.4 16% Earnings per share (0.4)p 3.1p - * total 3.3p 3.1p 18% * continuing operations Notes:
(a) Continuing operations exclude BuckHickman, part of the MDD Europe and Asia Pacific Division, which was sold on 10 April 2007. The results of this discontinued operation are shown as a single number on the face of the income statement below profit after tax and are thus excluded from the trading results discussed in this statement, including comparative information. Further details are given in note 4 to the financial information.
(b) CER - constant exchange rates
Business Strategy
* Business strategy implementation on track with continued strengthening of our leading EDE experience. * State of the art web front end introduced globally across all distribution businesses. * Driving growth through the addition of niche, high technology suppliers. * New business in Greater China successfully launched in April 2007. * Disposal of BuckHickman complete. * Launch this month of Live Edge award - Premier Farnell's global environmental design challenge. www.live-edge.com
Financial Highlights
* Gross margin up 0.4 percentage points on the prior year representing the sixth consecutive quarter of gross margin improvement. * Monthly sales per day increasing through the quarter with first quarter sales growth of 4%. * Improvement in operating margin to 12.1% in the first quarter compared to 11.7% in the prior year, reflecting continued, robust cost control and operational gearing* of 22%. * Profit before tax up 16% and earnings per share from continuing operations up 18%, both at constant exchange rates. * Strong cash performance, with cash generated from continuing operations up 10% on the prior year. Net financial liabilities ended the period at ‚£244 million (30 April 2006: ‚£311 million).
Commenting on the results, Harriet Green, Group Chief Executive, said:
"The first quarter has seen progress against last year in revenue, operating profit and cash generation. We are driving the business through continued investment and rigorous implementation of our strategy. We expect that the second quarter will continue to reflect the results of the investments we are making and will deliver further revenue growth with our focus on EDE, the web and internationalising our high service model. We anticipate making continued progress in the current financial year in line with our expectations."
* Operational gearing represents the year on year increase in operating profit compared to the increase in sales, both at constant exchange rates.
¢â‚¬ percentage changes in sales
Comparison 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 continuing businesses at constant exchange rates and for like periods, unless otherwise stated.
For further information, contact:
Harriet Green, Group Premier +44 (0) 20 7851 Chief Executive Farnell plc 4100
Mark Whiteling, Group Finance Director Elaine Ryman Financial +44 (0) 20 7269 Dynamics (UK) 7121
A conference call with Harriet Green and Mark Whiteling will take place on 31 May at 8:30am UK time. To obtain dial-in details please call Elaine Ryman at Financial Dynamics on the above number. The 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 2007 Annual Report and Accounts, and links to all other Group web sites.
The results for the second quarter of the financial year to 3 February 2008 will be announced on 11 September 2007.
Premier Farnell plc
FIRST QUARTER STATEMENT Resultsfor the First Quarterended 29 April 2007 of the Financial Year ending 3 February 2008
Premier Farnell, a leading high service distributor providing essential products and services to engineers and purchasing professionals globally, announces its results for the first quarter ended 29 April 2007.
Note: percentage changes in sales
Comparison 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 continuing businesses at constant exchange rates and for like periods, unless otherwise stated.
Chief Executive's Operational Overview
Since we announced the outcome of our strategic review last October we have been driving ahead with the implementation of our plans. Our strategy is simple. We will deliver sustained, profitable growth through focusing on the Electronic Design Engineer (EDE) market segment globally, internationalising our business model to expand into new territories, driving more business through the web and maintaining our solid Maintenance, Repair and Operations (MRO) base.
We are confident that these plans, combined with operational excellence, will enable us to build powerfully on the success of the previous five quarters, and deliver our commitment to enhanced shareholder value.
This quarter has seen the significant progress of our web capability with the launch of a new web front end globally for the Marketing and Distribution Division (MDD) now complete. Europe, UK and Asia all came online during the quarter and customer feedback and early performance statistics are demonstrating excellent trends. Following the launch of the new web front end at Newark towards the end of last year, first quarter web sales in the Americas were up 19% on the prior year. Web sales overall increased 32% on the prior year and 11% over the fourth quarter last year. Total eCommerce sales accounted for 26% of total MDD sales in the quarter compared to 22% in the first quarter of last year. Our new web site has, importantly, regularly reached the top of the non-sponsored search engine listings for electronic component distributors and is an important element of our multi-channel offering as we drive powerful, targeted marketing initiatives. It remains a critical enabler of our EDE strategy, giving engineers the rapid access to quality data and product information they require.
Our EDE plans globally are well advanced as we continue to strengthen our leadership position. This unique customer group needs fast, responsive, knowledgeable support, as well as information excellence, new product availability and multi-channel technical support. Delivering these are key differentiators for Premier Farnell.
During the period, we increased the number of actively stocked product lines, specifically in the specialist technology product areas that reflect the needs of the EDE community, ensuring that customers have access to what they need, when they need it, to assist them in the time to market of their end product. We also added some important niche suppliers, again with the needs of the EDE segment very much as a consideration, including Enfis, Equinox, IST, Telegesis and THAT Corporation, all offering the very latest in new products and technologies to help design engineers leverage the best available solutions. As we continue to internationalise our EDE proposition, the recent signing of a territorial extension with Sharp further enhances our technology offering. Suppliers want to partner with us, recognising the specialist access we can provide to seed their new products at the very outset of a product's design cycle.
New customer acquisition remains a focus and in addition to attracting new EDE customers, we continue to enjoy significant growth in the small customer segment in the Americas where sales are up 16% year on year. With continued investment in training our commercial teams to support the EDE sector even more effectively, we expect new customer growth to accelerate further.
In May 2007, we launched a global environmental design challenge - Live Edge, E lectronic Design for the Global Environment which gives us the opportunity to support design engineers in their quest to make a difference to the planet, www.live-edge.com. We have already received a significant amount of interest in this challenge. As part of our continued environmental commitment we were also pleased to be recognised as one of the biggest improvers in the latest Business in the Community (BiTC) Corporate Responsibility Index, moving into the top 100 performers for the first time.
As further evidence of our powerful multi-channel approach we have launched new catalogues across Asia and Europe, including the first editions of our translated Eastern European catalogues, which are being distributed to five countries further accelerating our progress in this important region. Demand for our new Chinese catalogue has exceeded all expectations with over 4,500 requests in the first weeks after launch.
Internationalising our model continues with the successful launch of Premier Electronics in China during April. Our new warehouse and systems are fully operational, with the capability to offer next day delivery to most cities across China already. Targeted marketing through our different channels and exhibition activity is driving new customer acquisition at a rapid rate as we focus on the profitable EDE market in China. The web site also continues to grow in importance as part of our multi-channel offering and visitor numbers continue to steadily increase. Molex, one of the world's leading connectivity suppliers, has already extended our franchise agreement to include Asia since the launch of Premier Electronics.
In line with our strategy, we were also successful in completing the timely disposal of BuckHickman to the BSS Group in April 2007.
Our management team is totally committed to our quest for a high performance culture as we drive the business strategy to deliver better results. Our people plan continues to make strong progress as we develop and grow a strong team for the future, continuing to add talent from outside the organisation to enhance our knowledge base. This, when combined with superb logistics performance from the operations teams globally, who achieved 99%+ performance against our same day shipping targets for the quarter, powerfully underpins our commitment to excellence in meeting the needs of our customers worldwide through our multi-channel approach.
Financial ResultsSales
Sales for the quarter from continuing operations were ‚£183.6 million (2006/7: ‚£ 188.6 million). Sales per day increased 4.4% on the prior year. The average exchange rate for the US dollar against sterling was $1.97 (Q1 2006/7: $1.76). At constant exchange rates, the sales increase in the first quarter from continuing operations was ‚£7.6 million.
Margins and Operating Profit
The gross margin from continuing operations for the quarter was 39.8%, an increase of 0.4 percentage points on the prior year representing the sixth consecutive quarter of gross margin improvement.
Operating profit from continuing operations was ‚£22.2 million (2006/7: ‚£22.1 million), producing an operating margin of 12.1% (2006/7: 11.7%). There was an adverse impact on operating profit of ‚£1.6 million from the translation of overseas results compared with the prior year, principally as a result of the weakness of the US dollar. At constant exchange rates, the increase in operating profit compared with the prior year was 8.3%. 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.
Finance Costs
Net finance costs in the quarter were ‚£4.7 million (2006/7: ‚£5.7 million). This comprises net interest payable of ‚£2.8 million (2006/7: ‚£3.7 million), which was covered 7.9 times by operating profit, and a charge of ‚£1.9 million (2006/ 7: ‚£2.0 million) in respect of the Company's convertible preference shares. The reduction in net finance costs reflects the benefit of the improved net borrowing position, with the underlying level of net financial liabilities at 29 April 2007 (after adjusting for exchange rates) being ‚£50 million lower than a year ago.
Profit Before Tax and Taxation Charge
Reported profit before tax from continuing operations for the quarter was ‚£17.5 million (2006/7: ‚£16.4 million). At constant exchange rates, profit before tax increased 15.9% year-on-year, significantly ahead of the rate of sales growth achieved.
The taxation charge from continuing operations for the quarter was at an effective rate of 29.5% of profit before tax and preference dividends (2006/7: 28.7%).
Disposal of BuckHickman
On 10 April 2007, the Group disposed of its BuckHickman business, part of the Marketing and Distribution Division, Europe and Asia Pacific, to BSS Group plc. The pre-tax loss on disposal reflected in the quarter was ‚£13.6 million, after the write-off of goodwill allocated to this business of ‚£19.3 million, and the net cash consideration received during the quarter was ‚£25.8 million. BuckHickman is a leading UK distributor of industrial tools and supplies: in 2006/7, it generated sales of ‚£99.8 million and an operating loss of ‚£0.8 million.
Return on Net Operating Assets
Return on net operating assets for the quarter, based on continuing operations, was 30.9% (2006/7: 30.2%).
Earnings per Share
Earnings per share from continuing operations for the first quarter were 3.3p (2006/7: 3.1p), an increase of 17.9% at constant exchange rates.
Balance Sheet and Cash Flow
Net cash generated from continuing operations in the quarter was ‚£19.4 million, 10.2% up on the prior year. Working capital increased by ‚£7.2 million during the quarter due primarily to increased receivables arising from higher sales levels. The net cash inflow during the quarter was ‚£36.2 million (2006/7: ‚£14.1 million) including net proceeds from the business disposal of ‚£25.8 million. Net financial liabilities at the end of the quarter were ‚£243.8 million (30 April 2006: ‚£311.2 million), including ‚£103.4 million (30 April 2006: ‚£110.5 million) attributable to the Company's preference shares.
Operations
Marketing and Distribution Division (MDD)
MDD comprises: Newark, Farnell, MCM and CPC.
Continuing Q1 2007/8 Q1 2006/7 Q1 growthbusinesses (restated) ‚£m at CER* ‚£m Sales 165.1 169.7 3.9%
Operating profit 21.4 21.2 7.0%
Operating 13.0% 12.5% margin%
*Constant exchange rates
First quarter sales grew 3.9% on the prior year despite a strong comparative. The improved operating margin of 13.0% demonstrates continued cost control, with operational gearing of 23.7%. The adverse impact on operating profit in the quarter from the translation of overseas results was ‚£1.2 million due principally to the relatively weak US dollar.
Following the implementation of the new web front end across the Americas at the end of last year and the successful roll out to Europe and Asia Pacific in April 2007, web sales increased 32% on the prior year and 11% on the fourth quarter, with total eCommerce sales accounting for 26% (Q1 2006/7: 22%) of total MDD sales in the quarter.
The Americas
Newark and MCM.
Q1 2007/8 Q1 2006/7 Q1 growth at CER* ‚£m ‚£m Sales 80.9 88.6 2.3%
Operating profit 7.9 8.3 8.2%
Operating 9.8% 9.4% margin%
*Constant exchange rates
First quarter sales were up 2.3% on the prior year, with monthly sales per day increasing through the quarter. This performance was supported by strong web sales, targeted email campaigns and improved call centre sales and customer service activities. In addition, continued focus on the small customer segment resulted in sales growth to these customers of 16% on the prior year and 13% on the fourth quarter of last year. At constant exchange rates, the sales increase in the first quarter was ‚£1.8 million, and the operating profit increase was ‚£ 0.6 million. Operating margin of 9.8% compared with 9.4% achieved in the first quarter of last year, with operational gearing remaining strong.
Web sales in the Americas for the quarter were up 19% on the prior year, reflecting the success of the new web platform launched at Newark in December 2006. Visits to the web site have increased 26% in the quarter compared to the fourth quarter of last year and the number of new web customers has grown 19% over the same period. Feedback from customers and suppliers has been very positive and web performance indicators continue to improve.
MCM's sales were flat year on year reflecting a decline of sales into the home integration market. During the quarter, the business added over 600 new products targeted at specific market segments and increased its direct mail circulation, with a resulting sales per day improvement towards the end of the quarter. Web sales grew 27% year on year with total eCommerce sales accounting for 42% of MCM's total sales.
Europe and Asia Pacific
Farnell and CPC.
Continuing Q1 2007/8 Q1 2006/7 Q1 growthbusinesses (restated) ‚£m at CER* ‚£m Sales 84.2 81.1 5.5% Operating profit 13.5 12.9 6.3% Operating 16.0% 15.9% margin% *Constant exchange rates
Sales from continuing operations were up 5.5% in the quarter. The operating margin of 16.0% was slightly ahead of last year, reflecting continued cost control.
Sales by region Q1 2007/ Q1 2006/7 SPD
8 (restated) Growth Continuing businesses ‚£m ‚£m % UK (including 44.3 42.8 3.7% exports) Mainland Europe 32.7 30.4 10.8% Asia Pacific 7.2 7.9 -5.0%
Sales through the Farnell brand in the UK increased 3.4%, as we continue to benefit from growth in our established technical leadership position and concentrate our resources to support customer focus on the increasing regulatory and environmental requirements of electronic design. CPC's sales increased 4.5% with initiatives in direct marketing, eMarketing and search engine optimisation continuing to deliver success, together with specific actions to re-activate lapsed customers and prospecting of potential customers. CPC's web sales grew 26% year on year as the business saw a record number of unique visitors to the web site following the launch of the new web front end.
In mainland Europe, Farnell reported sales growth of 10.8% with double digit year on year sales growth continuing for our major territories, reflecting ongoing development of our multi-channel approach, a strong web performance and continued targeted, marketing activity. The roll out of our differentiated EDE service proposition is now well underway and we expect this to bring further growth.
The new web front end launched in the Americas in December was introduced into the Europe and Asia Pacific regions in April, making available to EDE customers new product associations including cross-referencing for obsolete products, alternative products and upgrades. Web sales in the quarter grew 37% year on year with total eCommerce sales now accounting for 34% of total sales.
The first quarter saw the launch in April of the new Premier Electronics business in China. This included the opening of a new warehouse and distribution centre, with the capability to offer next day delivery to most cities, a fully implemented Mandarin language Enterprise Resource Planning (ERP) System, and the launch of a new Mandarin Chinese language catalogue and a Chinese web platform as we continue to drive our multi-channel strategy. Our exhibitions and direct marketing campaigns attracted over 10,000 prospective customers, and we have already received over 4,500 requests for our catalogue. Visitor numbers to our web site continue to grow underpinning the importance of a multi-channel offering for new customer acquisition.
During the quarter we continued to transition our China business from its mainly MRO, lower margin, customer base to become more focused on the growing, higher margin EDE segment. As anticipated, this implementation phase of our strategy resulted in a sales decline in the period although there was a gross margin improvement on the fourth quarter of last year. Sales in Australia were down slightly on the prior year, although the business continued to gain share during the quarter in a market which continues to be affected by the exposure to global competition.
Industrial Products Division (IPD)
Q1 2007/8 Q1 2006/7 Q1 growth ‚£m ‚£m at CER* Sales 18.5 18.9 9.2% Operating profit 3.5 3.3 20.7% Operating 18.9% 17.5% margin% *Constant exchange rates
Sales grew 9.2% in the quarter reflecting the strong performance of Akron Brass. At constant exchange rates, operating profit was 20.7% ahead of last year, with an improvement in operating margin to 18.9%.
Akron Brass
Akron Brass sales grew 15.1% in the first quarter. The business continued to enjoy the benefit of the strong order intake from North American fire equipment manufacturers in the fourth quarter of last year, driven by changes in regulatory requirements. In addition, there was a strong sales performance from Weldon's lighting solutions and from international growth, driven mainly by geographic expansion in Asia. Operating margin was ahead of last year reflecting continued efficiencies across the business, including benefits from several product redesigns.
TPC Wire & Cable
TPC's first quarter sales were up 5.8% year on year. Sales to new markets, including mining, utilities and government increased 25%, and the business also continued to target off-road construction and on-shore oil drilling. The successful diversification into these markets, together with increased product offerings, continues to more than compensate for the decline in sales in the North American automotive markets. The business continued to successfully control costs and maintain margins.
Outlook
The first quarter has seen progress against last year in revenue, operating profit and cash generation. We are driving the business through continued investment and rigorous implementation of our strategy. We expect that the second quarter will continue to reflect the results of the investments we are making and will deliver further revenue growth with our focus on EDE, the web and internationalising our high service model. We anticipate making continued progress in the current financial year in line with our expectations.
This press release contains certain forward-looking statements relating to the business of the Group and certain of its plans and objectives, including, but not limited to, future capital expenditures, future ordinary expenditures and future actions to be taken by the Group in connection with such capital and ordinary expenditures, the expected benefits and future actions to be taken by the Group in respect of certain sales and marketing initiatives, operating efficiencies and economies of scale. By their nature forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. Actual expenditures made and actions taken may differ materially from the Group's expectations contained in the forward-looking statements as a result of various factors, many of which are beyond the control of the Group. These factors include, but are not limited to, the implementation of initiatives supporting the Group's strategy, the implementation of cost-saving initiatives to offset current market conditions, continued use and acceptance of e-commerce programs and systems, the ability to expand into new markets and territories, the implementation of new sales and marketing initiatives, changes in demand for electronic, electrical, electromagnetic and industrial products, rapid changes in distribution of products and customer expectations, the ability to introduce and customers' acceptance of new services, products and product lines, product availability, the impact of competitive pricing, fluctuations in foreign currencies, and changes in interest rates and overall market conditions, particularly the impact of changes in world-wide and national economies.
CONSOLIDATED INCOME STATEMENT For the 13 weeks ended 29th April 2007 2007/8 2006/7 2006/7 First First Full quarter quarter year unaudited unaudited unaudited (restated) (restated) Notes ‚£m ‚£m ‚£m Continuing operations Revenue 2 183.6 188.6 723.3 Cost of sales (110.5) (114.3) (437.8) Gross profit 73.1 74.3 285.5 Net operating (50.9) (52.2) (202.4)expenses Operating profit 2 22.2 22.1 83.1 Finance income 0.1 0.1 0.6(interest receivable) Finance costs - interest payable (2.9) (3.8) (13.6) - preference (1.6) (1.7) (6.7)dividends - premium on (0.3) (0.3) (1.4)redemption of preference shares - gain on purchase - - 0.3of preference shares Total finance costs (4.8) (5.8) (21.4) Profit before 17.5 16.4 62.3taxation Taxation 3 (5.6) (5.2) (20.0) Profit after 11.9 11.2 42.3taxation from continuing operations (Loss)/profit after 4 (13.5) (0.1) 10.1taxation from discontinued operations (Loss)/profit for (1.6) 11.1 52.4the period (attributable to ordinary shareholders) Earnings per share 5 Basic (0.4)p 3.1p 14.4p Diluted (0.4)p 3.0p 14.4p Earnings per share 5 from continuing operations Basic 3.3p 3.1p 11.6p Diluted 3.3p 3.1p 11.6p Ordinary dividends Interim - proposed 4.0p Final - proposed 5.0p Paid 9.0p Impact on 32.6shareholders' funds (‚£m)
Prior year figures have been restated to reflect the reclassification of the BuckHickman business as a discontinued operation following its disposal on 10th April 2007. Further details are given in note 4.
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE For the 13 weeks ended 29th April 2007 2007/8 2006/7 2006/7 First First Full quarter quarter year unaudited unaudited audited Notes ‚£m ‚£m ‚£m (Loss)/profit for the (1.6) 11.1 52.4period Net exchange 0.3 - (0.6)adjustments Actuarial gains on - - 12.2pensions and other post-retirement obligations Deferred tax on - - (4.4)actuarial gains Deferred tax arising on - - 0.3purchase of preference shares Net gains/(losses) not 7 0.3 - 7.5recognised in the income statement Total recognised (1.3) 11.1 59.9(expense)/income for the period CONSOLIDATED BALANCE SHEET As at 29th April 2007 29th 30th 28th April April January 2007 2006 2007 unaudited unaudited audited Notes ‚£m ‚£m ‚£m ASSETS Non-current assets Goodwill 30.3 49.9 49.6 Other intangible 21.3 24.0 22.2assets Property, plant 54.7 66.5 58.8and equipment Retirement benefit 56.4 51.2 56.8asset Deferred tax 0.3 0.4 0.2assets Total non-current 163.0 192.0 187.6assets Current assets Inventories 151.1 164.9 162.7 Trade and other 115.2 147.4 127.9receivables Cash and cash 6 33.4 47.7 32.2equivalents Total current 299.7 360.0 322.8assets LIABILITIES Current liabilities Financial 6 (4.3) (86.0) (11.1)liabilities Trade and other (83.9) (98.4) (94.9)payables Current tax (30.7) (34.1) (28.0)payable Short-term - (3.1) (0.8)provisions Total current (118.9) (221.6) (134.8)liabilities Net current assets 180.8 138.4 188.0 Non-current liabilities Financial 6 (272.9) (272.9) (302.4)liabilities Retirement and (28.9) (38.2) (29.6)other post-employment benefits Deferred tax (30.1) (24.2) (30.7)liabilities Other provisions - (0.9) (0.9) Total non-current (331.9) (336.2) (363.6)liabilities NET ASSETS/ 11.9 (5.8) 12.0(LIABILITIES) EQUITY Ordinary shares 18.2 18.1 18.2 Equity element of 18.4 19.9 18.4preference shares Share premium 22.2 21.1 21.6 Capital redemption 1.4 0.8 1.4reserve Hedging reserve (0.3) (0.1) (0.1) Cumulative (2.6) (2.3) (2.9)translation reserve Retained earnings (45.4) (63.3) (44.6) SHAREHOLDERS' 7 11.9 (5.8) 12.0FUNDS/(DEFICIT) CONSOLIDATED CASH FLOW STATEMENT For the 13 weeks ended 29th April 2007 2007/8 2006/7 2006/7 First First Full quarter quarter year unaudited unaudited unaudited (restated) (restated) Notes ‚£m ‚£m ‚£m Cash flows from operating activities Operating profit 22.2 22.1 83.1from continuing operations Depreciation and 4.8 4.8 18.7amortisation Changes in working (7.2) (9.1) (5.8)capital Additional pension (0.7) (0.5) (2.4)scheme funding (UK defined benefit plan) Other non-cash 0.3 0.3 (1.8)movements Cash generated from 19.4 17.6 91.8continuing operations Cash generated from (0.3) 0.6 (1.2)discontinued operations Total cash generated 19.1 18.2 90.6from operations Interest received 0.2 0.2 0.6 Interest paid (1.6) (0.5) (14.1) Dividends paid on - - (6.7)preference shares Taxation paid (3.3) (2.5) (18.7) Net cash generated 14.4 15.4 51.7from operating activities Cash flows from investing activities Disposal of business 4 25.8 - 20.4 Proceeds from sale - 0.3 5.1of property, plant and equipment Purchase of (2.4) (1.2) (7.4)property, plant and equipment Purchase of (2.2) (1.1) (7.0)intangible assets (computer software) Net cash generated 21.2 (2.0) 11.1from/(used in) investing activities Cash flows from financing activities Issue of ordinary 0.6 0.7 1.3shares Purchase of - - (8.4)preference shares New bank loans - - 78.9 Repayment of bank (27.8) (2.0) (115.1)loans Dividends paid to - - (32.6)ordinary shareholders Net cash used in (27.2) (1.3) (75.9)financing activities Net increase/ 8.4 12.1 (13.1)(decrease) in cash, cash equivalents and bank overdrafts Cash, cash 21.3 35.6 35.6equivalents and bank overdrafts at beginning of period Exchange losses (0.2) (0.6) (1.2) Cash, cash 29.5 47.1 21.3equivalents and bank overdrafts at end of period Reconciliation of net financial liabilities Net financial (281.3) (330.1) (330.1)liabilities at beginning of period Net increase/ 8.4 12.1 (13.1)(decrease) in cash, cash equivalents and bank overdrafts Decrease in debt 27.8 2.0 36.2 Decrease in - - 8.4preference shares Premium on (0.3) (0.3) (1.4)redemption of preference shares Derivative financial (0.2) 0.1 0.1instruments Exchange movement 1.8 5.0 18.6 Net financial 6 (243.8) (311.2) (281.3)liabilities at end of period
Prior year figures have been restated to reflect the reclassification of the BuckHickman business as a discontinued operation following its disposal on 10th April 2007. Further details are given in note 4.
NOTES
1 Basis of preparation
The unaudited consolidated financial information in this report has been prepared in accordance with International Financial Reporting Standards (IFRS) and applying the accounting policies disclosed in the Group's 2007 Annual Report and Accounts on pages 53 to 55.
2 Segment information (continuing operations)
2007/8 2006/7 2006/7 First First Full quarter quarter year unaudited unaudited unaudited (restated) (restated) ‚£m ‚£m ‚£m Revenue Marketing and Distribution Division Americas 80.9 88.6 329.3 Europe and Asia Pacific 84.2 81.1 320.6 Total Marketing and Distribution 165.1 169.7 649.9 Division Industrial Products Division 18.5 18.9 73.4 183.6 188.6 723.3 Operating profit Marketing and Distribution Division Americas 7.9 8.3 30.5 Europe and Asia Pacific 13.5 12.9 49.1 Total Marketing and Distribution 21.4 21.2 79.6 Division Industrial Products Division 3.5 3.3 13.7 Head Office costs (2.7) (2.4) (10.2) 22.2 22.1 83.1
Prior year figures have been restated to reflect the reclassification of the BuckHickman business, part of the Marketing and Distribution Division, Europe and Asia Pacific, as a discontinued operation following its disposal on 10th April 2007. Further details are given in note 4.
3 Taxation (continuing operations)
The taxation charge for continuing operations represents an effective tax rate for the period on profit before tax and preference dividends of 29.5% (2006/7: 28.7%), being the estimated effective rate of taxation for the financial year ending 3rd February 2008.
4 Discontinued operations
(Loss)/profit after taxation from discontinued operations comprises:
2007/8 2006/7 2006/7 First First Full quarter quarter year unaudited unaudited unaudited ‚£m ‚£m ‚£m
Current year disposals (BuckHickman) (13.5) (0.4) (0.6)
Prior year disposals (Kent) - 0.3 10.7 (13.5) (0.1) 10.1On 10th April 2007, the Group disposed of BuckHickman, part of the Marketingand Distribution Division, Europe and Asia Pacific. Consequently, theBuckHickman business has been reclassified as a discontinued operation and itstrading results are included in the income statement as a single line belowprofit after taxation from continuing operations, with comparatives restatedaccordingly. The impact of the disposal of BuckHickman on the income statementis as follows: 2007/8 2006/7 2006/7 First First Full quarter quarter year unaudited unaudited unaudited ‚£m ‚£m ‚£m Post tax result Revenue 19.3 26.3 99.8 Gross margin 6.0 7.8 30.2 Net operating expenses (5.8) (8.3) (31.0) Operating profit/(loss) 0.2 (0.5) (0.8) Taxation (0.1) 0.1 0.2 Profit/(loss) after taxation 0.1 (0.4) (0.6) Provisional loss on disposal Consideration (net of costs) 25.2 Net assets disposed (see below) (38.8) Loss on disposal of net assets (13.6) Taxation - Net loss on disposal (13.6) Total income statement impact (13.5) (0.4) (0.6) Net assets disposed comprises: Goodwill allocated to BuckHickman 19.3 Intangible assets (computer software) 1.2 Property, plant and equipment 2.2 Inventories 14.0 Receivables 16.8 Payables (14.7) 38.8
The net loss on disposal is subject to finalisation and agreement of the completion accounts.
Cash flows from BuckHickman included in the consolidated statement of cash flows are as follows:
Net cash flows from operating activities (0.3) 0.6 (1.1)
Net cash flows from investing activities (including net 25.8 (0.2) (0.7)
proceeds on disposal)
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.
Reconciliations of earnings and the weighted average number of ordinary shares used in the calculations are set out below.
2007/8 2006/7 2006/7 First First Full quarter quarter year unaudited unaudited unaudited ‚£m ‚£m ‚£m Earnings per share (Loss)/profit attributable to (1.6) 11.1 52.4 ordinary shareholders Earnings per share from continuing operations Profit after taxation from 11.9 11.2 42.3 continuing operations Number Number Number
Weighted average number of shares 363,688,697 363,031,849 363,328,421
Dilutive effect of share options 1,502,987 2,008,556 1,293,627
Diluted weighted average number of 365,191,684 365,040,405 364,622,048
shares 6 Net financial liabilities 29th 30th 28th April April January 2007 2006 2007 unaudited unaudited audited ‚£m ‚£m ‚£m Cash and cash equivalents 33.4 47.7 32.2 Unsecured loans and overdrafts (173.5) (248.3) (210.3)
Net financial liabilities before preference (140.1) (200.6) (178.1)
shares and derivatives Preference shares (103.4) (110.5) (103.1) Derivative financial instruments (0.3) (0.1) (0.1) Net financial liabilities (243.8) (311.2) (281.3)
Net financial liabilities are analysed in the balance sheet as follows:
Current assets Cash and cash equivalents 33.4 47.7 32.2 Current liabilities Bank overdrafts (3.9) (0.6) (10.9) 7.2% US dollar Guaranteed Senior Notes payable - (85.2) - 2006 Other loans (0.1) (0.1) (0.1) Derivative financial instruments (0.3) (0.1) (0.1) (4.3) (86.0) (11.1) Non-current liabilities Bank loans (54.3) (36.1) (82.0)
5.3% US dollar Guaranteed Senior Notes payable (33.0) (36.3) (33.7)
2010
5.9% US dollar Guaranteed Senior Notes payable (79.5) (87.4) (81.1)
2013 Other loans (2.7) (2.6) (2.5) Preference shares (103.4) (110.5) (103.1) (272.9) (272.9) (302.4)
7 Consolidated statement of changes in shareholders' equity
2007/8 2006/7 2006/7 First First Full quarter quarter year unaudited unaudited audited ‚£m ‚£m ‚£m
Shareholders' funds/(deficit) at beginning of 12.0 (18.4) (18.4)
year Profit for the year (1.6) 11.1 52.4 Net gains and losses recognised directly in 0.3 - 7.5 equity Ordinary dividends declared - - (32.6) Ordinary shares issued 0.6 0.6 1.2 Purchase of preference shares: - reduction in equity element - - (1.5) - gain arising on equity element - - 1.2 Share-based payments 0.8 0.8 2.1 Derivative financial instruments (0.2) 0.1 0.1
Shareholders' funds/(deficit) at end of year 11.9 (5.8) 12.0
8 Exchange rates
The principal average exchange rates used to translate the Group's overseas profits were as follows:
2007/8 2006/7 2006/7 First First Full quarter quarter year US dollar 1.97 1.76 1.86 Euro 1.48 1.45 1.47
9 Annual Report and Accounts
The Group's 2007 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.
PREMIER FARNELL PLCRelated Shares:
PFL.L