11th Jun 2009 07:00
Premier Farnell plc 11 June
2009
Results for the First Quarter of the Financial Year ending 31 January 2010Key Financials £m Q1 09/10 Q1 08/9 Q1 growth Continuing operations £m £m (unaudited)Revenue 204.3 199.3 -15%(a)Underlying operating profit (b) 17.5 24.2 -41%(a)Total operating profit 13.5 24.2 -54%(a)Underlying profit before tax (c) 13.0 20.4 -36%Total profit before taxation 9.0 24.0 -63%
Underlying earnings per share (c) 2.4p 3.9p -38% Basic earnings per share
1.7p 4.9p -65%
Financial Key Points
- Further sales decline in the first quarter as the fourth quarter trends continued into the current financial year.
- Year on year group sales performance in April and May showed an improvement over March.
- Gross margin stability, 39.4% compared with 39.3% in the fourth quarter, aided by the higher margin characteristics of Electronic Design Engineering (EDE) sales and sales via the web.
- Restructuring actions executed in the quarter in order to accelerate our web transition will deliver an annualised benefit of £6 million (one-off cost of £4 million recognised in the first quarter results).
- Reduction in cost base of £3 million (at constant exchange rates) against the first quarter last year, reflecting the benefit of ongoing cost actions together with those taken in November of last year.
- Strong cash performance - cash generated from operations, excludingrestructuring, represented 149% of underlying operating profit compared with91% achieved in the first quarter of last year. Return on net operating assetswas 28%.
- Healthy funding position with £88 million in facility headroom on bank borrowings and a net cash position of £30 million.
Strategic Highlights
- We are investing for future leadership and the assumptionsunderlying our strategy continue to be validated even in current markets. InEurope, where our strategy is more embedded, we are outperforming our markets,reflecting the higher growth, higher margin characteristics of EDE and theweb.
- Web sales for our distribution businesses grew 5% in the first quarter, with Farnell Europe achieving 53% of total sales via eChannels as our web transition continues apace.
- Our developing international markets have shown strong performance again, with Eastern Europe sales up 56% and sales in India up 167%.
- Our restructuring plans are on track as our accelerated transition to the web positively impacts our journey towards a permanent 2 percentage point reduction in operating expenses as a percentage of sales.
- element14, our innovative community for engineering customers was launchedsubsequent to the quarter end and has been very well received by EDEcustomers. element14 is designed to attract new customers to our propositionwhile extending and deepening our relationships as we invest in innovation andtransform into a product, information and services company.
Commenting on the results, Harriet Green, Chief Executive Officer, said:
"Our results for the first quarter saw a further decline in salesas the market trends we saw in the fourth quarter continued into the currentfinancial year, particularly the continuation of industrial and electronicdestocking in the supply chain, as well as reduced activity. However, our yearon year sales performance in April and May showed an improvement over March.
"Premier Farnell is investing for leadership as our strategic assumptions continue to be validated despite market conditions. Sales to EDE customers are outperforming Maintenance, Repair and Operation (MRO) sales globally and are less impacted by declining global markets. Our growing portfolio of products and services to meet the demands of this segment is attracting new customers and the demand for web excellence continues as increasing levels of business are transacted via eCommerce channels.
"Our management of costs, strong cash performance and the increasing value our customers attribute to our service has delivered another quarter of gross margin stability and enabled continued investment in the critical areas of our strategy.
"We remain dissatisfied with our performance and are executing our detailedplans to ensure that we will emerge from this difficult period as a stronger,more agile organisation. Through decisive actions to further embed thestrategy and strong management of costs, the Board believes that the businessis improving its position to seize the opportunities for growth thatexist in our chosen segments, now and into the future."
For further information, contact:
Premier Farnell plc Harriet Green, Chief Executive Officer +44 (0) 20 7851 4100 Mark Whiteling, Chief Financial Officer
Financial Dynamics (UK)Richard Mountain +44 (0) 20 7269 7121
Premier Farnell's announcements and presentations are published at www.premierfarnell.com, together with business information, the 2009 Annual Report and Accounts, and links to all other Group web sites, including element14 our new community website for electronic design engineers.
The results for the second quarter of the financial year to 31 January 2010 will be announced on Thursday, 3 September 2009.
Notes:
(a) Throughout this statement, in order to reflect underlying business performance, sales growth is based on sales per day for continuing businesses at constant exchange rates and for like periods, and growth in operating profit is calculated at constant exchange rates, unless otherwise stated.
(b) Underlying operating profit excludes restructuring costs of £4.0 million incurred in the quarter (2008/9 Q1: nil).
(c) Underlying profit before taxation and earnings per share excludes restructuring costs of £4.0 million incurred in the quarter (2008/9 Q1: nil) and excludes gains on the purchase and cancellation of preference shares in the quarter of nil (2008/9 Q1: £3.6 million).
(d) With effect from 2 February 2009, the Group has adopted IFRS 8,Operating Segments. This has not affected the financial results of the Group,but has resulted in a change to the Group's segmental disclosures. Theprevious two divisions within the Marketing and Distribution Division havebeen split into three distribution divisions within MDD with CPC (previouslyin MDD Europe and Asia Pacific) and MCM (previously in MDD Americas) now bothcategorised in the Other Distribution Division. Comparatives have beenre-presented accordingly.
(e) All results relate to continuing operations.
Premier Farnell plc
STATEMENT ON FIRST QUARTER OF THE
FINANCIAL YEAR ENDING 31 JANUARY 2010
Premier Farnell plc, the leading multi-channel, high service distributor supporting millions of engineers and purchasing professionals globally, announces its results of the first quarter for the financial year ending 31 January 2010.
Notes:
(a) Throughout this statement, in order to reflect underlying business performance, sales growth is based on sales per day for continuing businesses at constant exchange rates and for like periods, and growth in operating profit is calculated at constant exchange rates, unless otherwise stated.
(b) Underlying operating profit excludes restructuring costs of £4.0 million incurred in the quarter (2008/9 Q1: nil).
(c) Underlying profit before taxation and earnings per share excludes restructuring costs of £4.0 million incurred in the quarter (2008/9 Q1: nil) and excludes gains on the purchase and cancellation of preference shares in the quarter of £nil (2008/9 Q1: £3.6 million).
(d) With effect from 2 February 2009, the Group has adopted IFRS 8,Operating Segments. This has not affected the financial results of the Group,but has resulted in a change to the Group's segmental disclosures. Theprevious two divisions within the Marketing and Distribution Division havebeen split in to three distribution divisions within MDD with CPC (previouslyin MDD Europe and Asia Pacific) and MCM (previously in MDD Americas) now bothcategorised in the Other Distribution Division. Comparatives have beenre-presented accordingly.
(e) All results relate to continuing operations.
Chief Executive's Overview
Our results for the first quarter continue to be impacted by theglobal economic slowdown. We remain dissatisfied with our performance and areexecuting on detailed plans to ensure that we will emerge from this difficultperiod as a stronger, more agile organisation ready to seize the opportunitiesfor growth that exist in our chosen segments. Investment in our strategicpriorities - Electronic Design Engineering (EDE), the web andinternationalisation - is ongoing and has resulted in our marketoutperformance in Europe. Our singular focus and the execution of our strategyhas again demonstrated that the assumptions on which we based it have heldtrue and continue to deliver opportunities for the future. During the firstquarter, EDE sales and gross margins have remained stronger than Maintenance,Repair and Operations (MRO), the web continues to be our highest marginchannel and the preferred channel by EDEs around the world, and our developinginternational markets delivered strong sales growth.Sales per day for the quarter declined 14.9% when compared to theprevious year's strong comparator. The gross margin has remained stable at39.4% compared with 39.3% in the fourth quarter of last year and 39.8% in thefirst quarter of last year at constant exchange rates, reflecting the highermargin characteristics of EDE sales and sales via the web, and our ability toeffectively manage the business through this downturn. At constant exchangerates, underlying operating profit in the quarter was down 40.9% reflectingthe sales decline and the operational gearing inherent in the business. On acomparable basis to the fourth quarter, in which we saw a sales decline of8.4% and an underlying operating profit decline of 29.8%, the operating profitdecline relative to the sales decline in the first quarter reflects thebenefit of the cost saving actions taken in the fourth quarter.Compared with the first quarter of last year, underlying operatingexpenses were down £3 million or 4.5% at constant exchange rates reflectingthe nature of our relatively fixed cost base. The year on year profit decreasealso reflects the impact of increased pension costs of £1.7 million, and ourcontinuing strategic investments, which increased on the prior year by £0.7million. Headcount was down year on year by 4.2% and our cost out plans are ontrack, as we transform our business, to deliver our commitment of a twopercentage point reduction in costs as a percentage of sales. Earlier thisyear, in order to reflect the economic climate, the Group announced that therewould be no merit pay awards for the current financial year, a decisionaffecting all employees and directors.Sales in February and March saw further deterioration from thefourth quarter, as we continued to see de-stocking and reduced activitylevels. The impact of this inventory liquidation has been reflected partlythrough a reduction in our average order values compared with thoseexperienced in the fourth quarter. Overall transactional volumes, whilst down,have not been as significantly impacted, reflecting the value customersattribute to our high service proposition and as demonstrated by the stablegross margin we have maintained for three and a half years. The fact that oursales decline reflects, in part, a reduction in our average order value is anindication that whilst customers are buying less in the current economicclimate, our strategic offering has continued to ensure we maintain strongcustomer retention and acquisition which further demonstrates that ourinvestments are delivering returns. This phase of de-stocking will at somestage result in a recalibration of the supply chain that will create newopportunities in our markets. Our high-service model, offering next daydelivery for over 99% of orders will become even more essential to ourcustomers as they manage their supply chain needs. We have now seen the rateof year on year sales decline levelling out in April and May which both showedan improvement over March. We continue to look forward to further signs thatour sales levels are stabilising, as we remain focused on meeting customerneed, taking market share and effectively managing our gross margin and costbase.The performance in our core markets continues to reflect the extentto which we have successfully progressed our strategic transformation. Ourbusinesses that have a higher proportion of sales from EDE and the web havecontinued to outperform their markets. In our Farnell European businesses,including the UK, where the EDE and web transformation is more progressed, wereported a sales decline of 11.2%, in comparison to the overall Europeanmarket reported by DMASS (Distributors and Manufacturers Association ofSemiconductor Specialists) which showed a decline of 26.3%. Our Farnell UKbusiness which saw a sales decline of 12.8%, excluding exports, alsooutperformed the market, with the most recent data from the Association ofFranchised Distributors of Electronic Components (AFDEC) indicating a declineof 13.8%, excluding Farnell. In North America, where our transformation isless progressed, Newark's year on year sales performance was down 21.6%.Although in line with the Semiconductor Industry Association (SIA) this isreflective of their higher percentage of MRO sales compared to our otherbusinesses. In order to accelerate our strategic progress in North America,Laurence Bain, Chief Operating Officer, has temporarily relocated to Chicagoin order to share his knowledge, from our successes in Europe, and drive ourstrengthened Newark management team and engaged workforce.Our strategic investments during the quarter will ensure we emergefrom this period stronger, and more aligned to customer needs. During thequarter we added 10,000 new products, focused particularly on the productsthat our EDE customers require. Key investment in the strategic priorities forour developing markets - China, India and Eastern Europe - and indifferentiating innovation, such as element14, our new eCommunity, continuesto demonstrate our leadership of the high service space. element14 waslaunched on 1 June and EDEs are already using the site to share information,collaborate on designs and network with colleagues. The total investment was£0.5 million and since the launch, we have had 500 customers activate accountsand have seen a number of transactions originate through the community. Wehave also recently developed, in close co-operation with EMA DesignAutomation, an innovative new coupling interface, DesignLink, that allowsdesign engineers to immediately search and find parts from within theirComputer Aided Design (CAD) environment without ever having to leave it, onceagain strengthening our customer connection. element14 and DesignLink bothdemonstrate our commitment to providing customers with more than just product,but also information, enhanced services and tools all in one place. Wecontinue to recruit actively in those areas where we need additional resourceand skill to drive our strategy, as our employee profile reflects the shiftingemphasis of our business to the web.
Web
Driving business to the web is key to reducing our cost base and we continue to transition business to the web globally. The ongoing reshaping of our business in Europe and North America reflects the changes in customer channel preference as part of our multi-channel sales approach. Web gross margins remain higher than our other channels and overall web sales grew by 4.7% in the quarter. We continue to make strategic investments in our web functionality and our suite of eTools to improve customer experience.
Europe, our most advanced web business, has further accelerated itstransition and iBuy, our innovative eProcurement solution, continues to exceedall of our targets and expectations. iBuy will be rolled out in the otherregions throughout the year, while investment in analytics tools also enablesus to monitor rigorously the performance of our websites and respond quicklyto changes in customer behaviour. We are able to measure increasing levels ofcustomer loyalty as customers connect with us many times in a day tocollaborate, share and access information as well as purchase products andservices. This wider connection with customers will increase further with thelaunch of element14, our online community for design engineers. This is afirst for engineers in our industry, as we differentiate our support to thistarget segment; no longer just selling technology products but partnering withour customers to provide the tools, information, and services to support theirdevelopment activities earlier in the design cycle. Customer feedback has beenoverwhelmingly positive. The site can be customised for individual userpreference and connects seamlessly with our transactional websites, serving todifferentiate us further in our chosen markets.The web remains a key enabler of our other strategic priorities. By2012, experts predict that Asian web users, including approximately 490million Chinese, will outnumber North Americans on the web by 3 to 1, whilstIndian users will become the third largest group online. Web usage in Chinahas more than doubled in the last 2 years to over 250 million, and investmentin our APAC web capability continues as the channel gains in significanceproviding further opportunity for regional growth, customer retention andeffective cost to serve.
EDE
The EDE customer segment continues to outperform the MRO customersegment and our evolving proposition continues to attract EDE customers. InEurope new EDE customers increased by 9.8% over the fourth quarter and ourstrengthening relationship with key Contract Manufacturers has also drivenpositive performance. Sales to Newark's smaller customer segment declined13.4% compared with Newark's overall decline of 21.6%. These small customersare predominantly EDEs and we believe less affected by the economic climatewhich has been severely impacted by the North American industrial sector, thetraditional heartland of MRO customers. We have invested in our contact centrein order to enhance our important one-to-one relationships with customers, aswell as provide necessary technical support as we transform into a productinformation and services business. Each of our businesses began theirtransformation at a different point and, although Newark has made progress onits EDE journey, the business still relies too heavily on MRO - a significantfactor in their below expectation first quarter performance. Investment willcontinue to change this position, as growing global technical resourcesfurther differentiate us in North America.APAC, with its predominance of EDE customers, saw growth of 40% inone of our top EDE product lines through targeted campaigns. Manufacturerscontinue to recognise our value in seeding the market with their latesttechnologies and element14 will further facilitate this process, as increasingnumbers of manufacturers want to engage and be part of the different customerexperience we are creating. Panasonic, a leading EDE supplier has just awardedus the Demand Creation Award for Europe and agreed to extend its franchise
toAPAC.InternationalisationGrowth in our developing international markets continues at pace aswe capitalise on the significant opportunities from our investments in EasternEurope, China and India. In Eastern Europe strong sales growth continued as weprovided more local language support and websites, and our high service,multi-channel approach attracted significant numbers of new customers. Salesin India grew by 167% year on year as the business becomes embedded in to ourstrategic drive, and mainland China, up 23.6%, once again returned a verysolid performance as we have begun to see evidence that the government'sinternal investment is reaching the small and medium customers in this market- a stark comparison to our experience in North America. In Asia Pacific, ourEDE proposition continues to grow and we see great potential for new businessopportunity and growth.Other Distribution BusinessesBoth CPC and MCM have continued to respond to the market with pricepositioning, a strong web presence, high conversion rates, and continuedSearch Engine Optimisation (SEO) investment to increase traffic to itswebsites by over 20%. The performance of CPC, which has taken market share ina highly competitive marketplace, reflected their continued drive to the web,and the development of a great product range from international sources. MCM'sfocus on online and offline marketing has also seen new customers numbers growsignificantly and web sales increase.
Industrial Products Division
Whilst TPC and Akron Brass have both been affected by difficultconditions in their traditional domestic markets, they have continued to focuson new products and international markets. Akron Brass has been particularlysuccessful in this activity, delivering a strong performance in the quarter tostabilise the business which, as our only manufacturing business, issignificant.
Outlook
Premier Farnell is investing for leadership as our strategicassumptions continue to be validated despite market conditions. Sales to EDEcustomers are outperforming MRO sales globally and are less impacted bydeclining global markets. Our growing portfolio of products and services tomeet the demands of this segment is attracting new customers and the demandfor web excellence continues as increasing levels of business are transactedvia eCommerce channels.Our management of costs, strong cash performance and the increasingvalue our customers attribute to our service has delivered another quarter ofgross margin stability and enabled continued investment in the critical areasof our strategy.We remain dissatisfied with our performance and are executing our detailedplans to ensure that we will emerge from this difficult period as a stronger,more agile organisation. Through decisive actions to further embed thestrategy and strong management of costs, the Board believes that the businessis improving its position to seize the opportunities for growth thatexist in our chosen segments, now and into the future.
Financial Results
Revenue
Sales for the first quarter were £204.3 million (2008/9: £199.3million or £240.4 million at constant exchange rates). Sales per day decreasedby 14.9% in the quarter, although year on year sales growth for April and Mayshowed an improvement over March. Our strategic assumptions and direction havecontinued to be confirmed, even in these more difficult market conditions -EDE sales continued to outperform MRO sales in the quarter, web salescontinued to grow, up 4.7% in the quarter, and we continued to see growth inour international markets. The average exchange rate for the US dollar againststerling was $1.47 (2008/9: $1.99) and the average exchange rate for the Euroagainst sterling was Euro 1.11 (2008/9: Euro 1.29).
Margins and Operating Profit
The gross margin in the first quarter was 39.4% (2008/9: 40.1% or 39.8% at constant exchange rates). This compares with 39.3% in the fourth quarter of the prior year reflecting continued stability as we manage our business effectively through the economic downturn.
Despite the economic slowdown, we have continued our strategicdirection and invested as appropriate. During the quarter our total revenueinvestment to drive specific strategic initiatives and support our EDE and webpropositions, together with our international expansion, amounted to £3.4million. Our cost out plans to achieve a permanent two percentage pointreduction in operating expenses as a percentage of sales remain on track andour quarter end headcount was 4.2% lower than the same period last year, withunderlying operating expenses £3.0 million below prior year at constantexchange rates, despite the impact of increased pension costs and ourcontinuing strategic investments.Underlying operating profit was £17.5 million (2008/9: £24.2million), producing an operating margin of 8.6% (2008/9: 12.1%), whichreflects both the impact of the sales decline and our continued investment inthe strategy. Total operating profit for the quarter was £13.5 million(2008/9: £24.2 million). There was a beneficial impact on operating profit of£5.4 million from the translation of overseas results compared with the prioryear, reflecting the relative weakness of sterling. At constant exchangerates, the decrease in underlying operating profit compared with the prioryear was 40.9%.
Foreign Currency Impact
A one cent movement in the exchange rate between the US dollar andsterling impacts the Group's operating profit by approximately £200,000 perannum, and a one cent movement in the exchange rate between the Euro andsterling impacts the Group's operating profit by approximately £200,000 perannum.Finance CostsNet finance costs in the first quarter were £4.5 million (2008/9:£0.2 million or £3.8 million excluding gains on the purchase and cancellationof preference shares). This comprises net interest payable of £3.4 million(2008/9: £2.7 million), which was covered 5.1 times by underlying operatingprofit, and a net charge of £1.1 million (2008/9: a net credit of £2.5 millionor a charge of £1.1 million excluding gains on the purchase and cancellationof preference shares) in respect of the Company's convertible preferenceshares. The increase in net interest payable reflects the negative impact ofexchange rates, with the benefit of lower interest rates on the Group'sbilateral banking facilities (which carry a LIBOR based floating rate ofinterest) partially offsetting the interest cost of additional borrowings tofund the Group's purchase and cancellation of preference shares in the prioryear.Profit Before Tax
Underlying profit before tax in the first quarter was £13.0 million (2008/9: £20.4 million). Total profit before tax in the first quarter was £9.0 million (2008/9: £24.0 million).
Taxation Charge
The taxation charge from continuing operations for the quarter was at an effective rate of 29.0% (2008/9: 29.0%) of profit before tax, preference dividends and gains on the purchase and cancellation of preference shares.
Return on Net Operating Assets and Balance Sheet
The return on net operating assets for the first quarter was 27.9% before restructuring costs (2008/9: 30.4%), compared with our strategic target of 30% and reflects the impact of the year on year profit reduction.
Earnings per Share
Underlying earnings per share were 2.4 pence (2008/9: 3.9 pence). Total earnings per share for the first quarter were 1.7 pence (2008/9: 4.9 pence).
Cash Flow and Net Financial Liabilities
Net cash generated from continuing operations in the first quarterwas £24.5 million (2008/9: £22.1 million) or £26.0 million excluding theimpact of restructuring costs (2008/9: £22.1 million), representing 181% ofoperating profit or 149% excluding the impact of restructuring costs, comparedwith 91% achieved in the first quarter of last year. Working capital reducedby £3.1 million in the quarter reflecting a combination of our management ofinventory to the sales levels we are experiencing and the impact of lowersales on receivable balances. Free cash flow for the quarter, being cashgenerated from continuing operations less net capital expenditure, interest,preference dividends and tax, was £21.6 million, or £23.1 million excludingthe restructuring costs, (2008/9: £14.8 million).Net financial liabilities at the end of the first quarter were£266.9 million (1 February 2009: £295.9 million), including £59.6 million (1February 2009: £59.4 million) attributable to the Company's preference shares.The impact of exchange rates in the period was to reduce net financialliabilities by £5.5 million, principally in relation to our US$ denominatedprivate placement loan notes.
Financial Position
Premier Farnell's financial position remains robust with goodliquidity and strong free cash flow. In addition to the new £150 millionsyndicate bank facilities agreed at the end of the last quarter, which expirein January 2013, we have recently entered into a further £20 million bankfacility which expires in May 2012. Our facilities now total £170 millionwhich, together with the Group's continuing strong cash generation, continueto provide a good level of operational and financial flexibility to meet theGroup's funding requirements. Based on these new facilities, our headroom onbank borrowings at the quarter end would have been £88 million which, togetherwith our net cash position of £30 million, gives us a healthy fundingposition.
The Group anticipates that the combination of free cash flow, existing cash resources and available bank facilities will enable it to meet the repayment of the US$66 million Senior Notes which become due in May 2010.
Pensions
The impact of the prior year end valuations on our defined benefit pension plans have resulted in a net charge to the income statement in the first quarter of £1.2 million, compared with net income of £0.5 million in the first quarter of 2008/9. This primarily reflects the decline in the market value of investments of the US Pension Plan during 2008/9. During the first quarter we reduced further our exposure to the equity markets in the North American plan and we are currently reviewing the structure of our pension plans.
Operations
With effect from 2 February 2009, the Group has adopted IFRS 8,Operating Segments. This has not affected the financial results of the Group,but has resulted in a change to the Group's segmental disclosures. Theprevious two divisions within the Marketing and Distribution Division havebeen split into three distribution divisions within MDD with CPC (previouslyin MDD Europe and Asia Pacific) and MCM (previously in MDD Americas) now bothcategorised in the Other Distribution Division. Comparatives have beenre-presented accordingly.
Marketing and Distribution Division (MDD)
(Newark and Farnell businesses including Premier Electronics, CPC and MCM)
Q1 09/10 Q1 08/9 Q1 growth £m £mRevenue 183.7 181.4 -14.9%Underlying operating 16.7 23.6 -39.7%profit* 12.7 23.6 -54.2%Total operating profitUnderlying operating 9.1% 13.0%margin %Operating margin % 6.9% 13.0%
*excluding restructuring costs of £4.0 million (2008/9: nil)
The Division remains focused on its strategic initiatives which continue to be confirmed even in these more difficult markets. EDE is outperforming MRO, the web continues to attract new customers and our investments in international markets are realising positive sales growth in those territories. Although first quarter sales declined 14.9%, web sales for the Division grew 4.7%, sales in Eastern Europe increased 55.7% and we also saw positive growth in India and Greater China.
The acceleration of our strategic transformation is moving at pace to ensure that we have the appropriate level of resource committed to our growth initiatives. As noted in our year end results announcement in March, action has been taken during the first quarter to restructure our branch network in North America and rationalise our structure in Europe. The benefits from these MDD actions will provide an annualised saving of £6.0 million. Associated one-off costs of £4.0 million have been charged in the quarter.
The underlying operating margin reflects the impact of the sales decline and our relatively fixed cost base, together with the impact of increased pension costs. During the quarter our total revenue investment to support the strategic initiatives for our EDE and web propositions, together with our international expansion, amounted to £3.4 million.
As we accelerate our transition to the web and attract new customers to this content rich channel, total eCommerce sales reached 36% of total sales in the quarter with Farnell Europe at 53%, demonstrating our progress towards achieving between 50% and 70% of sales via eCommerce.
There was a beneficial impact on operating profit in the quarterfrom the translation of overseas results of £4.1 million, reflecting therelative strength of the US dollar (£2.8 million) and the Euro (£1.3 million).MDD Americas(Newark) Q1 09/10 Q1 08/9 Q1 growth £m £mRevenue 83.7 80.8 -21.6%Underlying operating 2.9 7.9 -72.4%profit* 1.8 7.9 -82.9%Total operating profitUnderlying operating 3.5% 9.8%margin %Operating margin % 2.2% 9.8%
*excluding restructuring costs of £1.1 million (2008/9: nil)
Sales in MDD Americas for the first quarter declined 21.6%, in linewith those reported by the Semiconductor Industry Association. Thisperformance reflects the higher percentage of MRO sales compared to our otherbusinesses and confirms our need to accelerate the transition to EDE and theweb. During the quarter, our branch restructuring programme resulted in theclosure of 9 branches with a one-off cost of £1.1 million. We have investedsignificantly in our contact centre to ensure that we are able to continue theimportant one-to-one customer relationships already established, and ourongoing investment in our web environment will further attract customers tothis content rich channel.
Underlying operating margin in the first quarter was impacted by the sales decline, the highly competitive nature of the North American MRO market and our continued investment to restructure the business for the future. In addition, there was an incremental cost of £1.4 million relating to the US pension plan.
The region remains focussed on its EDE strategic initiatives. Inthe quarter, Newark added 5,000 new EDE products to its range. Newark alsolaunched several new marketing initiatives targeting the EDE customer,including a "New Technologies" catalogue, mailed to over 160,000 EDE customersand the "Tech First" Journal, which is a continuation of a powerful series oftechnical publications provided globally by Premier Farnell. The journalfeatures the latest news on new products and technologies in thecommunications sector, with articles from leading and niche communicationssuppliers, as well as our own technical marketing team.
Newark also continued strategic investments to deliver best in class service through its multiple sales channels. Upgrades to the Newark website include improved search functionality, enhanced eSuite tools such as eQuotes and eInvoicing, and new Tech Cast training modules to help EDE customers get up to speed on many of today's most complex electronic solutions. During the quarter Newark increased its proportion of sales via eCommerce channels to 21%.
MDD Europe and Asia Pacific
(Farnell and Premier Electronics)
Q1 09/10 Q1 08/9 Q1 growth £m £mRevenue 77.4 79.6 -10.9%Underlying operating 11.5 13.1 -20.1%profit* 8.6 13.1 -40.3%Total operating profitUnderlying operating 14.9% 16.5%margin %Operating margin % 11.1% 16.5%
*excluding restructuring costs of £2.9 million (2008/9: nil)
Sales were down 10.9% in the first quarter with the underlyingoperating margin at 14.9%, reflecting the impact of the sales decline and theongoing revenue investments we are making for the future. The reshapingactions announced in March had a one-off cost of £2.9 million in the quarteras the business accelerates its transition to the web.
Revenue by region Q1 09/10 Q1 08/09 Revenue
growth £m £mUK (including exports) 27.9 30.7 -8.9%Mainland Europe 39.8 40.0 -12.8%Asia Pacific 9.7 8.9 -8.5%Farnell Europe is the region in the most advanced stage of ourstrategic transformation. EDE sales outperformed MRO sales during the firstquarter with the rate of EDE sales decline being significantly less than therate of MRO sales decline, compared with the fourth quarter last year. Thebusiness continues to invest in its EDE product portfolio, adding 5,000products in the quarter to strengthen its proposition to this segment. EasternEurope has continued to deliver significant opportunities for growth, withsales up 55.7% in the quarter, as our multi-channel offering continues toattract new customers. Sales for the Farnell Europe region declined 11.2% inthe quarter, compared with the European market (including the UK) whichdeclined by 26.3% according to DMASS.
Farnell sales in the UK, excluding export sales, declined 12.8% in the first quarter, outperforming the UK market which according to the most recent data from AFDEC declined by 13.8%, excluding Farnell .
In the Asia Pacific region, both China and India continued to drivesales growth as we improve the EDE proposition in these markets. In GreaterChina sales grew 1.0% during the quarter, reflecting our robust EDE offeringand ongoing investment to increase our local and regional capability includingactions to help drive web sales across the region as a whole. Sales in Indiaincreased 167% on the prior year as the business capitalises on the benefitsit can now offer as part of the Premier Farnell Group. This business is now inits second year as part of Premier Farnell and continues to deliver on thepotential we expected when we completed the acquisition. Our Australian andNew Zealand business, which saw first quarter sales increase by 12.6% over thefourth quarter last year, has benefited from the restructuring towards the end2008/9, as part of the group wide programme, and is now strategically alignedwith the opportunities in the local market.Migration to the web progresses at pace and we are starting to seethe benefits from our restructuring. Web sales for MDD Europe and Asia Pacificgrew 4.5% in the first quarter, and in Farnell Europe they now account for 53%of total sales, compared to 51% in the fourth quarter. This performance wassupported by the success of the web tools we have invested in to support ourcustomers, including iBuy, increased web marketing through search engineoptimisation and pay-per-click activity, and a new local language website inTurkey in the quarter.
Other Distribution Businesses
(CPC and MCM) Q1 09/10 Q1 08/9 Q1 growth £m £mRevenue 22.6 21.0 -1.0%
Total operating profit 2.3 2.6 -17.9% Operating margin % 10.2% 12.4%
CPC's sales grew 1.0% in the quarter, reflecting an impressive performance in a very difficult and competitive UK market. This has been achieved through the success of CPC's strategic brand and price positioning with a value for money proposition that is second to none. Investment in search engine optimisation has resulted in a 22.7% increase in traffic to the website during the quarter with web sales growing 17.2% year on year. Web sales now account for 36.2% of total sales. Margins have been maintained through efficient sourcing strategies, including Far Eastern private label ranges.
MCM's sales decreased by 5.8% in the quarter. This reflects theimpact of the North American recession on MCM's National Account customers,with sales from small to medium sized customers remaining stable. Continuedfocus towards both on-line and off-line marketing has resulted in 16,000 newcustomers being added in the quarter with customer adds to the website up 56%.Strategic pricing actions have been taken based on competitive bench markingsurveys which has contributed to the increase in web sales, up 9.1% in thequarter.
Industrial Products Division (IPD)
(Akron Brass and TPC Wire & Cable)
Q1 09/10 Q1 08/09 Q1 growth £m £mRevenue 20.6 17.9 -14.5%Operating profit 3.2 3.5 -33.3%Operating margin % 15.5% 19.6%
First quarter sales for our IPD Division declined 14.5%, or 8.2% excluding theCadillac Electric business which was closed at the end of the prior year. BothAkron Brass and TPC Wire & Cable remain focussed on their successful targetingof opportunities and new markets in order to mitigate the impact of thedifficult conditions in their domestic markets.
Akron Brass
Despite the tough market conditions, Akron Brass achieved a strongfirst quarter performance with sales down only 3.0% on the prior yearsupported by its engineered safety solutions business for which the marketremains relatively healthy due to order backlog and support from the Obamaadministration. The success of this business is also demonstrated by Akron'sincrease in market share through its competitor conversions during thequarter. Sales from the Fire Original Equipment Manufacturers (OEM) marketsalso helped offset the softness in the Municipal markets. Akron Brasscontinues to identify new opportunities in international and industrialmarkets and create new products to support areas where the market is growing.Operating margins remained strong during the quarter.
TPC Wire & Cable
TPC's first quarter sales declined 26.5%, reflecting the dramaticslowdown in the North American automobile manufacturing and industrialsegments serviced by TPC, including manufacturing and steel production wheremany sites are idle resulting in project and maintenance delays. In order tooffset the slowing in its traditional markets, TPC has continued to diversifyinto new markets and to benefit from the transfer of customers and product ofthe "Hoffman" range from the Cadillac business last quarter. TPC has alsosought to expand into new international markets and a new industrial programmewas developed with our local subsidiary in Brazil to sell TPC product in tothe Brazilian industrial segment. Operating margins from this business havebeen impacted by the sales mix and actions to refocus sales towards key growthsegments.This press release contains certain forward-looking statementsrelating to the business of the Group and certain of its plans and objectives,including, but not limited to, future capital expenditures, future ordinaryexpenditures and future actions to be taken by the Group in connection withsuch capital and ordinary expenditures, the expected benefits and futureactions to be taken by the Group in respect of certain sales and marketinginitiatives, operating efficiencies and economies of scale. By their natureforward-looking statements involve risk and uncertainty because they relate toevents and depend on circumstances that will occur in the future. Actualexpenditures made and actions taken may differ materially from the Group'sexpectations contained in the forward-looking statements as a result ofvarious factors, many of which are beyond the control of the Group. Thesefactors include, but are not limited to, the implementation of initiativessupporting the Group's strategy, recruitment and integration of new personnel,the implementation of cost-saving initiatives to offset current marketconditions, continued use and acceptance of e-commerce programs and systems,the ability to expand into new markets and territories, the implementation ofnew sales and marketing initiatives, changes in demand for electronic,electrical, electromagnetic and industrial products, rapid changes indistribution of products and customer expectations, the ability to introduceand customers' acceptance of new services, products and product lines, productavailability, the impact of competitive pricing, fluctuations in foreigncurrencies, and changes in interest rates and overall market conditions,particularly the impact of changes in world-wide and national economies. TheGroup does not intend to update the forward-looking statements made herein.Condensed Consolidated Income StatementFor the first quarter ended 3rd May 2009 2009/10 2008/9 2008/9 First First Full quarter quarter year unaudited unaudited audited Notes £m £m £m Continuing operationsRevenue 2 204.3 199.3 804.4Cost of sales (123.8) (119.3) (485.6)Gross profit 80.5 80.0 318.8Net operating expenses- before restructuring costs (63.0) (55.8) (230.0)- restructuring costs 3 (4.0) - (3.4)Total net operating expenses (67.0) (55.8) (233.4)Operating profit- before restructuring costs 17.5 24.2 88.8- restructuring costs 3 (4.0) - (3.4)Total operating profit 2 13.5 24.2 85.4Finance income (interest receivable) 0.1 0.2 0.7Finance costs- interest payable (3.5) (2.9) (12.6)- preference dividends (0.9) (0.9) (3.5)- premium on redemption of preference shares (0.2) (0.2) (0.9)- gain on purchase of preference shares
- 3.6 3.7Total finance costs (4.6) (0.4) (13.3)Profit before taxation 3 9.0 24.0 72.8Taxation 4 (2.9) (6.2) (21.1)
Profit for the period (attributable to ordinary shareholders)
6.1 17.8 51.7 Earnings per share 5Basic 1.7p 4.9p 14.3pDiluted 1.7p 4.9p 14.2p Ordinary dividendsInterim - proposed 4.2pFinal - proposed 5.2pPaid 9.4p
Impact on shareholders' funds (£m) 34.0
Condensed Consolidated Statement of Comprehensive Income For the first quarter ended 3rd May 2009
2009/10 2008/9 2008/9 First First Full quarter quarter year unaudited unaudited unaudited Notes £m £m £m Profit for the period 6.1 17.8 51.7 Net exchange adjustments (0.1) 1.6 11.6
Actuarial losses on pensions and other post-retirement obligations - - (85.1)Deferred tax credit on actuarial losses - - 31.3
Net (losses)/gains not recognised in the income statement 7
(0.1) 1.6 (42.2)
Total comprehensive income for the period
6.0 19.4 9.5
The accompanying notes form an integral part of this unaudited condensed consolidated financial information.
Condensed Consolidated Balance SheetAs at 3rd May 2009 3rd May 4th May 1st February 2009 2008 2009 unaudited unaudited audited Notes £m £m £mASSETSNon-current assetsGoodwill 32.3 31.1 32.5Other intangible assets 24.7 19.9 25.0
Property, plant and equipment 54.8
54.7 58.1Retirement benefit assets - 53.8 -Deferred tax assets 5.0 0.2 5.0Total non-current assets 116.8 159.7 120.6 Current assetsInventories 185.1 159.9 194.3Trade and other receivables 119.7 127.0 128.8Cash and cash equivalents 6 30.3 38.9 39.6Total current assets 335.1 325.8 362.7 LIABILITIESCurrent liabilitiesFinancial liabilities 6 (2.4) (2.2) (5.1)Trade and other payables (88.7) (91.2) (94.5)Current tax payable (22.3) (25.6) (17.4)Total current liabilities (113.4) (119.0) (117.0) Net current assets 221.7 206.8 245.7 Non-current liabilitiesFinancial liabilities 6 (294.8) (274.0) (330.4)Retirement and other post-employment benefits (35.1) (21.3) (35.3)Deferred tax liabilities (6.0) (32.0) (6.2)Total non-current liabilities (335.9) (327.3) (371.9) NET ASSETS/(LIABILITIES) 2.6 39.2 (5.6) EQUITYOrdinary shares 18.3 18.2 18.3
Equity element of preference shares 10.4
10.5 10.4Share premium 23.8 23.0 23.8Capital redemption reserve 4.4 4.4 4.4Hedging reserve (1.8) (2.1) (3.7)
Cumulative translation reserve 15.2
5.3 15.3Retained earnings (67.7) (20.1) (74.1)TOTAL EQUITY 7 2.6 39.2 (5.6)
The accompanying notes form an integral part of this unaudited condensed consolidated financial information.
Condensed Consolidated Statement of Cash FlowsFor the first quarter ended 3rd May 2009 2009/10 2008/9 2008/9 First First Full quarter quarter year unaudited unaudited audited Notes £m £m £m Cash flows from operating activitiesOperating profit from continuing operations
13.5 24.2 85.4Restructuring costs:- income statement impact 4.0 - 3.4- cash impact (1.5) - (2.0)
Non-cash impact of restructuring costs
2.5 - 1.4Depreciation and amortisation 5.0 4.2 18.0Changes in working capital 3.1 (5.8) 2.7
Additional pension scheme funding (UK defined benefit plan) (0.5) (0.7) (2.9)Other non-cash movements 0.9 0.2 (2.3)Total cash generated from operations
24.5 22.1 102.3Interest received 0.1 0.2 0.7Interest paid (1.1) (1.4) (12.4)
Dividends paid on preference shares - - (3.5)Taxation received/(paid) 0.6 (2.6) (21.9)Net cash generated from operating activities
24.1 18.3 65.2
Cash flows from investing activitiesAcquisition of business - - (1.1)Disposal of business - - 0.7Proceeds from sale of property, plant and equipment - - 3.3Purchase of property, plant and equipment (1.0) (1.2) (7.0)Purchase of intangible assets (computer software) (1.5) (2.3) (9.1)Net cash used in investing activities
(2.5) (3.5) (13.2)
Cash flows from financing activitiesIssue of ordinary shares - - 0.9Purchase of ordinary shares - (2.7) (2.9)Purchase of preference shares - (23.1) (23.6)New bank loans 128.1 12.3 29.5Repayment of bank loans (158.7) - (22.8)
Dividends paid to ordinary shareholders - - (34.0)Net cash used in financing activities
(30.6) (13.5) (52.9)
Net (decrease)/increase in cash, cash equivalents and bank overdrafts
(9.0) 1.3 (0.9)Cash, cash equivalents and bank overdrafts at beginning of period 39.0 37.6 37.6Exchange gains 0.3 - 2.3Cash, cash equivalents and bank overdrafts at end of period
30.3 38.9 39.0
Reconciliation of net financial liabilitiesNet financial liabilities at beginning of period (295.9) (254.1) (254.1)Net (decrease)/increase in cash, cash equivalents and bank overdrafts
(9.0) 1.3 (0.9)Decrease/(increase) in debt 30.6 (12.3) (6.7)Decrease in preference shares - 26.8 27.4
Premium on redemption of preference shares (0.2) (0.2) (0.9)Derivative financial instruments 2.1 0.8 (1.5)Exchange movement 5.5 0.4 (59.2)Net financial liabilities at end of period 6
(266.9) (237.3) (295.9)
The accompanying notes form an integral part of this unaudited condensed consolidated financial information.
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 2009 Annual Report and Accounts on pages 81 to
85, except as described below.
The following new standards and amendments to standards are mandatory for the first time
for financial years beginning on or after 1 January 2009, and have been adopted by the
Group effective from 2 February 2009.
IAS 1 (revised), `Presentation of financial statements'. The revised standard brings new
disclosure requirements regarding `non-owner changes in equity' and 'owner changes in
equity', which are now required to be shown separately. Under this revised guidance the
Group has elected to continue to present two performance statements: an income statement
and a statement of comprehensive income (previously the 'Statement of Recognised Income and
Expense'). These financial statements have been prepared under the revised disclosure
requirements. The requirements under the revised standard have not had a significant impact
on the Group's financial statements.
IFRS 8, `Operating segments' (replacing IAS 14, `Segment reporting'): IFRS 8 requires a
`management approach' under which segment information is presented on the same basis as
that used for internal reporting purposes. This has not affected the financial results of
the Group, but has resulted in a change to the Group's segmental disclosures. The previous
two divisions within the Marketing and Distribution Division (MDD) have been split in to
three divisions with CPC (previously in MDD Europe and Asia Pacific) and MCM (previously in
MDD Americas) now both categorised as "Other Distribution Businesses". Comparatives have
been re-presented accordingly.
The Group's 2009 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 from
the Company's website at www.premierfarnell.com.
2 Segment information
(unaudited)
2009/10 First quarter 2008/9 Full year Before After 2008/9 Before After restructuring Restructuring restructuring First
restructuring Restructuring restructuring costs costs costs quarter costs costs costs (re-presented)(re-presented) (re-presented) (re-presented) £m £m £m £m £m £m £m Revenue Marketing and Distribution Division Americas 83.7 - 83.7 80.8 335.5 - 335.5 Europe and Asia Pacific 77.4 - 77.4 79.6 303.8 - 303.8 Other Distribution Businesses 22.6 - 22.6 21.0 87.8 - 87.8 Total Marketing and Distribution Division 183.7 - 183.7 181.4 727.1 - 727.1 Industrial Products Division 20.6 - 20.6 17.9 77.3 - 77.3 204.3 - 204.3 199.3 804.4 - 804.4 Operating profit Marketing and Distribution Division Americas 2.9 (1.1) 1.8 7.9 31.2 (0.9) 30.3 Europe and Asia Pacific 11.5 (2.9) 8.6 13.1 44.8 (1.8) 43.0 Other Distribution Businesses 2.3 - 2.3 2.6 9.7 (0.2) 9.5 Total Marketing and Distribution Division 16.7 (4.0) 12.7 23.6 85.7 (2.9) 82.8 Industrial Products Division 3.2 - 3.2 3.5 14.3 (0.2) 14.1 Head Office costs (2.4) - (2.4) (2.9) (11.2) (0.3) (11.5) 17.5 (4.0) 13.5 24.2 88.8 (3.4) 85.4
Segmental information has been re-presented to reflect the adoption of IFRS 8 (see note 1).
3 Profit before taxation (continuing operations)
Profit before taxation is stated after charging/(crediting):
2009/10 2008/9 2008/9 First First Full quarter quarter year unaudited unaudited audited £m £m £m Restructuring costs 4.0 - 3.4 Share-based payments
0.3 0.8 0.8
Defined benefit pension schemes (net)
1.2 (0.5) (2.2)
As noted in its year end results announcement on 19th March 2009, the Group has taken further
action during the quarter to restructure its branch network in North America and to
rationalise its structure in Europe. The one-off cost related to this restructuring was £4.0
million with the annualised benefit of these actions being approximately £6.0 million.
The impact of the prior year end valuations on the Group's defined benefit pension plans have
resulted in a net charge to the income statement in the first quarter of £1.2 million,
compared to net income of £0.5 million in the first quarter of 2008/9. This reflects
primarily the decline in the market value of investments of the US Pension Plan during
2008/9. During the first quarter the Group reduced further its exposure to the equity markets
in the North American plan.
4 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% (2008/9: 29.0%),
being the estimated effective rate of taxation for the financial year ending 31 January 2010.
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 and awards
with a non-market based performance condition granted to employees where the exercise price
is less than the average market price of the Company's ordinary shares during the period, and
those shares with a market based performance condition based on the current estimate of the
number of shares that will vest under the performance criteria.
Reconciliations of earnings and the weighted average number of ordinary shares used in the
calculations are set out below. 2009/10 2008/9 First quarter (unaudited) First quarter (unaudited) Basic per Diluted per Basic per Diluted per Earnings share amount share amount Earnings share amount share amount £m pence pence £m pence pence
Earnings per share
Profit attributable
to ordinary shareholders 6.1 1.7 1.7 17.8 4.9 4.9
Gain on purchase
of preference shares - - - (3.6) (1.0) (1.0) Restructuring costs 4.0 1.1 1.1 - - - Tax attributable to restructuring costs (1.3) (0.4) (0.4) - - - Profit attributable to ordinary shareholders before gain on purchase of preference shares and excluding restructuring costs 8.8 2.4 2.4 14.2
3.9 3.9 Number Number
Weighted average number of shares 362,443,906 363,049,627 Dilutive effect of share options 2,623,803 2,799,928 Diluted weighted average number of shares 365,067,709
365,849,555 2008/9 Full Year (audited) Basic per Diluted per Earnings share amount share amount £m pence pence Earnings per share
Profit attributable to ordinary shareholders 51.7 14.3 14.2 Gain on purchase of preference shares (3.7) (1.0) (1.0) Restructuring costs 3.4 0.9 0.9 Tax attributable to restructuring costs (1.0) (0.3) (0.3)
Profit attributable to ordinary shareholders
before gain on purchase of preference shares
and excluding restructuring costs 50.4
13.9 13.8 Number
Weighted average number of shares 362,412,369 Dilutive effect of share options 2,678,546 Diluted weighted average number of shares 365,090,915
Earnings per share before the gain on purchase of preference shares and excluding
restructuring costs have been provided in order to facilitate year on year comparison.6 Net financial liabilities 3rd May 4th May 1st February 2009 2008 2009 unaudited unaudited audited £m £m £m Cash and cash equivalents 30.3 38.9 39.6 Unsecured loans and overdrafts (235.3)
(214.8) (271.7)
Net financial liabilities before
preference shares and derivatives (205.0)
(175.9) (232.1)
Preference shares (59.6)
(59.3) (59.4)
Derivative financial instruments (net) (2.3) (2.1) (4.4) Net financial liabilities (266.9)
(237.3) (295.9)
Net financial liabilities are analysed
in the balance sheet as follows:
Current assets Cash and cash equivalents 30.3 38.9 39.6 Current liabilities Bank overdrafts - - (0.6) Other loans (0.1) (0.1) (0.1) Derivative financial instruments (2.3) (2.1) (4.4) (2.4) (2.2) (5.1) Non-current liabilities Bank loans (79.3) (98.1) (109.8) 5.3% US dollar Guaranteed Senior Notes payable 2010 (44.3)
(33.3) (45.8)
5.9% US dollar Guaranteed Senior Notes payable 2013 (106.7)
(80.3) (110.4) Other loans (4.9) (3.0) (5.0) Preference shares (59.6) (59.3) (59.4) (294.8) (274.0) (330.4)
In addition to the new £150 million syndicate bank facilities agreed at the end of the last
quarter, which expire in January 2013, the Group has recently entered in to a further £20
million bank facility which expires in May 2012. Based on these new bank facilities of £170
million, the Group's headroom on bank borrowings at the end of the first quarter was £88
million,
7 Consolidated statement of changes in equity
2009/10 2008/9 2008/9 First First Full quarter quarter year unaudited unaudited audited £m £m £m Total equity at beginning of period (5.6) 20.1 20.1 Profit for the period 6.1 17.8 51.7 Other comprehensive income (0.1) 1.6 (42.2) Derivative financial instruments 1.9 0.8 (0.8) Transactions with owners: Ordinary dividends paid - - (34.0) Ordinary shares issued - - 0.9 Purchase of ordinary shares - (2.7) (2.9)
Purchase of preference shares:
- reduction in equity element - (4.7) (4.8) - gain arising on equity element - 4.7 4.8 - deferred tax - 0.8 0.8 Share-based payments 0.3 0.8 0.8 Total transactions with owners 0.3
(1.1) (34.4)
Total equity at end of period 2.6 39.2 (5.6)
8 Exchange rates
The principal average exchange rates used to translate the Group's overseas profits were as follows:
2009/10 2008/9 2008/9 First First Full quarter quarter year US dollar 1.47 1.99 1.79 Euro 1.11 1.29 1.24
vendorRelated Shares:
PFL.L