9th Sep 2010 07:00
Premier Farnell plc
9 September 2010
Results for the Second Quarter and Half Year ended 1 August 2010 of the Financial Year ending 30 January 2011 Key Financials £m Q2 10/11 Q2 09/10 Q2 H1 10/11 H1 09/10 H1 growth growth Continuing operations £m £m £m £m (Unaudited) Revenue 252.1 183.7 30% 497.0 388.0 25% Underlying operating 28.5 15.1 73% 55.5 32.6 58% profit (b) Total operating profit 28.5 20.6 27% 55.5 34.1 50% Underlying profit before 23.8 10.7 122% 46.0 23.7 94% tax (b) Total profit before 23.8 16.2 47% 46.0 25.2 83% taxation Underlying earnings per 4.7p 2.2p 114% 9.0p 4.6p 96% share (b) Basic earnings per share 4.7p 3.1p 52% 9.0p 4.8p 88% Interim ordinary dividend 4.4p 4.2p 4.8% 4.4p 4.2p 4.8% per share Free cash flow (c) 4.7 16.5 -72% 19.5 39.6 -51% Financial Key Points
* Group sales for the quarter grew 29.6% year on year and throughout the
quarter our sales growth was stable, with sales in July growing 29.9%.
* Strong sales growth combined with the operational gearing inherent in our
business has driven second quarter underlying operating profit growth of
72.5% year on year, with our North American underlying operating profit
increasing more than four-fold.
* Second quarter sales in MDD Europe grew 37.0% year on year and in MDD Asia
Pacific sales grew 47.8%. In MDD Americas' sales per day have now improved
for four consecutive quarters with second quarter sales in the region
growing 31.9% year on year.
* Gross margin for the second quarter was up 1.2 percentage points year on
year, at 40.8%, as we continue to deliver a stable gross margin which is
unrivalled in the high service distribution industry.
* The Group's underlying return on sales increased a further 0.3 percentage
points over the prior quarter to 11.3%. This is despite £1.1 million of
incremental operating expenses incurred in the quarter (£1.6 million in the
first half) with the balance of the £5.0 million of incremental operating
expenses signalled at the end of last year to be incurred in the second half of this year. * The board has approved an interim dividend of 4.4 pence per share, an increase of 4.8 percentage points on the prior year.
Strategic Highlights
* We continue to deliver market share gains as we leverage the strength of
our proposition to capitalise on the structural growth opportunities in the
technology distribution industry.
* Our global EDE sales continue to significantly outperform our global MRO
sales and EDE sales now account for 50.6% of sales from our electronics distribution businesses. * In the quarter MDD web sales grew 53.5% year on year with eCommerce accounting for 45.9% of sales. In Europe and Asia Pacific, eCommerce
accounted for 60.7% and 56.0% of sales, respectively. In North America web
sales grew 77.4% and eCommerce accounted for 32.0% of second quarter sales
as the business accelerated through a tipping point in its eCommerce penetration. * We have extended our reach in Asia Pacific and entered the developing
markets of Thailand, Taiwan and South Korea, embracing the element14 brand
to launch three new local language websites in these regions that combine
commerce and community, bringing another first to our industry. * Second quarter sales from our developing markets accounted for 21.4% of Group sales led by Greater China where sales grew 102.0% year on year.
Sales in the emerging markets of India and Eastern Europe grew 77.7% and
82.3% year on year, respectively. * element14, our online community for design engineers, attracted 300,000 customer visits during the quarter, with the engagement levels in the community growing 19.3% when compared to the prior quarter.
Commenting on the results, Harriet Green, Group Chief Executive, said:
"The Group's second quarter sales and operating profits were the highest for 10years. This reflects the continued progress in our strategy and market sharegrowth as well as the broader-based increased activity levels in the globalelectronics supply chain."In August our Group sales have continued to grow, up over 25% year on year.However, despite the strong first half performance we remain cognisant of theuncertainties surrounding the economic backdrop and the inherent limitedvisibility we have in our business. The positive first half performance as wellas the Board's confidence in the continued execution of the strategy and thebenefit of our initiatives to support the goals for the next 1,000 daysunderpins the decision to increase the interim dividend to 4.4 pence pershare."
For further information, contact:
Premier Farnell plcHarriet Green, Chief Executive Officer +44 (0) 20 7851
4100
Mark Whiteling, Chief Financial Officer
Financial Dynamics (UK)Andrew Lorenz +44 (0) 20 7269 7291
Premier Farnell's announcements and presentations are published at www. premierfarnell.com together with business information and links to all other Group web sites, including element14 our community website for electronic design engineers.
The 2010 Annual Report and Accounts is now available online and can be accessed at www.premierfarnell.com/annualreport2010.
The results for the third quarter of the financial year ending 30 January 2011 will be announced on 9 December 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, profit before taxation and earnings per share
in the prior year excludes restructuring costs of £4.8 million (Q1: £4.0
million, Q2: £0.8 million) and the one-off gain arising in the second
quarter of £6.3 million from the reorganisation of the Group's North
American pension plans.
c. Free cash flow comprises total cash generated from operations, excluding
cash flows related to restructuring, less net capital expenditure,
interest, preference dividends and tax payments.
Premier Farnell plc SECOND QUARTER STATEMENT Results for the Second Quarter and Half Year ended 1 August 2010 of the Financial Year ending 30 January 2011
Premier Farnell, the leading multi-channel, high service distributor supporting millions of engineers and purchasing professionals globally, announces its results for the second quarter of the financial year ending 30 January 2011.
Chief Executive's Operational Overview
Group sales for the quarter grew 29.6% year on year, with sales in July growing29.9%, as we continue to capitalise on the growth opportunities inherent in ourstrategy and the high service distribution market. This sales performancecombined with the positive impact of the Group's operating leverage has led toour second quarter underlying operating profit growing 72.5% year on year. Ourstrategic focus on the Electronic Design Engineering (EDE) sector, the world'sdeveloping markets and increasing sales via the web continues to drive animprovement in profitability. This strategy, together with the benefit of thecost actions we have taken, has delivered a second quarter underlying return onsales of 11.3%, up a further 0.3 percentage points on the prior quarter as wecontinue to make progress towards our return on sales target of 12%-15%. Oursecond quarter gross margin was up 1.2 percentage points year on year at 40.8%and has now remained stable for nineteen consecutive quarters. This grossmargin performance is a true differentiator in our industry which clearlyreflects the value and loyalty that our customers attribute to our high serviceproposition.We continue to deliver market share gains and we are committed to acceleratingour progress in this area, through investing in the key pillars of our strategyand the strength of our content rich web environments and global supply chain.Approximately 20% of the market is served by ourselves and three other globalplayers, with the remaining 80% of the market served by small and medium sizedbusinesses. This 80% of the market provides a significant structural growthopportunity for the Group and with initiatives like our Target80 (T80)programme we will continue to build on the increase in market share we havedelivered since we began our strategic transformation.The progress we are making in our strategic transformation continues to be afundamental driver behind the strength of our performance. In the secondquarter our global sales to the EDE sector significantly outperformed ourglobal sales to the Maintenance, Repair and Operations (MRO) sector and EDEsales now account for 50.6% of sales from our electronics distributionbusinesses. Our accelerated transformation in North America has driven EDEsales to account for 36.2% of MDD Americas' sales with the division focused onits target to exit the year with 40% of sales coming from EDE. Sales from ourdeveloping markets accounted for 21.4% of Group sales in the quarter, as ourbusinesses in the world's emerging markets continue to grow strongly. InGreater China our second quarter sales grew 102.0% year on year and in Indiaand Eastern Europe our year on year sales growth was 77.7% and 82.3%,respectively. Subsequent to quarter end we entered the high servicedistribution space in Thailand, Taiwan and South Korea, leveraging the power ofthe web and the element14 brand to become the first electronics distributor tomerge commerce with community in these regions. The high web adoption levelsand large engineering populations of Thailand, Taiwan and South Korea underpinour decision to enter these countries as we drive towards achieving our goal of30% of Group sales coming from the world's developing markets. The web remainscentral to our drive to increase operational efficiencies while continuing toshape our organisation. In the quarter MDD web sales grew 53.5% year on yearwith eCommerce accounting for 45.9% of MDD sales. In Europe eCommerce accountedfor 60.7% of sales and in Asia Pacific 56.0% of sales came via this channel. InNorth America our first quarter eCommerce penetration was 28.7% which reflecteda tipping point in the business' web transformation. In the second quarter MDDAmericas' accelerated through this tipping point as web sales in North Americagrew 77.4% in the quarter with eCommerce accounting for 32.0% of sales.Our Group sales performance in the second quarter was stronger than our firstquarter sales performance, with both the sales and operating profit levels inEurope reaching an all time high for a single quarter. This is counter seasonalfor our business and as we move into the second half of the year we willcontinue to leverage the strength of our high service offering to capitalise onthe opportunities within the electronics supply chain. The strong secondquarter sales statistics released by the Semiconductor Industry Association(SIA), which are heavily influenced by certain consumer focused high volume endmarkets, suggest the electronics industry does not appear to be slowing in itsrecovery, although the SIA noted that the semiconductor industry does remainsensitive to the concerns around the broader economic recovery. While wecontinue to recognise the uncertainty that remains in the broader economicenvironment throughout the second quarter our year on year sales growth wasstable and in August our Group sales have continued to grow strongly, up over25% year on year.In North America our sales per day have now shown a consecutive quarter onquarter improvement for the last four quarters, leading to MDD Americas' secondquarter sales growing 31.9% year on year. Our North American gross margin hasseen a significant year on year increase as the business remains focused on themore profitable MRO market segments and continues to increase its level ofsales to the higher margin EDE sector. This gross margin improvement togetherwith the strong North American sales performance has driven a more thanfour-fold increase in underlying operating profit on the prior year. In Europeour sales growth accelerated in the second quarter with sales growing 37.0%year on year and in Asia Pacific our strong performance continued with secondquarter year on year sales growth of 47.8%. Our strategic transformation iswell progressed in these regions and this is reflected in the MDD Europe andAsia Pacific underlying return on sales, which in the second quarter was 17.9%,a 4.0 percentage point improvement year on year.We are committed to investing in innovation and enhancing our proposition asthe demand for design services, new technologies, technical and legislativeinformation and online collaboration and solutions, continues to drive growthwithin the electronics design industry. During the quarter our MDD activecustomer base grew 8.1% year on year, 2.1 percentage points above our target of6.0%. We remain focused on meeting our customers' ever-changing needs andduring the quarter we added 10,200 new esoteric EDE products. For 2,400 ofthese we were the first high service distributor to bring the technology tomarket. We continue to strengthen our world-class line card and recently weextended our franchise with Analog Devices into Asia Pacific, globalising ourpartnership and significantly enhancing our global range of EDE products thatare available from locally stocked inventories around the world. The three newlocal-language websites in Thailand, Taiwan and South Korea brings our totalnumber of local language websites to 32. Under the element14 brand these threewebsites represent another first, powerfully combining commerce and communityfor customers in those countries and over the course of our 1,000 day strategyour goal is to leverage this unique capability to acquire 18,000 new customersacross these regions. element14, our online community for design engineers, hasnow been established for 14 months and is continuing to strengthen its deeprelationship with the EDE community, growing in both its vibrancy andinteractivity. The community attracted 300,000 customer visits during thequarter and element14's engagement levels reached a record high in July.Engagement within the site grew during quarter by 19.3% when compared to theprior quarter as EDEs increasingly embrace the fusion of commerce and communityto complete more and more of their work online. Providing our customers withmore of the design services they require throughout the design cycle isbecoming an increasingly important part of our proposition. Over 4,200customers have registered for our freemium version of the CadSoft EAGLEComputer Aided Design (CAD) software and we are committed to the ongoingdevelopment of the software. As part of this we released during the quarter anew version of EAGLE which incorporates our own DesignLink interface, providingcustomers with a real-time link to our transactional websites, and additionallanguage support in Mandarin and Hungarian as we target new markets for thesoftware.
Other Distribution Businesses
CPC's strong sales performance has continued into the second quarter with salesgrowing 10.8% year on year. The business' sales via eCommerce accounted for38.1% of all sales in the quarter, with sales via the web growing 24.0%. CPC'scontinued investment in advertising combined with new customer acquisitionprogrammes has led to its number of new customers growing 64.3% when comparedto the second quarter of last year. MCM's sales in the quarter grew 14.9% yearon year, driven by sales from new products and private label products whichgrew 73.7% and 51.7% year on year, respectively. Web sales accounted for 35.9%of MCM's sales and the business continues to invest in its proposition to driveincreased customer acquisition, with its active customer base growing 4.3% yearon year.
Industrial Products Division (IPD)
Sales at TPC grew 58.0% year on year, driven by the business' continuedtargeting of new product segments, which accounted for 30.4% of total secondquarter sales, and international sales which grew 59.4% year on year. TPC'srecently launched website continues to grow as a transactional channel, withsecond quarter web sales growing 65.2% over the first quarter. Sales at AkronBrass grew 4.8% on the first quarter, a 5.2% decline year on year. With 15.4%of sales now coming from new products, Akron Brass remains committed toinvesting in its proposition and in the quarter the business also expanded itoperations in India and officially opened its offices in China and the MiddleEast.Dividend
The second quarter and first half has shown significant profitable growth.This, together with the Board's confidence in the continued execution of thestrategy and the benefit of our initiatives to support the goals for the next1,000 days underpins the decision to pay an interim dividend of 4.4 pence pershare, a 4.8 percentage point increase on the prior year.
Outlook
In August our Group sales have continued to grow, up over 25% year on year.However, despite the strong first half performance we remain cognisant of theuncertainties surrounding the economic backdrop and the inherent limitedvisibility we have in our business. The positive first half performance as wellas the Board's confidence in the continued execution of the strategy and thebenefit of our initiatives to support the goals for the next 1,000 daysunderpins the decision to increase the interim dividend to 4.4 pence per share.Financial ResultsRevenueHalf Year
Sales for the first half were £497.0 million (2009/10: £388.0 million or £399.3million at constant exchange rates). Sales per day increased by 24.5% on theprior year. The average exchange rate for the US dollar against sterling was$1.52 (H1 2009/10: $1.55) and the average exchange rate for the Euro againststerling was Euro 1.16 (H1 2009/10: Euro 1.14).
Second Quarter
Sales for the second quarter were £252.1 million (2009/10: £183.7 million or £194.6 million at constant exchange rates). Sales per day increased by 29.6% onthe prior year. The average exchange rate for the US dollar against sterlingwas $1.51 (Q2 2009/10: $1.64) and the average exchange rate for the Euroagainst sterling was Euro 1.19 (Q2 2009/10: Euro 1.16).
Margins and Operating Profit
Half Year
The gross margin in the first half was 40.8% compared with 39.5% in the firsthalf of the prior year, or 39.7% at constant exchange rates. This continues ourrecord of maintaining margin stability and underpins our profitability whichdifferentiates us in the industry.Underlying operating expenses in the first half were 29.5% of sales comparedwith 31.1% in the prior year reflecting the impact of the increase in sales andthe ongoing benefits arising from our cost reduction activities including prioryear restructuring programmes. In addition, first half underlying operatingexpenses include £1.6 million of incremental costs, of which £1.1 million wereincurred in the second quarter, as we continue to transform our business, withtotal estimated costs for the full year being £5.0 million as previouslyannounced.Underlying operating profit was £55.5 million (2009/10: £32.6 million)producing an underlying operating margin of 11.2% (2009/10: 8.4%). Thisreflects the leverage from our increased sales, operating efficiencies as wetransition to the web and the continued benefit from the cost actions takenlast year to permanently reduce our operating costs by £16 million per annum.Excluding the incremental operating expenses of £1.6 million, our underlyingoperating margin was 11.5%. At constant exchange rates the increase inunderlying operating profit compared with the prior year was 58.0% or 62.7%excluding the incremental operating expenses. Operational gearing, being theyear on year increase in underlying operating profit expressed as a percentageof the increase in sales, all at constant exchange rates, was 20.9%, or 22.5%excluding the incremental operating expenses.Total operating profit for the half year was £55.5 million (2009/10: £34.1million). There was a beneficial impact on underlying operating profit of £2.5million from the translation of overseas results compared with the prior year.
Second Quarter
The gross margin in the second quarter was 40.8% compared with 39.6% in the second quarter last year, or 39.7% at constant exchange rates, and 40.8% to the first quarter. This represents the nineteenth consecutive quarter of gross margin stability, which continues to differentiate us in the industry.
Underlying operating profit was £28.5 million (2009/10: £15.1 million)producing an underlying operating margin of 11.3%, or 11.7% excluding theincremental underlying operating expenses of £1.1 million relating to ourbusiness transformation (2009/10: 8.2%). This reflects the leverage from ourincreased sales, operating efficiencies as we transition to the web andbenefits from our cost reduction programmes. There was a beneficial impact onunderlying operating profit of £1.4 million from the translation of overseasresults compared to the prior year. Operational gearing in the second quarterwas 20.8% or 22.8% excluding the incremental operating expenses of £1.1million. At constant exchange rates the year on year increase in underlyingoperating profit was 72.5%, compared to the year on year increase in the firstquarter of 45.2%.Foreign Currency Impact
A one cent movement in the exchange rate between the US dollar and sterlingimpacts the Group's operating profit by approximately £200,000 per annum, and aone cent movement in the exchange rate between the Euro and sterling impactsthe Group's operating profit by approximately £200,000 per annum.
Finance Costs
Net finance costs in the first half were £9.5 million (2009/10: £8.9 million).This comprises net interest payable of £7.3 million (2009/10: £6.7 million),which was covered 7.6 times by underlying operating profit, and a charge of £2.2 million (2009/10: £2.2 million) in respect of the Company's convertiblepreference shares.Profit Before Tax
Underlying profit before tax in the first half was £46.0 million (2009/10: £23.7 million) and total profit before tax in the first half was £46.0 million(2009/10: £25.2 million).Underlying profit before tax in the second quarter was £23.8 million (2009/10:£10.7 million) and total profit before tax in the second quarter was £23.8million (2009/10: £16.2 million).
Taxation Charge
The taxation charge for the first half was at an effective rate of 28.0% (2009/ 10: 29.0%) of profit before tax and preference dividends.
Return on Net Operating Assets
Return on net operating assets for the first half, based on continuing operations, was 39.2% (2009/10: 27.1%), reflecting our strong operating profit performance and well ahead of our strategic target of greater than 30.0%.
Earnings per Share
Underlying earnings per share for the first half were 9.0 pence (2009/10: 4.6pence). Total earnings per share for the first half were 9.0 pence (2009/10:4.8 pence).Interim Dividend
The dividend of 4.4 pence per share (2009/10: 4.2 pence per share) will be paid on 20 October 2010 to shareholders on the register on 24 September 2010.
Cash Flow and Net Financial Liabilities
Total cash generated from operations in the second quarter was £26.2 million(2009/10: £26.5 million) or £26.3 million excluding the cash impact of 2009/10restructuring costs (2009/10: £28.6 million), representing 91.9% of operatingprofit (2009/10: 128.6%) or 92.3% excluding the impact of restructuring costs(2009/10: 189.4%). Working capital increased by £8.3 million in the quarterreflecting continued targeted inventory investment and a higher level ofreceivables in line with the increase in sales.Total cash generated from operations in the first half was £47.8 million (2009/10: £51.0 million) or £48.3 million excluding the impact of restructuring costs(2009/10: £54.6 million), representing 86.1% of operating profit or 87.0%excluding the impact of restructuring costs (2009/10: 149.6% or 167.5%excluding the impact of restructuring costs). Our working capital to salesratio in the first half was 24.5%. Free cash flow in the first half, beingtotal cash generated from continuing operations less net capital expenditure,interest, preference dividends and tax payments, was £19.0 million, or £19.5million excluding restructuring costs, (2009/10: £39.6 million excludingrestructuring costs). Our free cash flow to sales ratio in the first half was3.9%, reflecting our working capital investment in the period.Net financial liabilities at the end of the first half were £261.6 million (31January 2010: £264.2 million), including £60.6 million (31 January 2010: £60.2million) attributable to the Company's preference shares. The impact ofexchange rates in the first half was to increase net financial liabilities
by £1.7 million.Financial Position
Premier Farnell's financial position remains robust with good liquidity andstrong free cash flow. In June 2010, the Group repaid its $66 million USPrivate Placement notes as they fell due, by drawing down $30 million from itsnew $75 million US Private Placement Shelf Facility, repayable July 2017, andthe remainder from existing bank facilities.At 1 August 2010 our headroom on bank borrowings was £62.3 million, with thesefacilities now totalling £185 million and in place until January 2013. Thisheadroom, combined with our net cash position of £41.4 million, continues togive us a secure funding position.
Operations
Marketing and Distribution Division (MDD)
(Newark and Farnell businesses including Premier Electronics, CPC and MCM)
Q2 10/11 Q2 09/10 Q2 H1 10/11 H1 09/10 H1 growth growth £m £m £m £m Revenue 230.6 164.8 32.4% 455.1 348.5 26.7% Underlying operating 28.2 13.8* 87.9% 55.2 30.5* 67.7% profit Underlying operating 12.2% 8.4%* 12.1% 8.8%* margin % * excluding restructuring costs in 2009/10 of £4.8 million (Q1: £4.0 million,Q2: £0.8 million) and the one-off gain arising in the second quarter of £5.3million from the reorganisation of the Group's North American pension plans.Through continued focus on the EDE sector, the web and the internationalisationof our business, MDD Americas, Europe and Asia Pacific have again deliveredstrong sales growth for the second quarter, with sales for the MDD divisiongrowing 32.4% year on year. In the key emerging markets of Greater China, Indiaand Eastern Europe our combined second quarter sales growth was 90.7%. The SIA,the Association of Franchised Distributors of Electronic Components (AFDEC) andthe Distributors and Manufacturers Association of Semiconductors (DMASS) havecontinued to report strong year on year growth rates in the second quarter.However, as well as the positive impact on the statistics from easing year onyear comparators, this growth continues to be largely driven by theacceleration in volume electronic component sales, as evidenced by the recordsales growth recently reported by organisations in that space.Investment in innovation and the strength of our proposition have beenfundamental to our continued progress in driving market share gains. In thequarter we further enhanced our proposition with the addition of eight new andemerging supplier partners. In Asia Pacific we increased our number ofregionally stocked products to 104,000 up from 60,000, building the broadestlocally held inventory of EDE products in the Asia Pacific high serviceindustry and in the third quarter we will increase this to 120,000. Ourinnovative eProcurement solution, iBuy, continues to deliver strong results. InNorth America, sales from iBuy increased 727.5% on the prior quarter, and inEurope and APAC sales from this innovative solution grew 162.6% and 439.7% yearon year, respectively. In total eCommerce accounted for 45.9% of MDD secondquarter sales and EDE sales now account for 50.6% of sales from our electronicsdistribution businesses as their transformation continues at pace.
The division's underlying operating margin improved to 12.2% reflecting the operating leverage from the increase in sales, gross margin stability and the efficiencies from our continued transition to the web. Underlying operating profit increased by 87.9% on the second quarter in the prior year.
MDD Americas(Newark) Q2 10/11 Q2 09/10 Q2 growth H1 10/11 H1 09/10 H1 growth £m £m £m £m Revenue 99.9 69.4 31.9% 196.2 153.1 24.1% Underlying operating 6.8 1.4* 355.4% 13.0 4.3* 199.8% profit Underlying operating 6.8% 2.0%* 6.6% 2.8%* margin % * excluding restructuring costs in 2009/10 of £1.9 million (Q1: £1.1 million,Q2: £0.8 million) and the one-off gain arising in the second quarter of £5.0million from the reorganisation of the Group's North American pension plans.MDD Americas second quarter sales grew 31.9% over the second quarter of theprior year and 14.9% sequentially over the first quarter. This represents thefourth consecutive quarter of sequential quarter on quarter improvement in thedivision's sales per day. EDE sales accounted for 36.2% of all sales as wecontinue to accelerate our North American transformation and move towardsexiting the year with 40% of MDD Americas' sales coming from EDE. For theequivalent period the SIA reported that North American semiconductor sales hadgrown 52.7% year on year. MDD Americas' web sales grew 77.4% in the quarterwith eCommerce now accounting for 32.0% of sales, an increase of 3.3 percentagepoints over the prior quarter.
The significant year on year increase in gross margin supported the second quarter underlying operating profit increase of 355.4%. Our North American underlying operating margin increased to 6.8%, the fourth consecutive quarter of sequential improvement.
MDD Europe and Asia Pacific
(Farnell and Premier Electronics)
Q2 10/11 Q2 09/10 Q2 H1 10/11 H1 09/10 H1 growth growth £m £m £m £m Revenue 106.3 74.0 38.7% 210.8 151.4 34.1% Underlying operating 19.0 10.3 66.9% 37.6 21.8* 55.6% profit Underlying operating 17.9% 13.9% 17.8% 14.4%* margin %
*excluding Q1 restructuring costs in 2009/10 of £2.9 million
Sales in the second quarter grew 38.7%, with sequential growth of 3.1% over thefirst quarter. This reflects the strength of our strongly embedded strategy inthese regions, together with the continuing focus on execution and operationalexcellence. The division's underlying operating margin improved to 17.9% in thesecond quarter, up 4.0 percentage points over the second quarter of last year,as sales to the higher margin EDE sector positively impacted our profitabilityand the cost actions we took last year continue to deliver benefits. As aconsequence, underlying operating profit increased 66.9% on the prior year.
Revenue by region Q2 10/11 Q2 09/10 Revenue H1 10/11 H1 09/10 Revenue growth growth £m £m £m £m UK (including 36.1 27.2 32.3% 71.1 55.1 28.7% exports) Mainland Europe 53.3 36.7 40.8% 106.7 76.5 33.9% Asia Pacific 16.9 10.1 47.8% 33.0 19.8 49.3%
Sales for Farnell Europe, including the UK, grew 37.0% in the quarter, with allmajor regions reporting strong positive growth. This compares to the Europeanmarket which grew 70.0% for the three months to June 2010, according to DMASS.Second quarter sales in Eastern Europe grew 82.3% year on year as we continueto take advantage of the significant opportunities for growth in the region.
Farnell UK sales grew 24.5% in the quarter and 1.9% over the prior quarter. This compares to the most recent data from AFDEC who reported sales growth of 38.4% excluding Farnell, in the 3 months to July.
Sales in the Asia Pacific region grew 47.8% in the quarter. This represents anoutperformance of the wider Asia Pacific market where the SIA reported saleshad grown 38.4%, for the equivalent period. Sales in Greater China and Indiaare continuing to drive growth with strategic investments delivering a strongEDE and web offering. During the quarter we saw sales growth of 102.0% and77.7% in Greater China and India, respectively. Our expansion and investment inAsia Pacific is key to our future and subsequent to quarter end we expanded ourvirtual footprint in the region, entering the electronics distribution marketsin South Korea, Thailand and Taiwan.Our web transition continues in MDD Europe and Asia Pacific with the division'sweb sales growing 52.4% in the quarter and eCommerce sales now accounting for60.7% of total sales in Europe and 56.0% in Asia Pacific.
Other Distribution Businesses
(CPC and MCM) Q2 10/11 Q2 09/10 Q2 growth H1 10/11 H1 09/10 H1 growth £m £m £m £m Revenue 24.4 21.4 11.9% 48.1 44.0 9.0% Underlying operating 2.4 2.1* 12.5% 4.6 4.4* 4.2% profit Underlying operating 9.8% 9.8%* 9.6% 10.0%* margin %
* excluding the one-off gain arising in the second quarter of £0.3 million from the reorganisation of the Group's North American pension plans.
CPC has continued the strong performance it achieved in the first quarter,delivering sales growth of 10.8% despite the highly competitive and difficultUK market. CPC's innovative marketing and sales initiatives have led to its websales growing 24.0% in the quarter, with eCommerce now accounting for 38.1% ofthe business' sales.
MCM sales grew 14.9% in the second quarter, which is a 4.9% increase on the prior quarter. Market conditions have shown some improvement with the US consumer goods index showing growth of 12.7% at the end of July versus the prior year.
Industrial Products Division
(Akron Brass and TPC Wire and Cable)
Q2 10/11 Q2 09/ Q2 H1 10/11 H1 09/ H1 10 growth 10 growth £m £m £m £m Revenue 21.5 18.9 5.0% 41.9 39.5 4.0% Underlying operating 3.8 3.8* -7.6% 7.0 7.0* -2.4% profit Underlying operating 17.7% 20.1%* 16.7% 17.7%* margin
* excluding the one-off gain arising in the second quarter of £1.0 million from the reorganisation of the Group's North American pension plans.
TPC Wire & Cable
TPC improved on the impressive first quarter performance by growing sales 58.0%in the second quarter. The focus by the management team on opportunities forgrowth, with reduced reliance on its traditional markets, including automotiveand steel, has helped drive this strong performance. Sales to new productsegments are now 30.4% of sales with international sales growing 59.4% year
onyear.Akron Brass
Sales at Akron Brass grew 4.8% on the prior quarter, a 5.2% decline year onyear. Akron's sales declined 4.8% year on year in the first half whichrepresents an 8.5 percentage point outperformance of the global fire apparatusmarket for the first half. The performance of the wider market reflects thetighter controls around government spending which continue to impact some ofthe end markets in this industry. For Akron, this impact was partly mitigatedby new product developments, with new products increasing to 15.4% of sales inthe quarter, and with the official opening of Akron's offices in China and theMiddle East the business continues to focus on growing its internationalproposition.
Risk and Uncertainties
The principal risks and uncertainties facing the Group for the remaining six months of the year and the ways in which they are mitigated are largely unchanged since they were described in the Company's 2010 Annual Report and Accounts on pages 51 to 53. As set out in the annual report, we continue to believe in our EDE strategy delivering a growth rate above the overall electronics market and that the strategy remains equally relevant in the current global economic situation.
Risks and Mitigating Actions Opportunity Uncertainties Insufficient We have a fully integrated We are leveraging the progress with multi-channel sales and marketing combination of commerce,
transformation in plan aimed at addressing the needs community and our
US of our EDE customers. The US element14 brand in the element14 transactional site was US to win market share launched in February 2010 to and attract EDEs to our address the EDE market sector and online environment. drive adoption of the web as a key Indeed our progress in channel. this area continues and as we exited the second quarter EDE accounted for 36.2% of our North American sales and eCommerce accounted for 32.0% of sales. Competitive We have an accelerated software The continued investmentadvantage in the development approach which ensures in and development of web channel is not speed to market for additions and web functionality
maintained improvements to our web provides value to functionality. We continue to customers and meets vision and plan our long term their developing development of our future online requirements. For environment. example the launch of DesignLink, our CAD coupling interface. Recruitment, Our high potential talent is The creation of a high development or identified and nurtured through performing actively retention of agreed development plans including engaged team which will talented people a comprehensive mentoring consequently lead to programme as well as a focus on improved business succession planning for our key performance. By focusing leadership positions. We actively on training and measure the retention of talent development, customer within our organisation which relationships, provides us with the ability to leadership, social track trends and act with the responsibility, and appropriate and necessary actions. communications, the In the last two years we have number of employees who embedded core skills training are actively engaged at including leadership development Premier Farnell has and sales effectiveness increased by one programmes. We conduct annual percentage point over employee engagement surveys to financial year 2009, to enable progress of our people 77%. actions to be monitored and areas of improvement identified and actions put in place. Our reward schemes are continuously evaluated to drive and reward performance and ensure retention of key talent. As we drive significant change throughout the organisation our competency development and evaluation processes are focused on encouraging change agility, particularly as we emerge from global recession. Foreign exchange Net operating assets are reviewed -
exposure to US and by currency on a quarterly basis
Euro Zone and aligned with net debt. We conduct ongoing sensitivity analysis and consider when and what financial instruments to put in place to minimise our exposure to transactional currency flow. Our treasury policy and procedures are subject to regular review and audit. Competitive We continue to focus on product, We are implementing newpressures margin and our high service strategic initiatives proposition to drive profitable to build customer growth. We have business loyalty and delineate a intelligence processes to maintain differentiating our awareness of market proposition for our key developments and competitor customer base. actions. We continue to invest in and focus on innovation to build customer loyalty.
Significant failure Business continuity plans are kept We have implemented
or inefficiencies under review for all our locations. improved workflows and in our systems and We have the ability to switch order operational
infrastructure fulfilment in Europe between our efficiencies as well as Leeds and Li¨ge distribution provided increased centres. Contingency plans are in capacity and invested place for our US warehouse and in capability. All of management systems. We have these allow the greater maintained an ongoing review of our support of customers' IT infrastructure. We will invest future requirements, in our back-office systems to suppliers' future needs support our single front-end web and the ability to platform over the next 3 to 5 leverage information as years. an asset. Legal risks We have exposure to a number of The increase in countries and their respective environmental legal compliance requirements are legislation for addressed through a variety of electronics, allows us controls. Trade compliance is a to provide real value specific significant requirement to our key customers which is controlled through an through our legislative experienced specialist team, expertise. automated screening enablers and ongoing training of our sales teams. Pensions - an We commission formal triennial -
inability to fund actuarial valuations which confirm liabilities that ongoing funding is maintained (defined benefit at an appropriate level for our plan) and the defined benefit schemes in the US, negative impact on UK and Canada, together with annual the Group's balance actuarial reviews. Our US and
sheet Canadian defined benefit schemes were closed to further accrual of defined benefit obligations during 2010, the UK having been similarly closed in 1998. We have also reduced our exposure to equity investments in these plans.
This press release contains certain forward-looking statements relating to thebusiness of the Group and certain of its plans and objectives, including, butnot limited to, future capital expenditures, future ordinary expenditures andfuture actions to be taken by the Group in connection with such capital andordinary expenditures, the expected benefits and future actions to be taken bythe Group in respect of certain sales and marketing initiatives, operatingefficiencies and economies of scale. By their nature forward-looking statementsinvolve risk and uncertainty because they relate to events and depend oncircumstances that will occur in the future. Actual expenditures made andactions taken may differ materially from the Group's expectations contained inthe forward-looking statements as a result of various factors, many of whichare beyond the control of the Group. These factors include, but are not limitedto, the implementation of initiatives supporting the Group's strategy, theeffect of legislation and regulatory enactments, recruitment and integration ofnew personnel, the implementation of cost-saving initiatives to offset currentmarket conditions, continued use and acceptance of e-commerce programs andsystems, the ability to expand into new markets and territories, theimplementation of new sales and marketing initiatives, changes in demand forelectronic, electrical, electromagnetic and industrial products, rapid changesin distribution of products and customer expectations, the ability 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 Statement For the second quarter and half year ended 1st August 2010
2010/11 2009/10 2010/11 2009/10 2009/10 Second Second First First Full quarter quarter half half year unaudited unaudited unaudited unaudited audited Notes £m £m £m £m £m Continuing operations Revenue 4 252.1 183.7 497.0 388.0 795.3 Cost of sales (149.2) (110.9) (294.1) (234.7) (478.9) Gross profit 102.9 72.8 202.9 153.3 316.4 Net operating expenses - before restructuring (74.4) (57.7) (147.4) (120.7) (243.7)and pension changes - restructuring costs 5 - (0.8) - (4.8) (7.6) - net one-off income 5 - 6.3 - 6.3 6.3from pension changes Total net operating (74.4) (52.2) (147.4) (119.2) (245.0)expenses Operating profit - before restructuring 28.5 15.1 55.5 32.6 72.7and pension changes - restructuring costs 5 - (0.8) - (4.8) (7.6) - net one-off income 5 - 6.3 - 6.3 6.3from pension changes Total operating profit 4 28.5 20.6 55.5 34.1 71.4 Finance income 0.1 0.1 0.1 0.2 0.5(interest receivable) Finance costs - interest payable (3.7) (3.4) (7.4) (6.9) (14.1) - preference dividends (0.9) (0.9) (1.8) (1.8) (3.5) - premium on (0.2) (0.2) (0.4) (0.4) (0.8)redemption of preference shares Total finance costs (4.8) (4.5) (9.6) (9.1) (18.4) Profit before taxation 5 23.8 16.2 46.0 25.2 53.5 Taxation 6 (6.9) (4.9) (13.4) (7.8) (16.0) Profit for the period 16.9 11.3 32.6 17.4 37.5(attributable to ordinary shareholders) Earnings per share 7 Basic 4.7p 3.1p 9.0p 4.8p 10.4p Diluted 4.6p 3.1p 8.9p 4.8p 10.3p Ordinary dividends Interim - proposed 10 4.4p 4.2p 4.2p Final - proposed 5.2p Paid 5.2p 5.2p 9.4p Impact on 18.8 18.9 34.0
shareholders' funds (£m) Condensed Consolidated Statement of Comprehensive Income
For the second quarter and half year ended 1st August 2010
2010/11 2009/10 2010/11 2009/10 2009/10 Second Second First First Full quarter quarter half half year unaudited unaudited unaudited unaudited audited £m £m £m £m £m Profit for the period 16.9 11.3 32.6 17.4 37.5 Net exchange (1.1) (5.9) 0.8 (6.0) 1.1adjustments Actuarial losses on - (21.5) - (21.5) (12.2)pensions and other post-retirement obligations Deferred tax credit on - 7.7 - 7.7 4.1actuarial losses Net fair value gains on 2.7 2.4 2.5 4.3 4.1cash flow hedges Net gains/(losses) not 1.6 (17.3) 3.3 (15.5) (2.9)recognised in the income statement Total comprehensive 18.5 (6.0) 35.9 1.9 34.6income/(expense) for the period (attributable to ordinary shareholders)
The accompanying notes form an integral part of this unaudited condensed consolidated financial information. Condensed Consolidated Balance Sheet
As at 1st August 2010 1st 2nd 31st August August January 2010 2009 2010 unaudited unaudited audited Notes £m £m £m ASSETS Non-current assets Goodwill 34.9 31.8 34.8 Other intangible assets 22.8 24.1 24.2
Property, plant and equipment 52.1 49.8
53.4 Deferred tax assets 12.2 6.6 12.2 Total non-current assets 122.0 112.3 124.6 Current assets Inventories 199.2 162.9 175.2 Financial assets 3.8 0.4 1.1 Trade and other receivables 147.2 111.8 126.7 Cash and cash equivalents 8 41.4 27.3 26.6 Total current assets 391.6 302.4 329.6 LIABILITIES Current liabilities Financial liabilities 8 (1.0) (39.9) (43.1) Trade and other payables (124.6) (77.4) (101.6) Current tax payable (26.9) (27.2) (27.4) Total current liabilities (152.5) (144.5) (172.1) Net current assets 239.1 157.9 157.5 Non-current liabilities Financial liabilities 8 (305.8) (247.1) (248.8) Retirement and other post-employment (37.6) (48.4) (38.8)benefits Deferred tax liabilities (3.1) (1.8) (3.0) Total non-current liabilities (346.5) (297.3) (290.6) NET ASSETS/(LIABILITIES) 14.6 (27.1) (8.5) EQUITY Ordinary shares 18.4 18.3 18.3
Equity element of preference shares 10.4 10.4
10.4 Share premium 27.2 23.8 24.2 Capital redemption reserve 4.4 4.4 4.4 Hedging reserve 2.9 0.6 0.4
Cumulative translation reserve 17.2 9.3
16.4 Retained earnings (65.9) (93.9) (82.6) TOTAL EQUITY 14.6 (27.1) (8.5)
Consolidated Statement of changes in Equity For the half year ended 1st August 2010
2010/11 2009/10 2009/10 First First Full half half year unaudited unaudited audited £m £m £m Total equity at beginning of period (8.5) (5.6) (5.6) Profit for the period 32.6 17.4 37.5 Other comprehensive income/(expense) 3.3 (15.5) (2.9) Total comprehensive income 35.9 1.9 34.6 Transactions with owners: Ordinary dividends paid (18.8) (18.9) (34.0) Ordinary shares issued 3.1 - 0.4 Purchase of ordinary shares - (5.0) (5.0) Share-based payments 2.9 0.5 1.1 Total transactions with owners (12.8) (23.4)
(37.5)
Total equity at end of period 14.6 (27.1)
(8.5)
The accompanying notes form an integral part of this unaudited condensed
consolidated financial information.
Condensed Consolidated Statement of Cash Flows
For the second quarter and half year ended 1st August 2010
2010/11 2009/10 2010/11 2009/10 2009/10 Second Second First First Full quarter quarter half half year unaudited unaudited unaudited unaudited audited Notes £m £m £m £m £m Cash flows from operating activities Operating profit 28.5 20.6 55.5 34.1 71.4 Restructuring/pension changes:
- net income statement impact - (5.5) - (1.5)
1.3 - cash impact (0.1) (2.1) (0.5) (3.6) (7.1) Non-cash impact of (0.1) (7.6) (0.5) (5.1) (5.8)restructuring/pension changes Depreciation and 4.8 4.7 9.5 9.7 19.5amortisation
Changes in working capital (8.3) 8.5 (17.9) 11.6
12.8
Additional funding for (0.7) (0.7) (2.0) (1.2)
(2.9)
post retirement defined
benefit plans
Other non-cash movements 2.0 1.0 3.2 1.9
3.3
Total cash generated from 26.2 26.5 47.8 51.0
98.3operations Interest received 0.1 0.1 0.1 0.2 0.5 Interest paid (5.4) (5.4) (6.7) (6.5) (12.5) Dividends paid on (1.8) (1.8) (1.8) (1.8) (3.5)preference shares Taxation paid (10.6) (1.9) (14.1) (1.3) (11.6) Net cash generated from 8.5 17.5 25.3 41.6 71.2operating activities
Cash flows from investing
activities Acquisition of business - - - - (6.2) Proceeds from sale of - - - - 0.1property, plant and equipment Purchase of property, (1.8) (0.9) (2.5) (1.9) (5.5)plant and equipment Purchase of intangible (2.1) (2.2) (3.8) (3.7) (6.5)
assets (computer software) Net cash used in investing (3.9) (3.1) (6.3) (5.6) (18.1)activities
Cash flows from financing
activities
Issue of ordinary shares 1.2 - 3.1 -
0.4 Purchase of ordinary - (5.0) - (5.0) (5.0)shares New bank loans 52.8 8.8 56.8 136.9 144.1 Repayment of bank loans (43.4) - (43.4) (158.7)
(169.8)
Dividends paid to ordinary (18.8) (18.9) (18.8) (18.9) (34.0)shareholders Net cash used in financing (8.2) (15.1) (2.3) (45.7) (64.3)activities Net (decrease)/increase in (3.6) (0.7) 16.7 (9.7)
(11.2)
cash, cash equivalents and
bank overdrafts
Cash, cash equivalents and 46.2 30.3 25.4 39.0
39.0bank overdrafts at beginning of period Exchange (losses)/gains (1.2) (2.3) (0.7) (2.0) (2.4)
Cash, cash equivalents and 41.4 27.3 41.4 27.3
25.4
bank overdrafts at end of
period Reconciliation of net financial liabilities Net financial liabilities (264.2) (295.9)
(295.9)
at beginning of period Net increase/(decrease) in 16.7 (9.7)
(11.2)
cash, cash equivalents and
bank overdrafts
(Increase)/decrease in (13.4) 21.8
25.7debt
Premium on redemption of (0.4) (0.4)
(0.8)preference shares Derivative financial 2.3 4.8 5.0instruments Amortisation of (0.9) (0.8) (1.7)arrangement fees Exchange movement (1.7) 20.9 14.7 Net financial liabilities 8 (261.6) (259.3)
(264.2)
at end of period
The accompanying notes form an integral part of this unaudited condensed consolidated financial information.
Notes 1 General information Premier Farnell plc (the "Company") is a company incorporated and domiciled in the UK and is listed on the London Stock Exchange. The
address of the Company's registered office is Farnell House, Forge Lane,
Leeds, LS12 2NE, England. The Company's registered number is 876412.
This condensed consolidated financial information was approved for issue
on 7th September 2010. This condensed consolidated financial information does not comprise statutory accounts within the meaning of Section 434 of the Companies Act
2006. Statutory accounts for the financial year ended 31st January 2010,
have been delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified and did not contain any statement under Section 237 of the Companies Act 1985. Copies of the
Company's Annual Report and Accounts are available from Premier Farnell
plc, 150 Armley Road, Leeds, LS12 2QQ, England, or from the Company's website at www.premierfarnell.com. 2 Basis of preparation
This condensed consolidated financial information for the second quarter
and half year ended 1st August 2010, has been prepared in accordance with
the Disclosure and Transparency Rules of the Financial Services Authority
and with IAS 34, Interim Financial Reporting, as adopted by the European
Union. This condensed consolidated financial information should be read in
conjunction with the consolidated financial statements included in the Company's Annual Report and Accounts for the financial year ended 31st
January 2010, which have been prepared in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the European Union.
The interim financial information has not been audited or reviewed by auditors pursuant to the Auditing Practices Board's guidance on Review of Interim Financial Information. 3 Accounting policies
The following new standards, amendments to standards and interpretations
are mandatory for the first time for the financial year beginning 1 February 2010, but do not have any significant impact on the Group:
• IFRS 3 (revised), `Business combinations', and consequential amendments
to IAS 27, `Consolidated and separate financial statements', IAS 28, `Investments in associates', and
IAS 31, `Interests in joint ventures'. However, the Group will apply IFRS
3 (revised) to any future business combinations. The revised standard
continues to apply the acquisition method to business combinations, with
some significant changes. For example, all payments to purchase a business
are to be recorded at fair value at the acquisition date, with contingent
payments classified as debt subsequently re-measured through the income
statement. All acquisition-related costs should be expensed. • IFRIC 17, `Distributions of non-cash assets to owners'; • IFRIC 18, `Transfers of assets from customers'; • `Additional exemptions for first-time adopters' (Amendment to IFRS 1); and • Improvements to International Financial Reporting Standards 2009. The following new standards, new interpretations and amendments to standards and interpretations have been issued but are not effective for the financial year beginning 1 February 2010 and have not been early adopted: • IFRS 9, `Financial instruments'; • Revised IAS 24, `Related party disclosures'; • `Classification of rights issues' (Amendment to IAS 32);
• `Prepayments of a minimum funding requirement' (Amendments to IFRIC 14);
and • IFRIC 19, `Extinguishing financial liabilities with equity instruments'. Taxes on income in the interim periods are accrued using the estimated effective tax rate that would be applicable to expected total annual earnings. 4 Segment information (unaudited) 2010/11 2009/10 Second quarter Second Before Restructuring After quarter restructuring /pension restructuring /pension changes /pension changes (note 5) changes £m £m £m £m Marketing and Distribution Division Americas 99.9 69.4 - 69.4 Europe and Asia Pacific 106.3 74.0 - 74.0 Other Distribution 24.4 21.4 - 21.4Businesses Total Marketing and 230.6 164.8 - 164.8Distribution Division Industrial Products 21.5 18.9 - 18.9Division 252.1 183.7 - 183.7Operating profit Marketing and Distribution Division Americas 6.8 1.4 4.2 5.6 Europe and Asia Pacific 19.0 10.3 - 10.3 Other Distribution 2.4 2.1 0.3 2.4Businesses Total Marketing and 28.2 13.8 4.5 18.3Distribution Division Industrial Products 3.8 3.8 1.0 4.8Division Head Office costs (3.5) (2.5) - (2.5) 28.5 15.1 5.5 20.6 2010/11 2009/10 First half First Before Restructuring After half restructuring /pension restructuring /pension changes /pension changes (note 5) changes £m £m £m £m Revenue
Marketing and Distribution
Division Americas 196.2 153.1 - 153.1 Europe and Asia Pacific 210.8 151.4 - 151.4 Other Distribution 48.1 44.0 - 44.0Businesses Total Marketing and 455.1 348.5 - 348.5Distribution Division Industrial Products 41.9 39.5 - 39.5Division 497.0 388.0 - 388.0Operating profit
Marketing and Distribution
Division Americas 13.0 4.3 3.1 7.4 Europe and Asia Pacific 37.6 21.8 (2.9) 18.9 Other Distribution 4.6 4.4 0.3 4.7Businesses Total Marketing and 55.2 30.5 0.5 31.0Distribution Division Industrial Products 7.0 7.0 1.0 8.0Division Head Office costs (6.7) (4.9) - (4.9) 55.5 32.6 1.5 34.1
2009/10 Full year (audited)
Before Restructuring After restructuring costs/pension restructuring costs/pension changes costs/pension changes (note 5) changes £m £m £m Revenue Marketing and Distribution Division Americas 310.0 - 310.0 Europe and Asia Pacific 317.0 - 317.0 Other Distribution 91.4 - 91.4Businesses Total Marketing and 718.4 - 718.4Distribution Division Industrial Products Division 76.9 - 76.9 795.3 - 795.3Operating profit Marketing and Distribution Division Americas 12.3 0.3 12.6 Europe and Asia Pacific 48.5 (2.9) 45.6 Other Distribution Businesses 9.0 0.3 9.3 Total Marketing and 69.8 (2.3) 67.5Distribution Division Industrial Products Division 13.6 1.0 14.6 Head Office costs (10.7) - (10.7) 72.7 (1.3) 71.4 1st 2nd 31st August August January 2010 2009 2010 £m £m £m Segment assets Marketing and Distribution Division Americas 144.7 120.3 132.6 Europe and Asia Pacific 222.3 179.4 197.4 Other Distribution Businesses 42.3 33.9 38.9 Total Marketing and 409.3 333.6 368.9Distribution Division Industrial Products Division 45.6 44.7 44.2 Head Office 1.3 2.1 1.2 Segment assets 456.2 380.4 414.3 Unallocated assets: Cash and cash equivalents 41.4 27.3 26.6 Deferred tax assets 12.2 6.6 12.2 Financial assets 3.8 0.4 1.1 Total assets 513.6 414.7 454.2
The segments shown above are the segments for which summary management information is presented to the Board which is deemed to be the Group's chief operating decision maker. 5. Profit before taxation
Profit before taxation is stated after the following
2010/11 2009/10 2010/11 2009/10 2009/10 Second Second First First Full quarter quarter half half year unaudited unaudited unaudited unaudited audited £m £m £m £m £m One-off (charges)/ credits: - restructuring costs - (0.8) - (4.8) (7.6) - net one-off income - 6.3 - 6.3 6.3from pension changes - 5.5 - 1.5 (1.3)Charge for share-based (2.1) (0.2) (2.9) (0.5) (1.1)payments (Charge)/income for (0.1) (1.0) (0.6) (2.2) (3.2)defined benefit pension schemes
Due to their significance, restructuring costs and the net one-off income from pension changes have been disclosed separately on the face of the income
statement. 6. Taxation
The taxation charge represents an effective tax rate for the full year on profit before tax and preference dividends of 28.0% (2009/10: 29.0%).
7. Earnings per share
Basic earnings per share is calculated by dividing the profit attributable toordinary shareholders for the period by the weighted average number of ordinaryshares in issue during the period, excluding those shares held by the PremierFarnell Executive Trust. For diluted earnings per share, the weighted averagenumber of ordinary shares in issue is adjusted to assume issue of all dilutivepotential ordinary shares, being those share options and awards with anon-market based performance condition granted to employees where the exerciseprice is less than the average market price of the Company's ordinary sharesduring the period, and those shares with a market based performance conditionbased on the current estimate of the number of shares that will vest under theperformance criteria.
Reconciliations of earnings and the weighted average number of ordinary shares used in the calculations are set out below.
2010/11 2009/10 First half (unaudited) First half (unaudited) Basic Diluted Basic Diluted Earnings share share Earnings share share amount amount amount amount £m pence pence £m pence pence Earnings per share Profit 32.6 9.0p 8.9p 17.4 4.8 4.8attributable to ordinary shareholders Restructuring - - - 4.8 1.3 1.3costs Tax - - - (1.5) (0.4) (0.4)attributable to restructuring costs Net one-off - - - (6.3) (1.7) (1.7)income from pension changes Tax - - - 2.4 0.6 0.6attributable to net one-off income from pension changes Profit 32.6 9.0p 8.9p 16.8 4.6 4.6attributable to ordinary shareholders before gain on purchase of preference shares, restructuring costs and one-off income from pension changes Number Number Weighted 360,471,117 361,736,206average number of shares Dilutive 4,126,897 2,494,734effect of share options Diluted 364,598,014 364,230,940weighted average number of shares 2009/10 Full Year (audited) Basic Diluted per per Earnings share share amount amount £m pence pence Earnings per share Profit 37.5 10.4 10.3attributable to ordinary shareholders Restructuring 7.6 2.1 2.1costs Tax (2.5) (0.7) (0.7)attributable to restructuring costs Net one-off (6.3) (1.8) (1.8)income from pension changes Tax 2.4 0.7 0.7attributable to net one-off income from pension changes Profit 38.7 10.7 10.6attributable to ordinary shareholders before gain on purchase of preference shares, restructuring costs and the net one-off income from pension changes Number Weighted 360,456,270average number of shares Dilutive 2,947,102effect of share options Diluted 363,403,372weighted average number of shares
Earnings per share excluding restructuring costs and one-off pension changes have been provided in order to facilitate year on year comparison.
8. Net financial liabilities 1st 2nd 31st August August January 2010 2009 2010 unaudited unaudited audited £m £m £m Cash and cash equivalents 41.4 27.3 26.6
Unsecured loans and overdrafts (245.3) (227.2) (231.2)
Net financial liabilities before (203.9) (199.9) (204.6) preference shares and derivatives
Preference shares (60.6) (59.8) (60.2) Derivative financial 2.9 0.4 0.6instruments (net) Net financial liabilities (261.6) (259.3) (264.2) Net financial liabilities are analysed in the balance sheet as follows: Current assets Cash and cash equivalents 41.4 27.3 26.6 Derivative financial 3.8 0.4 1.1instruments 45.2 27.7 27.7 Current liabilities Bank overdrafts - - (1.2) 5.3% US dollar Guaranteed - (39.8) (41.3)Senior Notes payable 2010 Other loans (0.1) (0.1) (0.1) Derivative financial (0.9) - (0.5)instruments (1.0) (39.9) (43.1) Non-current liabilities Bank loans (120.5) (87.5) (85.2) 5.9% US dollar Guaranteed (101.3) (95.8) (99.4)Senior Notes payable 2013 5.2% US dollar Guaranteed (19.1) - -Senior Notes payable 2017 Other loans (4.3) (4.0) (4.0) Preference shares (60.6) (59.8) (60.2) (305.8) (247.1) (248.8)During the second quarter the Group repaid its $66 million US Private Placementnotes as they fell due, by drawing down $30 million from its new $75 million USPrivate Placement Shelf Facility, repayable July 2017, and the remainder fromexisting bank facilities. At 1st August 2010 the headroom on bank borrowingswas £62.3 million with these facilities now totalling £185 million and in
placeuntil January 2013.9. Exchange rates
The principal average exchange rates used to translate the Group's overseas profits were as follows:
2010/11 2009/10 2010/11 2009/10 2009/10 Second Second First First Full quarter quarter half half year US dollar 1.51 1.64 1.52 1.55 1.59 Euro 1.19 1.16 1.16 1.14 1.13 10. Ordinary dividendAn interim dividend of 4.4 pence per share (2009/10: 4.2 pence per share) willbe paid on 20th October 2010 to ordinary shareholders on the register at closeof business on 24th September 2010, absorbing £15.9 million of shareholders'funds (2009/10: £15.2 million).
Statement of Directors' Responsibilities
The directors named below confirm that, to the best of their knowledge andbelief, this condensed consolidated interim financial information has beenprepared in accordance with IAS 34 as adopted by the European Union, and thatthe interim management report herein includes a fair review of the informationrequired by DTR 4.2.7 and DTR 4.2.8.The directors of Premier Farnell plc are listed in the Company's 2010 AnnualReport and Accounts.By order of the Board Harriet Green Mark Whiteling Chief Executive Officer Chief Financial Officer 9th September 2010 9th September 2010
vendorRelated Shares:
PFL.L