8th Dec 2011 07:00
Premier Farnell plc 8 December 2011Results for the Third Quarter ended 30 October 2011 of the Financial Yearending 29 January 2012 Key Financials £m Q3 11/ Q3 10/ Q3 9m 11/ 9m 10/ 9m 12 11 12 11 Continuing operations Growth Growth £m £m (a) £m £m (a) (unaudited) Adjusted revenue (b) 241.8 246.0 -1.4% 739.7 733.0 2.7% Total revenue 241.8 251.3 -3.5% 739.7 748.3 0.7% Adjusted operating profit 25.8 27.4 -5.8% 81.8 81.1 2.9% (b) Total operating profit 24.1 28.3 -14.8% 97.9 83.8 19.2% Adjusted profit before tax 21.1 22.7 -7.0% 68.2 66.9 1.9% (b)
Total profit before taxation 19.4 23.6 -17.8% 84.3 69.6 21.1%
Adjusted earnings per share 4.2p 4.4p -4.5% 13.4p 13.2p 1.5%
(b) Basic earnings per share 3.8p 4.6p -17.4% 17.2p 13.7p 25.5% Free cash flow (c) 14.2 13.9 2.2% 24.2 33.4 -27.5%
Resilient performance in line with our expectations as we focus on cost control and return on sales in a challenging environment
Financial Highlights
Operating profit for the quarter in line with expectations at £25.8m (2010/11: £27.4m) giving an industry leading return on sales of 10.7% driven by MDD return on sales of 11.7%.
Operating profit for the first nine months of the year up by 2.9% on last yearwith continued improvement in return on sales in MDD North America at 8.5% inthe third quarter, up from 8.0% on the third quarter last year and from the4.0% achieved in the third quarter two years ago.
Overhead costs year to date are down by £4m year on year with costs as a percentage of sales reduced by 0.6 percentage points - on track to remove £17m of planned costs in the current year.
Operating cash flow conversion(e) continues to be strong at 103.1% in the quarter generating free cash flow of £14.2m.
Quarterly sales per day (SPD) were down 1.4% against high comparators last year(2010/11 Q3: 23.3%), but increased sequentially across the quarter with Octoberflat year on year.
Global PMIs at 49.6 and SIA data showing a 1.8% decline in the three months to October indicate continuing market weakness.
Q3 gross margin, at 38.6%, was down 2.1% versus last year's challengingcomparator and down 1.1% versus our four year historical average. Thisfluctuation is primarily a temporary function of mix at this stage in the cycleand lower MRO pricing, with gross margin trends improving across the quarter.Gross margin for the first nine months of the year, at 39.7% was stable withthe four year through cycle average.Since the quarter end the company has successfully completed the refinancing ofits balance sheet with a five year £200m revolving bank facility and $235m of 5to 10 year US private placement notes.
Strategic Highlights
eCommerce penetration has increased by 78.3% since we entered the downturn in2008 with MDD eCommerce penetration in the quarter of 56.0% up 7.9 percentagepoints year on year, giving opportunities for further channel cost efficienciesin markets with higher penetration.Against exceptional EDE growth in Q3 of last year of 41.0% the positive 3-5%EDE gross margin differential against MRO have been maintained. Strategic MROcontinued to grow well in the quarter driven by late cycle growth and enhancedpenetration in targeted sectors.As our customers increasingly conduct their design activity in our webenvironment the element 14 community has had over 1.8m visits from customersduring the year to date and 'the Knode' had over 97,000 visits in its firstquarter of operation. As a result, our active customer base was up 3.8% in thequarter.Over the last four years emerging markets have delivered a 25% compound growthrate. In the quarter they grew 23.7% year on year, with Eastern Europe up 23.3%and India up 49.4%. Following exceptional growth of 90.1% in the same periodlast year sales in China declined by 0.9%. In the quarter the UK performed well, with growth of 4.2%. Europe as a wholegrew 0.6% year on year in the quarter - impacted by the sentiment that has nowseen Eurozone PMIs below 50 and declining for 7 consecutive months. In lightof very strong growth of 31.0% in Q3 of last year sales across Asia Pacificexperienced a slowdown of 3.6% year on year, as technology and industrialgrowth across the region weakened. Singapore and Malaysia absolute sales perday were flat through the quarter.
In continuation of our strategy to invest in our Services Beyond Product offering, the Group entered into:
1) conditional contracts for the acquisition of Shenzhen Embest Technology CoLtd ('Embest'), a provider of embedded development tools and engineering designservices with more than 20,000 customer contacts in China, and an expandinginternational business.2) agreement with ARM - the global leader in semiconductor IP, to distributeARM's portfolio of development tools, software and evaluation boards across theAmericas. These developments represent significant steps forward in the Group's evolutionto become a provider of not only product, but also a significant provider ofsoftware, services and technology solutions.
Commenting on the results, Harriet Green, Group Chief Executive, said:
"The quarter's profit was in line with our expectations, compared with lastyear's strong performance. Although we remain cautious on the global economicoutlook, the business has responded well to the challenging environment and weremain focused on margin management, improving our cost ratios and investing inour strategy. As markets remain uncertain it is encouraging to note that ourstrategy delivered third quarter operating profit up 40.2% on two years agowhen markets were similarly challenged, with sales up by 21.8% over the sameperiod.
November sales per day showed progression on Q3 but a small decline from November of last year. Gross Margin was up from Q3 levels.
The balance sheet has been further strengthened through the successfulrefinancing of our bank facilities and the raising of $235m through US privateplacement notes. This provides the company with flexibility to repay short termdebt and the confidence to execute its plans.Through focus on the strategic delivery of our key metrics - web penetration,growing our EDE active customer base and growth in profitable MRO segments -Premier Farnell has proven its resilience and agility through the economiccycle, maintaining an industry leading return on sales and with a track recordof acting swiftly and decisively to shape our business. This will allow us tocontinue to generate cash and benefit strongly from the recovery whenconfidence returns."
For further information, contact:
Harriet Green, Chief Executive Officer Premier Farnell +44 (0) 20 7851 plc 4100 Nicholas Cadbury, Chief Financial Officer Thomas Churchill, Investor Relations
Andrew Lorenz FTI Consulting +44 (0) 20 7269 7291
Premier Farnell's announcements and presentations are published at www. premierfarnell.comtogether with business information and links to all other Group web sites.
To learn more about our exciting new innovation, the element14 knode, followthis link http://www.element14.com/community/community/knode. A demonstrationof the element12 knode was included in our investor morning on 24th November2011. Recordings of this event are available - please contact our InvestorRelations team to obtain a link. The 2011 Annual Report and Accounts is now available online and can be accessedat http://annualreport2011.premierfarnell.com . The results for the fourthquarter of the financial year ending 29 January 2012 will be announced on 15thMarch 2012. Notes:Throughout this statement, in order to reflect underlying business performance,sales growth is based on sales per day for continuing businesses at constantexchange rates and for like periods, and growth in operating profit iscalculated at constant exchange rates, unless otherwise stated.The disposal of the TPC Wire & Cable (TPC) business, part of the IndustrialProducts Division, at the start of the first quarter (31 January 2011), doesnot qualify for accounting treatment as a discontinued operation. Accordingly,the Group's 2010/11 results have not been restated. However, to aidcomparison, when referring to the performance of the Group, within thefinancial highlights, strategic highlights, outlook, Chief Executive's commentand the Chief Executive's Operational Overview section of this statement allprior year comparators have been adjusted to exclude the trading results ofTPC. In addition, adjusted revenue, gross margin, operating profit, profitbefore tax, and earnings per share in the table above, exclude the tradingresults of TPC in the prior year and the gain on sale in the current year(pre-tax gain of £17.8m). Current year adjusted numbers also excluderestructuring costs of £2.8m and the gain on sale of Newark's calibrationservices business of £1.1m, both of which occurred in the third quarter.(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. Free cash flow also excludesnet proceeds from the sale of businesses.
(d) SIA data from Semiconductor Industry Association publication, PMI (Manufacturing Purchasing Managers' Index) data from relevant published source in each market.
(e) Operating cash flow (before capital expenditure) as a percentage of adjusted operating profit. Premier Farnell plc
Results for the Third Quarter and Nine Months Ended 30 October 2011 of the Financial Year ending 29 January 2012
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Premier Farnell, the leading multi-channel, high service distributor supporting millions of engineers and purchasing professionals globally, announces its results for the third quarter of the financial year ending 29 January 2012.
Chief Executive's Operational Overview
In the third quarter the group delivered profits in line with expectation withreturn on sales continuing to be industry leading. Against challengingcomparators from last year, when we grew by 23.3% overall in Q3, and our coreEDE business grew by 41.0%, our total sales per day this quarter were lower by1.4%. This sales performance was in line with global SIA data showing a declineof 1.8% and global PMI data of 49.6. As we continued to focus on our keystrategic objectives, our sales per day increased across the quarter withOctober sales per day above Q2 levels and flat year on year. In the quarter our European MDD businesses grew revenue by 0.6% year on year -supported by a strong performance in the UK with growth of 4.2%. North Americaand APAC (which grew by 22.1% and 31.0% respectively, in Q3 last year) sawdeclines of 4.6% and 3.6% respectively - however APAC returned to year on yeargrowth in October. In the quarter sales from CadSoft our global softwarebusiness grew by 40.0% year on year - giving further impetus to our 'servicesbeyond product' strategy. Gross margin was down 2.1% versus last year's challenging comparator when webenefited from strong EDE growth as confidence returned to the market, and down1.1% versus our four year historical average. This fluctuation is primarily atemporary function of mix at this stage in the cycle and lower MRO pricing,with gross margin trends improving across the quarter. Gross margin for thefirst nine months of the year, at 39.7% was stable with the four year throughcycle average. We continue to make strategic progress and deliver cost efficiencies. Ourincreasing eCommerce penetration is providing benefits now and leaving us wellplaced for future additional structural benefits. We are already seeing theadvantage of being quick to instigate strategic cost management as marketssoftened in Q2 - with SG&A as a percentage of sales reducing by 0.6% from thefirst nine months of last year. This represents a year to date reduction of £4m- in line with the guidance we gave in July on our intention to remove £17m ofplanned costs in the current year. We continue to plan and execute strategiccost actions to deliver the efficiencies that are offered by our transformationto place web channels at the forefront of our multi-channel strategy. Weanticipate further gross cost savings of the order of £10m p.a. which will be phasedin over the next 18-24 months.
As expected, one off costs of £2.8 million were incurred in the quarter in delivery of the strategic cost shaping actions taken in the period, partly offset by the gain on the sale of Newark's three calibration laboratories as part of a strategic agreement with Transcat, Inc.
The group achieved return on sales of 10.7% for the quarter, which representscontinued leadership in our industry. MDD North America achieved an operatingprofit of £7.9 million in the quarter compared with £12.3 million in the wholeof 2009/10, clear evidence of the impact of our strategy even in times of lowersales growth. Year to date operating profit in MDD North America is £24.2mversus £20.9m last year. Our MRO business has continued to show strength and we have been able tobalance the late cycle opportunity in MRO with our strategic focus on EDE andthe profitable MRO segments. Through focus on the key tactical metrics ofstrategic delivery - web penetration and growth in our EDE active customer base- we will ensure continued performance and increased resilience. As we continue to manage our working capital to reflect market conditions ourcash generation in Q3 was strong - at 103.1% of operating profit - withimprovement in working capital being targeted in Q4 as our inventory reducestowards our objective of parity with the previous year end. As in anychallenging market we remain committed to ensuring our service levels aremaintained and that we have the right inventory to grow when we exit thisperiod of slower growth. The execution of our strategy is even more relevant in challenging marketconditions and we continue to invest strategically. We can report threedevelopments that bring new capabilities to the group that will significantlyenhance our already differentiating proposition in building an ecosystem whereEDE engineers research, work, design and order using a single trusted source ofinformation, tools, solutions and product: Firstly, the group has entered into conditional contracts(a)for the acquisitionof Shenzhen Embest Technology Co Ltd with gross assets of approximately £0.5million (at current exchange rates). This acquisition will further strengthenour ability to provide EDE customers with value added services. Embest is atechnology company focusing on the design, development and marketing ofembedded development tools, reference designs and engineering design servicesto more than 20,000 customer contacts in China, with a rapidly expandinginternational business. EDE's globally require integrated development systemsand good reference designs to improve their design efficiency and acceleratetheir product development cycle and well made development kits, evaluationboards and reference solutions for key processor technologies are key factorsin influencing the choice of core processors and platforms. Through thisacquisition Premier Farnell becomes a strategic partner to many of the world'sleading semiconductor suppliers including Texas Instruments, Amtel andFreescale as a provider of reference solutions for their new product andtechnologies. Secondly, since the quarter end the group has also entered into an agreementwith ARM - the global leader in semiconductor IP, to distribute ARM's portfolioof development tools, software and evaluation boards across the Americas. Thisnew franchise represents a significant step forward in the Group's evolution tobecome a provider of not just product, but also software, services andtechnology solutions. Thirdly, building on strong third quarter sales growth of 40.0% from CadSoft aswe develop the business internationally with our global EDE customers, we willshortly be launching version 6 of the CadSoft Eagle PCB CAD software. This willprovide significant structural and functional enhancements in design capabilityand integration with our other services. The acquisition of Embest, the addition of key partners like ARM and thedevelopment of CadSoft Eagle, combined with the disposal of Newark'scalibration laboratories in Q3 and TPC Wire and Cable in Q1, demonstrates ourcommitment to focussing our energy and resources on driving our strategy. Wewill continue to invest in the future of our business through acquisition, thedevelopment of our differentiating EDE proposition, our eCommerce capabilityand our people.
Finally, our financial position has been further strengthened following thesuccessful refinancing of our banking facilities with a £200 million facilityexpiring in October 2016 now in place. In addition we have issued $235 millionUS Private Placement notes at fixed rates of 3.0%, 4,36% and 4.86% over 5, 7and 10 years (respectively). The funding put in place is at rates that are lessexpensive than the existing facilities and gives us the flexibility to repaymore expensive debt. This refinancing also gives us additional confidence inexecuting the strategy in these uncertain times. Other Distribution Businesses Third quarter sales at CPC grew strongly at 8.9%, driven by continued customeracquisition, with the number of active customers growing 10.5% on the prioryear. eCommerce accounted for 48.2% of total sales, a new high for the businessas sales via the web grew 18.9% year on year, supported by the introduction ofe-based solutions including optical character recognition. Sales from highermargin, private label products grew 16.8% year on year, in part driven by theaddition of 1,000 own branded products in the quarter. MCM experiencedchallenging market conditions in the third quarter, with sales falling againststrong Q3 comparators by 12.6% year on year. Strengthening the MCM managementteam in the quarter, together with a focussed drive on enhancing marketingeffectiveness, will ensure progress continues to be made in reducing relianceon larger customers and in increasing resilience.
Industrial Products Division (IPD)
Akron Brass continued to achieve positive year on year sales growth, up 3.2% inQ3 - its fourth consecutive quarter of year on year growth. Stronginternational sales continue to support growth - with year to date sales growthof 39.5%, aided by the business' sales offices in China and Dubai. New productdevelopment remains key to the differentiation of Akron's proposition andcomprised 21.9% of sales in the quarter, up from 15.8% in the first half.
Outlook
The quarter's profit was in line with our expectations, compared with lastyear's strong performance. Although we remain cautious on the global economicoutlook, the business has responded well to the challenging environment and weremain focused on margin management, improving our cost ratios and investing inour strategy. As markets remain uncertain it is encouraging to note that ourstrategy delivered third quarter operating profit up 40.2% on two years agowhen markets were similarly challenged with sales up by 21.8% over the sameperiod.
November sales per day showed progression on Q3 but a small decline from November of last year. Gross Margin was up from Q3 levels.
The balance sheet has also been further strengthened through the successfulrefinancing of our bank facilities and the raising of $235m through US privateplacement notes. This provides the company with the flexibility to repay shortterm debt and the confidence to execute its plans. Through focus on the strategic delivery of our key metrics - web penetrationand growing our EDE active customer base and growth in profitable MRO segments- Premier Farnell has proven its resilience and agility through the economiccycle, maintaining an industry leading return on sales and with a track recordof acting swiftly and decisively to shape our business. This will allow us tocontinue to generate cash and benefit strongly from the recovery whenconfidence returns
3 Year Success Metrics
Our performance against our 3 year success metrics is as follows:
Key Performance Indicators Goal Achieved in Q3 Achieved in 9M
Sales per day growth 6-8% -1.4% 2.7% Gross margin % Stability 38.6% 39.7% 11.1% (MDD Return on sales % 12%-15% 10.7% (MDD 11.7%) 12.2%) Return on net operating assets % >30% 38.5% 38.5% Working capital as a % of sales
Completion of the purchase is subject, amongst other things, to obtaining a number of regulatory and Chinese government licences and approvals and is anticipated to take place in early 2012. The consideration will be paid in cash to the individual shareholders.
Financial Results Note: The disposal of the TPC Wire & Cable (TPC) business, part of theIndustrial Products Division, at the start of the financial year (31 January2011), does not qualify for accounting treatment as a discontinued operation.References below, including the Operations Review, to adjusted sales, profit,cash and ratios exclude the results of TPC Wire & Cable in respect of previousperiods and the gain on sale in the current period. In addition, referencesbelow to adjusted numbers also exclude current year, third quarterreorganisation costs of £2.8 million and the gain by Newark from the strategicsale of its three calibration laboratories of £1.1million. RevenueNine Months Sales for the nine months were £739.7 million (2010/11 adjusted sales: £733.0million). At constant exchange rates, adjusted sales in the prior year were £722.2 million, resulting in growth this year of 2.7%. The average exchange rate for the US dollar against sterling was $1.61 (2010/11: $1.54) and the average exchange rate for the Euro against sterling was
€1.14 (2010/11: €1.17). Third Quarter Sales for the third quarter were £241.8 million (2010/11 adjusted sales: £246.0million). At constant exchange rates, adjusted sales in the prior year were £246.1 million, resulting in third quarter decline this year of 1.4%. The average exchange rate for the US dollar against sterling was $1.60 (2010/11: $1.58) and the average exchange rate for the Euro against sterling was
€1.15 (2010/11: €1.17). Margins and Operating ProfitNine Months Gross margin for the nine months was 39.7%, compared with adjusted gross marginof 40.5% in the same period in the prior year and the long term average grossmargin percentage of 39.7% over the last four years. Adjusted net operatingexpenses for the nine months were 28.7% of sales compared with 29.5% in thesame period in the prior year. Adjusted operating profit was £81.8 million(2010/11: £81.1 million), producing an operating margin of 11.1% in line withthe prior year.
There was an adverse impact on operating profit of £1.6 million from the translation of overseas results compared with the prior year. At constant exchange rates, adjusted operating profit increased by 2.9% on the prior year.
Total operating profit for the nine month period was £97.9 million (2010/11: £ 83.8 million), reflecting the gain on sales of businesses, less one-off restructuring costs of £2.8 million, an increase of 19.2% year on year.
Third Quarter
Gross margin for the third quarter was 38.6%, compared with adjusted grossmargin of 40.7% in the third quarter of the prior year. Adjusted net operatingexpenses in the third quarter were 27.9% of sales compared with 29.6% in thethird quarter of the prior year. Adjusted operating profit was £25.8 million(2010/11: £27.4 million), producing an operating margin of 10.7% compared with11.1% in the third quarter of the prior year. At constant exchange rates,adjusted operating profit decreased by 5.8% compared with the third quarter
ofthe prior year. Total operating profit in the quarter, was £24.1 million, reflecting a £1.1million gain following the sale of Newark's three calibration laboratories toTranscat, Inc. as a result of a strategic agreement, offset by £2.8 million ofone-off restructuring costs (severance), both of these having being highlightedin the second quarter statement.
Foreign Currency Impact
A one cent movement in the exchange rate between the US dollar and sterlingimpacts the Group's operating profit by approximately £250,000 per annum, and aone cent movement in the exchange rate between the Euro and sterling impactsthe Group's operating profit by approximately £500,000 per annum.
Finance Costs
Net finance costs in the nine months were £13.6 million (2010/11: £14.2million). This comprises net interest payable of £10.3 million (2010/11: £10.9million), which was covered 9.5 times by total operating profit or 7.9 times byadjusted operating profit, and a net charge of £2.7 million (2010/11: £2.7million) in respect of the Company's convertible preference shares.
Profit Before Tax
Adjusted profit before tax in the nine months was £68.2 million (2010/11: £66.9million), an increase of 1.9% on the prior year. Total profit before tax inthe period was £84.3 million (2010/11: £69.6 million), including a gain of £17.8 million from the sale of TPC in the first quarter. Adjusted profit before tax in the third quarter was £21.1 million (2010/11: £22.7 million), a decrease of 7.0% on the prior year. Total profit before taxin the quarter was £19.4 million (2010/11: £23.6 million).
Taxation Charge
Excluding the impact of one-off items, the taxation charge for the quarter wasat the estimated effective rate for the current financial year of 27.5% (2010/11: 28.0%) of profit before tax and preference dividends.
Disposal of businesses
On 31 January 2011, the Group completed the sale of the entire issued sharecapital of TPC Wire & Cable Corp. ("TPC") to Pfingsten Partners LLC for a totalcash consideration of $43 million. The sale of TPC, a leading US distributor ofindustrial wire and cable and part of IPD, is part of the Group's core strategyto focus on the EDE and profitable MRO markets. The sale of TPC does not qualify for accounting treatment as a discontinuedoperation. The provisional pre-tax gain on the sale amounts to £17.8 million,and is included in net operating expenses, and the estimated tax charge arisingon the gain is £2.8 million. The trading results of TPC in 2010/11 were notmaterial to the Group, with full year sales of £20.7 million and a full yearoperating profit of £3.6 million. On 7 September, the Group entered into a strategic agreement with Transcat Incto provide calibration services to our customers in Canada and the USA. Underthe terms of the agreement, Transcat purchased the assets of Newark's threeexisting calibration laboratories for a gross consideration of $3 million.
Return on Net Operating Assets
The return on net operating assets for the nine months was 38.5% (2010/11: 41.8%), compared with our strategic target of greater than 30%.
Earnings per Share
Adjusted earnings per share for the nine months were 13.4 pence (2010/11 earnings per share, adjusted to eliminate the trading results of TPC, 13.2 pence). Basic earnings per share for the period were 17.2 pence (2010/11: 13.7 pence).
Adjusted earnings per share for the third quarter were 4.2 pence (2010/11 4.4pence). Basic earnings per share for the quarter were 3.8 pence (2010/11: 4.6pence).
Cash Flow and Net Financial Liabilities
Conversion of operating profit into operating cash flow at 103.1% (2010/11:99.6%) represented a strong performance, with improvement in working capitalexpected in the fourth quarter as our inventory reduces to reflect the lowergrowth environment. Total cash generated from operations in the third quarter was £25.4 million or£26.6 million excluding the impact of restructuring costs (2010/11: £28.0million or £28.2 million excluding the impact of previous years restructuringcosts). Free cash flow for the quarter, being cash generated from continuingoperations less net capital expenditure, interest, and tax, was £14.2 million(excluding the impact of restructuring costs) (2010/11: £13.9 million). Ourfree cash flow to sales ratio in the quarter was 5.9%. Net financial liabilities at the end of the quarter were £256.8 million (30January 2011: £262.9 million), including £61.6 million (30 January 2011: £61.0million) attributable to the company's preference shares. This represents aratio of net debt to EBITDA of 2.0. The impact of exchange rates in the ninemonths was to decrease net financial liabilities by £1.4 million, principallyin relation to our US$ denominated private placement loan notes.
Financial Position
Premier Farnell's financial position remains robust with good liquidity andstrong free cash flow.Just after the quarter end, the company has successfullyrefinanced with a 5 year £200m revolving bank facility. The company hasfurther strengthened its balance sheet by issuing $235m of 5 to 10 year USprivate placement notes. The funding put in place is less expensive than theexisting facilities and provides the company with flexibility and options torepay short term debt and reduce the longer term cost of borrowing. Operations
Marketing and Distribution Division (MDD)
(Newark and Farnell businesses including element14, CPC and MCM)
Q3 11/12 Q3 10/11 Q3 growth 9M 11/12 9M 10/11 9M £m £m £m £m Growth Revenue 226.2 230.8 -1.7% 693.3 685.9 2.7% Adjusted operating profit 26.5 28.8 -8.1% 84.8 84.0 2.8% Adjusted operating margin % 11.7% 12.5% 12.2% 12.2% Against high sales comparators last year, when we saw sales grow 25.2%, thirdquarter sales in the MDD division declined by 1.7%, although absolute sales perday increased through the quarter with October well above year to date salesper day. When compared with the pre-recessionary sales levels in the secondquarter of financial year 2008/09, sales from our electronics distributionbusinesses have grown 8.4%. In the first nine months our MDD sales growth was2.7% (2010/11: 26.2%) with operating profit growth of 2.8%. The Semiconductor Industry Association reported a year on year decline globallyof 1.8% for the three months to October and November global PMI data of 49.6indicates continued reduced purchasing activity. Market conditions for theremainder of the year remain unclear. However, with our active customer basecontinuing to grow, up 3.8% for the quarter year on year - our only forwardlooking metric - we are well positioned to maximise the available opportunity. We continue to maintain our strategic focus on EDE, and profitable MRO and havemanaged our growth and profitability by participating only in activities thatmatch our strategic criteria. As we balance the late cycle opportunity in MROwith our strategic focus on EDE and the profitable MRO segments our EDEpenetration in the quarter reduced to 50%. This represents a temporaryfluctuation at this stage in the cycle. Sales in the division's international markets have continued to deliver stronglong term growth and in the key emerging markets of China, India and EasternEurope, together with sales from our new web-based markets of Taiwan, Thailandand South Korea, combined third quarter sales grew 23.7%.
Our global software business, CadSoft, saw sales grow 40.0% in the third quarter, clearly demonstrating the future potential of our strategic drive in "services beyond product".
All the distribution businesses have continued to drive growth via the web,with MDD web sales growing 11.8% in the quarter and eCommerce now accountingfor 56.0% of total MDD sales. Our European business achieved 74.2% eCommercepenetration in the quarter. MDD Americas(Newark) Q3 11/12 Q3 10/11 Q3 growth 9M 11/12 9M 10/11 9M £m £m £m £m growth Revenue 93.1 98.7 -4.6% 281.4 294.9 -0.7% Adjusted operating profit 7.9 7.9 0.7% 24.2 20.9 21.2% Adjusted operating margin % 8.5% 8.0% 8.6% 7.1% MDD Americas continued to make progress in difficult market conditions, thoughagainst strong comparators the third quarter saw sales decline 4.6%. Despitechallenging conditions for sales growth MDD Americas again delivered year onyear profit growth, with the nine months showing growth of 21.2%. Return onsales improved on the second quarter to 8.5%, up from 8.0% on the third quarterlast year and from the 4.0% achieved in the third quarter two years ago. The business remains focussed on its EDE proposition, supported by actions todrive the Global Product Segment Strategy around lighting and alternativeenergy, and the continued addition of new products. Additionally, progresscontinues in transitioning sales from the more commoditised, less profitableMRO market segments, towards the higher growth, more profitable market segmentswithin the MRO sector.
The improved profitability of the business is driven by our progression to theweb and our cost optimisation activities. In the third quarter web sales grew3.3% year on year with eCommerce now accounting for 39.6% of total sales.Newark significantly improved its online catalogue during the quarter which nowincludes live stock and pricing feeds and an ipad version. MDD Europe and Asia Pacific(Farnell and element14) Q3 11/12 Q3 10/11 Q3 growth 9M 11/12 9M 10/11 9M £m £m £m £m growth Revenue 107.5 107.0 -0.1% 338.3 317.8 5.8% Adjusted operating profit 16.1 18.6 -13.9% 53.9 56.2 -3.2% Adjusted operating margin % 15.0% 17.4% 15.9% 17.7% Sales in the third quarter were flat year on year and up 5.8% in the nine monthperiod. Web sales grew 14.0% in the third quarter, with eCommerce penetrationfor the division now at 71.8% with Europe continuing to surpass our successmetric of 70%. The division's operating margin remains strong, at 15.0% forthe quarter and 15.9% year to date. Revenue by region Q3 11/12 Q3 10/11 Q3 growth 9M 11/12 9M 10/11 9M £m £m £m £m growth UK 30.0 28.8 4.2% 92.2 85.1 9.0% Rest of Europe (incl 61.8 62.2 -1.0% 197.3 183.7 6.8% exports) Asia Pacific 15.7 16.0 -3.6% 48.8 49.0 -3.1% Note: sales analysis has been revised to reflect export sales in Rest of Europein order to give a more appropriate geographic split. Comparatives have beenrestated accordingly. Sales in the European business, including the UK, grew 0.6% year on year, withthe UK reporting growth of 4.2%. Excluding the UK, Europe declined by 1.0% yearon year in the quarter - impacted by the sentiment that has now seen EurozonePMIs below 50 and declining for 7 consecutive months and is compared withgrowth of 39.3% in Q3 last year. This strong UK growth compares to the mostrecent data from the Association of Franchised Distributors of ElectronicComponents (AFDEC) who reported a sales decline of 7.5% for the same period.Overall, our growth in Europe continues to outperform the growth seen in thewider European semiconductor market, where the SIA reported that sales declinedby 7.7% in the three months to October and the Distributors' and Manufacturers'Association of Semiconductor Specialists (DMASS) reported a calendar thirdquarter decline in Europe of 4.4%. Third quarter web sales in the region grew14.3% year on year as the business continues to surpass its success metric ofover 70% of sales through eCommerce channels, with the third quarter at 74.2%.The business continues to capitalise on the significant opportunities forgrowth in Eastern Europe with year on year sales growth of 23.3%. In Asia Pacific sales declined 3.6% in the quarter, against sales growth of31.0% last year but moved in to positive growth in October. Third quarter websales in the region grew 12.2% with eCommerce penetration now at 58.5%. BothSingapore's and Malaysia's absolute sales per day were flat through thequarter. The organisational changes required to drive new customer acquisitionand web conversion have taken place and we saw the regions active customergrowth improve sequentially on the second quarter with year on year growth
ofover 8% in Singapore.
Other Distribution Businesses
(CPC and MCM) Q3 11/12 Q3 10/11 Q3 growth 9M 11/12 9M 10/11 9M £m £m £m £m growth Revenue 25.6 25.1 2.7% 73.6 73.2 2.2% Adjusted operating profit 2.5 2.3 9.0% 6.7 6.9 -1.9% Adjusted operating margin % 9.8% 9.2% 9.1% 9.4%
CPC continued with its strong performance despite the uncertain UK consumermarket conditions, with sales growth in the quarter of 8.9%, up 4.7% on thesecond quarter. This was driven by marketing activities to increase customeracquisition and life cycle management which have resulted in the total numberof active spending accounts increasing 10.5% on the prior year and the numberof new spending accounts increasing by 25.5%. Focus on improving the customerexperience on the web has also supported the sales performance with effectiveonline marketing and the introduction of e-based solutions including opticalcharacter recognition. As a result web sales grew 18.9% and eCommerce salesaccounted for 48.2% of sales, an increase of 5.1 percentage points over thesecond quarter. In challenging market conditions, third quarter sales at MCM declined 12.6%year on year, with sales per day stable through the period. A strengthening ofthe MCM management team, together with an increased focus on improvingmarketing effectiveness, by collaborating with CPC and leveraging CPC'ssuccessful initiatives, will ensure the business becomes less reliant on largercustomers and increasing resilience. Enhancements to MCM's web site resultedin web sales growing 14.5% year on year and eCommerce penetration increasing to45.6% in the quarter compared with 41.8% in the second quarter. Improvements incustomer experience including same day shipping, speed of order handling andimproved quality delivery, have all contributed to a significant improvement incustomer feedback throughout the period.
Industrial Products Division (IPD)
(Akron Brass) Q3 11/12 Q3 10/11 Q3 growth 9M 11/12 9M 10/11 9M £m £m £m £m growth Revenue 15.6 15.2 3.2% 46.4 47.1 3.2% Adjusted operating profit 2.5 2.4 7.4% 7.1 7.6 -1.3% Adjusted operating margin % 16.0% 15.8% 15.3% 16.1% Sales at Akron Brass grew 3.2% in the quarter, the fourth consecutive quarterof positive year on year growth despite the ongoing highly challengingconditions in the US fire truck market, with government spending being severelycurtailed and new fire truck shipments having declined by 16% year on year.This outperformance is supported by Akron's continued and successful strategicdrive into international markets with over 30% of sales now coming from thesemarkets. Overall, sales outside the US grew 28.1% year on year in the quarterwith key markets including China, and South East Asia all of which grewstrongly. The business is now recognised as a key importer into China of highperformance monitors to aerial fire track manufacturer. Akron's performance issupported by new product development with new product sales representing 21.9%of total sales in the quarter, as the business continues to lead innovation
inits market.
This press release contains certain forward-looking statements relating to thebusiness of the Group and certain of its plans and objectives, including, butnot limited to, future capital expenditures, future ordinary expenditures andfuture actions to be taken by the Group in connection with such capital andordinary expenditures, the expected benefits and future actions to be taken bythe Group in respect of certain sales and marketing initiatives, operatingefficiencies and economies of scale. By their nature forward-lookingstatements involve risk and uncertainty because they relate to events anddepend on circumstances that will occur in the future. Actual expendituresmade and actions taken may differ materially from the Group's expectationscontained in the forward-looking statements as a result of various factors,many of which are beyond the control of the Group. These factors include, butare not limited to, the implementation of initiatives supporting the Group'sstrategy, the effect of legislation and regulatory enactments, recruitment andintegration of new personnel, the implementation of cost-saving initiatives,continued use and acceptance of e-commerce programs and systems, implementationof new IT systems, 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 third quarter and nine months ended 30 October 2011 2011/12 2010/11 2011/12 2010/11 2010/11 Third Third Nine Nine Full quarter quarter months months year unaudited unaudited unaudited unaudited audited Notes £m £m £m £m £m Continuing operations Revenue 2 241.8 251.3 739.7 748.3 990.8 Cost of sales (148.5) (148.0) (445.9) (442.1) (583.3) Gross profit 93.3 103.3 293.8 306.2 407.5 Net operating expenses
- before restructuring costs and gains on disposal of businesses (67.5) (75.0) (212.0) (222.4) (295.4) - restructuring costs 3 (2.8) - (2.8) - - - gains on disposal of businesses 3,4 1.1 - 18.9 - - Total net operating expenses (69.2) (75.0) (195.9) (222.4) (295.4) Operating profit
- before restructuring costs and gains on disposal of businesses 25.8 28.3 81.8 83.8 112.1 - restructuring costs 3 (2.8) - (2.8) - - - gains on disposal of businesses 3,4 1.1 - 18.9 - - Total operating profit 2 24.1 28.3 97.9 83.8 112.1
Finance income (interest receivable) - -
- 0.1 0.1 Finance costs - interest payable (3.6) (3.6) (10.3) (11.0) (14.6) - preference dividends (0.9) (0.9) (2.7) (2.7) (3.5) - premium on redemption of preference shares (0.2) (0.2) (0.6) (0.6) (0.8) Total finance costs (4.7) (4.7) (13.6) (14.3) (18.9) Profit before taxation 3 19.4 23.6 84.3 69.6 93.3 Taxation 5 (5.7) (6.8) (21.9) (20.2) (27.1)
Profit for the period (attributable
to ordinary shareholders) 13.7 16.8 62.4 49.4 66.2 Earnings per share 6 Basic 3.8p 4.6p 17.2p 13.7p 18.3p Diluted 3.7p 4.6p 16.9p 13.5p 18.0p Ordinary dividends Interim - proposed 4.4p 4.4p 4.4p Final - proposed 6.0p Paid 10.4p 9.6p 9.6p Impact on shareholders' funds (£m) 37.8 34.7 34.7 Condensed Consolidated Statement of Comprehensive Income
For the third quarter and nine months ended 30 October 2011
2011/12 2010/11 2011/12 2010/11 2010/11 Third Third Nine Nine Full quarter quarter months months year unaudited unaudited unaudited unaudited audited £m £m £m £m £m Profit for the period 13.7 16.8 62.4 49.4 66.2 Net exchange adjustments (0.2) 0.8 (0.1) 1.6 3.6
Recycling of cumulative translation adjustments on disposal of subsidiary
undertaking - - (0.8) - -
Actuarial losses on pensions and other
post-retirement obligations (3.9) - (8.4) - (0.7)
Deferred tax credit on actuarial losses on pensions and other post retirement
obligations 1.2 - 2.5 - 0.3
Deferred tax credit on share-based
payments - - - - 2.3
Net fair value losses on cash flow hedges - (4.3)
(0.4) (1.8) (1.2)
Other comprehensive income for the
period (2.9) (3.5) (7.2) (0.2) 4.3
Total comprehensive income for the period (attributable to ordinary
shareholders) 10.8 13.3 55.2 49.2 70.5
The accompanying notes form an integral part of this unaudited condensed consolidated financial information.
Condensed Consolidated Balance Sheet As at 30 October 2011 30 October 31 October 30 January 2011 2010 2011 unaudited unaudited audited Notes £m £m £m ASSETS Non-current assets Goodwill 34.3 34.8 34.8 Other intangible assets 28.7 23.2 24.3 Property, plant and equipment 52.6 53.2 54.4 Deferred tax assets 15.0 12.2 13.9 Total non-current assets 130.6 123.4 127.4 Current assets Inventories 224.4 206.0 214.7
Trade and other receivables 148.5
153.4 141.4 Cash and cash equivalents 7 62.8 50.9 33.4
Total current assets (excluding assets of disposal group classified as held for sale) 435.7
410.3 389.5
Assets of disposal group classified as held for sale - - 8.7 Total current assets 435.7 410.3 398.2 LIABILITIES Current liabilities Financial liabilities 7 (1.8) (1.5) (1.3) Trade and other payables (123.6) (135.2) (126.6) Current tax payable (22.9) (27.8) (23.6)
Total current liabilities (excluding liabilities of disposal group classified as
held for sale) (148.3) (164.5) (151.5) Liabilities of disposal group classified as held for sale - - (0.9) Total current liabilities (148.3) (164.5) (152.4) Net current assets 287.4 245.8 245.8 Non-current liabilities Financial liabilities 7 (317.8) (315.7) (295.0) Retirement and other post-employment benefits (42.6) (36.4) (36.3) Deferred tax liabilities (3.5) (3.1) (3.5) Total non-current liabilities (363.9) (355.2) (334.8) NET ASSETS 54.1 14.0 38.4 EQUITY Ordinary shares 18.5 18.4 18.4 Equity element of preference shares 10.4 10.4 10.4 Share premium 31.1 28.1 28.5 Capital redemption reserve 4.4 4.4 4.4 Hedging reserve (1.2) (1.4) (0.8) Cumulative translation reserve 19.1 18.0 20.0 Retained earnings (28.2) (63.9) (42.5) TOTAL EQUITY 54.1 14.0 38.4 Consolidated Statement of changes in Equity For the nine months ended 30 October 2011 2011/12 2010/11 2010/11 Nine Nine Full months months year unaudited unaudited audited £m £m £m
Total equity at beginning of period 38.4 (8.5)
(8.5) Profit for the period 62.4 49.4 66.2 Other comprehensive expense (7.2) (0.2) 4.3 Total comprehensive income 55.2 49.2 70.5 Transactions with owners: Ordinary dividends paid (37.8) (34.7) (34.7) Ordinary share capital subscribed 2.7 4.0 4.4 Purchase of ordinary shares (5.8) - - Share-based payments 1.4 4.0 6.7
Total transactions with owners (39.5) (26.7)
(23.6)
Total equity at end of period 54.1 14.0
38.4
The accompanying notes form an integral part of this unaudited condensed consolidated financial information. Condensed Consolidated Statement of Cash Flows For the third quarter and nine months ended 30 October 2011 2011/12 2010/11 2011/12 2010/11 2010/11 Third Third Nine Nine Full quarter quarter months months year unaudited unaudited unaudited unaudited audited Notes £m £m £m £m £m Cash flows from operating activities Operating profit 24.1 28.3 97.9 83.8 112.1
Less: gain on disposal of businesses included in arriving
at operating profit (1.1) - (18.9) - - Restructuring: - net income statement impact 2.8 - 2.8 - - - cash impact (1.2) (0.2) (1.2) (0.7) (0.8) Non-cash impact of restructuring 1.6 (0.2) 1.6 (0.7) (0.8) Depreciation and amortisation 5.0 4.7 13.7 14.2 19.1 Changes in working capital (4.0) (5.3)
(24.5) (23.2) (31.7)
Additional funding for post retirement defined benefit plans (0.9) (0.9) (2.4) (2.9) (3.9) Other non-cash movements 0.7 1.4 1.5 4.6 7.2 Total cash generated from operations 25.4 28.0 68.9 75.8 102.0 Interest received - - - 0.1 0.1 Interest paid (1.1) (1.3) (7.0) (8.0) (12.7) Dividends paid on preference shares - - (1.8) (1.8) (3.5) Taxation paid (5.6) (6.7) (20.4) (20.8) (29.6) Net cash generated from operating activities 18.7 20.0 39.7 45.3 56.3 Cash flows from investing activities
Net (outflow) / inflow from disposal of businesses (net of
tax paid) (0.3) - 24.6 - - Proceeds from sale of property, plant and equipment - - 1.3 - - Purchase of property, plant
and equipment (2.8) (3.3) (6.6) (5.8) (8.6)
Purchase of intangible assets (computer software) (2.9) (3.0) (11.4) (6.8) (10.5) Net cash used in investing activities (6.0) (6.3) 7.9 (12.6) (19.1) Cash flows from financing activities Purchase of ordinary shares - - (5.8) - - Issue of ordinary shares - 0.9 2.7 4.0 4.4 New borrowings 51.8 11.0 79.1 67.8 67.8 Repayment of borrowings (39.5) -
(58.2) (43.4) (67.8)
Dividends paid to ordinary shareholders (16.0) (15.9) (37.8) (34.7) (34.7) Net cash used in financing activities (3.7) (4.0) (20.0) (6.3) (30.3) Net increase in cash, cash equivalents and bank overdrafts 9.0 9.7 27.6 26.4 6.9 Cash, cash equivalents and bank overdrafts at beginning of period 50.6 41.4 33.4 25.4 25.4 Exchange gains/(losses) 3.2 0.4 1.8 (0.3) 1.1 Cash, cash equivalents and bank overdrafts at end of period 62.8 51.5 62.8 51.5 33.4 Reconciliation of net financial liabilities Net financial liabilities at beginning of period (262.9) (264.2) (264.2) Net increase in cash, cash equivalents and bank overdrafts 27.6 26.4 6.9 Increase in debt (20.9) (24.4) - Premium on redemption of preference shares (0.6) (0.6) (0.8) Derivative financial instruments - (2.0) (1.8) Amortisation of arrangement fees (1.4) (1.4) (2.0) Exchange movement 1.4 (0.1) (1.0) Net financial liabilities at end of period 7
(256.8) (266.3) (262.9) The accompanying notes form an integral part of this unaudited condensed consolidated financial information. Notes Basis of 1 preparation
The unaudited condensed financial information in this report has been
prepared based on International
Financial Reporting Standards (IFRSs), as adopted by the European Union, and
applying the accounting policies disclosed in the Group's 2011 Annual Report and Accounts on pages 100 to 103. There are no new standards or amendments to standards which are mandatory for the first time in the current financial year which would have a significant impact on the Group. 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 30 January
2011 have been delivered to the Registrar of Companies. The report of the
auditors on those accounts
was unqualifiied and did not contain any statement under Section 498 of the
Companies Act 2006. Copies
of the Company's 2011 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. Segment information 2 (unaudited) Third Quarter 2011/12 2010/11 Before Restructuing Gain After restructuring costs on restructuring Third and gain (note 3) disposal and gain quarter on disposal of of businesses on disposal businesses (note 4) of businesses £m £m £m £m £m Revenue Marketing and Distribution Division Americas 93.1 - - 93.1 98.7 Europe and Asia Pacific 107.5 - - 107.5 107.0 Other Distribution Businesses 25.6 - - 25.6 25.1 Total Marketing and Distribution Division 226.2 - - 226.2 230.8 Industrial Products Division 15.6 - - 15.6 20.5 241.8 - - 241.8 251.3 Operating profit Marketing and Distribution Division Americas 7.9 (0.3) 1.1 8.7 7.9 Europe and Asia Pacific 16.1 (2.2) - 13.9 18.6 Other Distribution Businesses 2.5 (0.1) - 2.4 2.3 Total Marketing and Distribution Division 26.5 (2.6) 1.1 25.0 28.8 Industrial Products Division 2.5 - - 2.5 3.3 Head Office costs (3.2) (0.2) - (3.4) (3.8) 25.8 (2.8) 1.1 24.1 28.3 Nine months 2011/12 2010/11 Before Restructuing Gain After Nine restructuring costs on restructuring months and gain (note 3) disposal and gain on disposal of of businesses on disposal businesses (note 4) of businesses £m £m £m £m £m Revenue Marketing and Distribution Division Americas 281.4 - - 281.4 294.9 Europe and Asia Pacific 338.3 - - 338.3 317.8 Other Distribution Businesses 73.6 - - 73.6 73.2 Total Marketing and Distribution Division 693.3 - - 693.3 685.9 Industrial Products Division 46.4 - - 46.4 62.4 739.7 - - 739.7 748.3 Operating profit Marketing and Distribution Division Americas 24.2 (0.3) 1.1 25.0 20.9 Europe and Asia Pacific 53.9 (2.2) - 51.7 56.2 Other Distribution Businesses 6.7 (0.1) - 6.6 6.9 Total Marketing and Distribution Division 84.8 (2.6) 1.1 83.3 84.0 Industrial Products Division 7.1 - 17.8 24.9 10.3 Head Office costs (10.1) (0.2) - (10.3) (10.5) 81.8 (2.8) 18.9 97.9 83.8 2010/11 Full year £m Revenue Marketing and Distribution Division Americas 386.3 Europe and Asia Pacific 423.5 Other Distribution Businesses 98.0 Total Marketing and Distribution Division 907.8 Industrial Products Division 83.0 990.8 Operating profit Marketing and Distribution Division Americas 29.1 Europe and Asia Pacific 74.7 Other Distribution Businesses 9.3 Total Marketing and Distribution Division 113.1 Industrial Products Division 14.2 Head Office costs (15.2) 112.1
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.
3 Profit before taxation
Profit before taxation is stated after the following:
2011/12 2010/11 2011/12 2010/11 2010/11 Third Third Nine Nine Full quarter quarter months months year unaudited unaudited unaudited unaudited audited £m £m £m £m £m One-off (charges)/credits: - Restructuring costs (2.8) - (2.8) - - - Gains on disposal of businesses (note 4) 1.1 - 18.9 - - (1.7) - 16.1 - -
Due to their significance, restructuring costs and the gains on disposal of businesses have been disclosed separately on the face of the income statement.
4 Gain on disposal of businesses
On 31 January 2011, the Group disposed of TPC Wire & Cable ("TPC"), part of
the Industrial Products Division,
to Pfingston Partners LLC for a cash consideration payable on completion of
$43 million (before costs). The disposal of TPC does not qualify as a discontinued operation under IFRS 5 "Non-current Assets Held for Sale
and Discontinued Operations" and consequently the results of TPC for prior
periods are shown within continuing
operations. The provisional gain on disposal of TPC of £17.8 million before
taxation is summarised below. 2011/12 Nine months £m Net sale proceeds 24.6 Net assets disposed of: Goodwill 0.1 Property, plant and equipment 0.5 Inventory 4.9 Trade and other receivables 3.1 Trade and other payables (1.0) Total net assets disposed: 7.6
Gain on disposal before recycling of cumulative translation adjustments and taxation 17.0 Recycling of cumulative translation adjustments 0.8 Provisional gain on disposal before taxation 17.8 Tax on gain on disposal (note 5) (2.8) Provisional gain on disposal 15.0
The gain on disposal includes the recycling of £0.8 million of net cumulative
currency translation adjustments
relating to TPC which were previously posted directly to reserves. During the
prior year, TPC contributed
£20.7 million of sales, £3.6 million of operating profit to the Group's results
and £2.7 million of operating
cash flow. During the third quarter of the prior year, TPC contributed £5.3
million of sales (nine months:
£15.3 million), £0.9 million of operating profit (nine months: £2.7 million)
and £0.9 million of operating cash flow (nine months: £2.4 million).
On 7th September 2011 the Group sold the assets of Newark's three calibration
laboratories as part of a
strategic agreement with Transcat Inc. The disposal consideration was £1.8
million (net of transaction costs)
and resulted in a provisional gain on disposal of £1.1 million. The trading
results of this business was not material to the Group. The provisional taxation charge on the gain on disposal was £0.4 million.
For the first nine months the net cash inflow from the disposal of businesses
was £24.6 million (Q3: net cash
outflow of £0.3 million), comprising TPC net proceeds of £24.9 million less
associated tax paid of £1.8
million (Q3: associated tax paid of £1.8 million), and the net proceeds from
the sale of the calibration laboratories of £1.8 million, less associated tax paid of £0.3 million, all of which arose in Q3. 5 Taxation
The taxation charge is based on an expected effective tax rate for the 2011/12
full financial year on profit before
tax, preference dividends and gain on disposal of businesses of 27.5% (2010/11:
28.0%). In addition, the
provisional taxation charge on the profit on disposal of TPC is £2.8 million
and on the profit on disposal of the three calibration laboratories is £0.4m. 6 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
Permier Farnell Executive Trust. For diluted earnings per share, the weighted
average number of ordinary shares
in issue is adjusted to assume the 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. 2011/12 2010/11 Nine months (unaudited) Nine months (unaudited) Basic Diluted Basic Diluted Earnings share amount share amount Earnings share amount share amount £m pence pence £m pence pence Earnings per share Profit attributable to ordinary shareholders 62.4 17.2 16.9 49.4 13.7 13.5 Restructuring costs 2.8 0.7 0.8 - - - Tax attributable to restructuring costs (0.7) (0.2) (0.2) - - - Gain on disposal of businesses (18.9) (5.2) (5.1) - - - Tax on gain on disposal of businesses 3.2 0.9 0.9 - - - Profit attributable to ordinary shareholders before gain on disposal of subsidiary undertakings and restructuring costs 48.8 13.4 13.3 49.4 13.7 13.5 Number Number Weighted average number of shares 363,000,958 360,859,369 Dilutive effect of share options 5,230,907 6,402,915 Diluted weighted average number of shares 368,231,865 367,262,284 2010/11 Full Year (audited) Basic per Diluted per Earnings share amount share amount £m pence pence Earnings per share
Profit attributable to ordinary shareholders 66.2 18.3
18.0 Number
Weighted average number of shares
361,149,321
Dilutive effect of share options
6,670,893
Diluted weighted average number of
shares 367,820,214
Earnings per share excluding restructuring costs and one-off pension changes have been provided in order to facilitate year on year comparison.
7 Net financial liabilities 30 October 31 October 31 January 2011 2010 2011 unaudited unaudited audited £m £m £m Cash and cash equivalents 62.8 50.9 33.4 Unsecured loans and overdrafts (256.8)
(255.0) (234.1)
Net financial liabilities before preference shares and derivatives (194.0) (204.1) (200.7) Preference shares (61.6) (60.8) (61.0) Derivative financial instruments (net) (1.2) (1.4) (1.2) Net financial liabilities (256.8) (266.3) (262.9) Net financial liabilities are analysed in the balance sheet as follows: Current assets Cash and cash equivalents 62.8 50.9 33.4 Current liabilities Other loans (0.6) (0.1) (0.1) Derivative financial instruments (1.2) (1.4) (1.2) (1.8) (1.5) (1.3) Non-current liabilities Bank loans (78.9) (132.3) (109.9) 5.9% US dollar Guaranteed Senior Notes payable 2013 (99.3) (99.4) (100.6) 5.2% US dollar Guaranteed Senior Notes payable 2017 (18.9) (18.8) (19.0) 3.0% US dollar Guaranteed Senior Notes payable 2016 (53.5) - - Other loans (5.6) (4.4) (4.5) Preference shares (61.6) (60.8) (61.0) (317.8) (315.7) (295.0)
On 18 August 2011 the Group issued US Private Placement Notes of $85 million
with an expiry period of up to
5 years bearing an interest coupon of 3% per annum for the first three years
and thereafter semi-annual floating interest rate plus a margin of 1.75% until maturity in 2016.
At 30 October 2011, the Group's syndicate bank facilities totalled £185 million
expiring in January 2013. Based
on these facilities, the headroom on bank borrowings at 30 October 2011 was £
106 million. The Group is also party to a $75 million US Private Placement Shelf Facility. This agreement allows loan notes with an expiry period
of up to 10 years to be issued in the period up to 31 March 2012. At 30 October
2011, a total of $30 million had been drawn down on this facility.
On 2 November 2011 the Group's syndicated bank facilities of £185 million were
replaced with a new syndicate
bank facility of £200 million expiring 28 October 2016. The Group also issued
on 15 November US Private
Placement Notes of $58.5 million bearing an interest coupon of 4.36% with an
expiry period of 7 years and US
Private Placement Notes of $98.5 million bearing an interest coupon of 4.83%
with an expiry period of 10 years.
8 Exchange rates The principal average exchange rates used to translate the Group's overseas profits were as follows: 2011/12 2010/11 2011/12 2010/11 2010/11 Third Third Nine Nine Full quarter quarter months months year US dollar 1.60 1.58 1.61 1.54 1.54 Euro 1.15 1.17 1.14 1.17 1.17
PINXRelated Shares:
PFL.L