17th Mar 2011 07:00
Premier Farnell plc 17 March 2011
Results for the Fourth Quarter and Financial Year Ended 30 January 2011
Key Financials £m Q4 10/11 Q4 09/10 Q4 FY 10/11 FY 09/10 FY Continuing operations(d) £m £m growth £m £m growth (Unaudited) (a) (a) Revenue 242.5 207.5 14% 990.8 795.3 21% Underlying operating 28.3 21.7 32% 112.1 72.7 48% profit (b) Total operating profit 28.3 21.7 32% 112.1 71.4 50% Underlying profit before 23.7 17.2 38% 93.3 54.8 70% tax (b) Total profit before 23.7 17.2 38% 93.3 53.5 74% taxation Underlying earnings per 4.6p 3.5p 31% 18.3p 10.7p 71% share (b) Basic earnings per share 4.6p 3.5p 31% 18.3p 10.4p 76% Free cash flow (c) 4.6 6.5 -29% 38.0 66.4 -43% Ordinary dividend (e) 6.0p 5.2p 15.4% 10.4p 9.4p 10.6% Financial Highlights * Sales momentum from the prior quarter has continued as we delivered our highest fourth quarter sales for more than 10 years. Group sales grew 13.9% year on year and 2.0% sequentially on the prior quarter, leading to full year sales growth of 21.4%. * Fourth quarter Group operating profit grew 31.6% year on year to reach the highest level for more than 10 years. Full year Group underlying operating profit grew 48.1%, led by MDD Americas where full year operating profit grew 129.9% year on year. * In the fourth quarter our MDD division had its strongest absolute sales per day performance for the year, as sales in Europe, North America and Asia Pacific grew 23.0%, 11.0% and 12.4%, respectively, year on year. * Gross margin in the fourth quarter improved again, up 1.5 percentage points year on year and 0.7 percentage points on the prior quarter to 41.8%. This is the ninth consecutive quarter of sequential improvement. * The Group's fourth quarter return on sales was 11.7%, up 1.2 percentage points year on year. * Our global MDD division delivered a fourth quarter return on sales of 13.1%, led by the improvement in MDD Americas as the division delivered a fourth quarter return on sales of 9.0%. * Group cash performance has remained strong, with full year underlying cash flow conversion at 91.7%. * The Board has recommended a final dividend of 6.0 pence per share, an increase of 15.4% on the prior year. This leads to a proposed full year dividend of 10.4 pence per share, a year on year increase of 10.6%.
Strategic Highlights
* In the fourth quarter our MDD active customer base grew 5.9% year on year. * eCommerce accounted for 51.1% of MDD sales in the fourth quarter, the first time over half of MDD sales have come via e-channels. Progress has continued in the new year, with eCommerce sales in Europe currently running at over 70%. * Emerging markets of Greater China, India and Eastern Europe delivered strong sales growth in the fourth quarter of 39.8%, 74.0% and 51.2%, respectively. * Full year EDE year on year sales growth of 38.3% has contributed to our EDE sales penetration level reaching 53.7% - which is within our target range of 50%-70%. * In the year we signed 43 supplier agreements, including new partnerships with three engineering services and software organisations, and added 72,500 new EDE products. * We have begun to build a holistic EDE ecosystem proposition as we partnered with our first specialist prototyping partner, Pentalogix, and made the initial launch of our new rapid prototyping service. * The element14 community saw close to half-a-million customers visit the site in the fourth quarter.
Commenting on the results, Harriet Green, Group Chief Executive, said:
"We have delivered the highest level in Group sales and operating profit for the fourth quarter for more than 10 years, with year on year growth of 13.9% and 31.6%, respectively, despite the tougher comparators. Sequentially sales grew 2.0% over the prior quarter which is counter seasonal for our business. Our focus on driving market share gains and the strength of our proven global strategy underpins this acceleration in our quarterly sales performance.
"This sales momentum from the fourth quarter has continued into the new financial year. The month of February saw the two highest day's sales ever recorded within our European business and for the Group sales grew 8.0% year on year. This level of growth is despite the weather disruption in the US that continued from January into February and after adjusting for the impact of the TPC Wire and Cable disposal. The extent of the disruption to the electronics supply chain caused by the recent environmental disasters in Japan is not yet fully understood. However, the Group's Japanese customer base and direct supply chain are very small, and it is clear that Premier Farnell's significant inventory and support to all its customers and suppliers will be invaluable at this time.
"The strength of the Group's performance in financial year 2011 together with this positive start to the new year, underpins the Board's decision to raise the proposed final dividend per share by 15.4%. Through driving further market share gains and the continued execution of our strategy the Group is well positioned to deliver sales growth in the new financial year that is in excess of our targeted level of sales growth."
For further information, contact:
Harriet Green, Chief Executive Premier Farnell plc +44 (0) 20 7851 4100 Officer
Mark Whiteling, Chief Financial Officer Andrew Lorenz Financial Dynamics +44 (0) 20 7269 7291 (UK)
Premier Farnell's announcements and presentations are published at www. premierfarnell.com together with business information and links to all other Group web sites. The 2011 Annual Report and Accounts will be available online on 12 May 2011. The results for the first quarter and financial year ending 29 January 2012 will be announced on 16 June 2011.
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 £7.6 million (Q1: £4.0 million, Q2: £0.8 million, Q3: £2.8 million, Q4 £nil) 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.
d. Results for continuing operations in 2009/10 and 2010/11 include the
results of TPC Wire & Cable which was disposed of on 31 January 2011, after
our financial year end. All numbers within this statement include TPC Wire
and Cable unless otherwise stated.
e. Proposed final dividend for approval by shareholders at the company's
Annual General Meeting on 14 June 2011.
Premier Farnell plc FOURTH QUARTER STATEMENT
Results for the Fourth Quarter and Financial Year Ended 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 fourth quarter and financial year ended 30 January 2011.
Chief Executive's Operational Overview
Our sales momentum from the prior quarter has accelerated in the fourth quarter, with Group sales growing 13.9% year on year, despite the stronger comparators, and 2.0% sequentially on the prior quarter. This sequential quarter on quarter growth is counter seasonal for our business and has led to fourth quarter sales reaching their highest level in over ten years. When compared to our full year sales of two years ago, full year sales from our distribution businesses have grown 11.6%, despite the recession, reflecting our successful focus on returning to the size of business we were prior to entering the downturn. Our strong sales performance throughout the year is a clear reflection of the growth opportunities inherent in the strategy and our market share gains. Indeed, while continuing to grow our business with existing customers we have also been focused on acquiring new customers and in the fourth quarter, our Marketing and Distribution Division's (MDD) active customer base grew 5.9% year on year.
Gross margin increased again in the fourth quarter to 41.8%, representing a 1.5 percentage point improvement year on year and a 0.7 percentage point increase on the prior quarter. This is the ninth consecutive quarter of improvement as our strategic focus towards the higher margin Electronic Design Engineering (EDE) sector and the web continues to have a positive impact on our gross margin. This industry differentiating approach and performance reflects the quality of business we serve and the value our customers attribute to our high service proposition. Driving sales via the web continues to provide us with significant cost efficiencies, both operationally and through the way our organisation is structured. Focus on gross margin and continuing to shape our business and cost structure for a web focused environment are key pillars of our strategy that we will continue to execute. The efficiency of our model is increasing the positive impact that our operational gearing has on our business. This is evident in the profitability of the Group, with fourth quarter operating profit growing 31.6% year on year to reach its highest level for more than ten years. The execution of our EDE led, web centric strategy continues to deliver an industry leading return on sales which was 11.7% for the quarter, close to our 1,000 day target range of 12%-15%.
The execution of our proven global strategy remained at the core of the Group's performance in the fourth quarter. When we began our strategy sales via the web accounted for 12.0% of MDD sales. In the fourth quarter, over half of our distribution sales came via the web and our other e-channels for the first time ever, representing a significant milestone in our transformation as eCommerce accounted for 51.1% of MDD sales. The acceleration in transformation to become a web-based business can be clearly seen in the 9.6 percentage point year on year improvement in our eCommerce penetration level, which has been led by the 11.1 percentage point increase year on year in MDD Americas' eCommerce penetration. Indeed, for the fourth quarter North American eCommerce sales accounted for 36.9% of the region's total sales, while in Asia Pacific we also continue to make good progress, as eCommerce accounted for 56.8% of fourth quarter sales. However, it is in Europe where our transition to the web is most progressed and in the quarter web sales grew 41.3% year on year, with the business' sales via eCommerce accounting for 67.1% of total fourth quarter sales, only 2.9 percentage points away from our strategic goal of 70%. More recently the region has exceeded this target for the first time, with eCommerce sales in Europe currently running at over 70%. Our strategic focus towards the EDE sector continues to be validated, as full year EDE sales per day growth of 38.3% has contributed to our MDD division exiting the year with 53.7% EDE sales penetration. The strength of our performance in the emerging markets of Greater China, India and Eastern Europe, together with the very encouraging results delivered by our new web-based businesses in Taiwan, Thailand and South Korea, have driven sales from the developing markets to account for 22.9% of the Group's fourth quarter sales.
Our online community, element14, continues to grow rapidly. In the fourth quarter alone close to half-a-million customers visited the site, spending a staggering 65,000 hours within the community as they researched their designs and product selections while conversing with a myriad of other design engineers across the world. The engagement level and interaction of customers within the element14 community grew 47.3% on the prior quarter and the online television program, The Ben Heck Show, continued to grow its EDE audience, with the current series topping one million views in the quarter. As the vibrancy within the site increases, it is consequently driving an improvement in the click-through conversion rate from the community to our transactional websites and in the quarter this conversion rate improved by 4.6 percentage points on the prior quarter. The solid-state lighting technology community within element14 is one of the most popular areas on the site. In recognition of this, and as part of our next 1,000 day programme to target vertical markets, during the quarter we merged the solid-state lighting technology community with a new lighting transactional micro-site. This clear example of merging commerce and community at the technology level is truly differentiating and is significantly deepening our customer relationships within this fast growing EDE-centric vertical market.
Our MDD division continued to deliver significant profitable growth in the period. Fourth quarter sales were up 14.6% year on year and 1.5% on the prior quarter, while the division's return on sales was 13.1%, a 1.8 percentage point improvement year on year. Sales in our European business for the fourth quarter grew 23.0% year on year, with strong sales growth in Eastern Europe, where sales were up 51.2% year on year. In North America our business has continued to deliver double digit growth, with sales up 11.0% year on year despite its operations and some of its end customers being negatively impacted due to the adverse weather conditions across North America affecting six days in the fourth quarter and continuing to impact two days in February. The 11.1 percentage point year on year increase in MDD Americas' eCommerce penetration has delivered significant cost benefits to the business. These have been fundamental in driving the continued progress of MDD Americas' profitability, with full year operating profit in the region growing 129.9% year on year. In addition, fourth quarter operating profit in North America grew 60.8% year on year as the region's return on sales improved 1.0 percentage point on the prior quarter to 9.0%, despite the impact on sales from the adverse weather conditions across North America. In Asia Pacific sales grew 12.4% year on year, led by the strong performance of Greater China and India. In the fourth quarter of last year sales in Greater China and India accounted for 31.5% of Asia Pacific's sales. This quarter sales in Greater China and India grew 39.8% and 74.0% year on year, respectively, and now account for 39.3% of Asia Pacific's sales. Asia Pacific's fourth quarter web sales grew 38.5% year on year and this web growth was in part driven by the successful launch of our new online businesses in Taiwan, Thailand and South Korea in the third quarter. Their performance to date has confirmed the huge potential of these markets.
Since we launched our core strategy we have continued to invest in our web-centric EDE proposition and global supply chain. Leveraging these investments to drive initiatives such as our T80 programme has been, and continues to be, a focus for the Group. We have now gained almost one percent of share since we began to transform our business and track market share as part of our strategy. As well as investing in the business' transformation, we have continued to invest in the breadth and depth of our product portfolio throughout the downturn and during the recovery this year. A recent report from the Semiconductor Industry Association's (SIA) expects sales in the semiconductor industry to grow 6% in 2011 whilst the authoritative Henderson Electronic Market Forecast predicts 8% growth in the global semiconductor market in 2011. In addition, with many electronic components critical in the design of electronics remaining in short supply and component manufacturing capacity below the excess threshold, researcher Future Horizons believes that 2011 "will be a very strong year" for growth in the industry. As a stocking distributor, our continued investment in inventory as well as our market leading on-line product data position us well to capitalise on these opportunities within the supply chain as we look to fully support our customers' needs. The combination of market growth of 6-8% combined with our objective of 2% annual sales growth through market share gains give comfort on the sustainability of growth at the top end of our targeted range. This EDE and web focused growth continues to allow us to shape our cost base to reflect the transformation in our operating model.
In the year we have added 72,500 new esoteric products to our portfolio, 14,500 of which were added in the fourth quarter. For 3,700 of these we were the first to bring the technology market, demonstrating the ongoing support we are receiving from our supplier partners. To further strengthen our technology and services portfolio we have added 43 new franchises this year, including the extension of our relationship with TDK into North America during the fourth quarter. In the quarter we also made the initial launch of our rapid Printed Circuit Board (PCB) prototyping service on element14, as we took the first steps in building a holistic EDE ecosystem proposition that will allow EDEs to use design rooms on element14 tailored to the design cycle and hosted within a virtual workspace. As well as signing an agreement to solidify our strategic relationship with our first specialist prototyping partner, Pentalogix, in the quarter we also signed agreements with two further engineering services and software organisations as we accelerate our plans to become an EDE's ecosystem partner of choice. In conjunction with the launch of the ecosystem prototyping room, we released an updated version of our Computer Aided Design (CAD) EAGLE software. This updated version provides EDEs with access to Premier Farnell product, inventory and pricing information plus the ability to create bills of materials with our order codes and load a `shopping cart' on our transactional websites, all from within their CAD environment. Such innovation and investment in seeing us significantly build our presence within the EDE community as an organisation who can meet all an EDE's needs throughout the design cycle.
Bringing these services and our core product offering to market via the web in an innovative way remains at the forefront of the Group's strategy. As our sales via eCommerce approach the 70% milestone in a number of regions (in Europe eCommerce sales are currently running at over 70%) and in order to ensure that the Group stays appraised of the latest online trends, in the fourth quarter we held our inaugural Web Advisory Board (WAB) meeting. The board includes eight external experts in the fields of digital marketing, Search Engine Optimisation (SEO), the mobile web and social media as well as a number of our own talented eCommerce leaders from around the world. The valuable input, guidance and counsel from the WAB will provide the Group with an unrivalled understanding of the rapidly changing online environment and the context in which such change is relevant to Premier Farnell maintaining its leading position in these rapidly evolving markets.
Other Distribution Businesses
Fourth quarter sales at CPC grew 2.9% year on year. This was driven primarily by the business' continued focus on eCommerce and investments to enhance the online customer experience, with web sales growing 11.2% on the prior year and eCommerce sales accounting for a record of 39.9% of total fourth quarter sales. Innovative marketing activities, including the successful leveraging of social media tools, led to CPC's active customer base growing 6.6% year on year. MCM's fourth quarter sales grew 0.7% year on year, as the business also continues to grow its active customer base, which was up 7.9% compared to the same period last year. In the quarter MCM launched an enhanced web environment driving eCommerce to account for 36.0% of sales. Sales from new products accounted for 32.4% of total sales as the business added six new major product lines and 1,800 new products.
Industrial Products Division (IPD)
Sales at Akron Brass returned to year on year growth in the quarter, with sales up 1.6% on the prior year. This growth was led by the business' international sales which grew 6.0% year on year and accounted for 28.6% of Akron's sales. Innovation and new product development is at the core of Akron's market leading position and in the quarter the business introduced a number of new products targeted at the forestry fire end market. On 31 January 2011, after the financial year end, the Group completed the sale of the entire issued share capital of TPC Wire and Cable for a total consideration of $43 million, subject to a working capital adjustment, paid in cash on completion.
Cash Flow and Investments
This year we have continued to invest in our strategy and in our inventory depth and profile, as we remain focused on accelerating the transformation of the Group and capitalising on the growth opportunities within our market. However, even with this increased level of investment, the Group has delivered underlying full year cash flow conversion of 91.7% and a free cash flow as a percentage of sales of 3.8%. In addition to the strategic investments we have made in our EDE and eCommerce propositions, over the course of the year we have also invested in a significant upgrade to our warehouse management software in Asia Pacific and the continued development of our IT infrastructure. These system improvements are fundamental to increasing the operational efficiency of our business as we continue to reduce costs. In total, our capital expenditure for the year was £19.1 million, up 59.2% on the prior year.
In the coming year, we will continue to invest in our strategy and proposition as we look to deliver sustained profitable growth and ongoing operational efficiencies. In addition, we will roll out our new warehouse management software across the rest of the world as well as implementing an upgrade to our global eCommerce platform. These investments are key to the implementation of our strategy through the attraction and retention of our targeted EDE customers and to this end, we would expect our capital expenditure for financial year 2012 to be circa £10 million higher than in the previous year as we continue to invest in and shape our business for the future.
Dividend
This year the Group delivered its highest level of sales and operating profit in ten years. This profitability has helped deliver Net Debt / EBITDA of 2.0 (including Preference Shares) which is within our targeted range. In recognition of this, and the Board's confidence in the continued successful execution of the strategy, the Board is recommending a final dividend increase to 6.0 pence per share (2009/10: 5.2 pence per share), a 15.4% increase on the prior year. Combined with the previously communicated increased interim dividend, the Group's total dividend for the year will be 10.4 pence per share (2009/10: 9.4 pence per share), subject to approval at the Annual General Meeting. This dividend is covered 1.8 times on an earnings per share basis. The Group's final dividend is payable on 22 June 2011.
Outlook
This sales momentum from the fourth quarter has continued into the new financial year. The month of February saw the two highest day's sales ever recorded within our European business and for the Group sales grew 8.0% year on year. This level of growth is despite the weather disruption in the US that continued from January into February and after adjusting for the impact of the TPC Wire and Cable disposal. The extent of the disruption to the electronics supply chain caused by the recent environmental disasters in Japan is not yet fully understood. However, the Group's Japanese customer base and direct supply chain are very small, and it is clear that Premier Farnell's significant inventory and support to all its customers and suppliers will be invaluable at this time.
The strength of the Group's performance in financial year 2011 together with this positive start to the new year, underpins the Board's decision to raise the proposed final dividend per share by 15.4%. Through driving further market share gains and the continued execution of our strategy the Group is well positioned to deliver sales growth in the new financial year that is in excess of our targeted level of sales growth.
Financial ResultsRevenueFull Year
Sales for the full financial year were £990.8 million (2009/10: £795.3 million or £815.2 million at constant exchange rates). Sales per day increased by 21.4% on the prior year. The average exchange rate for the US dollar against sterling was $1.54 (2009/10: $1.59) and the average exchange rate for the Euro against sterling was Euro 1.17 (2009/10: Euro 1.13).
Fourth Quarter
Sales for the fourth quarter were £242.5 million (2009/10: £207.5 million or £ 211.8 million at constant exchange rates). Sales per day increased by 13.9% on the same quarter in prior year. The average exchange rate for the US dollar against sterling was $1.56 (2009/10: $1.62) and the average exchange rate for the Euro against sterling was Euro 1.17 (2009/10: Euro 1.13).
Margins and Operating Profit
Full Year
The gross margin for the full financial year was 41.1% compared with 39.8% in the prior year and 39.9% at constant exchange rates, continuing our long standing record of maintaining margin stability which differentiates us in the industry.
Underlying operating expenses for the year were 29.8% of sales compared with 30.6% in the prior year reflecting the impact of the increase in sales and operating efficiencies. In addition, full year operating expenses include £5.0 million of incremental costs as we continue to transform our business. Of these costs £0.6 million were incurred in the fourth quarter.
Underlying operating profit was £112.1 million (2009/10: £72.7 million) producing an operating margin of 11.3% (2009/10: 9.1%) reflecting operational leverage from increased sales, strong margins and operating efficiencies. Excluding the £5.0 million incremental operating expenses our underlying operating margin was 11.8%. At constant exchange rates the increase in underlying operating profit was 48.1% compared with the prior year, or 54.7% excluding incremental operating expenses. Operational gearing, being the year on year increase in operating profit expressed as a percentage of the increase in sales, at constant exchange rates, was 20.7% or 23.6% excluding the incremental operating expenses.
Fourth Quarter
The gross margin in the fourth quarter was 41.8% compared with 40.3% in the fourth quarter last year, or 40.2% at constant exchange rates, and 41.1% in the third quarter. This represents the twenty-first consecutive quarter of gross margin stability, a clear differentiator in the industry.
Operating profit was £28.3 million (2009/10: £21.7 million) producing an operating margin of 11.7%, compared with 10.5% in the fourth quarter of the prior year. At constant exchange rates the increase in operating profit compared with the prior year was 31.6% or 34.4% excluding incremental operating expenses associated with transforming our business.
Foreign Currency Impact
A one cent movement in the exchange rate between the US dollar and sterling impacts the Group's operating profit by approximately £250,000 per annum and a one cent movement in the exchange rate between the Euro and sterling impacts the Group's operating profit by approximately £500,000 per annum.
Finance Costs
Net finance costs in the financial year were £18.8 million (2009/10: £17.9 million). This comprises net interest payable of £14.5 million (2009/10: £13.6 million), which was covered 7.7 times by operating profit, and a charge of £4.3 million (2009/10: £4.3 million) in respect of the Company's convertible preference shares.
Profit Before Tax
Profit before tax for the financial year was £93.3 million (2009/10: £53.5 million or £54.8 million, underlying).
Profit before tax in the fourth quarter was £23.7 million (2009/10: £17.2 million).
Taxation Charge
The taxation charge for the financial year was at an effective rate of 28.0% (2009/10: 28.0%) of profit before tax and preference dividends.
Return on Net Operating Assets
Return on net operating assets for the financial year was 42.5% (2009/10: 29.2%), reflecting the growth in operating profit.
Disposal of TPC Wire & Cable
On 31 January 2011, the Group completed the sale of the entire issued share capital of TPC Wire & Cable Corp. ("TPC") to Pfingsten Partners LLC for a total cash consideration of $43 million. The sale of TPC, a leading US distributor of industrial wire and cable and part of IPD, is part of the Group's core strategy to focus on the Electronic Design Engineer and profitable MRO markets.
The assets and liabilities of TPC have been classified as `held for sale' in the balance sheet as at 30 January 2011, with net assets of £7.8 million. The financial year 2011 trading results of TPC Wire and Cable were not material to the Group. The provisional pre-tax gain on the sale amounts to £16.8 million.
Earnings per Share
Earnings per share for the fourth quarter were 4.6 pence (2009/10: 3.5 pence). Earnings per share for the financial year were 18.3 pence (2009/10: 10.4 pence or 10.7 pence, underlying).
Cash Flow and Net Financial Liabilities
Total cash generated from operations for the full year was £102.0 million (2009 /10: £98.3 million) or £102.8 million (2009/10: £105.4 million) excluding the impact of 2009/10 restructuring costs and pension changes, representing 91.0% of operating profit or 91.7% (2009/10: 137.7% or 145.0%), respectively. Free cash flow for the full year, being total cash generated from operations less net capital expenditure, interest, preference dividends and tax payments, was £ 37.2 million, or £38.0 million excluding restructuring costs, (2009/10: £59.3 million or £66.4 million excluding restructuring costs).
Net financial liabilities at the end of the financial year were £262.9 million (31 January 2010: £264.2 million), including £61.0 million (31 January 2010: £ 60.2 million) attributable to the Company's preference shares.
Financial Position
Premier Farnell's financial position remains robust with good liquidity and strong free cash flow. At 30 January 2011 our headroom on bank borrowings was £ 74 million under Facilities in place until January 2013. This headroom, combined with our net cash position of £33 million, gives us a secure funding position. In addition, the Group also has unused facilities of $45 million as part of its US Private Placement Shelf Facility agreement.
Operations
Marketing and Distribution Division (MDD)
(including Newark, Farnell, element14, CPC and MCM)
Q4 10/11 Q4 09/10 Q4 FY 10/11 FY 09/10 FY £m £m growth £m £m growth Revenue 221.9 189.1 14.6% 907.8 718.4 23.1% Underlying operating 29.1 21.4 37.9% 113.1 69.8* 55.9% profit Underlying operating 13.1% 11.3% 12.5% 9.7%* margin %
* excluding restructuring costs in 2009/10 of £7.6 million (Q1: £4.0 million, Q2: £0.8 million, Q3: £2.8 million) and the one-off gain arising in the second quarter of £5.3 million from the reorganisation of the Group's North American pension plans.
Fourth quarter MDD sales grew 14.6% year on year, despite the prior year tougher comparators, with the quarter being the strongest absolute sales per day performance for the year. This strong close to the year led to full year sales growing 23.1%. The fourth quarter performance compares to the wider global semiconductor market where the SIA reported global semiconductor sales growth of 14.0% year on year, for the equivalent period. Full year EDE sales per day growth of 38.3% contributed to MDD exiting the year with 53.7% EDE sales penetration. Sales in the division's international markets have again delivered strong growth and in the key emerging markets of China, India and Eastern Europe have grown 49.0% combined for the fourth quarter versus prior year and 73.1% for the full year.
Sales from eCommerce for the division accounted for 51.1% of total sales, with growth in all regions, the first time this has been over 50%. In the quarter we launched a French language website in Switzerland which takes our number of transactional websites up to 48 and local language websites to 33. The continued development of our e-commerce proposition has allowed e-commerce sales in Europe to exceed 70% of total sales since the year end.
By focusing on profitable growth with operating efficiency the division continues to deliver a strong return on sales, which for the quarter was 13.1% and 12.5% for the full year, representing an improvement of 2.8 percentage points over the prior full year. The strong sales performance, combined with the division's improving gross margin and the continued cost benefits from increased operational efficiencies, has led to full year operating profit growing 55.9% year on year.
MDD Americas(Newark) Q4 10/11 Q4 09/10 Q4 FY 10/11 FY 09/10 FY £m £m growth £m £m growth Revenue 91.4 78.8 11.0% 386.3 310.0 20.2% Underlying operating 8.2 4.9 60.8% 29.1 12.3* 129.9% profit Underlying operating 9.0% 6.2% 7.5% 4.0%* margin %
*excluding restructuring costs in 2009/10 of £4.7 million (Q1: £1.1 million, Q2: £0.8 million, Q3: £2.8 million) and the one-off gain arising in the second quarter of £5.0 million from the reorganisation of the Group's North American pension plans.
MDD Americas' fourth quarter sales grew 11.0% year on year and full year sales were up 20.2% year on year. The business' operations as well as some of its end customers were affected for 6 working days due to the adverse weather conditions across North America. However, even after taking this into account, and following a strong improvement in gross margin and cost efficiencies, MDD Americas' fourth quarter operating profit grew 60.8% year on year and its return on sales improved 1.0 percentage point over the prior quarter to 9.0%. For the full year the region's underlying operating profit grew 129.9% year on year and its underlying return on sales improved to 7.5%, up from 4.0% in the prior year. In the wider market the SIA reported that semiconductor sales in North America grew 24.5% for the three months to the end of January 2011.
In North America we added 5,000 EDE products in the quarter. The division's continued focus towards the EDE sector led to sales from development tools and services growing 41.1% year on year, and for the full year EDE sales in the region grew 32.2%, with EDE exiting the year having accounted for 40.0% of fourth quarter sales. The number of customers visiting the US element14 store continued to increase, up 26.5% over the previous quarter.
MDD Europe and Asia Pacific
(Farnell and element14) Q4 10/11 Q4 09/10 Q4 FY 10/11 FY 09/10 FY £m £m growth £m £m growth Revenue 105.7 86.3 21.3% 423.5 317.0 30.7% Underlying operating 18.5 14.3 34.1% 74.7 48.5* 46.9% profit Underlying operating 17.5% 16.6% 17.6% 15.3%* margin %
*excluding Q1 restructuring costs in 2009/10 of £2.9 million
MDD Europe and Asia Pacific fourth quarter sales grew 21.3% year on year, with full year sales up 30.7% on the prior year. With strong margins and tight cost control the business was able to deliver 34.1% operating profit growth for the fourth quarter and 46.9% for its full year operating profit growth. The division continues to deliver an industry leading return on sales, which for the fourth quarter was 17.5%, while the division's full year underlying return on sales was 17.6%. eCommerce accounted for 65.8% of MDD Europe and Asia Pacific fourth quarter sales.
Revenue by region Q4 10/11 Q4 09/10 Revenue FY 10/11 FY 09/10 Revenue £m £m growth £m £m growth UK (including exports) 35.4 28.9 23.0% 143.2 111.8 28.0% Mainland Europe 54.9 45.1 22.8% 215.9 161.8 31.5% Asia Pacific 15.4 12.3 12.4% 64.4 43.4 34.4%
In the fourth quarter sales in Europe accelerated, growing 5.5% sequentially on the prior quarter and 23.0% year on year. Full year sales grew 29.9% on the prior year. Full year EDE sales per day growth of 41.3% contributed to our European business exiting the year with 66.5% EDE sales penetration. Fourth quarter web sales in the region grew 41.3% year on year and the business moved even closer to reaching our strategic goal of 70% of sales via eCommerce as the fourth quarter achieved 67.1% of sales via e-channels. More recently the region has exceeded the strategic goal of 70% of sales to come via eCommerce for the first time, with eCommerce sales in Europe currently running at over 70%. The European sales growth performance compares to the wider European technology market where the Distributors' and Manufacturers' Association of Semiconductor Specialists (DMASS) reported that sales for the 2010 calendar fourth quarter grew 49.8% year on year.
Farnell UK sales, excluding exports, grew 18.8% in the quarter, and 21.6% for the year. This compares with the most recent data from the Association of Franchised Distributors of Electronic Components (AFDEC) who reported sales growth of 20.3% excluding Farnell, for the equivalent period.
In Asia Pacific fourth quarter sales grew 12.4%, despite very tough prior year comparatives, leading to full year sales growth of 34.4%. The region's sales performance compares to the wider Asia Pacific semiconductor market where, according to the SIA, sales grew 12.2% for the equivalent period. Full year EDE sales per day growth of 47.9% contributed to our Asia Pacific business exiting the year with 60.5% EDE sales penetration. Year on year sales growth in Greater China and India remained strong into the fourth quarter with sales up 39.8% and 74.0%, respectively.
Other Distribution Businesses(CPC and MCM) Q4 10/11 Q4 09/10 Q4 FY 10/11 FY 09/10 FY £m £m growth £m £m growth Revenue 24.8 24.0 2.3% 98.0 91.4 6.6% Underlying operating 2.4 2.2 9.1% 9.3 9.0* 3.1% profit Underlying operating 9.7% 9.2% 9.5% 9.8%* margin %
* excluding the one-off gain arising in 2009/10 of £0.3 million from the reorganisation of the Group's North American pension plans.
Fourth quarter sales at CPC grew 2.9% year on year and full year sales were up 6.4% compared to the prior year. eCommerce sales in the fourth quarter reached a new record high, increasing by 11.2% on the prior year to account for 39.9% sales. CPC's social media marketing activities continue to be influential in driving customer acquisition as the business' active customer base grew 6.6% year on year in the fourth quarter. MCM sales were up 0.7% year on year in the quarter and the business closed the year with full year sales growing 6.9% over the prior year. MCM's active customer base closed the year 7.9% higher than last year. Web sales grew 10.5% year on year for the quarter and now represent the largest sales channel. Investment in new products continued, with sales from those products representing 32.4% of overall sales.
Industrial Products Division
(Akron Brass and TPC Wire and Cable)
Q4 10/11 Q4 09/10 Q4 FY 10/11 FY 09/10 FY £m £m growth £m £m growth Revenue 20.6 18.4 7.5% 83.0 76.9 5.3% Underlying operating 3.9 3.2 18.2% 14.2 13.6* 1.6% profit Underlying operating 18.9% 17.4% 17.1% 17.7%* margin
* excluding the one-off gain arising in 2009/10 of £1.0 million from the reorganisation of the Group's North American pension plans.
Akron Brass
The fourth quarter saw Akron Brass return to growth with sales up 1.6% year on year and 7.0% on the prior quarter due to strategic investment in international and new product development. Full year sales declined 2.8%, as the global fire apparatus market was impacted by tighter controls around government spending for much of financial year 2011. Akron's international business grew to a record level of 28.6% of total sales in the fourth quarter as China grew 52.2%, the Middle East at 141.6% and South East Asia at 86.6%. New product sales in the quarter accounted for 17.0% of sales.
TPC Wire & Cable
Full year sales at TPC grew 40.4% with continued strong sales growth in the fourth quarter of 28.5%, despite tougher comparators. TPC's enhancement to its product offering drove sales from new products to account for 21% of sales.
This press release contains certain forward-looking statements relating to the business of the Group and certain of its plans and objectives, including, but not limited to, future capital expenditures, future ordinary expenditures and future actions to be taken by the Group in connection with such capital and ordinary expenditures, the expected benefits and future actions to be taken by the Group in respect of certain sales and marketing initiatives, operating efficiencies and economies of scale. By their nature forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. Actual expenditures made and actions taken may differ materially from the Group's expectations contained in the forward-looking statements as a result of various factors, many of which are beyond the control of the Group. These factors include, but are not limited to, the implementation of initiatives supporting the Group's strategy, the effect of legislation and regulatory enactments, recruitment and integration of new personnel, the implementation of cost-saving initiatives, continued use and acceptance of e-commerce programs and systems, implementation of new IT systems, the ability to expand into new markets and territories, the implementation of new sales and marketing initiatives, changes in demand for electronic, electrical, electromagnetic and industrial products, rapid changes in distribution of products and customer expectations, the ability to introduce and customers' acceptance of new services, products and product lines, product availability, the impact of competitive pricing, fluctuations in foreign currencies, and changes in interest rates and overall market conditions, particularly the impact of changes in world-wide and national economies. The Group does not intend to update the forward-looking statements made herein.
Condensed Consolidated Income Statement
For the fourth quarter and year ended 30th January 2011
2010/11 2009/10 2010/11 2009/10 Fourth Fourth Full Full quarter quarter year year unaudited unaudited unaudited audited Notes £m £m £m £m Continuing operations Revenue 2 242.5 207.5 990.8 795.3 Cost of sales (141.2) (123.8) (583.3) (478.9) Gross profit 101.3 83.7 407.5 316.4 Net operating expenses - before restructuring and (73.0) (62.0) (295.4) (243.7)pension changes - restructuring costs 3 - - - (7.6) - net one-off income from 3 - - - 6.3pension changes Total net operating expenses (73.0) (62.0) (295.4) (245.0) Operating profit - before restructuring and 28.3 21.7 112.1 72.7pension changes - restructuring costs 3 - - - (7.6) - net one-off income from 3 - - - 6.3pension changes Total operating profit 2 28.3 21.7 112.1 71.4 Finance income - 0.2 0.1 0.5(interest receivable) Finance costs - interest payable (3.6) (3.7) (14.6) (14.1) - preference dividends (0.8) (0.8) (3.5) (3.5) - premium on redemption (0.2) (0.2) (0.8) (0.8)of preference shares Total finance costs (4.6) (4.7) (18.9) (18.4) Profit before taxation 3 23.7 17.2 93.3 53.5 Taxation 4 (6.9) (4.7) (27.1) (16.0) Profit for the period 16.8 12.5 66.2 37.5(attributable to ordinary shareholders) Earnings per share 5 Basic 4.6p 3.5p 18.3p 10.4p Diluted 4.5p 3.4p 18.0p 10.3p Ordinary dividends Interim - proposed 4.4p 4.2p Final - proposed 9 6.0p 5.2p Paid 9.6p 9.4p Impact on shareholders' funds (£) 34.7 34.0
Condensed Consolidated Statement of Comprehensive Income
For the fourth quarter and year ended 30th January 2011
2010/11 2009/10 2010/11 2009/10 Fourth Fourth Full Full quarter quarter year year unaudited unaudited unaudited audited £m £m £m £m Profit for the period 16.8 12.5 66.2 37.5 Net exchange adjustments 2.0 5.2 3.6 1.1 Actuarial (losses)/gains on (0.7) 9.3 (0.7) (12.2)pensions and other post-retirement obligations Deferred tax credit/(charge) 0.3 (3.6) 0.3 4.1on actuarial (losses)/gains Deferred tax credit on share 2.3 - 2.3 -based payments Net fair value gains/(losses) 0.6 0.4 (1.2) 4.1on cash flow hedges Other comprehensive income 4.5 11.3 4.3 (2.9) Total comprehensive income 21.3 23.8 70.5 34.6for 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 30th January 2011 30th January 31st January 2011 2010 unaudited audited Notes £m £m ASSETS Non-current assets Goodwill 34.8 34.8 Other intangible assets 24.3 24.2 Property, plant and equipment 54.4 53.4 Deferred tax assets 13.9 12.2 Total non-current assets 127.4 124.6 Current assets Inventories 214.7 175.2 Financial assets - 1.1 Trade and other receivables 141.4 126.7 Cash and cash equivalents 7 33.4 26.6 389.5 329.6 Assets of disposal group 10 8.7 -classified as held for sale Total current assets 398.2 329.6 LIABILITIES Current liabilities Financial liabilities 7 (1.3) (43.1) Trade and other payables (126.6) (101.6) Current tax payable (23.6) (27.4) (151.5) (172.1) Liabilities of disposal group 10 (0.9) -classified as held for sale Total current liabilities (152.4) (172.1) Net current assets 245.8 157.5 Non-current liabilities Financial liabilities 7 (295.0) (248.8) Retirement and other (36.3) (38.8)post-employment benefits Deferred tax liabilities (3.5) (3.0) Total non-current liabilities (334.8) (290.6) NET ASSETS/(LIABILITIES) 38.4 (8.5) EQUITY Ordinary shares 18.4 18.3 Equity element of preference shares 10.4 10.4 Share premium 28.5 24.2 Capital redemption reserve 4.4 4.4 Hedging reserve (0.8) 0.4 Cumulative translation reserve 20.0 16.4 Retained earnings (42.5) (82.6) TOTAL EQUITY 38.4 (8.5)
Consolidated Statement of changes in Equity
For the year ended 30th January 2011
2010/11 2009/10 Full Full year year unaudited audited £m £m Total deficit at beginning of year (8.5) (5.6) Profit for the period 66.2 37.5 Other comprehensive expense 4.3 (2.9) Total comprehensive income 70.5 34.6 Transactions with owners: Ordinary dividends paid (34.7) (34.0) Ordinary shares issued 4.4 0.4 Purchase of ordinary shares - (5.0) Share-based payments 6.7 1.1 Total transactions with owners (23.6) (37.5) Total equity/(deficit) at end of year 38.4 (8.5)
The accompanying notes form an integral part of this unaudited condensed consolidated financial information.
Condensed Consolidated Statement of Cash Flows
For the fourth quarter and year ended 30th January 2011
2010/11 2009/10 2010/11 2009/10 Fourth Fourth Full Full quarter quarter year year unaudited unaudited unaudited audited Notes £m £m £m £m Cash flows from operating activities Operating profit 28.3 21.7 112.1 71.4 Restructuring/pension changes: - net income statement impact - - - 1.3 - cash impact (0.1) (1.4) (0.8) (7.1) Impact of 2010/11 (0.1) (1.4) (0.8) (5.8)restructuring/pension changes Depreciation and amortisation 4.9 4.7 19.1 19.5 Changes in working capital (8.5) (3.8) (31.7) 12.8 Additional funding for (1.0) (1.2) (3.9) (2.9)post retirement defined benefit plans Other non-cash movements 2.6 0.3 7.2 3.3 Total cash generated 6 26.2 20.3 102.0 98.3from operations Interest received - 0.2 0.1 0.5 Interest paid (4.7) (4.7) (12.7) (12.5) Dividends paid on (1.7) (1.7) (3.5) (3.5)preference shares Taxation paid (8.8) (5.2) (29.6) (11.6) Net cash generated 11.0 8.9 56.3 71.2from operating activities Cash flows from investing activities Acquisition of business - (0.1) - (6.2) Proceeds from sale of property, - 0.1 - 0.1plant and equipment Purchase of property, plant and (2.8) (2.8) (8.6) (5.5)equipment Purchase of intangible assets (3.7) (1.1) (10.5) (6.5)(computer software) Net cash used in (6.5) (3.9) (19.1) (18.1)investing activities Cash flows from financing activities Issue of ordinary shares 0.4 0.4 4.4 0.4 Purchase of ordinary shares - - - (5.0) New bank loans - - 67.8 144.1 Repayment of bank loans (24.4) (11.1) (67.8) (169.8) Dividends paid to - - (34.7) (34.0)ordinary shareholders Net cash used in (24.0) (10.7) (30.3) (64.3)financing activities Net (decrease)/increase in (19.5) (5.7) 6.9 (11.2)cash, cash equivalents and bank overdrafts Cash, cash equivalents and bank 51.5 31.7 25.4 39.0overdrafts at beginning of period Exchange gains/(losses) 1.4 (0.6) 1.1 (2.4) Cash, cash equivalents and bank 33.4 25.4 33.4 25.4overdrafts at end of period Reconciliation of net financial liabilities Net financial liabilities at (264.2) (295.9)beginning of year Net increase/(decrease) in 6.9 (11.2)cash, cash equivalents and bank overdrafts Decrease in debt - 25.7 Premium on redemption of (0.8) (0.8)preference shares Derivative financial (1.8) 5.0instruments Amortisation of arrangement (2.0) (1.7)fees Exchange movement (1.0) 14.7 Net financial liabilities at 7 (262.9) (264.2)end of year
The accompanying notes form an integral part of this unaudited condensed consolidated financial information.
Notes
1 Basis of preparation
The unaudited condensed consolidated financial information in this report has been prepared based on International Financial Reporting Standards (IFRSs), as adopted by the European Union, and applying the accounting policies disclosed in the Group's 2010 Annual Report and Accounts on pages 92 to 96, except as described below.
There are no new standards or amendments to standards which are mandatory for the first time in the financial year 2010/11 which would have a significant impact on the Group. IFRS 3 (revised), Business Combinations, will impact the accounting of future business acquisitions.
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, did not contain an emphasis of matter paragraph and did not contain any statement under Section 498 of the Companies Act 2006. Copies of the Company's 2010 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 Segment information
2010/11 2009/10 Fourth quarter (unaudited) Before Restructuring After Fourth restructuring /pension restructuring/ quarter /pension changes pension (unaudited) changes (note 3) changes £m £m £m £m Revenue Marketing and Distribution Division Americas 91.4 78.8 - 78.8 Europe and Asia 105.7 86.3 - 86.3Pacific Other 24.8 24.0 - 24.0Distribution Businesses Total Marketing 221.9 189.1 - 189.1and Distribution Division Industrial 20.6 18.4 - 18.4Products Division 242.5 207.5 - 207.5 Operating profit Marketing and Distribution Division Americas 8.2 4.9 - 4.9 Europe and Asia 18.5 14.3 - 14.3Pacific Other 2.4 2.2 - 2.2Distribution Businesses Total Marketing 29.1 21.4 - 21.4and Distribution Division Industrial 3.9 3.2 - 3.2Products Division Head Office (4.7) (2.9) - (2.9)costs 28.3 21.7 - 21.7 2010/11 2009/10 Full year (audited) Before Restructuring After restructuring /pension restructuring/ Full year /pension changes pension (unaudited) changes (note 3) changes £m £m £m £m Revenue Marketing and Distribution Division Americas 386.3 310.0 - 310.0 Europe and Asia 423.5 317.0 - 317.0Pacific Other 98.0 91.4 - 91.4Distribution Businesses Total Marketing 907.8 718.4 - 718.4and Distribution Division Industrial 83.0 76.9 - 76.9Products Division 990.8 795.3 - 795.3 Operating profit Marketing and Distribution Division Americas 29.1 12.3 0.3 12.6 Europe and Asia 74.7 48.5 (2.9) 45.6Pacific Other 9.3 9.0 0.3 9.3Distribution Businesses Total Marketing 113.1 69.8 (2.3) 67.5and Distribution Division Industrial 14.2 13.6 1.0 14.6Products Division Head Office (15.2) (10.7) - (10.7)costs 112.1 72.7 (1.3) 71.4 30th January 31st January 2011 2010 (unaudited) (audited) £m £m Segment assets Marketing and Distribution Division Americas 153.0 132.6 Europe and Asia 235.8 197.4 Pacific Other 39.5 38.9 Distribution Businesses Total Marketing 428.3 368.9 and Distribution Division Industrial 48.1 44.2 Products Division* Head Office 1.9 1.2 Segment assets 478.3 414.3 Unallocated assets: Cash and cash 33.4 26.6 equivalents Deferred tax 13.9 12.2 assets Financial - 1.1 assets Total assets 525.6 454.2
* Includes assets of a disposal group classified as held for sale of £8.7 million (see note 10)
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:
2010/11 2009/10 2010/11 2009/10 Fourth Fourth Full Full quarter quarter year year unaudited unaudited unaudited audited £m £m £m £m One-off (charges)/credits: - restructuring costs - - - (7.6) - net one-off income from - - - 6.3pension changes - - - (1.3) Charge for share-based (2.7) - (6.7) (1.1)payments Charge for defined benefit - (0.3) (0.8) (3.2)pension schemes
Due to their significance, restructuring costs and the net one-off income from pension changes in the prior year were disclosed separately on the face of the income statement.
4 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: 28.0%).
5 Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to ordinary shareholders for the period by the weighted average number of ordinary shares in issue during the period, excluding those shares held by the Premier Farnell Executive Trust. For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume issue of all dilutive potential ordinary shares, being those share options and awards with a non-market based performance condition granted to employees where the exercise price is less than the average market price of the Company's ordinary shares during the period, and those shares with a market based performance condition based on the current estimate of the number of shares that will vest under the performance criteria.
Reconciliations of earnings and the weighted average number of ordinary shares used in the calculations are set out below.
2010/11 2009/10 Full year (unaudited) Full Year (audited) Basic Diluted Basic per Diluted per share share share share Earnings amount amount Earnings amount amount £m pence pence £m pence pence Earnings per share Profit 66.2 18.3 18.0 37.5 10.4 10.3attributable to ordinary shareholders Restructuring - - - 7.6 2.1 2.1costs Tax attributable - - - (2.5) (0.7) (0.7)to restructuring costs Net one-off - - - (6.3) (1.8) (1.8)income from pension changes Tax attributable - - - 2.4 0.7 0.7to net one-off income from pension changes Profit 66.2 18.3 18.0 38.7 10.7 10.6attributable to ordinary shareholders before restructuring costs and one-off income from pension changes Number Number Weighted average 361,149,321 360,456,270number of shares Dilutive effect 6,670,893 2,947,102of share options Diluted weighted 367,820,214 363,403,372average 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.
6 Cash generated from operations
2010/11 2009/10 Full Full year year unaudited audited £m £m Continuing operations Profit after tax 66.2 37.5 Adjustment for: - tax 27.1 16.0 - depreciation 9.2 9.7 - amortisation of intangible assets 9.9 9.8 - loss on sale of property, plant - 0.2and equipment - preference dividends 3.5 3.5 - interest income (0.1) (0.5) - interest expense 14.6 14.1 - premium on redemption of preference shares 0.8 0.8 - additional funding for post (3.9) (2.9)retirement defined benefit plans - increase/(decrease) in net pension 0.4 2.0liability (US defined benefit plans) - increase in other post-retirement 0.1 -obligations - share-based payments 6.7 1.1 - non-cash impact of restructuring (0.8) (5.8)costs/pension changes Changes in working capital: - (increase)/decrease in inventories (41.6) 9.3 - increase in trade and other receivables (15.1) (3.6) - increase in trade and other payables 25.0 7.1 Total cash generated from operations 102.0 98.37 Net financial liabilities 30th January 31st January 2011 2010 unaudited audited £m £m Cash and cash equivalents 33.4 26.6 Unsecured loans and overdrafts (234.1) (231.2) Net financial liabilities before preference (200.7) (204.6)shares and derivatives Preference shares (61.0) (60.2) Derivative financial instruments (net) (1.2) 0.6 Net financial liabilities (262.9) (264.2) Net financial liabilities are analysed in the balance sheet as follows: Current assets Cash and cash equivalents 33.4 26.6 Derivative financial instruments - 1.1 33.4 27.7 Current liabilities Bank overdrafts - (1.2) 5.3% US dollar Guaranteed Senior Notes payable 2010 - (41.3) Other loans (0.1) (0.1) Derivative financial instruments (1.2) (0.5) (1.3) (43.1) Non-current liabilities Bank loans (109.9) (85.2)
5.9% US dollar Guaranteed Senior Notes payable 2013 (100.6) (99.4)
5.2% US dollar Guaranteed Senior Notes payable 2017 (19.0) - Other loans (4.5) (4.0) Preference shares (61.0) (60.2) (295.0) (248.8)
During the second quarter the Group repaid its $66 million US Private Placement notes as they fell due, by drawing down $30 million from its new $75 million US Private Placement Shelf Facility, repayable July 2017, and the remainder from existing bank facilities. At 30th January 2011, the headroom on bank borrowings was £73.9 million with these facilities now totalling £185 million and in place until January 2013.
8 Exchange rates
The principal average exchange rates used to translate the Group's overseasprofits were as follows: 2010/11 2009/10 2010/11 2009/10 Fourth Fourth Full Full quarter quarter year year US dollar 1.56 1.62 1.54 1.59 Euro 1.17 1.13 1.17 1.13 9 Ordinary dividend
The directors are proposing a final dividend in respect of the year ended 30th January 2011, of 6.0p per share which will absorb £21.7 million of shareholders' funds. As the final dividend is subject to approval at the Annual General Meeting of the Company, to be held on 14th June 2011, it has not been provided for at 30th January 2011. Once approved, the final dividend will be paid on 22nd June 2011 to shareholders on the register of members on 27th May 2011.
10 Events ocurring after the balance sheet date
On 31 January 2011, the Group completed the sale of TPC Wire & Cable ("TPC"), part of the Industrial Products Division, to Pfingsten Partners LLC for a cash consideration payable on completion of $43 million (before costs). The provisional pre-tax gain on disposal is £16.8 million. The disposal of TPC does not qualify as a discontinued operation, however, the assets and liabilities of TPC have been classified 'as held for sale' as at 30th January 2011, with net assets of £7.8 million. The trading results of TPC for the year ended 30th January 2011, were not material to the Group.
vendorRelated Shares:
PFL.L