Half-yearly Report

Premier Farnell plc 18 September 2014 Results for the first half of the financial year ending 1 February 2015 Key Financials H1 14/15 H1 13/14 Change Underlying Growth (a)Continuing operations (26 (26 weeks) weeks)(unaudited) £m except for per share Total revenue 479.3 498.2 -3.8% 3.3% Adjusted operating profit (b) 45.5 47.5 -4.2% 3.1% Adjusting items (b) (2.4) 0.2 Total operating profit 43.1 47.7 -9.6% -2.5% Adjusted profit before tax (b) 38.8 37.9 2.4% Total profit before taxation 36.4 38.1 -4.5% Adjusted earnings per share 7.2p 7.1p 1.4%(b) Basic earnings per share 6.8p 7.1p -4.2% Free cash flow (c) 13.8 8.3 66.3% Interim ordinary dividend per 4.4p 4.4p -share (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 growth in operating profit is calculated at constant exchange rates, unless otherwise stated. (b) Current year adjusting items comprise restructuring costs of £2.3m, and acquisition costs of £0.1m. In the prior year, adjusting items comprise restructuring costs of £1.3m and a net gain on US property disposal of £1.5m. (c) Free cash flow comprises total cash generated from operations, excluding cash flows related to adjusting items, less net capital expenditure, interest, preference dividends and tax payments. HIGHLIGHTS First half sales growth of 3.3%, accelerating to 4.7% in the second quarter.Positive momentum reflects the execution of our strategic priorities andgradual improvement in the market backdrop. Adjusted operating margin was 9.5%, in line with our expectations and unchangedfrom the prior year despite planned investments. Adjusted profit before tax up 2.4% year on year, despite currency movements,benefiting from reduced finance costs. Business reorganisation on track to achieve planned £6m-£8m annual costbenefits in 2015/16. New executive team in place to lead the simplifiedorganisation as we seek to leverage our global resources. Continued strategic progress, especially in developing leadership at the frontend of electronics cycle: Integration of AVID Technologies enhances Group's offering to componentsmanufacturers. Development kit sales to engineering customers up 13.5%. Phase one of element14 Design Center launched. Phase two will provideindustry's first online software store. Global contract signed with ARM to support mbed online tools platform fordevelopment of the Internet of Things. Emerging markets sales growth up 14.4%, ahead of target. Free cash flow at 2.9% of sales following inventory investments; inventoryexpected to remain at similar level in second half. The Board has approved an unchanged interim dividend of 4.4p per share (2013/14: 4.4p). Laurence Bain, Chief Executive Officer, commented: "The Group made progress in the first half of 2015 towards achieving its salesgrowth target of 6%, whilst maintaining stable gross margin. We are on trackwith our planned investments to develop our design services business and tofurther enhance our innovative eCommerce channels and, in June, we commencedthe reorganisation of our business into a more efficient, global enterprise. The successful execution of these initiatives will position the Group tobecome the global destination for electronics customers and deliver itsstrategy for profitable growth. We continue to expect a year of further progress in achieving the Group'sstrategic goals with our full year expectations remaining unchanged. Followingthe completion of the planned strategic investments over the remainder of thisyear, we believe that the Group will be well positioned to accelerate itstop-line growth and deliver profitability in line with our target." For further information, contact: Laurence Bain, Chief Executive Officer Premier Farnell plc +44 (0) 20 7851 4107Mark Whiteling, Chief Financial Officer Thomas Churchill, Investor RelationsRichard Mountain FTI Consulting +44 (0) 20 3727 1374 Premier Farnell's announcements and presentations are published at www.premierfarnell.com together with business information and links to all otherGroup web sites. An interim management statement will be announced on 14 November 2014. This press release contains certain forward-looking statements relating to thebusiness of the Group and certain of its plans and objectives, including, butnot limited to, future capital expenditures, future ordinary expenditures andfuture actions to be taken by the Group in connection with such capital andordinary expenditures, the expected benefits and future actions to be taken bythe Group in respect of certain sales and marketing initiatives, operatingefficiencies and economies of scale. By their nature forward-looking statementsinvolve risk and uncertainty because they relate to events and depend oncircumstances that will occur in the future. Actual expenditures made andactions taken may differ materially from the Group's expectations contained inthe forward-looking statements as a result of various factors, many of whichare beyond the control of the Group. These factors include, but are not limitedto, the implementation of initiatives supporting the Group's strategy, theeffect of legislation and regulatory enactments, recruitment and integration ofnew personnel, the implementation of cost saving initiatives, continued use andacceptance of e-commerce programs and systems, implementation of new ITsystems, 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 worldwide and national economies. TheGroup does not intend to update the forward-looking statements made herein. Premier Farnell plc Divisional Analysis Revenue Underlying H1 14/15 H1 13/14MDD Division £m £m growth(a) Europe 183.4 188.0 1.1% APAC 39.1 37.0 18.7% Europe & APAC 222.5 225.0 3.8% Americas 164.3 181.5 0.9% MDD Other 56.6 54.5 6.7% Total MDD 443.4 461.0 3.0% IPD 35.9 37.2 6.8% Group 479.3 498.2 3.3% Adjusted Operating Profit (Operating margin %) Underlying H1 14/15 H1 13/14MDD Division £m £m growth(a) Europe & APAC 30.8 31.4 3.2% 13.8% 14.0% Americas 9.9 10.5 6.0% 6.0% 5.8% MDD Other 5.6 5.5 3.0% 9.9% 10.1%Total MDD 46.3 47.4 3.8% 10.4% 10.3%IPD 6.8 7.0 7.7% 18.9% 18.8%Head office (7.6) (6.9) Group 45.5 47.5 3.1% 9.5% 9.5% Note: Current year adjusted operating profit excludes restructuring costs of£2.3m (MDD Europe and APAC £0.9m, MDD Americas £0.2m, Head office £1.2m) andacquisition costs of £0.1m (MDD Americas). PREMIER FARNELL OVERVIEW Premier Farnell plc is one of the world's leading high service distributors oftechnology products and solutions. The Marketing and Distribution Division (MDD) supports customers around theworld who range from engineers to purchasing professionals and electronicsenthusiasts. Our Industrial Products Division is an innovator in life safety and the worldleader in the manufacture of high-performance components for fire-fighting. FIRST HALF STRATEGIC REVIEW Building our future as the global destination for electronics customers We believe that by providing a superior customer offer we will become theglobal destination for electronics customers. Providing a customer propositionthat meets the requirements of different groups of customers in the electronicsindustry will help us capture a greater share of the long term underlyinggrowth in electronics. We have identified three high-level customer segments, two of which go beyondour historic target and provide us with significant opportunity to grow ourbusiness profitably. The core proposition to each of these complementarysegments is as follows: 1. Components manufacturers: design services and manufacturing of development boards 2. Engineering customers: low volume, time critical distribution of electronic components, tools and software 3. Manufacturing customers: medium volume, scheduled distribution of electronic components Historically, Premier Farnell has been focused on servicing the low volume,time critical requirement for electronics from engineering customers and thisstill makes up the core of our business today. More recently, we have takensteps to extend our business model. We can now support components manufacturerswith the launch of new technologies through design services and manufacturingof development kits and are seeking to grow share with manufacturing customersas we follow customers' designs through to production. Clearly defined strategic priorities The execution of our strategic vision of becoming the global destination forelectronics customers will create sustainable shareholder value by growing ourbusiness, delivering efficiencies, optimising profitability and deliveringstrong free cash flow. We are focused on delivering seven strategicpriorities, listed below, to achieve our objectives and deliver the financialsuccess defined by our through-the-cycle key performance indicators. Objective Strategic priority KPI Growth Become the recognised technology experts for design 6% sales services and manufacturing of development kits growth for global components manufacturers 4% active Build and leverage technical expertise to attract customer engineering customers at cutting edge of technology growth Grow our business with engineering and manufacturing 10% emerging customer base, especially in the emerging markets markets growth Efficiency Evolve our operating model into a more efficient >30% RONA and effective global, function based structure Develop attractive eCommerce channels 70% of MDD that enable automation of processes sales from eCommerce Profitability Optimise our business through effective 10%-12% ROS% management of gross margin and costs Cash Optimise use of cash in the business and distribution 6% FCF to of funds to shareholders through-the-cycle sales As described below, we have made progress against each of these strategicpriorities through the first half of our 2015 financial year as we seek todeliver our key performance indicators. Strategic objective 1: Growth By becoming the global destination for electronics customers, we believe thatPremier Farnell will deliver 6% sales growth through-the-cycle. Through thefirst half, the Group grew sales by 3.3% with positive momentum in all ourdivisions. Whilst growth rates are currently below our targeted level, we havemade significant progress in enhancing our customer proposition for each of ourthree targeted customer segments. As such, the Group is well positioned todeliver sales growth at levels consistent with our through-the-cycle target. Become the recognised technology experts for design services and manufacturingof development kits for global components manufacturers. Over the past three years, we have taken steps to extend our business model atthe front end of electronics as we endeavour to become the recognisedtechnology experts for design services and new product introduction for globalcomponents manufacturers. Most notably, we acquired Embest and AVIDTechnologies, businesses with significant technical expertise that allow us toprovide design services to our key semiconductor components manufacturers.Specifically, our engineers at Embest and AVID are working with these strategicpartners to design and manufacture the development kits that support therelease of their latest components. The market for the manufacture ofdevelopment kits is estimated to be worth approximately £350 million globally. In the first half, we further extended our partnership with ARM in a move thatincreases our value to many of our supplier partners. By signing a globalcontract that allows Embest to support the ARM mbed online tools platform, weare now enabling the development of connected embedded devices in the Internetof Things (IoT). We also designed and manufactured a number of influentialdevelopment boards during the period including the Texas Instruments CC3200Launchpad development board, a product which is targeted at the IoT, and theFreescale MagniV MINIBRD development platform which targets the automotivesector. In addition, we have extended the distribution franchise for NXP's NFCExplore development board into North America following a successful launch inEurope and Asia Pacific. This product provides engineering customers with a newdevelopment platform to innovate in the near field communications technologyspace. Build and leverage technical expertise to attract engineering customers at thecutting edge of technology. Access to the latest technologies, as well as the technical expertise toutilise them effectively, is attractive for many small volume engineeringcustomers. Development boards are key products used by engineering customers totest the attributes of the semiconductor as they make their product selectionin the early stages of product design. The size of the total global market forthe distribution of development boards to design engineers is estimated to beat least £350 million. Following last year's inventory investment to enhanceour range in this key product group, we have delivered accelerated growth indevelopment kit sales, up 13.5% year on year in the first half. In addition, we launched phase one of our new online Design Center during thefirst half. The Design Center is a hub on the element14 community whichprovides design engineering customers with access and information to a broadrange of development kits and tools. Engineers are increasingly using softwareas the key point of differentiation in their products. Through phase two, whichwill go live early next year, the Design Center will incorporate a softwarestore where customers can buy licences for embedded systems development toolsfrom brands such as ARM, Timesys, Atollic and CadSoft. Grow our business with our engineering and manufacturing customer base,especially in the emerging markets. From around the globe, engineering customers with low volume, time criticalrequirements come to Premier Farnell for access to a broad range of products,information and support to make their product selection, as well as the fast,reliable fulfilment of orders. The products they require will includecomponents and tools, such as test and measurement equipment. We have anextensive proposition for customers in this space with over 600,000 productsstocked from over 3,000 suppliers available for immediate shipment. We arecommitted to continuing to develop this offering in order to attract and retainthis core customer segment globally. Last year, we invested in inventory toincrease our product linefill to targeted levels, especially in our MRO productrange in North America. As a consequence of the re-organisation of our businessto a global structure, we will be better positioned to leverage our resourcesglobally in order to grow our business with engineering and manufacturingcustomers. Electronics distribution is a marketplace that is changing rapidly. As productlifecycles have become shorter, the need for new innovations has increased andour customers' desire to offer personalised product solutions has proliferated.This is expanding the small run production market - mid-sized volumeopportunities that were previously closed to us - as the lines blur betweenhigh and low volume distribution. We have focused on developing our offering to allow us to grow our businesswith mid volume, manufacturing customers, particularly as we work with designengineering customers to follow their product development through toproduction. The enhancements that we have already made include: expanding thedepth of key electronic products held in our inventory; providing greaterproduct traceability; and holding a range of production packaging options. Asoutlined at the beginning of the year, we are making investments to enhance ouronline channels which will benefit customers in this segment as well as our lowvolume customer base. Although our active customer base declined 2.7% year on year, it increased 0.3%over the prior year end. The year on year decline reflects the activityinstigated in the second half of last year to de-emphasise non-profitablecustomers in segments not core to our strategic objectives and the toughercomparators in the first half of this year. We believe that the developmentsoutlined above position Premier Farnell to grow business with our engineeringand manufacturing customer base. We have made some significant progress againstthis priority. Most notably, we have seen sales in emerging markets grow aboveour strategic target, up 14.4% year on year with China and India especiallystrong. Strategic objective 2: Efficiency The effective and efficient investment of our shareholders' funds is a primaryaim of our strategy. We continue to measure our success in the optimisation ofour global resources against a return on net operating assets (RONA) target of>30%. In the first half, the Group's RONA exceeded this goal at 30.6%. Evolve our operating model into a more efficient and effective global, functionbased structure. In June, we reported that we had begun an important programme to move to anintegrated, global organisational structure in our element14 marketing anddistribution businesses. By moving to a function based structure, the businesscan better leverage its expertise and resources around the globe. As well asenabling the accelerated execution of our strategy, the simplified globalstructure will deliver operating efficiencies and enable the Group to benefitfrom economies of scale. As previously indicated, we anticipate that the cost to achieve thisreorganisation will be approximately £8m and we are on track to deliverannualised cost benefits, once fully implemented, of £6m to £8m. Develop attractive eCommerce channels that enable automation of processes. Our multichannel sales and marketing approach leverages transactional eCommercecapability to make it simple for engineering customers to buy from PremierFarnell, wherever in the world they are based. In addition to its convergencewith the market leading online community, element14, which now has over 250,000members, our eCommerce sales and marketing channels are supported by 24/5technical support, regional contact centres and, for larger accounts, fieldsales resources. As well as supporting customers' requirement for detailedinformation amongst many other benefits, eCommerce channels are typically themost efficient as they allow greater automation of processes. eCommerce penetration was 49.5% in the first half, reflecting the decommissionof optical character recognition for the fully automated processing of faxesand the shift in our customer base as we extend our model towards the mediumvolume manufacturing customer market. Whilst we have typically served themanufacturing customer segment through offline channels, web enhancementstargeted at these customers are scheduled to go live in the second half. Thiswill enable the Group to continue to drive towards our objective of 70% salesvia eCommerce. These investments continue on track, with the roll out of our upgraded webplatform now complete across three European markets following its successfulimplementation in North America at the end of last year. The programme will becompleted across the rest of Europe and Asia Pacific over the course of thesecond half of the year. Having a single global web platform will allow thebusiness to benefit from operating efficiencies, such as the capability toimplement sales and marketing activity more quickly and consistently around theglobe, as well as providing a better online experience for our customers. Strategic objective 3: Profitability Optimise our business through effective management of gross margin and costs. The Group targets an operating margin that optimises profitabilitythrough-the-cycle by seeking to balance gross margin and costs.First halfoperating margin of 9.5% (on an adjusted basis) was in line with ourexpectations given our planned strategic investments to enhance our customerproposition. Gross margin for the first half of the financial year was 37.4%, sequentiallystable with the second half of the prior year. We continue to remain focused onmanaging gross margin appropriately, in line with market conditions andreflecting the value we create for customers and suppliers. We remain focused on the tight management of costs. First half net operatingexpenses as a percentage of sales reduced to 27.9%, down 0.4 percentage pointson the prior year (at constant exchange rates). The Group will continue tomanage its cost base both strategically, as we further simplify theorganisation and take advantage of the efficiencies arising from increasedeCommerce activity, and tactically, in response to sales volumes as we focus onoptimising business performance. Strategic objective 4: Cash Optimise use of cash in the business and distribution of funds to shareholdersthrough-the-cycle. We aim to optimise the use of cash in the business to take advantage of theopportunities that we see and enable distribution of funds to shareholdersthrough-the-cycle. Adjusted free cash flow as a percentage of sales of 2.9% was below ourthrough-the-cycle target of 6%, following further inventory investments toenrich our product offering for engineering and manufacturing customers. Netcash outflow from investment in working capital was £14.4m, resulting inadjusted cash conversion at 84.4% (2013/14: 71.6%). Second half inventorylevels are expected to remain at similar levels overall as we optimise ourproduct portfolio, whilst continuing to ensure that our inventory breadth anddepth supports our targeted customers' requirements. With our ability to manage working capital in response to market conditions andour commitment to maintaining the quality of earnings through this period ofinvestment, the Board has approved an unchanged interim dividend of 4.4p pershare. FIRST HALF BUSINESS REVIEW Positive Group sales momentum continues Group sales grew 3.3% year on year in the first half. Sales momentum improvedin all our divisions through the course of the first half, reflecting theexecution of our strategic initiatives and a gradual improvement in the marketbackdrop. Excluding Raspberry Pi, Group sales in the first half grew 3.3% yearon year. Underlying sales growth Underlying sales growth (including Raspberry Pi) (excluding Raspberry Pi) Q1 Q2 H1 Q1 Q2 H1 Europe 0.8% 1.4% 1.1% 0.9% 1.7% 1.3% APAC 20.5% 17.1% 18.7% 18.8% 15.6% 17.1% Americas -0.5% 2.3% 0.9% 0.8% 3.5% 2.1% CPC & MCM (MDD Other) 0.8% 13.0% 6.7% -1.4% 6.9% 2.6% Akron Brass (IPD) 5.2% 8.4% 6.8% 5.2% 8.4% 6.8% Group 2.0% 4.7% 3.3% 2.2% 4.4% 3.3% Europe and Asia Pacific Europe and Asia Pacific's element14 business delivered first half sales growthof 3.8% year on year. The European economic environment remains mixed. In the first half, Europesales grew 1.1% year on year with positive momentum from Q1 to Q2. Despite strong manufacturing PMIs, market conditions in the United Kingdomremain challenging and are characterised by heightened competition. Againstthis backdrop, UK sales declined 1.2% in the first half. However, the UK iswell positioned to benefit from investments in our customer proposition,including our online enhancements. Continental Europe performed more stronglyin the first half, growing sales 2.1% year on year as small declines in Franceand Scandinavia were more than offset by sales growth in Spain, Italy, Germanyand Eastern Europe. Asia Pacific provides the Group with a significant long-term growthopportunity. First half sales grew 18.7% year on year, with every marketdelivering positive growth as we expanded our market share in the region. Sales in the key emerging markets of China and India grew 23.8% and 21.5%,respectively, whilst Australia also delivered first half sales growth of 6.6%over the prior year. Americas Americas' sales grew 0.9% in the first half, as we implemented sales plans andintegrated AVID Technologies into the Group. Excluding Avid Technologies,Americas grew sales by 0.1% year on year in the first half. Focus on ourstrategic priorities has resulted in improving sales momentum across the half,with Q2 sales up 2.3% compared to a decline of 0.5% in the first quarter. We continue to make investments to strengthen the Americas business and enhancethe value of its offering by leveraging our global resources, whilst alsotaking action to implement cost efficiencies and improve its operating model.Over the medium term, we expect the execution of our strategy to develop ourAmericas business into a digital enterprise and capitalise on the significantopportunities in the region. CPC and MCM CPC and MCM performed strongly in the first half overall, despite a challengingmarket backdrop, to deliver combined sales growth of 6.7%. The businessesdelivered a significantly stronger performance in the second quarter when salesgrew 13.0% year on year. This follows the publication of CPC's new catalogueand as the division leveraged its product range to 'maker' and hobbyistcustomers with the launch of the Raspberry Pi B+ board. Raspberry Pi Raspberry Pi sales grew 4.8% year on year in the first half as demand continuedfor this disruptive technology launched in May 2012. In the second quarter, wewere instrumental in the launch of the Raspberry Pi B+ board, which resulted inour element14 brand achieving market leading coverage across both traditionalpress and social media as we seek to grow our brand awareness. Akron Brass Following a standout year in 2013/14, Akron Brass continued to deliver a strongperformance in the first half of 2014/15. First half sales grew 6.8% year onyear as the business expands further into international markets andincreasingly innovates to build on its market leading position in NorthAmerica. Akron Brass' sales growth rate accelerated to 8.4% in the secondquarter. The progress made so far this year is encouraging and positions AkronBrass for continued strong financial performance. FIRST HALF FINANCIAL COMMENTARY Operating Profit As explained in the strategic review, the Group targets an operating marginthat optimises profitability through-the-cycle by seeking to balance grossmargin and costs. First half operating margin of 9.5% (on an adjusted basis)was in line with our expectations given the planned strategic investments toenhance our customer proposition. Adjusting itemsinclude £2.3m of restructuring costs related to our globalbusiness re-organisation and acquisition costs of £0.1m related to the purchaseof AVID Technologies. We continue to anticipate that the total cost to achievethe business re-organisation will be approximately £8m. In the prior year,adjusting items excluded restructuring costs of £1.3m and a net gain on USproperty disposal of £1.5m. Adjusted operating profit for the first half was £45.5m (2013/14: £47.5m),representing growth of 3.1% year on year at constant exchange rates. Total operating profit for the first half was £43.1m, reflecting a net costfrom adjusting items of £2.4m (2013/14: £47.7m, after reflecting a net gainfrom adjusting items of £0.2m), resulting in a year on year decline of 2.5% atconstant exchange rates. Cash flow and balance sheet As described in the strategic review, adjusted free cash flow as a percentageof sales of 2.9% was below our through-the-cycle target of 6%, followingfurther inventory investments to enrich our product offering for engineeringand manufacturing customers. Net cash outflow from investment in workingcapital was £14.4m, resulting in adjusted cash conversion at 84.4% (2013/14:71.6%). Second half inventory levels are expected to remain at similar levelsoverall as we optimise our product portfolio whilst continuing to ensure thatour inventory breadth and depth supports our targeted customers' requirements. During the period the Group purchased and cancelled 712,948 of its preferenceshares at a total cash cost of £11.5 million. Based on the book value and fairvalue of the instrument at the date of purchase, the financial liabilityelement of the preference shares was reduced by £11.5 million and the equityelement by £1.9 million. Total consideration payable for the acquisition of AVID Technologies was £7.7million, with additional acquisition costs of £0.1 million shown as anadjusting item. Of the total consideration of £7.7 million, £0.3 millionrelates to the fair value of net assets acquired and £7.4 million relates togoodwill. Net financial liabilities (including preference shares) increased to £240.8mfrom £225.8m at the end of the prior financial year. The impact of exchangerates in the period was to decrease net financial liabilities by £4.9m,principally in relation to our US$ denominated private placement notes. Netdebt to adjusted EBITDA of 2.3x at the end of the first half was in line withour expectations following the acquisition of AVID Technologies. Premier Farnell's financial position remains robust, with good liquidity andstrong free cash flow. At the end of the first half, headroom on bankborrowings was £132.7m under facilities in place until October 2016. Thisheadroom, combined with our net cash position of £39.5m, continues to give us asecure funding position. Since the half year end, the Group successfullyrefinanced its US Private Placement due August 2016 until 2024. Foreign currency In the first half of 2014/15, the average exchange rates for sterling againstthe US dollar and the Euro were, respectively, £1 = US$1.68 (H1 2013/14: £1 =US$1.52) and £1 = €1.23 (H1 2013/14: £1 = €1.17). Prior year comparatives forrevenues and adjusted operating profit benefited by £33.9m and £3.4m,respectively, as a result of the foreign exchange rates compared to the firsthalf 2014/15. At the beginning of the second half of last year, sterling strengthened againstboth the US dollar and the Euro and this should result in less challengingcomparatives in the second half of 2014/15. For reference, the average exchangerates in the second half last year for sterling against the US dollar and theEuro were, respectively, £1 = US$1.62 and £1 = €1.19. A one cent movement in the exchange rate between the US dollar and sterlingimpacts the translation of the Group's operating profit by approximately £0.2mper annum, and a one cent movement in the exchange rate between the Euro andsterling impacts the translation of the Group's operating profit byapproximately £0.5m per annum. Finance costs Net finance costs in the first half were £6.7m (2013/14: £9.6m). This comprisesnet interest payable of £4.9m (2013/14: £7.4m), which was covered 9.3 times byadjusted operating profit, and a net charge of £1.8m (2013/14: £2.2m) inrespect of the Company's convertible preference shares. The reduction in netfinance costs reflects the repayment of the US$159m Private Placement notes inJune 2013, combined with the retranslation of US$ interest charges on theGroup's US$ Private Placement notes, as well as the benefit of the repurchaseand cancellation of 0.7m preference shares. Profit before tax Adjusted profit before tax for the first half was £38.8m (2013/14: £37.9m), anincrease of 2.4% on the previous year. Total profit before tax was £36.4m (2013/14: £38.1m), a decline of 4.5% on the previous year. Tax The taxation charge for the first half represents an effective tax rate of30.0% (2013/14: 30.0%) on profit before tax, preference dividends and adjustingitems. We anticipate an effective tax rate at broadly similar levels goingforward. Earnings per share Adjusted basic earnings per share for the first half are 7.2p (2013/14: 7.1p).Basic earnings per share after the net impact of adjusting items are 6.8p (2013/14: 7.1p). Dividend The Board has recommended that the interim dividend is maintained at 4.4p pershare (2013/14: 4.4p per share). The interim dividend is payable on 23 October2014 to shareholders on the register at 26 September 2014. Board changes As announced separately today, we are pleased to welcome Gary Hughes to theBoard as one of our non-executive directors, with effect from 1 November 2014. Mr Hughes is currently a senior member of the Operational Excellence team atApax Partners LLP and a non-executive director of J Sainsbury plc, Matomy MediaGroup plc, Smart Technologies Inc, and SECC Limited. His former roles includeChief Financial Officer of Gala Coral Group, Chief Executive Officer of thelargest operating division of United Business Media plc and Group FinanceDirector of Emap plc. Mr Hughes qualified as a Chartered Accountant with Ernst& Whinney. His extensive experience in finance and operational roles in anumber of industries will provide a valuable addition to Premier Farnell as wecontinue to develop our business. Dennis Millard, who has been a member of the Board since 2007 and chairs itsAudit Committee, will stand down from the Board at the end of January 2015. Atthat time, Mr Hughes will become Chairman of the Audit Committee and PaulWithers will take over as the Senior Independent Director. Outlook The Group made progress in the first half of 2015 towards achieving its salesgrowth target of 6%, whilst maintaining stable gross margin. We are on trackwith our planned investments to develop our design services business and tofurther enhance our innovative eCommerce channels and, in June, we commencedthe reorganisation of our business into a more efficient, global enterprise. The successful execution of these initiatives will position the Group tobecome the global destination for electronics customers and deliver itsstrategy for profitable growth. We continue to expect a year of further progress in achieving the Group'sstrategic goals with our full year expectations remaining unchanged. Followingthe completion of the planned strategic investments over the remainder of thisyear, we believe that the Group will be well positioned to accelerate itstop-line growth and deliver profitability in line with our target. Risks and uncertainties The principal risks and uncertainties facing the Group and the ways in whichthey are mitigated are described on pages 26 and 27 of the Company's 2013/14Annual Report and Accounts. In addition, we have recognised that evolving ourbusiness model will require rigorous management of the risks arising from thischange to safeguard current operating performance and ensure the move to globalbased structures is effective. Risks and Mitigating actions Opportunityuncertainties Business The CEO, CFO and CPO are Our new global structure willreorganisation directly involved in managing facilitate better sharing ofas we evolve this model change, supported expertise and resources across theour business by both experienced programme business globally. It will allowmodel managers and high performing us to enhance the service we employees from across the provide to meet the needs of business. customers and suppliers across regional boundaries. Condensed Consolidated Income Statement For the half year ended 3 August 2014 2014/15 2013/14 2013/14 Half Half Full year year year unaudited unaudited audited Notes £m £m £m Continuing operations Revenue 2 479.3 498.2 968.0 Cost of sales (299.9) (310.5) (605.1) Gross profit 179.4 187.7 362.9 Net operating expenses - adjusted operating expenses (133.9) (140.2) (269.9) - adjusting items 3 (2.4) 0.2 (1.5) Total net operating expenses (136.3) (140.0) (271.4) Operating profit - adjusted operating profit 2 45.5 47.5 93.0 - adjusting items 3 (2.4) 0.2 (1.5) Total operating profit 2 43.1 47.7 91.5 Finance income 0.3 0.2 0.4 Finance costs - interest payable (5.2) (7.6) (12.8) - preference dividends (1.4) (1.8) (3.5) - premium on redemption of preference shares (0.4) (0.4) (0.8) Total finance costs (7.0) (9.8) (17.1) Total profit before taxation 36.4 38.1 74.8 Taxation 4 (11.3) (12.1) (23.4) Profit for the period attributabletoowners of the parent 25.1 26.0 51.4 Earnings per share Basic 5 6.8p 7.1p 14.0p Diluted 6.7p 7.0p 13.9p Ordinary dividends Interim - proposed 4.4p 4.4p 4.4p Final - proposed 6.0p Paid 6.0p 6.0p 10.4p Impact on shareholders' funds (£m) 22.0 22.0 38.1 Condensed Consolidated Statement of Comprehensive Income For the half year ended 3 August 2014 2014/15 2013/14 2013/14 Half Half Full year year year unaudited unaudited audited £m £m £m Profit for the period 25.1 26.0 51.4 Items that will not be reclassified to profit or loss Remeasurements of postemployment benefit obligations (2.1) 1.2 (4.0) Deferred tax credit/(charge) on remeasurementsof post employment benefit obligations 0.6 (0.6) 0.7 Total items that will not be reclassified to profit or loss (1.5) 0.6 (3.3) Items that may be reclassified to profit or loss Net exchange adjustments (1.2) 1.9 (5.9) Net fair value (losses)/gains on cash flow hedges (0.7) 4.0 6.0 Total items that may be reclassifiedsubsequently to profit or loss (1.9) 5.9 0.1 Other comprehensive (expense)/income for the period (3.4) 6.5 (3.2) Total comprehensive income for the periodattributable to owners of the parent 21.7 32.5 48.2 The accompanying notes form an integral part of this unaudited condensedconsolidated financial information. Condensed Consolidated Balance Sheet As at 3 August 2014 3 August 4 August 2 February 2014 2013 2014 unaudited unaudited 1 audited Notes £m £m £m ASSETS Non-current assets Goodwill 45.6 38.0 38.3 Other intangible assets 34.5 31.5 32.6 Property, plant and equipment 49.1 52.3 49.5 Deferred tax assets 8.6 7.9 4.9 Total non-current assets 137.8 129.7 125.3 Current assets Inventories 247.3 250.2 236.0 Derivative financial instruments 6 1.3 0.3 2.0 Trade and other receivables 136.1 137.3 128.9 Current tax receivable 3.8 3.8 2.1 Cash and cash equivalents 6 39.5 46.1 42.8 Total current assets 428.0 437.7 411.8 LIABILITIES Current liabilities Financial liabilities 6 (1.7) (1.9) (1.8) Derivative financial instruments 6 - (0.3) - Trade and other payables (125.5) (130.4) (118.0) Current tax payable (22.4) (11.7) (12.4) Total current liabilities (149.6) (144.3) (132.2) Net current assets 278.4 293.4 279.6 Non-current liabilities Financial liabilities 6 (279.9) (289.8) (268.8) Retirement and other post-employment benefits (44.1) (41.7) (44.7) Deferred tax liabilities (6.2) (7.3) (6.7) Total non-current liabilities (330.2) (338.8) (320.2) NET ASSETS 86.0 84.3 84.7 EQUITY Ordinary shares 18.6 18.6 18.6 Equity element of preference shares 8.5 10.4 10.4 Share premium 32.8 32.4 32.7 Capital redemption reserve 5.2 4.4 4.4 Hedging reserve 1.3 - 2.0 Cumulative translation reserve 15.8 24.8 17.0 Retained earnings 3.8 (6.3) (0.4) TOTAL EQUITY 86.0 84.3 84.7 Consolidated Statement of Changes in Equity For the half year ended 3 August 2014 2014/15 2013/14 2013/14 Half Half Full year year year unaudited unaudited audited £m £m £m Total equity at beginning of period 84.7 72.2 72.2 Profit for the period 25.1 26.0 51.4 Other comprehensive (expense)/income (3.4) 6.5 (3.2) Total comprehensive income 21.7 32.5 48.2 Transactions with owners: Ordinary dividends paid (22.0) (22.0) (38.1) Ordinary share capital subscribed 0.1 0.5 0.8 Share-based payments 1.5 1.1 1.6 Total transactions with owners (20.4) (20.4) (35.7) Total equity at end of period 86.0 84.3 84.7 The accompanying notes form an integral part of this unaudited condensedconsolidated financial information. 1 Comparative information has been restated due to the revision of IAS19. Thishas reduced the Group's brought forward post-employment liabilities by £6.2million, with associated deferred tax assets being reduced by £0.7 million anddeferred tax liabilities by £1.1 million. Condensed Consolidated Statement of Cash Flows For the half year ended 3 August 2014 2014/15 2013/14 2013/14 Half Half Full year year year unaudited unaudited audited Notes £m £m £m Cash flows from operating activities Operating profit 2 43.1 47.7 91.5 Adjusting items: - net income statement impact 3 2.4 (0.2) 1.5 - cash impact (2.7) (4.0) (6.2) Non cash impact of adjusting items (0.3) (4.2) (4.7) Depreciation and amortisation 7.4 9.2 17.7 Changes in working capital (14.4) (22.3) (23.7) Additional funding for post retirement defined benefit plans (1.9) (1.7) (2.6) Other non-cash movements 1.8 1.3 2.2 Total cash generated from operations 35.7 30.0 80.4 Interest received 0.3 0.2 0.4 Interest paid (5.0) (7.4) (12.4) Dividends paid on preference shares (1.4) (1.8) (3.5) Taxation paid (8.4) (8.8) (17.5) Net cash generated from operating activities 21.2 12.2 47.4 Cash flows from investing activities Net outflow from purchase of business (7.8) (2.2) (2.2) Adjusting items: - cash impact of US property disposal - 4.0 4.2 Purchase of property, plant and equipment (3.8) (2.1) (5.1) Purchase of intangible assets (6.3) (5.8) (12.7) Net cash used in investing activities (17.9) (6.1) (15.8) Cash flows from financing activities Issue of ordinary shares 0.1 0.5 0.8 Purchase of preference shares (11.5) - - Proceeds from bank loans 27.5 27.3 27.3 Repayment of bank loans - (101.5) (108.6) Dividends paid to ordinary shareholders (22.0) (22.0) (38.1) Net cash used in financing activities (5.9) (95.7) (118.6) Net decrease in cash, cash equivalents and bank overdrafts (2.6) (89.6) (87.0) Cash, cash equivalents and bank overdrafts at beginning of period 42.8 131.6 131.6 Exchange (losses)/ gains (0.7) 4.1 (1.8) Cash, cash equivalents and bank overdrafts at end of period 39.5 46.1 42.8 Reconciliation of net financial liabilities Net financial liabilities at beginning of period (225.8) (229.6) (229.6) Net decrease in cash, cash equivalents and bank overdrafts (2.6) (89.6) (87.0) (Increase)/ decrease in debt (27.5) 74.2 81.3 Purchase of preference shares 11.5 - - Premium on redemption of preference shares (0.4) (0.4) (0.8) Derivative financial instruments (0.7) 2.2 4.2 Amortisation of arrangement fees (0.2) (0.3) (0.5) Exchange movement 4.9 (2.1) 6.6 Net financial liabilities at end of period 6 (240.8) (245.6) (225.8) 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 2013/14 Annual Report and Accounts on pages 82 to 86 except as described below. There are no new IFRS's or IFRIC's that are effective for the first time in the current year which have had a significant impact on the Group. This condensed consolidated financial information does not comprise statutory accounts within the meaning of Section 498 of the Companies Act 2006. Statutory accounts for the financial year ended 2 February 2014, were approved by the Board of Directors on 17 April 2014 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified and did not contain any statement under Section 498 of the Companies Act 2006. Copies of the Company's Annual Report and Accounts are available from Premier Farnell plc, 150 Armley Road, Leeds, LS12 2QQ, England, or from the Company's website at www.premierfarnell.com. Going concern basis After making enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The Group therefore continues to adopt the going concern basis in preparing its interim financial statements. Estimates The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing these condensed interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 2 February 2014. 2 Segment information 2014/15 Half year unaudited 2013/14 Half year unaudited Adjusting Adjusting Before items After Before items After Adjusting Adjusting Adjusting adjusting items (Note 3) items items (Note 3) tems £m £m £m £m £m £m Revenue Marketing and Distribution Division Americas 164.3 - 164.3 181.5 - 181.5 Europe and Asia Pacific 222.5 - 222.5 225.0 - 225.0 Other Distribution Businesses 56.6 - 56.6 54.5 - 54.5 Total Marketing and Distribution Division 443.4 - 443.4 461.0 - 461.0 Industrial Products Division 35.9 - 35.9 37.2 - 37.2 479.3 - 479.3 498.2 - 498.2 Operating profit Marketing and Distribution Division Americas 9.9 (0.3) 9.6 10.5 1.3 11.8 Europe and Asia Pacific 30.8 (0.9) 29.9 31.4 (0.5) 30.9 Other Distribution Businesses 5.6 - 5.6 5.5 - 5.5 Total Marketing and Distribution Division 46.3 (1.2) 45.1 47.4 0.8 48.2 Industrial Products Division 6.8 - 6.8 7.0 - 7.0 Head Office costs (7.6) (1.2) (8.8) (6.9) (0.6) (7.5) 45.5 (2.4) 43.1 47.5 0.2 47.7 2013/14 Full year audited Adjusting Before items After Adjusting Adjusting items (Note 3) items £m £m £m Revenue Marketing and Distribution Division Americas 347.1 - 347.1 Europe and Asia Pacific 435.9 - 435.9 Other Distribution Businesses 109.7 - 109.7 Total Marketing and Distribution Division 892.7 - 892.7 Industrial Products Division 75.3 - 75.3 968.0 - 968.0 Operating profit Marketing and Distribution Division Americas 19.7 0.6 20.3 Europe and Asia Pacific 60.3 0.2 60.5 Other Distribution Businesses 12.1 - 12.1 Total Marketing and Distribution Division 92.1 0.8 92.9 Industrial Products Division 14.0 - 14.0 Head Office costs (13.1) (2.3) (15.4) 93.0 (1.5) 91.5 3 Operating profit 2014/15 2013/14 2013/14 Statutory operating profit is stated after (charging)/crediting the following: Half Half Full year year year unaudited unaudited audited £m £m £m - Restructuring costs (2.3) (1.3) (3.9) - Acquisition costs (0.1) - - - Net gain on US property disposal - 1.5 1.6 - Remeasurement of the fair value of contingent consideration - - 0.8 (2.4) 0.2 (1.5) Due to their significance and nature, adjusted operating expenses and adjusted operating profit have been disclosed on the face of the income statement which excludes the items above. Adjusting items in the period include £2.3 million of restructuring costs related to the Group's global business re-organisation and acquisition costs of £0.1 million due to the purchase of AVID Technologies (see note 12). The net gain on US property disposal in prior year relates to the sale and relocation of the MDD Americas Head Office. Restructuring costs incurred in the prior year primarily relate to decisions taken to reflect re-alignment of focus on areas of greatest opportunity, drive efficiency of global operations and optimise financial performance. In addition, there was one-off gain in prior year related to a re-measurement of the fair value of contingent consideration payable in respect of the acquisition of Shenzhen Embest Technology Co Ltd. 4 Taxation The taxation charge represents an effective tax rate for the 2014/15 financial year on profit before tax and preference dividends of 30.0% (2013/14: 30.0%). 5 Earnings per share Basic earnings per share is calculated by dividing the profit attributable to owners of the parent 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. Reconciliations of earnings and the weighted average number of ordinary shares used in the calculations are set out below. 2014/15 2013/14 Half Year unaudited Half Year unaudited Basic Diluted Basic Diluted per per per per share share share share Earnings amount amount Earnings amount amount £m pence pence £m pence pence Earnings per share Profit attributable to owners of the parent 25.1 6.8 6.7 26.0 7.1 7.0 Restructuring costs 2.3 0.6 0.6 1.3 0.4 0.4 Tax attributable to restructuring costs (0.7) (0.2) (0.2) (0.4) (0.1) (0.1) Net gain on US property disposal - - - (1.5) (0.4) (0.4) Tax attributable to gain on US property disposal - - - 0.6 0.1 0.1 Acquisition costs 0.1 - - - - - Tax attributable to acquisition costs - - - - - - Adjusted profit attributable to owners of the parent 26.8 7.2 7.1 26.0 7.1 7.0 Number Number Weighted average number of shares 367,312,884 366,453,668 Dilutive effect of share options 2,328,674 2,853,364 Diluted weighted average number of shares 369,641,558 369,307,032 2013/14 Full Year audited Basic per Diluted per Earnings share amount share amount £m pence pence Earnings per share Profit attributable to owners of the parent 51.4 14.0 13.9 Restructuring costs 3.9 1.1 1.1 Tax attributable to restructuring costs (1.1) (0.3) (0.3) Net gain on US property disposal (1.6) (0.4) (0.4) Tax attributable to net gain on US property disposal 0.6 0.1 0.1 Remeasurement of contingent consideration (0.8) (0.2) (0.2) Adjusted profit attributable to owners of the parent 52.4 14.3 14.2 Number Weighted average number of shares 367,069,378 Dilutive effect of share options 2,763,398 Diluted weighted average number of shares 369,832,776 Adjusted earnings per share has been provided in order to facilitate year on year comparison. 6 Net financial liabilities 3 August 4 August 2 February 2014 2013 2014 unaudited unaudited audited £m £m £m Cash and cash equivalents 39.5 46.1 42.8 Unsecured loans and overdrafts (229.3) (228.7) (207.2) Net financial liabilities before preference shares and derivatives (189.8) (182.6) (164.4) Preference shares (52.3) (63.0) (63.4) Derivative financial instruments (net) 1.3 - 2.0 Net financial liabilities (240.8) (245.6) (225.8) Net financial liabilities are analysed in the balance sheet as follows: Current assets Cash and cash equivalents 39.5 46.1 42.8 Derivative financial instruments 1.3 0.3 2.0 40.8 46.4 44.8 Current liabilities Other loans (1.7) (1.9) (1.8) Derivative financial instruments - (0.3) - (1.7) (2.2) (1.8) Non-current liabilities Bank loans (66.4) (47.5) (39.2) 3.0% US dollar Guaranteed Senior Notes payable 2016 (50.2) (55.8) (51.8) 5.2% US dollar Guaranteed Senior Notes payable 2017 (17.7) (19.7) (18.3) 4.4% US dollar Guaranteed Senior Notes payable 2018 (34.4) (38.3) (35.5) 4.8% US dollar Guaranteed Senior Notes payable 2021 (53.8) (59.8) (55.4) Other loans (5.1) (5.7) (5.2) Preference shares (52.3) (63.0) (63.4) (279.9) (289.8) (268.8) At 3 August 2014, the Group's syndicate bank facilities totalled £200 million expiring in October 2016. Based on these facilities, the headroom on bank borrowings at 3 August 2014 was £132.7 million. Fair value estimation The valuation methods for Group financial instruments held at fair value are defined by the following fair value measurement hierarchy: - Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1); - Inputs other than quoted prices included within level 1 that are observed for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2); - Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3). The following table presents the Group's assets and liabilities that are measured at fair value. At 3 August 2014 Level 1 Level 2 Level 3 Total £m £m £m balance Assets Derivative financial instruments used for cash flow hedges - 1.3 - 1.3 Liabilities Contingent consideration - - (0.7) (0.7) Net assets/ (liabilities) - 1.3 (0.7) 0.6 At 2 February 2014 Level 1 Level 2 Level 3 Total £m £m £m balance Assets Derivative financial instruments used for cash flow hedges - 2.0 - 2.0 Liabilities Contingent consideration - - (0.7) (0.7) Net assets/ (liabilities) - 2.0 (0.7) 1.3 Fair value of financial assets and liabilities measured at amortised cost The book value and fair value of the Group's borrowings and preference shares are as follows: At 3 August 2014 the fair value of short term borrowings was £1.7m (2 February 2014: £1.8m) compared to a book value of £1.7m (2 February 2014: £1.8m). At 3 August 2014 the fair value of long term borrowings was £233.4m (2 February 2014: £209.4m) compared to a book value of £227.6m (2 February 2014: £205.4m). At 3 August 2014 the fair value of preference shares was £51.7m (2 February 2014: £63.1m) compared to a book value of £60.8m (2 February 2014: £73.8m). The fair value of other financial assets and liabilities is approximate to their carrying amount. 7 Purchase of preference shares During the period the Group purchased and cancelled 712,948 of its preference shares at a total cash cost of £11.5 million. Based on the book value and fair value of the instrument at the date of purchase, the financial liability element of the preference shares was reduced by £11.5 million and the equity element by £1.9 million. There was no difference between the book value and fair value of the financial liability element at the date of purchase thus nil gain/loss was recognised. A transfer from retained earnings of £0.8 million to non-distributable reserves was made in order to maintain the legal nominal value of share capital. 8 Retirement benefit obligations The valuation of the Group's defined benefit pension schemes in the UK and the US has been updated at 3 August 2014 on an actuarial basis, applying current discount and inflation rate assumptions and incorporating the market value of assets at 3 August 2014. Remeasurements of post employment benefit obligations in the half year of £2.1 million (£1.5 million net of associated deferred tax) have been taken through the Consolidated Statement of Comprehensive Income. 9 Exchange rates The principal average exchange rates used to translate the Group's overseas profits were as follows: 2014/15 2013/14 2013/14 Half Half Full year year year US dollar 1.68 1.52 1.57 Euro 1.23 1.17 1.18 10 Ordinary dividend An interim dividend of 4.4p pence per share (2013/14: 4.4 pence per share) will be paid on 23 October 2014 to ordinary shareholders on the register at close of business on 26 September 2014, absorbing £16.2 million of shareholders' funds (2013/14 £16.1 million). 11 Related party transactions The Group has not entered into any material transactions with related parties in the first six months of the period. 12 Acquisitions On 17th April 2014 the Group completed its acquisition of the trade and assets of AVID Technologies Inc (AVID). This acquisition enhances the Group's technology capability at the front end of the electronics design cycle, supporting suppliers' new product introduction strategies and extending our business model. Total consideration payable was £7.7 million, with additional acquisition costs of £0.1 million charged to administrative expenses and shown as an adjusting item in the consolidated income statement for the period. Of the total consideration of £7.7 million, £0.3 million relates to the fair value of net assets acquired and £7.4 million relates to goodwill which cannot be directly attributed to identifiable assets and liabilities acquired. This goodwill is underpinned by a number of elements, including the strategic premium attributed to the existing, well-positioned business, highly skilled workforce and established reputation in the innovation-driven electronics design and product development service sector. Other important elements of this goodwill include the strengthening and expansion of our strategic customer and supplier proposition in new technologies, the opportunity to leverage the insights from AVID's design opportunities to support our strategic programmes within our distribution businesses and the scope to develop AVID's customer base through the existing Service Agreement relationships we have with certain suppliers. Both the trading results of AVID for the period since acquisition, and also for the period since the start of the financial year had the acquisition taken place on that date, are not material to the Group's results. All of the goodwill is expected to be deductible for tax purposes. Statement of Directors' Responsibilities The directors confirm that these condensed interim financial statements have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and that the interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely: - An indication of important events that have occurred during the first six months and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and - Material related-party transactions in the first six months and any material changes in the related-party transactions described in the last annual report. The directors of Premier Farnell plc are listed in the Premier Farnell plc Annual Report for 2 February 2014. A list of current directors is maintained on the Premier Farnell plc website: www.premierfarnell.com. By order of the Board Laurence Bain Chief Executive Officer 18 September 2014 Mark Whiteling Chief Financial Officer 18 September 2014