Premier Farnell plc 9th September 2003
Results for the Second Quarter and Half Year to 3rd August 2003 for the
financial year ending on 1st February 2004.
Key Financials �m
Second Qtr Second Qtr First Half First Half
2003/4 2002/3 2003/4
2002/3
�m �m �m
�m
Sales 188.8 188.3 390.6 392.6
Operating profit 16.4 18.9 32.7 40.6
Adjusted operating 17.0 19.5 36.4 41.9
profit*
Profit before taxation 13.0 10.1 25.4 27.9
Profit before taxation, 13.5 15.6 26.6 34.1
goodwill amortisation
and gain/loss on
business disposals
Earnings per share 2.0p 1.5p 3.9p 3.6p
Adjusted earnings per 2.2p 3.0p 4.7p 5.4p
share**
Key Financials $m
$m $m $m $m
(�1=$1.64) (�1= $1.52) (�1=$1.61) (�1= $1.48)
Sales 309.6 286.2 628.9 581.0
Operating profit 26.9 28.7 52.6 60.1
Adjusted operating 27.9 29.6 58.5 62.0
profit*
Profit before taxation 21.3 15.3 40.9 41.3
Profit before taxation, 22.1 23.7 42.8 50.5
goodwill amortisation
and gain/loss on
business disposals
Earnings per share $0.033 $0.023 $0.063 $0.053
Adjusted earnings per $0.036 $0.046 $0.076 $0.080
share**
* before rebranding costs, in first quarter, and goodwill amortisation
** before rebranding costs, in first quarter, goodwill amortisation and gain/
loss on business disposals
Half Year Highlights
* Group sales per day up 3.1%*** compared to first half last year, for
continuing businesses
* eCommerce sales per day up 41%*** compared to the first half last year
* European market share gains continue with UK sales per day up 10.8%***
compared to the first half last year
* North American sales remain sluggish in a difficult market
* Investment in services and systems beginning to deliver benefits
"Despite the unprecedented downturn in the electronics industry, we continue to
create value by successfully expanding our major account sales, improving the
efficiency, service and technological offerings of our businesses,
significantly expanding our product line and strengthening customer
relationships. Productivity largely determines success in the current economic
environment and we have invested in eCommerce andvendor-managed inventory
capabilities to enable customers to lower their total procurement cost.
Continually revitalising our business and building a durable platform for
growth, Premier Farnell is well-positioned for an economic upturn in 2004".
John Hirst, Group Chief Executive
*** NOTE
Comparison of sales for specific periods is affected by three variables:
1. Changes in exchange rates used to translate the overseas sales in different
currencies into sterling;
2. Differences in the number of working days;
3. Disposal or acquisition of businesses.
To eliminate the impact of these variables and give an accurate comparison, the
percentage change in sales per day is used throughout this statement for
continuing businesses at constant exchange rates.
For further information, contact:
Premier Farnell plc
John Hirst, Group CEO +44 (0) 20 7851 4100
Andrew Fisher, Group Finance Director
Nicholas Ross, Group Director,
Communications
Andrew Lorenz +44 (0) 20 7269 7291
Richard Mountain
at Financial Dynamics (UK)
Andrew Saunders + 1 212 889 4350
at Taylor Rafferty (NA)
The Company's announcements are published on the Internet atwww.
premierfarnell.com, together with business information, the 2003 Annual Report
and Accounts and links to all other Group websites.
Group third quarter results are expected to be published in the week beginning
1st December 2003.
A conference call with John Hirst and Andrew Fisher will take place at 4pm UK
time on 9th September. To obtain dial-in details please call Richard Mountain
(UK or mainland Europe) at Financial Dynamics or Andrew Saunders (US) at Taylor
Rafferty on the above numbers.
Premier Farnell plc
CHAIRMAN'S STATEMENT ON SECOND QUARTER AND HALF YEAR RESULTS FOR THE PERIOD
ENDED
3rdAUGUST 2003
Premier Farnell, the leading global marketer and distributor of electronic,
maintenance, repair and operations (MRO) and specialist products and services,
today announces its results for the second quarter and half year.
NOTE
Comparison of sales for specific periods is affected by three variables:
1 Changes in exchange rates used to translate the overseas sales in different
currencies into sterling;
2 Differences in the number of working days;
3 Disposal or acquisition of businesses.
To eliminate the impact of these variables and give an accurate comparison, the
percentage change in sales per day is used throughout this statement for
continuing businesses at constant exchange rates.
Financial Results
* Group Sales
Group sales in the first half of the year were �390.6million (2002/3: �
392.6million). Sales per day increased 3.1%, compared to the same period last
year, for continuing businesses at constant exchange rates. Group second
quarter sales per day were up 2.8%, compared to the same period last year.
North American and European markets were generally weak and continued to
reflect subdued customer demand.
* Margins, Operating Profit and Foreign Exchange Effects
The gross margin for the Group improved slightly to 40.3% in the second quarter
from 40.1% in the first quarter, benefiting from effective management action
and the stronger euro. The gross margin in the first half of 40.2% was below
the previous year (40.9%) due to the start up of the two major contracts in the
UK with Vauxhall and Rolls-Royce, and customer promotional activity in North
America. Operating profit in the first half was �32.7million (2002/3: �
40.6million), producing an operating margin of 8.4% (2002/3: 10.3%). Adjusted
operating profit, before the �2.4million one-off costs of rebranding and �
1.3million of goodwill amortisation, was �36.4million (2002/3: �41.9million),
producing an operating margin of 9.3% (2002/3: 10.7%). The reduction includes
the impact of additional depreciation, following the implementation of Siebel
customer relationship management (CRM) and related software in the UK and North
America, and the investment in the Li�ge distribution centre in mainland
Europe.
Weakness of the US dollar against sterling in the first half resulted in an
adverse currency translation impact on sales of �14.8million, offset by a
favourable euro effect of �6.4million, resulting in a net adverse impact on
sales of �8.4million. The net effect of the weak dollar and the strong euro
against sterling resulted in a beneficial currency translation impact on profit
before tax in the first half, of �0.4million. Net interest payable in the first
half was �7.4million and was covered 4.9 times by operating profit before
one-off rebranding costs and goodwill amortisation.
* Profit Before Taxation
Profit before taxation in the first half of the year was �25.4million (2002/3:
�27.9million). Profit before taxation, goodwill amortisation and gain/loss on
business disposals was �26.6million (2002/3: �34.1million) after charging the �
2.4million one-off costs of rebranding in the first quarter.
* Earnings per Share and Dividend
Earnings per share in the first half were 3.9pence (2002/3: 3.6pence). Adjusted
earnings per share, before rebranding costs, amortisation of goodwill and gain/
loss on business disposals were 4.7pence (2002/3: 5.4pence).
The Board is declaring an interim dividend of 4.0pence per share (2002/3:
4.0pence) to be paid on 24th October 2003 to shareholders on the register on
26th September 2003.
* Balance Sheet and Cash Flow
Net debt amounted to �228.9million at 3rd August 2003, up from �209.2million at
the end of January 2003. Operating cash flow was 76% of operating profit before
goodwill amortisation. Working capital increased by �14.6million during the
half year with investment in inventory to enhance the product ranges in the
Americas and Europe.
During the first quarter, the Company acquired in the market 197,000 Preference
Shares for cancellation, at a cost of �2.3million. The number of Preference
Shares in issue at the end of the first half was 7.6million.
* Pensions
In line with equity markets, there has been an improvement in the market value
of the assets held within the Group's defined benefit pension funds in the UK
and US. As previously disclosed, the Company intends to make cash contributions
to the UK defined benefit scheme of approximately �0.6 million (2002/3:Nil) in
the current year and the contribution holiday continues for the US scheme,
which remains heavily in surplus.
* Disposals
During the second quarter, Maintenance Inc, part of the Industrial Products
Division, was sold for a cash consideration of �0.9million. This resulted in a
gain before tax of �0.1million, including �0.4million of goodwill previously
eliminated against reserves. The business made a small operating profit in the
first half of this year and in the year to 2nd February 2003.
Operations
Marketing and Distribution Division (MDD) - Overview
The Marketing and Distribution Division comprises Newark InOne, Farnell InOne,
BuckHickman InOne, MCM, an InOne Company, and CPC. The main markets are in
North America, Europe, Australasia and Asia.
* MDD Strategy; Creating Value for our Customers
The Marketing and Distribution Division's central objective is to increase
sales and market share by providing customers with the products they need,
enabling them to manage the total cost of procurement and achieve peace of
mind. Managing the total cost of procurement leads directly to economic
benefit, while peace of mind is delivered by excellence in services and
reliability of supply.
The strategy to achieve this objective revolves around three major themes:
talent, technology and service. The Group aims to recruit and develop the very
best management talent and has continued to improve its level of service. It
has also introduced and developed many new services and channels to provide an
easy and reliable customer experience. The investment in front office systems
is substantially complete. It includes global product and customer databases,
an advanced publication management system, customer relationship management and
data mining software and a flexible eCommerce capability.
This technology has transformed the division's ability to gather and analyse
data from all sales channels, enabling superior understanding of customers'
preferences and buying patterns and facilitating more precise marketing to
identified customer segments. Providing customers with visibility and control
over the procurement of indirect materials and the opportunity to reduce the
number of suppliers they deal with, are important elements of the proposition.
Managing the flow of information and adding value through the supply chain aims
to deliver closer relationships with customers and suppliers and market share
gains.
During the first quarter of this year, the brands of some of the Group's major
businesses were modernised and unified to signify the excellent progress that
has been made. Newark, Farnell and Buck & Hickman were linked together with a
new brand suffix, InOne, which demonstrates to customers, suppliers and
employees the extensive capabilities, products and services available across
the InOne businesses.
The services include:
* Flexible electronic ordering capabilities through websites and eProcurement
to reduce purchase transaction costs
* A diverse product range to reduce the number of vendors and administration
costs
* Swift and reliable delivery for security of supply
* Provision of detailed purchase information to monitor and control
expenditure
* A range of stockroom management services to reduce cost, working capital
and risk of stock outs
* A choice of order channels to suit specific customer requirements
* A product sourcing service with a database of up to four million products
to locate non-stocked items and reduce costs of procurement
* A product obsolescence advisory service to reduce the possibility of future
sourcing problems.
The aim is to provide this capability wherever customers have the need.
In combination, these services present a comprehensive package for customers.
For both procurement and finance leaders, they facilitate cost control and
enhance productivity, whilst providing ease of use and security and reliability
of supply that individual engineers also value.
* MDD Summary Financial Results
2nd Qtr 2nd Qtr 1st Half 1st Half
2003/4 2002/3 2003/4 2002/3
�m �m �m �m
Sales 164.9 162.5 341.4 339.1
Operating profit 15.2 17.1 29.9 36.8
Adjusted operating 15.8 17.7 33.6 38.1
profit *
Return on sales % 9.2 10.5 8.8 10.9
Adjusted return on sales 9.6 10.9 9.8 11.2
%*
*before goodwill amortisation and rebranding costs
Divisional sales per day increased 2.9% in the first half of the year compared
to the same period last year (at constant exchange rates). The sales growth
rate of 2.9% in the second quarter was the same as in the first quarter.
Operating profit in the first half was �33.6million, before goodwill
amortisation of �1.3million and the one-off rebranding costs of �2.4million
taken in the first quarter. The reduction in operating profit, compared to last
year, is mainly due to increased depreciation following implementation of the
CRM software in the UK and North America, promotional activity in North America
and investment in the Li�ge distribution centre.
* The Americas
2nd Qtr 2nd Qtr 1st Half 1st Half
2003/4 2002/3 2003/4 2002/3
�m �m �m �m
Sales 69.6 77.6 146.9 164.8
Operating profit 6.3 7.4 12.7 17.1
Adjusted operating profit* 6.3 7.4 13.9 17.1
Return on sales % 9.1 9.5 8.6 10.4
Adjusted return on sales % 9.1 9.5 9.5 10.4
*
*before rebranding costs
Sales per day in the first half were down 3.4% compared to the same period last
year (at constant exchange rates). In the second quarter, sales per day were
3.5% below the same period last year. Daily sales patterns in the second
quarter were particularly volatile and underlying market trends difficult to
discern. The adverse effect on sales of the weaker dollar in the first half was
�12.4million. The operating profit for the first half was �13.9million (2002/3:
�17.1million) before one-off rebranding costs of �1.2million, and was affected
by additional depreciation on the CRM software and promotional activity for the
extended product range.
The training and learning process for branch and contact centre employees has
continued, following the implementation of the CRM software in March this year.
Newark InOne is now designing and executing sales campaigns, which are expected
to have a growing impact. They include, for example, outbound telemarketing to
customers, who have purchased specific products in the past, informing them of
the related new products now available.
The performance of the business reflects the underlying difficult market
conditions. Real progress, however, is being made through focus on key market
segments and value added services. US government sales increased 16.9% during
the first half compared to the same period last year, following federal budget
releases. The numerous government facilities are being identified and staff
informed of the advantages of purchasing from Newark InOne. The number of
customer stockrooms now managed in some form by Newark InOne reached 254 and
more are under discussion. eCommerce sales increased in the first half by
20.9%, compared to the same period last year, reflecting progress in both
website and eProcurement sales. Sales improved in both Mexico and Brazil.
Despite continuing to face difficult markets, MCM's sales in the second quarter
were ahead of the same period last year due to focus on specific market
segments and strong new product sales.
* Europe and Asia Pacific
*
2nd Qtr 2003/4 2nd Qtr 1st Half 1st Half
2002/3 2003/4 2002/3
�m
�m �m �m
Sales 95.3 84.9 194.5 174.3
Operating profit 8.9 9.7 17.2 19.7
Adjusted operating profit * 9.5 10.3 19.7 21.0
Return on sales % 9.3 11.4 8.8 11.3
Adjusted return on sales %* 10.0 12.1 10.1 12.0
*before goodwill amortisation and rebranding costs
Sales per day in the first half were up 8.4% compared to the same period last
year (at constant exchange rates), while in the second quarter, sales per day
were 8.5% above last year. The beneficial effect on sales of the stronger euro
was �4.7million. The UK and mainland European markets remained generally weak
throughout the first half but progress has continued as a result of focusing on
customer needs and service. Operating profit for the first half was �
19.7million (2002/3: �21.0million), before goodwill amortisation of �
1.3million, and one-off rebranding costs of �1.2million, and was impacted,
primarily, by the additional depreciation on the CRM and related software and
investment in the Liege distribution centre.
In the UK, first half sales increased 10.8% over the same period last year. CPC
sales increased through concentration on specific market segments, the
introduction of new products and direct mail activity. BuckHickman InOne sales
increased 23.1% in the first half in poor underlying industrial markets,
including the benefits of the two contracts won in the last twelve months with
Vauxhall and
Rolls-Royce. These contracts have continued to progress in line with plans.
Sales to the health and safety market segment increased by 42.2% during the
first half continuing the excellent progress of last year.
The introduction of CRM software in the UK late last year is generating much
greater visibility of sales and increased speed of response. This system, for
example, provides data on individual customer sales trends by highlighting
changes in buying patterns. It then schedules calls by telesales staff to
explore reasons for the changes. Issues can be resolved and in many cases this
results in improved sales. The software also enables much faster response to
customer enquiries for value added services, such as requests for "Product
Find" (not in catalogue products) or quotation services. Both these process
improvements are now producing tangible benefits to the business.
In mainland Europe, half-year sales per day increased by 2.3% compared to the
same period last year. Sales improved in Germany and the Netherlands despite
difficult markets, while in Scandinavia, sales declined as the electronics and
telecommunications industry continued to reduce. In July, a new service called
"Newark InOne Direct Ship" was initiated for UK and most mainland European
customers. This enables customers to order some 70,000 Newark InOne products
from their local call centre for delivery within three working days. Success
has already been achieved with some significant orders from customers in
Germany. Plans are well advanced to make Newark InOne products available for
ordering through the Farnell InOne websites.
First half sales in Asia increased 15.1% over the same period last year, with
all offices in the region contributing. In Australasia, first half sales
increased by 2.9%, despite difficult local market conditions. Increasingly,
Newark InOne products are being marketed to Asian and Australasian customers.
* New Product Additions to the MDD Range
Throughout the Division, new products have been added to the extensive range
available for overnight delivery to customers. At Newark InOne, 25,000 new
passive and semiconductor products were added during the first half of the
year, to increase the range of surface mount components available for design
and development engineers. A further 16,600 electromechanical and connector
items have also recently been included. These 42,000 items were introduced in
the re-designed and branded Newark InOne catalogue launched earlier this month.
The new Farnell InOne UK catalogue, launched in May, contains 150,000 products,
in seven volumes, two of which incorporate the majority of the BuckHickman
InOne range. These catalogues, as well as those launched during the first six
months in all other Farnell InOne businesses, incorporate the new brand design,
demonstrating the progress made and consistency of services available across
the whole division. CPC has also extended its range with the launch, in August,
of its new catalogue, offering 13,500 new products. As a matter of course,
products continue to be deleted from catalogues based on customer needs and
technical obsolescence.
* Focus on Major Customers Continues
The division has global customer arrangements with several organisations. These
include BAE Systems, Hewlett Packard, Philips, Siemens, Honeywell and Motorola.
In the first half of the year, sales to these customers increased by 1% and now
account for close to 3% of divisional sales.
Sales to other large customers have also recorded progress in the first half of
the year. In Europe and Asia Pacific, for example, sales to all major corporate
account customers in the UK were up 112%. Sales to major customers increased
19% in France, 1% in Germany, 8% in the Netherlands and 6% in Australia,
despite the poor economic conditions in those countries.
* eCommerce Shows Continued Growth
Sales through eCommerce again showed a significant increase as customers took
advantage of the opportunity to save time and increase their own productivity
by ordering through divisional websites or eProcurement systems. eCommerce
sales per day in the first half increased 41% and are now 9.4% of divisional
sales.
Divisional website sales increased 55% in the first half, compared to the same
period last year. At Newark InOne, website sales increased 14% in the first
half and the site now has greatly improved product search capabilities. At
Farnell InOne, website sales increased 75% in the first half and further site
enhancements are planned for the second half of the year. In some countries,
web sales have reached 25% of local sales, demonstrating the ease with which
customers are able to find and order their requirements.
During the first half of the year, eProcurement partnerships in America
increased by 14, bringing the active total to 130. Sales to these companies in
the first half increased by 49.8%. New agreements signed in the second quarter
include Proctor & Gamble, Daimler Chrysler and McCain Foods. A further 48
potential eProcurement arrangements are in discussion. During the second
quarter, Newark InOne worked with Oracle and is one of the few suppliers
recognised as supporting its latest eProcurement "transparent punch out"
software to enable real-time pricing, simpler purchasing, inventory
availability and more efficient management of electronic catalogues.
In Europe and Asia Pacific, 8 further partnerships are now active, including
Pirelli in the UK, TNO in the Netherlands and Disneyland in France. This brings
the total to 121. Plans and developments are under discussion with a further 59
potential eProcurement customers. One more arrangement was established with
Motorola in China incorporating, for the first time, both the Farnell InOne and
Newark InOne product ranges. Overall, the division now has 252 active
eProcurement trading partnerships.
Industrial Products Division
2nd Qtr 2nd Qtr 1st Half 1st Half
2003/4 2002/3 2003/4 2002/3
�m �m �m �m
Sales : 23.5 23.1 48.5 47.1
Continuing businesses 0.4 2.7 0.7 6.4
Businesses disposed 23.9 25.8 49.2 53.5
Total
Operating Profit 3.2 3.7 6.8 7.6
Return on sales % 13.4 14.3 13.8 14.2
The Industrial Products Division achieved sales in the first half of the year
of �49.2million, up 4.4% compared to the same period last year (for continuing
businesses and at constant exchange rates). Despite the difficult market
conditions for all businesses, performance was robust.
* Akron Brass
Sales per day in the first half of the year increased 8.1% compared to the same
period last year. The North American original equipment fire truck market
continued to be firm with notable successes achieved in Australasia and in
Europe, where sales of specialist products increased due to the weaker dollar.
The industrial and municipal markets in the US for fire hose nozzles and
cannons were quiet throughout the period.
* TPC Wire and Cable
Sales per day increased 3.4% in the first half against the same period last
year. The normal seasonal plant shutdowns, some of which were extended, took
place in July among major steel and automotive customers. Sales improved in
Mexico during the first half, particularly to the automotive industry,
following recruitment of local sales representation last year.
* Kent
Sales per day were flat in the first half compared to last year. The European
market remained quiet but progress was made in most countries with strong
performances in Italy and Spain, primarily due to the change in the sales force
remuneration structure last year, as well as the addition of new products.
Sales in France remained weak following the disruption referred to in the
Preliminary Results announcement in March 2003.
Personnel Changes
Laurence Bain, Chief Operating Officer, who joined the company in July 2002,
was appointed to the Premier Farnell Board of Directors on 1st July 2003. In
August 2003, Stephen Canham joined the Group and was appointed Managing
Director, Europe and Asia Pacific, for the Marketing and Distribution Division.
Mike Ruprich, CEO Americas, for the Marketing and Distribution Division, left
the company at the end of July and an announcement about his replacement will
be made shortly.
Outlook
In the first half, we continued to see mixed macro-economic signals. Some
indicators are pointing to an improvement in industrial activity in North
America later this year. So far, however, this is not yet evident in the
Group's North American businesses. Against this background, we remain committed
to controlling costs and promoting the services developed over the past few
years to large and small customers, including eCommerce, inventory management
and specialist sourcing. The balance of the year is difficult to predict at
this stage but, if the recovery materialises in 2004, we remain confident of
achieving significant improvements in performance.
Sir Malcolm Bates
Chairman
9th September 2003
Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the United
States Private Securities Litigation Reform Act of 1995: The U.S. Private
Securities Litigation Reform Act of 1995 provides a "safe harbor" for
forward-looking statements. 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 introduction of new
information technology and e-commerce platforms, 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 cost-saving
initiatives to offset current market conditions, the ability to recruit and
retain management personnel, integration of new information systems, continued
use and acceptance of e-commerce programs and systems and the impact on other
distribution 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.
Consolidated Profit and
Loss Account
For the second quarter and half year ended 3rd August 2003
2003/4 2002/3 2003/4 2002/3 2002/3
Second Second First First Full
quarter quarter half half year
unaudited unaudited unaudited unaudited audited
Notes �m �m �m �m �m
Turnover 1 188.8 188.3 390.6 392.6 759.0
Operating profit
- before rebranding costs 17.0 19.5 36.4 41.9 82.9
and amortisation of
goodwill
- rebranding costs 2 - - (2.4) - -
- amortisation of goodwill (0.6) (0.6) (1.3) (1.3) (2.6)
Total operating profit 1 16.4 18.9 32.7 40.6 80.3
Gain/(loss) on disposal of 3 0.1 (4.9) 0.1 (4.9) (4.8)
businesses
Net interest payable (3.5) (3.9) (7.4) (7.8) (15.7)
Profit before taxation 13.0 10.1 25.4 27.9 59.8
Taxation 4 (4.1) (3.9) (8.1) (9.5) (18.2)
Profit after taxation 8.9 6.2 17.3 18.4 41.6
Preference dividends (1.6) (1.0) (3.3) (7.5) (10.8)
(non-equity)
Profit attributable to 7.3 5.2 14.0 10.9 30.8
ordinary shareholders
Ordinary dividends (14.5) (14.5) (14.5) (14.5) (32.6)
(equity)
Retained loss (7.2) (9.3) (0.5) (3.6) (1.8)
Earnings per share 5
Basic 2.0p 1.5p 3.9p 3.6p 9.3p
Diluted 2.0p 1.5p 3.9p 3.6p 9.3p
Earnings per share before
rebranding costs,
amortisation of goodwill 5
and disposals
Basic 2.2p 3.0p 4.7p 5.4p 11.2p
Diluted 2.1p 3.0p 4.7p 5.4p 11.2p
Dividend per share 4.0p 4.0p 9.0p
Statement of Total
Recognised Gains and
Losses
For the half year ended
3rd August 2003
2003/4 2002/3 2002/3
First First Full
half half year
unaudited unaudited audited
�m �m �m
Profit after taxation for 17.3 18.4 41.6
the period
Currency translation 3.1 (1.9) (0.3)
adjustments
Total recognised gains for 20.4 16.5 41.3
the period
Consolidated Profit and
Loss Account
For the second quarter and half year ended 3rd August 2003
2003/4 2002/3 2003/4 2002/3 2002/3
Second Second First First Full
quarter quarter half half year
unaudited unaudited unaudited unaudited audited
Notes $m $m $m $m $m
Turnover 1 309.6 286.2 628.9 581.0 1,161.3
Operating profit
- before rebranding 27.9 29.6 58.5 62.0 126.9
costs and amortisation
of goodwill
- rebranding costs 2 - - (3.8) - -
- amortisation of (1.0) (0.9) (2.1) (1.9) (4.0)
goodwill
Total operating profit 1 26.9 28.7 52.6 60.1 122.9
Gain/(loss) on disposal 3 0.2 (7.5) 0.2 (7.3) (7.4)
of businesses
Net interest payable (5.8) (5.9) (11.9) (11.5) (24.0)
Profit before taxation 21.3 15.3 40.9 41.3 91.5
Taxation 4 (6.7) (5.9) (13.0) (14.1) (27.9)
Profit after taxation 14.6 9.4 27.9 27.2 63.6
Preference dividends (2.6) (1.5) (5.3) (11.1) (16.5)
(non-equity)
Profit attributable to 12.0 7.9 22.6 16.1 47.1
ordinary shareholders
Ordinary dividends (23.8) (22.0) (23.4) (21.4) (49.9)
(equity)
Retained loss (11.8) (14.1) (0.8) (5.3) (2.8)
Earnings per share 5
Basic $0.033 $0.023 $0.063 $0.053 $0.142
Diluted $0.033 $0.023 $0.063 $0.053 $0.142
Earnings per share
before rebranding
costs,
amortisation of 5
goodwill and disposals
Basic $0.036 $0.046 $0.076 $0.080 $0.171
Diluted $0.034 $0.046 $0.076 $0.080 $0.171
Dividend per share $0.064 $0.059 $0.138
The translation of
sterling into US
dollars
has been presented for
convenience
purposes only using the
following average
exchange rates: 1.64 1.52 1.61 1.48 1.53
Consolidated Balance Sheet
As at 3rd August 2003
3rd 4th 2nd
August February
August
2003 2002 2003
unaudited unaudited audited
Notes �m �m �m
Fixed Assets
Intangible assets 47.2 49.8 48.5
Tangible assets 112.6 106.9 112.9
Interests in own shares 0.1 0.3 0.2
159.9 157.0 161.6
Current Assets
Stocks 164.4 143.2 147.8
Debtors - due within one year 127.9 127.6 121.8
- due after more than one year 86.5 81.2 82.2
Cash at bank and in hand 32.6 33.7 29.6
411.4 385.7 381.4
Creditors - due within one year
Loans and overdrafts (1.1) (100.5) (97.3)
Other (161.6) (154.6) (157.4)
(162.7) (255.1) (254.7)
Net current assets 248.7 130.6 126.7
Total assets less current liabilities 408.6 287.6 288.3
Creditors - due after more than one
year
Loans (260.4) (146.9) (141.5)
Provisions for liabilities and charges 6 (44.0) (40.8) (43.3)
Net assets 104.2 99.9 103.5
Equity shareholders' funds (19.7) (27.7) (23.2)
Non-equity shareholders' funds 123.9 127.6 126.7
Total shareholders' funds 104.2 99.9 103.5
Movement in Shareholders' Funds
For the half year ended 3rd August 2003
2003/4 2002/3 2002/3
First First Full
half half year
unaudited unaudited audited
Notes �m �m �m
Profit after taxation 17.3 18.4 41.6
Dividends - preference (3.3) (7.5) (10.8)
- ordinary (14.5) (14.5) (32.6)
(0.5) (3.6) (1.8)
New share capital subscribed - 0.5 0.7
Purchase of own preference shares 8 (2.3) (8.3) (8.3)
Preference share conversion costs - (0.9) (0.9)
Goodwill reinstated on disposal of 0.4 2.6 2.6
businesses
Currency translation adjustment 3.1 (1.9) (0.3)
Net change in shareholders' funds 0.7 (11.6) (8.0)
Opening shareholders' funds 103.5 111.5 111.5
Closing shareholders' funds 104.2 99.9 103.5
Consolidated Balance Sheet
As at 3rd August 2003
3rd 4th 2nd
August February
August
2003 2002 2003
unaudited unaudited audited
$m $m $m
Fixed Assets
Intangible assets 76.0 78.2 79.5
Tangible assets 181.3 167.8 185.2
Interests in own shares 0.2 0.5 0.3
257.5 246.5 265.0
Current Assets
Stocks 264.7 224.8 242.4
Debtors - due within one year 205.9 200.3 199.8
- due after more than one year 139.3 127.5 134.8
Cash at bank and in hand 52.5 52.9 48.5
662.4 605.5 625.5
Creditors - due within one
year
Loans and overdrafts (1.8) (157.8) (159.6)
Other (260.2) (242.7) (258.1)
(262.0) (400.5) (417.7)
Net current assets 400.4 205.0 207.8
Total assets less current 657.9 451.5 472.8
liabilities
Creditors - due after more
than one year
Loans (419.3) (230.6) (232.1)
Provisions for liabilities and (70.8) (64.1) (71.0)
charges
Net assets 167.8 156.8 169.7
Equity shareholders' funds (31.7) (43.5) (38.1)
Non-equity shareholders' funds 199.5 200.3 207.8
Total shareholders' funds 167.8 156.8 169.7
The translation of sterling into US dollars
has been presented for convenience
purposes only using the following period-end
exchange rates: 1.61 1.57 1.64
Summarised Consolidated Cash Flow Statement
For the second quarter and half year ended 3rd August 2003
2003/4 2002/3 2003/4 2002/3 2002/3
Second Second First First Full
quarter quarter half half year
unaudited unaudited unaudited unaudited audited
Notes �m �m �m �m �m
Operating profit 16.4 18.9 32.7 40.6 80.3
Depreciation and 3.9 3.5 7.6 6.5 11.6
non-cash items
Working capital (8.9) 1.0 (14.6) 2.7 0.1
Net cash inflow from
operating
activities 11.4 23.4 25.7 49.8 92.0
Net interest payable (6.6) (7.5) (7.0) (7.6) (15.8)
Preference dividends (3.3) (7.5) (3.3) (7.5) (10.8)
Taxation paid (2.6) (4.3) (6.8) (6.5) (12.7)
Purchase of tangible (4.7) (4.1) (9.3) (8.8) (24.9)
fixed assets
Sale of tangible fixed 0.3 0.2 1.4 0.3 1.7
assets
Disposal of businesses 0.8 3.5 0.8 3.2 3.3
(net of costs)
Ordinary dividends paid (18.1) (13.6) (18.1) (13.6) (28.1)
Cash (outflow)/inflow
before use of
liquid resources and (22.8) (9.9) (16.6) 9.3 4.7
financing
Issue of ordinary - - - 0.5 0.7
shares
Purchase of own - (8.3) (2.3) (8.3) (8.3)
preference shares
Preference share - (0.9) - (0.9) (0.9)
conversion costs
New bank loans 150.4 17.0 193.1 17.0 29.1
Repayment of bank loans (126.9) - (170.9) (10.0) (23.0)
Increase/(decrease) in 0.7 (2.1) 3.3 7.6 2.3
cash
Reconciliation of net
debt
Net debt at beginning (209.2) (236.4) (236.4)
of period
Increase in cash 3.3 7.6 2.3
Increase in debt (22.2) (7.0) (6.1)
Exchange movement (0.8) 22.1 31.0
Net debt at end of 7 (228.9) (213.7) (209.2)
period
Summarised Consolidated Cash Flow Statement
For the second quarter and half year ended 3rd August 2003
2003/4 2002/3 2003/4 2002/3 2002/3
Second Second First First Full
quarter quarter half half year
unaudited unaudited unaudited unaudited audited
$m $m $m $m $m
Operating profit 26.9 28.7 52.6 60.1 122.9
Depreciation and 6.4 5.3 12.2 9.6 17.7
non-cash items
Working capital (14.6) 1.5 (23.5) 4.0 0.2
Net cash inflow from
operating
activities 18.7 35.5 41.3 73.7 140.8
Net interest payable (10.8) (11.4) (11.3) (11.2) (24.2)
Preference dividends (5.4) (11.4) (5.3) (11.1) (16.5)
Taxation paid (4.3) (6.5) (11.0) (9.6) (19.4)
Purchase of tangible (7.7) (6.2) (15.0) (13.0) (38.1)
fixed assets
Sale of tangible fixed 0.5 0.3 2.3 0.4 2.6
assets
Disposal of businesses 1.3 5.3 1.3 4.7 5.0
(net of costs)
Ordinary dividends paid (29.7) (20.6) (29.1) (20.1) (43.0)
Cash (outflow)/inflow
before use of
liquid resources and (37.4) (15.0) (26.8) 13.8 7.2
financing
Issue of ordinary - - - 0.7 1.1
shares
Purchase of own - (12.6) (3.7) (12.3) (12.7)
preference shares
Preference share - (1.4) - (1.3) (1.4)
conversion costs
New bank loans 246.6 25.8 310.9 25.2 44.5
Repayment of bank loans (208.1) - (275.1) (14.8) (35.2)
Increase/(decrease) in 1.1 (3.2) 5.3 11.3 3.5
cash
The translation of sterling into US dollars
has been presented for convenience
purposes only using the following average
exchange rates: 1.64 1.52 1.61 1.48 1.53
Notes
1 Segment information
2003/4 2002/3 2003/4 2002/3 2002/3
Second Second First First Full
quarter quarter half half year
unaudited unaudited unaudited unaudited audited
�m �m �m �m �m
Turnover
Marketing and Distribution Division
Americas 69.6 77.6 146.9 164.8 311.6
Europe and Asia 95.3 84.9 194.5 174.3 348.6
Pacific
164.9 162.5 341.4 339.1 660.2
Industrial Products 23.9 25.8 49.2 53.5 98.8
Division
188.8 188.3 390.6 392.6 759.0
Operating profit
Marketing and Distribution Division
Americas
- before rebranding 6.3 7.4 13.9 17.1 33.0
costs
- rebranding costs - - (1.2) - -
(note 2)
6.3 7.4 12.7 17.1 33.0
Europe and Asia
Pacific
- before rebranding 9.5 10.3 19.7 21.0 42.2
costs and
amortisation of
goodwill
- rebranding costs - - (1.2) - -
(note 2)
- amortisation of (0.6) (0.6) (1.3) (1.3) (2.6)
goodwill
8.9 9.7 17.2 19.7 39.6
Total Marketing and 15.2 17.1 29.9 36.8 72.6
Distribution
Division
Industrial Products 3.2 3.7 6.8 7.6 15.2
Division
Head Office costs (2.0) (1.9) (4.0) (3.8) (7.5)
16.4 18.9 32.7 40.6 80.3
$m $m $m $m $m
Turnover
Marketing and
Distribution
Division
Americas 114.1 118.0 236.6 243.9 476.7
Europe and Asia 156.3 129.0 313.1 257.9 533.4
Pacific
270.4 247.0 549.7 501.8 1,010.1
Industrial Products 39.2 39.2 79.2 79.2 151.2
Division
309.6 286.2 628.9 581.0 1,161.3
Operating profit
Marketing and
Distribution
Division
Americas
- before rebranding 10.3 11.2 22.3 25.3 50.5
costs
- rebranding costs - - (1.9) - -
(note 2)
10.3 11.2 20.4 25.3 50.5
Europe and Asia
Pacific
- before rebranding 15.6 15.7 31.7 31.1 64.6
costs and
amortisation of
goodwill
- rebranding costs - - (1.9) - -
(note 2)
- amortisation of (1.0) (0.9) (2.1) (1.9) (4.0)
goodwill
14.6 14.8 27.7 29.2 60.6
Total Marketing and 24.9 26.0 48.1 54.5 111.1
Distribution
Division
Industrial Products 5.3 5.6 10.9 11.2 23.3
Division
Head Office costs (3.3) (2.9) (6.4) (5.6) (11.5)
26.9 28.7 52.6 60.1 122.9
The first half of 2002/3 includes sales of �5.4m and an operating loss of �0.1m
in respect of DA Lubricants, part of the Industrial Products Division, which
was sold in June 2002.
2 Rebranding
On 27th February 2003, the Group announced the rebranding of four businesses of
the Marketing and Distribution Division to demonstrate to customers and
suppliers the close alignment and global collaboration between these
businesses. The new trading names are Newark InOne, Farnell InOne, BuckHickman
InOne, and MCM, an InOne company.
The operating profit of the Marketing and Distribution Division for the half
year ended 3rd August 2003, reflects the one-off cost of the rebranding of �
2.4m, of which �1.2m relates to the Americas and �1.2m relates to Europe and
Asia Pacific.
3 Disposal of business
On 31st July 2003, the Group sold Maintenance Inc., a distributor of asphalt
resurfacing products and part of the Industrial Products Division, for a cash
consideration of �0.9m. The gain on sale of �0.1m is after charging goodwill
previously eliminated against reserves of �0.4m.
In the period up to disposal, this business contributed �0.7m of sales (2002/3:
first half �1.0m and full year �1.6m) and �0.1m of operating profit (2002/3:
first half �0.2m and full year �0.2m).
4 Taxation
The taxation charge includes provision at an effective rate for the first half,
excluding goodwill amortisation and gain/loss on disposal of businesses, of
30.5% (2002/3: first half 30.5%), being the estimated effective rate of
taxation for the year ending 1st February 2004. No tax charge is expected to
arise on the disposal referred to in note 3 above. A tax credit of �0.9m arose
from business disposals in 2002/3.
* Earnings per share
Basic earnings per share are based on the profit attributable to ordinary
shareholders and 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,
i.e. those share options 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 shares used in
the calculations are set out below.
2003/4 2002/3 2002/3
First First Full
half half year
unaudited unaudited audited
�m �m �m
Profit attributable to ordinary 14.0 10.9 30.8
shareholders
Rebranding costs 2.4 - -
(Gain)/loss on disposal of (0.1) 4.9 4.8
businesses
Tax attributable to rebranding/ (0.7) (0.9) (0.9)
disposal of businesses
Amortisation of 1.3 1.3 2.6
goodwill
Profit attributable to ordinary
shareholders before rebranding
costs, amortisation of goodwill and
disposals
16.9 16.2 37.3
Number Number Number
Weighted average number of shares 362,134,889 301,059,611 331,570,659
Dilutive effect of 438,143 1,154,992 850,520
share options
Diluted weighted average number of 362,573,032 302,214,603 332,421,179
shares
Earnings per share before rebranding costs, amortisation of goodwill and gain/
loss on disposal of businesses have been disclosed in order to facilitate
comparison.
6 Provisions for liabilities and charges
Provisions for liabilities and charges comprise deferred taxation of �37.2m
(4th August 2002: �34.8m, 2nd February 2003: �36.6m), provision for overseas
post-retirement obligations of �5.3m (4th August 2002: �4.5m, 2nd February
2003: �5.2m) and provision for dilapidation costs on leased properties of �1.5m
(4th August 2002: �1.5m, 2nd February 2003: �1.5m).
7 Net debt
3rd 4th 2nd
February
August August
2003 2002 2003
unaudited unaudited audited
�m �m �m
Cash and short term 32.6 33.7 29.6
deposits
Unsecured loans and (261.5) (247.4) (238.8)
overdrafts
(228.9) (213.7) (209.2)
Unsecured loans and overdrafts comprise:
Bank overdrafts 1.0 1.8 2.7
Bank loans 22.0 44.0 44.0
7.0% US dollar Guaranteed Senior - 98.7 94.5
Notes payable 2003
7.2% US dollar Guaranteed Senior Notes 96.3 98.7 94.5
payable 2006
5.3% US dollar Guaranteed Senior 41.0 - -
Notes payable 2010
5.9% US dollar Guaranteed Senior 98.8 - -
Notes payable 2013
Other loans 2.4 4.2 3.1
261.5 247.4 238.8
Unsecured loans and
overdrafts are
repayable as
follows:
Within one year 1.1 100.5 97.3
Between one and two 0.2 - 0.2
years
Between two and 118.6 142.7 138.8
five years
After five years 141.6 4.2 2.5
261.5 247.4 238.8
In June 2003, the Group raised $225m of new financing in the private placement
market. This comprises $66m (�41.0m) Senior Notes payable 2010 and $159m (�
98.8m) Senior Notes payable 2013 at fixed interest rates of 5.3% and 5.9%,
respectively. The funds raised were used to repay other borrowings, principally
the $155m 7% Senior Notes due on 17th June 2003.
8 Purchase and cancellation of preference shares
On 19th March 2003 the Company purchased and cancelled a total of 197,000 of
its own preference shares at a cost of �2.3m. The total number of preference
shares in issue on 3rd August 2003 was 7.6million (2nd February 2003:
7.8million).
9 Basis of preparation
The unaudited consolidated financial information for the 26 weeks ended 3rd
August 2003 has been prepared applying the accounting policies disclosed in the
Group's 2003 Annual Report and Accounts which have been delivered to the
Registrar of Companies and which contain an unqualified audit report.
The principal average exchange rates used to translate the Group's overseas
profits were as follows:
2003/4 2002/3 2003/4 2002/3 2002/3
Second Second First First Full
quarter quarter half half year
US dollar 1.64 1.52 1.61 1.48 1.53
Euro 1.42 1.57 1.44 1.60 1.58
Australian dollar 2.47 2.74 2.53 2.73 2.78
10 Dividend
The interim ordinary dividend will be paid on 24th October 2003 to ordinary
shareholders on the register at close of business on 26th September 2003.
The preference share dividend for the six months ending 26th January 2004 will
be paid on 26th January 2004 to preference shareholders on the register at
close of business on 9th January 2004.
END