Premier Farnell plc 4th December 2003
Results for the Third Quarter and Nine Months to 2nd November 2003 for the
financial year ending on 1st February 2004
Key Financials �m
Third Third Nine Months Nine
2003/4
Qtr Qtr Months
�m
2003/4 2002/3 2002/3
�m �m �m
Sales 193.5 189.2 584.1 581.8
Operating profit 18.1 20.6 50.8 61.2
Adjusted operating 18.8 21.3 55.2 63.2
profit*
Profit before taxation 14.5 16.6 39.9 44.5
Profit before taxation, 15.2 17.3 41.8 51.4
goodwill amortisation
and gain/loss on
business disposals
Earnings per share 2.3p 2.9p 6.2p 6.5p
Adjusted earnings per 2.5p 3.0p 7.2p 8.4p
share**
Key Financials $m
$m $m $m $m
(�1=$1.65) (�1= $1.56) (�1=$1.62) (�1= $1.51)
Sales 319.3 295.2 946.2 878.5
Operating profit 29.8 32.1 82.3 92.4
Adjusted operating 31.0 33.2 89.4 95.4
profit*
Profit before taxation 23.9 25.9 64.7 67.2
Profit before taxation, 25.1 27.0 67.7 77.6
goodwill amortisation
and gain/loss on
business disposals
Earnings per share $0.038 $0.045 $0.100 $0.098
Adjusted earnings per $0.041 $0.047 $0.117 $0.127
share**
* before rebranding costs, in first quarter, and goodwill amortisation
** before rebranding costs, in first quarter, goodwill amortisation and gain/
loss on business disposals
Third Quarter and Nine Months Highlights
* Group sales per day up 3%***compared to the first nine months of last year
for continuing businesses in tough market conditions
* Return to year on year sales per day growth in the North American Marketing
and Distribution Division (MDD) in the third quarter
* Sales to the US Government up 17%***in the third quarter
* Strong third quarter MDD sales growth in the Europe and Asia Pacific
region, with the UK up 6%***, France up 15%*** and Germany/Austria up 7%***
* MDD eCommerce sales per day up 46%*** in the first nine months compared to
the same period last year
* Investment in marketing IT systems delivering benefits
"In the third quarter, we continued to consolidate and strengthen our business
and to build a durable platform for future growth. We developed deeper
relationships with key accounts, identified new, promising market segments and
improved the efficiency, service and technological offerings of our businesses
to improve our customers' productivity by reducing overall procurement cost. A
three year programme of IT infrastructure investment is behind us and we
believe we are now well positioned to benefit as markets improve."
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 year end results are expected to be published in the week beginning 15th
March, 2004.
A conference call with John Hirst and Andrew Fisher will take place at 4pm UK
time on 4th December. 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 THIRD QUARTER AND NINE MONTHS' RESULTS FOR THE PERIOD
ENDED
2nd NOVEMBER 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 third quarter and nine months.
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 nine months of the year were �584.1million (2002/3: �
581.8million). Sales per day increased 3.1%, compared to the same period last
year, for continuing businesses at constant exchange rates. Group third quarter
sales per day were up 3.2%, compared to the same period last year. However, the
key markets where the Group operates in Europe and North America remain weak.
* Margins, Operating Profit
The gross margin of 40.1% in the first nine months was below the previous year
(41.0%) 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 nine months was �50.8million (2002/3: �61.2million),
producing an operating margin of 8.7% (2002/3: 10.5%). Adjusted operating
profit, before the �2.4million one-off costs of rebranding and �2.0million of
goodwill amortisation, was �55.2million (2002/3: �63.2million), producing an
operating margin of 9.5% (2002/3: 10.9%). The reduction compared to the prior
year includes the impact of additional depreciation, following the
implementation of 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. Operating margin in the quarter was ahead of the
first half as costs continued to be kept under tight control.
* Foreign Exchange Effects
Weakness of the US dollar against sterling in the first nine months resulted in
an adverse currency translation impact on sales of �19.2million, offset by a
favourable euro effect of �9.5million, resulting in a net adverse impact on
sales of �9.7million. 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 nine months of �0.5million.
* Interest
Net interest payable in the first nine months was �11.0million and was covered
5.0 times by operating profit before one-off rebranding costs and goodwill
amortisation.
* Profit Before Taxation
Profit before taxation in the first nine months of the year was �39.9million
(2002/3: �44.5million). Profit before taxation, goodwill amortisation and gain/
loss on business disposals was �41.8million (2002/3: �51.4million) after
charging the �2.4million one-off costs of rebranding in the first quarter.
* Earnings per Share
Earnings per share in the first nine months were 6.2pence (2002/3: 6.5pence).
Adjusted earnings per share, before rebranding costs, amortisation of goodwill
and gain/loss on business disposals were 7.2pence (2002/3: 8.4pence).
* Balance Sheet, Cash Flow and Working Capital
Net debt amounted to �228.0million at 2nd November 2003, up from �209.2million
at the end of January 2003. Operating cash flow was 73% of operating profit
before goodwill amortisation. Working capital increased by �24.2million during
the first nine months as a result of investment in inventory to enhance the
product ranges in the Americas and Europe together with a normal seasonal
increase in receivables in the third quarter which is expected to reverse in
the fourth quarter.
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 nine months was 7.6million.
* 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. This business made a small operating profit in the
period up to disposal 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.
Markets in mainland Europe remained subdued in the third quarter and UK
industrial activity continued to be depressed. Throughout the electronics
industry, which accounts for less than half of divisional sales, demand
remained weak, although there are indications in the US that some large
customers are becoming more optimistic. Purchasing managers' surveys and other
indices are more consistently positive in recent times, indicating that general
industrial demand may increase in the coming months.
* MDD Summary Financial Results
Third Third Nine Months Nine
Qtr Qtr 2003/4 Months
2003/4 2002/3 �m 2002/3
�m �m �m
Sales 169.5 165.9 510.9 505.0
Operating profit 16.4 18.8 46.3 55.6
Adjusted operating profit * 17.1 19.5 50.7 57.6
Return on sales % 9.7% 11.3% 9.1% 11.0%
Adjusted return on sales %* 10.1% 11.8% 9.9% 11.4%
*before goodwill amortisation and rebranding costs
Divisional sales per day increased 2.9% in the nine months compared to the same
period last year (at constant exchange rates). The sales growth rate in the
third quarter was 3.0%. Operating profit in the nine months was �50.7million,
before goodwill amortisation of �2.0million and 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 CRM software in the UK and North America, promotional
activity in North America and investment in the Li�ge distribution centre.
The customer proposition continues to be enhanced throughout the division by
extending the product range and improving services available to customers.
Customer data continues to be gathered through the new systems so that the
offer can be refined further.
* The Americas
Third Third Nine Nine
Months Months
Qtr Qtr 2003/4 2002/3
2003/4 2002/3 �m �m
�m �m
Sales 74.2 77.9 221.1 242.7
Operating profit 6.9 8.4 19.6 25.5
Adjusted operating profit* 6.9 8.4 20.8 25.5
Return on sales % 9.3% 10.8% 8.9% 10.5%
Adjusted return on sales % * 9.3% 10.8% 9.4% 10.5%
*before rebranding costs
Sales per day in the first nine months were down 2.2% compared to the same
period last year (at constant exchange rates). In the third quarter, sales per
day were slightly ahead of the same period last year and up 6.1% sequentially
over the second quarter this year. The adverse effect on sales of the weaker
dollar in the nine months was �15.8million. Operating profit for the nine
months was �20.8million (2002/3: �25.5million) before one-off rebranding costs
of �1.2million, and was affected by additional depreciation on the customer
relationship management (CRM) software and targeted promotional activity.
Newark InOne continues to control costs carefully throughout the business.
Sales growth compared to prior year has increased steadily over the last few
months at Newark InOne. Customers have responded well to the increased range of
new products introduced during this year, including 25,000 new passives and
semi conductors in the first half of the year. The CRM software implemented in
March 2003 has enabled the sales and marketing team to develop and execute
innovative campaigns to promote new and associated products to customers and
introduce the enhanced Newark InOne services to existing and potential
customers.
Both Newark InOne and Farnell InOne continue to focus on identifying and
nurturing key account relationships and expanding value-added services. Through
focussed marketing activity, including targeting of specific government
facilities, sales to the US government grew 16.7% in the third quarter compared
to the third quarter last year.
The current phase of investment at the North American distribution centre in
South Carolina has been completed, accommodating the increased product range
and providing for future expansion.
Sales in Mexico and Brazil continued their improvement compared to the third
quarter last year and the second quarter.
Despite the tough market conditions, MCM sales per day in the third quarter
were stable compared to last year.
* Europe and Asia Pacific
*
Third Third
Nine Months Nine Months
Qtr Qtr 2003/4 2002/3
2003/4 2002/3 �m �m
�m �m
Sales 95.3 88.0 289.8 262.3
Operating profit 9.5 10.4 26.7 30.1
Adjusted operating profit * 10.2 11.1 29.9 32.1
Return on sales % 10.0% 11.8% 9.2% 11.5%
Adjusted return on sales %* 10.7% 12.6% 10.3% 12.2%
*before goodwill amortisation and rebranding costs
Sales per day in the nine months were up 7.4% over the same period last year
(at constant exchange rates) and increased 5.5% compared to the third quarter
last year. The beneficial effect on sales of the stronger euro during the nine
months was �7.1million. Despite generally weak markets in the UK and mainland
Europe, sales continue to increase reflecting the success of our strategy of
focussing on specific market segments including major accounts, education and
health and safety. All of these segments showed significant increases. In a
flat market, sales growth appears to be coming at the expense of smaller
competitors and Farnell InOne is growing market share in the UK and mainland
Europe. Operating profit in the nine months was �29.9million (2002/3: �
32.1million) before goodwill amortisation of �2.0million, and one-off
rebranding costs of �1.2million, and was affected by the additional
depreciation of the CRM and related software and investment in the Li�ge
distribution centre.
In the UK, sales per day for the nine months increased 9.1% over the same
period last year and were 5.9% ahead of last year in the third quarter.
BuckHickman InOne sales were 12.5% above last year in the third quarter in a
weak market. The contracts with Vauxhall and Rolls-Royce continue to progress
in line with plans. Further new business has been won with large customers
during the quarter, including the UK Atomic Energy Authority (UKAEA), Bosch and
Bombardier. BuckHickman InOne has entered into 18 new vendor managed inventory
(VMI) arrangements with customers in the quarter. CPC sales increased by
concentration on specific market segments, the introduction of new products and
direct mail activity.
The CRM software continues to facilitate identification of customers' changing
purchasing patterns and enable active management of those accounts. It also
allows implementation of multiple sales campaigns tailored to specific
segments. These process improvements are now producing tangible benefits for
the Group.
In mainland Europe, sales per day for the nine months increased 3.2%, while
third quarter sales increased 5.0% despite continuing poor market conditions.
Farnell InOne enjoyed sales growth in key European markets as a result of early
focus on key accounts and the steady introduction of new products. In France,
sales increased 14.6% in the quarter due to new product introductions and sales
to major customers. Germany and Austria continued to demonstrate improved
performance, with third quarter sales up 6.9% as a result of focus on selected
market segments. At the new distribution centre in Li�ge, efficiency levels
continued to improve towards those targeted and the breadth of products was
increased during the third quarter. The facility is expected to supply the
majority of Western European customers by early 2004.
Asian and Australian sales per day in the third quarter were broadly flat in
subdued markets. Premier Farnell continues to build its presence in the region.
In the third quarter, a new distribution centre and sales office was opened in
Shanghai to serve international and local businesses. These infrastructure
improvements complement the existing representative office in Beijing.
* InOne Branding Benefits
During the first quarter of the year, the brands of some of the Group's major
businesses were modernised and unified. Newark, Farnell and Buck & Hickman were
linked together with a new brand suffix, InOne. This new branding has provided
the opportunity to demonstrate to all customers the extensive range of services
and European and American products now available in most countries.
The addition of Newark InOne products to the European, Australian and Asian
portfolios has materially increased the overall service offer, enabling
customers to reduce further their number of vendors. In Asia, customer
awareness of this expansion has been facilitated by the change to the joint
name Farnell Newark InOne.
The division has won two awards for the rebranding work. The National
Electronic Distributors Association (NEDA) awarded Newark InOne seven out of
nine available awards for direct marketing and advertising. The internal
communication of the new branding to employees won a CiB (Communicators in
Business) Communication Excellence Award.
* 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. Marketing and
Distribution Division eCommerce sales per day in the first nine months
increased 46% and are now 10% of divisional sales.
Divisional website sales increased 56% in the first nine months, compared to
the same period last year. At Newark InOne, website sales increased 18% in the
first nine months, compared to the same period last year and the site now has
greatly improved product search capabilities. At Farnell InOne, website sales
increased 74% in the first nine months compared to last year.
During the first nine months of the year, 19 new eProcurement partnerships have
been completed in North America, including GE Power Systems, the University of
Arizona, Timken and ICG Commerce, bringing the total number of active
partnerships to 133.
In Europe and Asia Pacific, in the first nine months of the year, 19 further
partnerships were implemented, including Bosch Germany and UKAEA. This brings
the total of live partnerships to 133.
Plans and developments are under discussion within the division as a whole with
a further 116 potential eProcurement customers. Overall, the division now has
266 active eProcurement trading partnerships.
* Awards
Premier Farnell was named European Distributor 2003 at the European Electronics
Awards in September, organised by trade publication, Electronics Weekly.
Farnell InOne has also received 2003 Distributor of the Year Awards from Tyco
Electronics and Epcos.
Industrial Products Division
Third Third Nine Nine
Qtr 2003/4 Qtr Months Months
�m 2002/3 2003/4 2002/3
�m �m �m
Sales : 24.0 22.8 72.5 69.9
Continuing businesses - 0.5 0.7 6.9
Businesses disposed
Total 24.0 23.3 73.2 76.8
Operating Profit 3.6 3.7 10.4 11.3
Return on sales % 15.0% 15.9% 14.2% 14.7%
Divisional sales per day increased 4.5% in the nine months over the same period
last year and 4.6% in the third quarter, for continuing businesses at constant
exchange rates.
* Akron Brass
Sales per day have continued to progress, increasing 7.6% in the first nine
months and 6.6% in the third quarter over the same period last year. The core
markets remain challenging, but the business continued to perform well as a
result of focussed expansion outside traditional markets, new product promotion
and improved operational efficiency from a new production facility.
* TPC Wire & Cable
Sales per day were up 1.0% in the third quarter compared to the same period
last year. The sales growth was achieved despite the weakness of the
traditional automotive market. TPC has introduced new applications, targeted
new industries and launched new products in order to broaden the base of the
business.
* Kent
Sales per day during the third quarter increased 2.3% compared to last year.
The European market remained quiet, but progress was made in most countries,
with strong performances in Italy, Spain and Germany, primarily due to improved
sales force development and a broader product range.
Personnel Changes
Paul Tallentire, previously Regional Director, Western Europe for the Marketing
and Distribution Division, has been appointed President of Newark InOne. He
will take up his new role in December 2003. Stephen Makepeace, Managing
Director of Farnell InOne, Australia has been appointed Regional Director,
Farnell InOne, Western Europe. Both of these appointments provide evidence of
our growing ability to leverage and promote talent from within the
organisation.
Outlook
In the third quarter, the Company started to receive uneven signs of
improvement in the key markets where it operates. While most European markets
remained quiet and UK industrial activity continued to be depressed, there are
now sporadic signals of increased optimism in North America as purchasing
managers' surveys and other indices gradually improve. The main phase of the
front office IT investment is complete thereby enabling the business to expand
the overall service and product offering and secure more long-term
relationships with key customers. In this way, the Company will be well
positioned to benefit from recovery in demand.
Sir Malcolm Bates
Chairman
4th December 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 third quarter and nine months ended 2nd November 2003
2003/4 2002/3 2003/4 2002/3 2002/3
Third Third Nine Nine Full
quarter quarter months months year
unaudited unaudited unaudited unaudited audited
Notes �m �m �m �m �m
Turnover 1 193.5 189.2 584.1 581.8 759.0
Operating profit
- before rebranding costs 18.8 21.3 55.2 63.2 82.9
and amortisation of
goodwill
- rebranding costs 2 - - (2.4) - -
- amortisation of goodwill (0.7) (0.7) (2.0) (2.0) (2.6)
Total operating profit 1 18.1 20.6 50.8 61.2 80.3
Gain/(loss) on disposal of 3 - - 0.1 (4.9) (4.8)
businesses
Net interest payable (3.6) (4.0) (11.0) (11.8) (15.7)
Profit before taxation 14.5 16.6 39.9 44.5 59.8
Taxation 4 (4.4) (5.0) (12.5) (14.5) (18.2)
Profit after taxation 10.1 11.6 27.4 30.0 41.6
Preference dividends (1.7) (1.6) (5.0) (9.1) (10.8)
(non-equity)
Profit attributable to 8.4 10.0 22.4 20.9 30.8
ordinary shareholders
Ordinary dividends - - (14.5) (14.5) (32.6)
(equity)
Retained profit/(loss) 8.4 10.0 7.9 6.4 (1.8)
Earnings per share 5
Basic 2.3p 2.9p 6.2p 6.5p 9.3p
Diluted 2.3p 2.9p 6.2p 6.5p 9.3p
Earnings per share before
rebranding costs,
amortisation of goodwill 5
and disposals
Basic 2.5p 3.0p 7.2p 8.4p 11.2p
Diluted 2.5p 2.9p 7.2p 8.3p 11.2p
Statement of Total Recognised Gains and Losses
For the nine months ended 2nd November 2003
2003/4 2002/3 2002/3
Nine Nine Full
months months year
unaudited unaudited audited
�m �m �m
Profit after taxation for 27.4 30.0 41.6
the period
Currency translation 7.6 (1.3) (0.3)
adjustments
Total recognised gains for 35.0 28.7 41.3
the period
Consolidated Profit and Loss Account
For the third quarter and nine months ended 2nd November 2003
2003/4 2002/3 2003/4 2002/3 2002/3
Third Third Nine Nine Full
quarter quarter months months year
unaudited unaudited unaudited unaudited audited
Notes $m $m $m $m $m
Turnover 1 319.3 295.2 946.2 878.5 1,161.3
Operating profit
- before rebranding 31.0 33.2 89.4 95.4 126.9
costs and amortisation
of goodwill
- rebranding costs 2 - - (3.9) - -
- amortisation of (1.2) (1.1) (3.2) (3.0) (4.0)
goodwill
Total operating profit 1 29.8 32.1 82.3 92.4 122.9
Gain/(loss) on 3 - - 0.2 (7.4) (7.4)
disposal of businesses
Net interest payable (5.9) (6.2) (17.8) (17.8) (24.0)
Profit before taxation 23.9 25.9 64.7 67.2 91.5
Taxation 4 (7.3) (7.8) (20.3) (21.8) (27.9)
Profit after taxation 16.6 18.1 44.4 45.4 63.6
Preference dividends (2.8) (2.5) (8.1) (13.8) (16.5)
(non-equity)
Profit attributable to 13.8 15.6 36.3 31.6 47.1
ordinary shareholders
Ordinary dividends - - (23.5) (21.9) (49.9)
(equity)
Retained profit/(loss) 13.8 15.6 12.8 9.7 (2.8)
Earnings per share 5
Basic $0.038 $0.045 $0.100 $0.098 $0.142
Diluted $0.038 $0.045 $0.100 $0.098 $0.142
Earnings per share
before rebranding
costs, amortisation of
goodwill and disposals
5
Basic $0.041 $0.047 $0.117 $0.127 $0.171
Diluted $0.041 $0.045 $0.117 $0.125 $0.171
The translation of
sterling into US
dollars has been
presented for
convenience purposes
only using the
following average
exchange rates: 1.65 1.56 1.62 1.51 1.53
Consolidated Balance Sheet
As at 2nd November 2003
2nd 3rd 2nd
November November
February
2003 2002 2003
unaudited unaudited audited
Notes �m �m �m
Fixed Assets
Intangible assets 46.5 49.1 48.5
Tangible assets 109.8 109.8 112.9
Interests in own shares - 0.2 0.2
156.3 159.1 161.6
Current Assets
Stocks 154.1 147.6 147.8
Debtors - due within one year 137.5 127.8 121.8
- due after more than one year 83.8 83.9 82.2
Cash at bank and in hand 33.9 38.1 29.6
409.3 397.4 381.4
Creditors - due within one year
Loans and overdrafts (5.6) (101.2) (97.3)
Other (143.7) (149.8) (157.4)
(149.3) (251.0) (254.7)
Net current assets 260.0 146.4 126.7
Total assets less current 416.3 305.5 288.3
liabilities
Creditors - due after more than
one year
Loans (256.3) (153.5) (141.5)
Provisions for liabilities and 6 (42.0) (41.5) (43.3)
charges
Net assets 118.0 110.5 103.5
Equity shareholders' funds (4.9) (17.2) (23.2)
Non-equity shareholders' funds 122.9 127.7 126.7
Total shareholders' funds 118.0 110.5 103.5
Movement in Shareholders' Funds
For the nine months ended 2nd November 2003
2003/4 2002/3 2002/3
Nine Nine Full
months months year
unaudited unaudited audited
Notes �m �m �m
Profit after taxation 27.4 30.0 41.6
Dividends - preference (5.0) (9.1) (10.8)
- ordinary (14.5) (14.5) (32.6)
7.9 6.4 (1.8)
New share capital subscribed 0.9 0.5 0.7
Purchase of own preference 8 (2.3) (8.3) (8.3)
shares
Preference share conversion - (0.9) (0.9)
costs
Goodwill reinstated on disposal 0.4 2.6 2.6
of businesses
Currency translation adjustment 7.6 (1.3) (0.3)
Net change in shareholders' 14.5 (1.0) (8.0)
funds
Opening shareholders' funds 103.5 111.5 111.5
Closing shareholders' funds 118.0 110.5 103.5
Consolidated Balance Sheet
As at 2nd November 2003
2nd 3rd 2nd
November November February
2003 2002 2003
unaudited unaudited audited
$m $m $m
Fixed Assets
Intangible assets 79.1 76.6 79.5
Tangible assets 186.6 171.3 185.2
Interests in own shares - 0.3 0.3
265.7 248.2 265.0
Current Assets
Stocks 262.0 230.3 242.4
Debtors - due within one year 233.7 199.4 199.8
- due after more than one year 142.5 130.9 134.8
Cash at bank and in hand 57.6 59.4 48.5
695.8 620.0 625.5
Creditors - due within one year
Loans and overdrafts (9.5) (157.9) (159.6)
Other (244.3) (233.7) (258.1)
(253.8) (391.6) (417.7)
Net current assets 442.0 228.4 207.8
Total assets less current 707.7 476.6 472.8
liabilities
Creditors - due after more than one
year
Loans (435.7) (239.5) (232.1)
Provisions for liabilities and (71.4) (64.7) (71.0)
charges
Net assets 200.6 172.4 169.7
Equity shareholders' funds (8.3) (26.8) (38.1)
Non-equity shareholders' funds 208.9 199.2 207.8
Total shareholders' funds 200.6 172.4 169.7
The translation of sterling into US
dollars
has been presented for convenience
purposes only using the following
period-end
exchange rates: 1.70 1.56 1.64
Summarised Consolidated Cash Flow Statement
For the third quarter and nine months ended 2nd November 2003
2003/4 2002/3 2003/4 2002/3 2002/3
Third Third Nine Nine Full
quarter quarter months months year
unaudited unaudited unaudited unaudited audited
Notes �m �m �m �m �m
Operating profit 18.1 20.6 50.8 61.2 80.3
Depreciation and 4.4 2.8 12.0 9.3 11.6
non-cash items
Working capital (9.6) 0.4 (24.2) 3.1 0.1
Net cash inflow from
operating
activities 12.9 23.8 38.6 73.6 92.0
Net interest payable (0.3) (0.5) (7.3) (8.1) (15.8)
Preference dividends - - (3.3) (7.5) (10.8)
Taxation paid (3.2) (4.6) (10.0) (11.1) (12.7)
Purchase of tangible (5.7) (6.3) (15.0) (15.1) (24.9)
fixed assets
Sale of tangible fixed - 0.1 1.4 0.4 1.7
assets
Disposal of businesses - - 0.8 3.2 3.3
(net of costs)
Ordinary dividends paid (14.5) (14.5) (32.6) (28.1) (28.1)
Cash (outflow)/inflow
before use of
liquid resources and (10.8) (2.0) (27.4) 7.3 4.7
financing
Issue of ordinary 0.9 - 0.9 0.5 0.7
shares
Purchase of own - - (2.3) (8.3) (8.3)
preference shares
Preference share - - - (0.9) (0.9)
conversion costs
New bank loans 13.5 6.0 206.6 23.0 29.1
Repayment of bank loans (4.7) - (175.6) (10.0) (23.0)
(Decrease)/increase in (1.1) 4.0 2.2 11.6 2.3
cash
Reconciliation of net
debt
Net debt at beginning (209.2) (236.4) (236.4)
of period
Increase in cash 2.2 11.6 2.3
Increase in debt (31.0) (13.0) (6.1)
Exchange movement 10.0 21.2 31.0
Net debt at end of 7 (228.0) (216.6) (209.2)
period
Summarised Consolidated Cash Flow Statement
For the third quarter and nine months ended 2nd November 2003
2003/4 2002/3 2003/4 2002/3 2002/3
Third Third Nine Nine Full
quarter quarter months months year
unaudited unaudited unaudited unaudited audited
$m $m $m $m $m
Operating profit 29.8 32.1 82.3 92.4 122.9
Depreciation and non-cash 7.3 4.3 19.4 14.0 17.7
items
Working capital (15.8) 0.7 (39.2) 4.7 0.2
Net cash inflow from
operating
activities 21.3 37.1 62.5 111.1 140.8
Net interest payable (0.5) (0.8) (11.8) (12.2) (24.2)
Preference dividends - - (5.3) (11.3) (16.5)
Taxation paid (5.3) (7.2) (16.3) (16.8) (19.4)
Purchase of tangible (9.4) (9.8) (24.3) (22.8) (38.1)
fixed assets
Sale of tangible fixed - 0.2 2.3 0.6 2.6
assets
Disposal of businesses - - 1.3 4.8 5.0
(net of costs)
Ordinary dividends paid (23.9) (22.6) (52.8) (42.4) (43.0)
Cash (outflow)/inflow
before use of
liquid resources and (17.8) (3.1) (44.4) 11.0 7.2
financing
Issue of ordinary shares 1.5 - 1.5 0.8 1.1
Purchase of own - - (3.7) (12.5) (12.7)
preference shares
Preference share - - - (1.4) (1.4)
conversion costs
New bank loans 22.3 9.4 334.7 34.7 44.5
Repayment of bank loans (7.8) - (284.5) (15.1) (35.2)
(Decrease)/increase in (1.8) 6.3 3.6 17.5 3.5
cash
The translation of
sterling into US dollars
has been presented for
convenience
purposes only using the
following average
exchange rates: 1.65 1.56 1.62 1.51 1.53
Notes
1 Segment information
2003/4 2002/3 2003/4 2002/3 2002/3
Third Third Nine Nine Full
quarter quarter months months year
unaudited unaudited unaudited unaudited audited
�m �m �m �m �m
Turnover
Marketing and
Distribution Division
Americas 74.2 77.9 221.1 242.7 311.6
Europe and Asia Pacific 95.3 88.0 289.8 262.3 348.6
169.5 165.9 510.9 505.0 660.2
Industrial Products 24.0 23.3 73.2 76.8 98.8
Division
193.5 189.2 584.1 581.8 759.0
Operating profit
Marketing and
Distribution Division
Americas
- before rebranding 6.9 8.4 20.8 25.5 33.0
costs
- rebranding costs - - (1.2) - -
(note 2)
6.9 8.4 19.6 25.5 33.0
Europe and Asia Pacific
- before rebranding
costs and amortisation
of goodwill 10.2 11.1 29.9 32.1 42.2
- rebranding costs - - (1.2) - -
(note 2)
- amortisation of (0.7) (0.7) (2.0) (2.0) (2.6)
goodwill
9.5 10.4 26.7 30.1 39.6
Total Marketing and 16.4 18.8 46.3 55.6 72.6
Distribution Division
Industrial Products 3.6 3.7 10.4 11.3 15.2
Division
Head Office costs (1.9) (1.9) (5.9) (5.7) (7.5)
18.1 20.6 50.8 61.2 80.3
$m $m $m $m $m
Turnover
Marketing and
Distribution Division
Americas 122.5 121.5 358.2 366.5 476.7
Europe and Asia Pacific 157.2 137.3 469.4 396.1 533.4
279.7 258.8 827.6 762.6 1,010.1
Industrial Products 39.6 36.4 118.6 115.9 151.2
Division
319.3 295.2 946.2 878.5 1,161.3
Operating profit
Marketing and
Distribution Division
Americas
- before rebranding 11.4 13.1 33.7 38.4 50.5
costs
- rebranding costs - - (1.9) - -
(note 2)
11.4 13.1 31.8 38.4 50.5
Europe and Asia Pacific
- before rebranding
costs and amortisation
of goodwill 16.8 17.3 48.4 48.5 64.6
- rebranding costs - - (2.0) - -
(note 2)
- amortisation of (1.2) (1.1) (3.2) (3.0) (4.0)
goodwill
15.6 16.2 43.2 45.5 60.6
Total Marketing and 27.0 29.3 75.0 83.9 111.1
Distribution Division
Industrial Products 5.9 5.8 16.9 17.1 23.3
Division
Head Office costs (3.1) (3.0) (9.6) (8.6) (11.5)
29.8 32.1 82.3 92.4 122.9
The first nine months 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 nine
months ended 2nd November 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 nine months �1.5m and full year �1.6m) and �0.1m of operating profit
(2002/3: first nine months �0.3m and full year �0.2m).
4 Taxation
The taxation charge includes provision at an effective rate for the first nine
months, excluding goodwill amortisation and gain/loss on disposal of
businesses, of 30.0% (2002/3: first nine months 30.0%), 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.
5 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 ordinary shares
used in the calculations are set out below.
2003/4 2002/3 2002/3
Nine Nine Full
months months year
unaudited unaudited audited
�m �m �m
Profit attributable to 22.4 20.9 30.8
ordinary shareholders
Rebranding costs 2.4 - -
(Gain)/loss on disposal (0.1) 4.9 4.8
of businesses
Tax attributable to (0.7) (0.9) (0.9)
rebranding/disposal of
businesses
Amortisation of goodwill 2.0 2.0 2.6
Profit attributable to
ordinary shareholders
before rebranding costs,
amortisation of goodwill 26.0 26.9 37.3
and disposals
Number Number Number
Weighted average number 362,227,670 321,391,484 331,570,659
of ordinary shares
Dilutive effect of share 837,271 811,325 850,520
options
Diluted weighted average number of 363,064,941 322,202,809 332,421,179
ordinary shares
The year on year increase in the weighted average number of ordinary shares
outstanding results from the special conversion, approved by shareholders on
13th May 2002, of 19.5 million preference shares into 89.8 million ordinary
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 �35.4m
(3rd November 2002: �35.0m, 2nd February 2003: �36.6m), provision for overseas
post-retirement obligations of �5.1m (3rd November 2002: �5.0m, 2nd February
2003: �5.2m) and provision for dilapidation costs on leased properties of �1.5m
(3rd November 2002: �1.5m, 2nd February 2003: �1.5m).
7 Net debt
2nd 3rd 2nd
November November February
2003 2002 2003
unaudited unaudited audited
�m �m �m
Cash and short term 33.9 38.1 29.6
deposits
Unsecured loans and (261.9) (254.7) (238.8)
overdrafts
(228.0) (216.6) (209.2)
Unsecured loans and
overdrafts comprise:
Bank overdrafts 5.5 1.8 2.7
Bank loans 30.6 50.0 44.0
7.0% US dollar Guaranteed - 99.4 94.5
Senior Notes payable 2003
7.2% US dollar Guaranteed 91.2 99.4 94.5
Senior Notes payable 2006
5.3% US dollar Guaranteed 38.8 - -
Senior Notes payable 2010
5.9% US dollar Guaranteed 93.5 - -
Senior Notes payable 2013
Other loans 2.3 4.1 3.1
261.9 254.7 238.8
Unsecured loans and
overdrafts are repayable
as follows:
Within one year 5.6 101.2 97.3
Between one and two years 0.1 - 0.2
Between two and five 122.1 149.4 138.8
years
After five years 134.1 4.1 2.5
261.9 254.7 238.8
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 7.0% 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 2nd November 2003 was 7.6million (2nd February 2003:
7.8million).
9 Basis of preparation
The unaudited consolidated financial information for the 39 weeks ended 2nd
November 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
Third Third Nine Nine Full
quarter quarter months months year
US dollar 1.65 1.56 1.62 1.51 1.53
Euro 1.44 1.58 1.44 1.59 1.58
Australian dollar 2.42 2.83 2.49 2.77 2.78
10 Dividend
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
