Premier Farnell plc 13 September Results for the Second Quarter and First Half of the 53 week financial year ending 3 February 2013.

Transcription

1 Premier Farnell plc 13 September 2012 Results for the Second Quarter and First Half of the 53 week financial year ending 3 February 2013 Key Financials Continuing operations (unaudited) Q2 12/13 Q2 11/12 Q2 H1 12/13 Growth (a) H1 11/12 H1 Growth (a) Total revenue % % Adjusted operating profit (b) % % Adjusting items (b) (0.4) - - (7.9) Total operating profit % % Adjusted profit before tax (b) % % Total profit before taxation % % Adjusted earnings per share (b) 3.7p 4.5p -17.8% 7.9p 9.3p -15.1% Basic earnings per share 3.6p 4.5p -20.0% 6.2p 13.4p -53.7% Interim ordinary dividend 4.4p 4.4p - 4.4p 4.4p - Free cash flow (c) Fourth consecutive quarter of stable sales per day in contracting markets Financial highlights Robust sales per day, stable for the fourth consecutive quarter, up 0.5% sequentially, outperforming a contracting market and down only 1.6% year on year. The stronger second quarter improves year on year sales decline from 5.0% in the first quarter to 3.3% for the first half. SIA data indicates industry contraction of 10.4% and 10.0% year on year in the 3 months to July for the Americas and Europe (respectively) with APAC at 1.4% growth. Second quarter gross margin of 38.5% was impacted by actions we took to outperform the market, cyclical pricing pressures and foreign exchange. First half gross margin was 39.2%. Adjusted second quarter overhead costs reduced to 28.4% of sales from 29.0% in Q1, giving second quarter and first half year on year reductions of 2.1m and 6.6m (respectively) at constant exchange rates. Second quarter adjusted operating profit was 24.1m, with the year on year percentage decline in line with that achieved in the first quarter, giving first half adjusted operating profit of 50.1m. Foreign exchange movements reduced second quarter adjusted operating profit by 1.1m compared with the prior year. Operating cash generation in the first half of 131.5% (e) of operating profit, up from 94.9% in the prior year. Board have approved an interim dividend of 4.4p per share (2011/12: 4.4p). Strategic highlights Our active customer base exited the second quarter up 1% on the prior year, excluding Raspberry Pi, with both EDE and MRO customer segments growing at a similar rate. Global MDD ecommerce penetration increased by 1.4 percentage points from Q4 2011/12 to the second quarter at 56.7% and exited at 57.7%. element14 Community received 1.7 million visits in the quarter maintaining strong progress following the peak arising from the Q1 launch of Raspberry Pi, with registered users increasing by more than 4,000 per month and now approximately 80,000 community interactions each week. Sales to international growth markets represented 22.5% of second quarter MDD sales with emerging markets increasing to 8.6% of the total. Raspberry Pi sales in the quarter of 3.9m, ahead of expectation, 90% of which was to 118,000 new customers. Our multi channel sales transformation continues with our Krakow contact centre on track and on budget. Embest acquisition in the quarter extends our service offering through embedded system design capabilities. 1

2 Commenting on the results, Laurence Bain, Group Chief Executive, said: In very challenging global markets we continue to show resilience and make strategic progress. At a global level we have now had four consecutive quarters of stable sales per day within a market that continued to decline. With our customer base increasing further in the second quarter and our year on year sales performance improving from Q1 to Q2 in Europe and the Americas - the business continues to perform well on a comparative basis. The second quarter gross margin percentage was consistent with actions we have taken to outperform the market and the current market circumstances. As markets recover we anticipate our gross margin returning to our longer term average range. In challenging markets we once again demonstrated our ability to manage our costs to maintain overall return on sales above 10%. Despite the global markets remaining uncertain and with very limited forward order visibility, I am confident that the Group is well positioned to leverage opportunities in our target markets. In August we were encouraged by the return to year on year growth of 0.4%. We remain cautious, but by providing our customers with unparalleled service and with continued focus on optimising share gains, gross margin, costs and cash, and with easier comparators in addition to the benefit of a 53 rd week we continue to expect growth to return in the second half. For further information, contact: Laurence Bain, Chief Executive Officer Premier Farnell plc +44 (0) Nicholas Cadbury, Chief Financial Officer Thomas Churchill, Investor Relations Richard Mountain FTI Consulting +44 (0) Premier Farnell s announcements and presentations are published at together with business information and links to all other Group web sites. The results for the third quarter of the 53 week financial year ending 3 February 2013 will be announced on 6 December Notes: (a) Throughout this statement, in order to reflect underlying business performance, sales growth is based on sales per day for continuing businesses at constant exchange rates and for like periods, and growth in operating profit is calculated at constant exchange rates, unless otherwise stated. (b) Current year adjusted operating profit, profit before tax, and earnings per share in the table above exclude restructuring costs of 7.5m (in the first quarter) and acquisition costs of 0.4m related to the purchase of the entire share capital of Shenzhen Embest Technology Co Ltd (Embest) (in the second quarter). In the prior year, adjusted operating profit, profit before tax, and earnings per share, excluded the gain on sale of TPC Wire & Cable (pre-tax gain of 17.8m). (c) Free cash flow comprises total cash generated from operations, excluding cash flows related to restructuring, less net capital expenditure, interest, preference dividends and tax payments. Free cash flow also excludes net proceeds from the sale of businesses. (d) SIA data from Semiconductor Industry Association publication, PMI data from relevant published source in each market. (e) Operating cash flow (before capital expenditure) as a percentage of adjusted operating profit. 2

3 Premier Farnell plc Divisional Analysis Revenue Q2 12/13 Q2 11/12 Q2 H1 12/13 H1 11/12 H1 MDD Division UK growth -0.1% growth -3.6% Rest of Europe % % APAC (1) % % Europe & APAC % % Americas % % MDD Other % % MDD Total % % IPD Group % % % % Adjusted Operating Profit (ROS) Q2 12/13 Q2 11/12 MDD Division Q2 growth H1 12/13 H1 11/12 H1 growth Europe & APAC (2) % % 14.7% 16.3% 15.7% 16.4% Americas (3) % % 7.0% 8.2% 7.3% 8.7% MDD Other % % 10.6% 9.4% 9.5% 8.8% MDD Total (4) % % 11.0% 12.3% 11.6% 12.5% IPD (5) % % 17.6% 15.2% 16.3% 14.9% Head office % % Group % % 10.1% 11.2% 10.5% 11.2% Notes: (1) Current year includes results of Embest post acquisition on 26 June 2012 (2) Current year adjusted to exclude impact of 6.9m restructuring costs (Q1) and 0.4m of acquisition costs (Q2) (3) Current year adjusted to exclude impact of 0.6m restructuring costs (Q1) (4) Current year adjusted to exclude impact of 7.5m restructuring costs (Q1) and 0.4m of acquisition costs (Q2) (5) Prior year adjusted to exclude impact of gain on sale 17.8m of TPC Wire & Cable 3

4 Results for the Second Quarter and First Half of the 53 week financial year ending 3 February 2013 Premier Farnell, the leading multi-channel, high service distributor supporting millions of engineers and purchasing professionals globally, announces its results for the second quarter of the 53 week financial year ending 3 February Introduction In very challenging global markets we continue to show resilience and make strategic progress through increased focus on the customer and through investment in, and delivery of the benefits from, our multi-channel sales proposition. With year on year and sequential GDP growth and manufacturing PMIs on a downward trend from the first quarter of 2012 into the second quarter in most global markets, the underlying economic environment in which we are operating remains difficult. In our largest markets the semiconductor industry is contracting at a greater pace than the underlying economies with SIA data showing a decline of 10.4% in the Americas for the 3 months to July and a decline of 10.0% in Europe for the same period. Despite the more challenging environment our adjusted operating profit decline in the second quarter of 8.9% year on year is stable compared with the 8.6% decline in the first quarter. We continue to be focused on meeting our customers needs, taking market share, developing our customer base, controlling our costs and margin, generating cash to maintain dividends and ensuring we are positioned optimally for market recovery. Through this focus we have maintained global sales per day for four quarters and we will continue to focus on the delivery of each quarter s results as well as our longer term strategy. Sales At Group level second quarter sales per day were stable from the first quarter with a sequential year on year improvement from -5.0% in the first quarter to -1.6% in the quarter at constant exchange rates. The average exchange rate for the US dollar against sterling was $1.56 (2011/12: $1.62) and the average exchange rate for the Euro against sterling was Euro 1.26 (2011/12: Euro 1.14). Within our MDD Division, against European SIA and DMASS data showing a year on year decline of 10.0% and 14.7%, respectively, and Eurozone manufacturing PMIs falling further to 44.0 in July, Europe, as our most strategically advanced region, has again significantly outperformed its markets with year on year sales decline halving from 7.3% in the first quarter to 3.6% in the second. Despite GDP growth in the US remaining positive in the second quarter SIA data for the Americas has worsened significantly from a decline of 0.4% for the three months to April to a decline of 10.4% for the three months to July. Against this volatile background our MDD Americas business has maintained sales per day sequentially from the first quarter and has improved on a year on year basis from a first quarter decline of 7.6% to 4.1% in the second quarter. Asia Pacific s second quarter sales per day were stable sequentially from the first quarter although down by 1.6% on a strong second quarter last year. Each market within APAC was stable against the first quarter against a backdrop of falling PMIs that are below 50 in every market except India and Indonesia. Following the completion of the formal acquisition process on 26 June, Embest contributed 0.4m of sales in the second quarter. Second quarter sales per day from Emerging Markets were stable year on year and sequentially and now represent 8.6% of global MDD sales, up from 8.3% in the second quarter last year. Within Other Distribution Businesses second quarter sales at CPC grew by 11.2% year on year, an increase from 5.8% in the first quarter, maintaining the strong performance of last year. Growth continues to be driven by web focused customer acquisition and the introduction of new products sourced globally. Web sales grew by 13.8% in the quarter. In challenging market conditions MCM maintained stable sales per day from the first quarter although this represented a year on year decline of 2.2%. Longer term development is being enhanced through increased collaboration with CPC. This is being achieved through increased focus on the web, targeted product segments and new product introductions. In the Industrial Products Division domestic market conditions have continued to be challenging for Akron Brass but are showing early signs of stabilising. It has a significant share of its home market in North America and is continuing to give focus to the development of international markets whilst broadening its product range and reaching into new 4

5 industrial markets at home and abroad. Sales per day increased by 11.2% year on year, up from 5.5% in the first quarter. International growth and continued increase in domestic US market share provide a strong foundation for further progress as US markets recover and international sales continue to grow. Gross margin The gross margin achieved by our core MDD businesses continues to reflect the value our customers obtain from our proposition. In the second quarter our gross margin at Group level was 38.5% compared to our long term average of 39.6%. Margin was impacted by decisions we took to outperform the market by not walking away from strategic sales opportunities that did not meet our normal margin expectations, and by cyclical pricing pressures. In addition the successful launch of the lower margin but strategic Raspberry Pi product (-0.3% vs. Q1), the relative strength of sales on our MDD Other businesses (-0.1% vs. Q1) and FX movements (-0.2% vs. Q1) impacted gross margin. First half gross margin at 39.2% was within 0.4% of our long term average. The maintenance of gross margin stability within a range around our long term average that will optimize overall performance across the economic cycle continues to be an area of focus and commitment. We anticipate our gross margin returning to within our longer term range as markets recover. Costs In uncertain sales markets the Group continues to actively manage its cost base both strategically, as the achievement of key metrics progresses, particularly progress to the web, and tactically, in response to sales volumes. Adjusted net operating expenses reduced by 2.5m ( 2.1m at constant exchange rates) compared to the prior year and reduced to 28.4% of sales from 29.0% in the first quarter. We will continue to manage costs as we transition to the web and shape our business to the market environment. We will invest in our strategy, particularly in our customers web experience, with the launch of a new web platform which is on track for a phased launch to commence later in the year, and in our people. Whilst our focus on cost efficiency remains absolute, we anticipate that costs will increase in the second half of the year as growth driven incentives return and expenditure on our web platform and data management solutions increase. In the quarter we concluded the previously announced acquisition of Embest resulting in one-off costs associated with the acquisition of 0.4m being charged to the income statement. These costs, combined with the 7.5m of one-off costs arising primarily from the establishment of our Krakow contact centre that were charged in the first quarter, result in exceptional costs of 7.9m in the first half. In the prior year, first half total net operating expenses included the pre-tax gain in the first quarter on the sale of the TPC business of 17.8m. Return on Sales Focus on the implementation of our strategy, gross margin and cost management has allowed the Group to deliver strong return on sales throughout the period since our strategy began. In the second quarter, active management of costs has continued and has contributed to the delivery of a stable second quarter year on year decline in adjusted operating profit of 8.9%, despite markets worsening from the first quarter. Adjusted operating profit in the quarter was 24.1m (2011/12: 27.5m), producing an operating margin of 10.1% compared with 11.2% in the second quarter of the prior year, and 10.8% in the previous quarter. 1.1m of the reduction in operating profit from the prior year resulted from exchange rate movement. In a declining sales environment our MDD Americas business saw a reduced year on year decline in return on sales of 1.2% giving a return for the quarter of 7.0%. The strategic metrics of our North American business continue to progress and the business is now well positioned to respond to recovery in its underlying markets. With continued focus on costs and customer acquisition Europe and Asia Pacific achieved a return on sales in the second quarter of 14.7% despite being impacted by GBP/ Euro currency movements and the launch of Raspberry Pi. Whilst short term returns have been influenced by economic conditions and longer term strategic initiatives in both regions, the strategic positioning in these regions continues to progress and with our significant infrastructure investments in Asia Pacific in recent years, there is confidence that we will benefit from market improvements and market share growth. 5

6 Cash Flow/Balance Sheet Second quarter cash conversion of adjusted operating profit into adjusted operating cash flow increased to 131.5% (2011/12: 94.9%) giving 123.8% for the first half. This effective management of working capital allowed first half positive net cash flow (after dividends, reorganisation costs and acquisition purchase) of 6.0m reducing net financial liabilities (including preference shares) to 234.3m. This represents a ratio of net debt to EBITDA of The impact of exchange rates in the period was to increase net financial liabilities by 1.5m in the first half, principally in relation to our US$ denominated private placement loan notes. In the second quarter the Group s inventory levels increased by 12.2m (at constant exchange rates) as we took action to align our inventory with the profile of our sales and to increase focus on faster moving items. This increase will reverse over the remainder of the year as slower moving items are removed. This inventory investment and the timing of the period end in relation to our standard payment cycle resulted in an increase in trade payables of 10.8m ( 9.7m at constant exchange rates). In the quarter movement in discount rates impacted on the actuarial valuation of the Group s US defined benefit pension scheme resulting in an increase in the valuation of retirement and other post-employment benefits net obligations to 57.6m from 47.3m at the end of the first quarter. Premier Farnell s financial position remains robust with good liquidity and strong free cash flow. At the quarter end, our headroom on bank borrowings was 180m under facilities in place until October This headroom, combined with our net cash position of 123.7m, gives us a secure funding position. Foreign Currency Impact A one cent movement in the exchange rate between the US dollar and sterling impacts the Group s operating profit by approximately 250,000 per annum, and a one cent movement in the exchange rate between the Euro and sterling impacts the Group s operating profit by approximately 500,000 per annum. There was a detrimental impact on adjusted operating profit of 1.1m from the translation of overseas results compared with the prior year. Finance Costs Net finance costs in the second quarter were 5.3m (2011/12: 4.5m). This comprises net interest payable of 4.2m (2011/12: 3.4m), which was covered 5.7 times by adjusted operating profit, and a net charge of 1.1m (2011/12: 1.1m) in respect of the Company s convertible preference shares. Finance costs (including preference shares) would be expected to reduce by approximately 1.0m per quarter from Q2 levels on repayment of the Group s 2013 USPP Notes. These notes are due for repayment in July Early repayment this year would attract a one-off charge that would offset the ongoing benefit in the current year. Profit Before Tax Adjusted profit before tax in the second quarter was 18.8m (2011/12: 23.0m), a decrease of 18.3% on the previous year, and 39.7m for the first half. (2011/12: 47.1m) Total profit before tax (including one-off items) in the quarter was 18.4m (2011/12: 23.0m) and 31.8m for the first half. (2011/12: 64.9m) Tax The effective tax rate of the Group is 27.5% of profit before tax after adding back preference dividends charged within finance costs. The underlying effective tax rate of 27.5% is unchanged from the prior year. Earnings Per Share Adjusted earnings per share for the second quarter are 3.7p (Q1 2011/12: 4.5p). Basic earnings per share (after the net impact of one-off items) are 3.6p (Q1 2011/12: 4.5p). Adjusted earnings per share for the first half are 7.9p (H1 2011/12: 9.3p). Basic earnings per share (after the net impact of one-off items) are 6.2p (H1 2011/12: 13.4p). Dividend The Board recommend payment of an interim dividend of 4.4p (2011/12: 4.4p). Strategy Whilst global economic and market conditions remain uncertain and challenging we remain focused on managing the implementation of our strategic transformation. Our strategy has delivered industry leading returns throughout its 6

7 implementation and as we increase focus on meeting the needs of our customers and investing in and delivering the benefits from our multi channel sales strategy we expect this to continue. We are driving the implementation of our strategy aggressively in order to deliver the strongest possible position to optimise our performance once markets recover. Through focus on delivery of a product proposition that provides customers in our targeted segments with an end to end service that they know can meet all of their requirements we are targeting increased market share gains and growth. The strengthening of our global multi channel sales strategy continues with our European contact centre in Krakow on plan and already delivering the expected benefits in customer service and marketing. Later in the year we will commence the phased roll out of our new web platform which will deliver benefits to our customers and improve operational efficiency further. We continue to make progress towards our goal of being a digital enterprise with ecommerce penetration in the second quarter of 56.7%, up 0.6% on the first quarter and exiting the quarter at 57.7%. In the first quarter we participated in the launch of Raspberry Pi. The first significant sales of this product were in the second quarter and exceeded our expectations at 3.9m. Whilst this had the expected impact on our gross margin this product attracted 118,000 new customers and contributed to a further 1.7m visits to our community websites in the second quarter on top of the 2.7m visits in the first quarter. The lower margin impact of Raspberry Pi will diminish as we continue to add a range of higher margin associated products. In the quarter the company completed the acquisition of Embest, a provider of embedded development tools. This together with our element14 community, our unique on line engineer design portal, the Knode, and our 40+ transactional sites now provide true solution partner support to our customers and our suppliers. Through a focus on the fundamentals of high service distribution whilst further developing our global proposition to EDE and strategic MRO customers, we further increased our active customer base by 1% excluding Raspberry Pi overall in the quarter demonstrating continued market share gains in our targeted market segments. Outlook In very challenging global markets we continue to show resilience and make strategic progress. At a global level we have now had four consecutive quarters of stable sales per day within a market that continued to decline. With our customer base increasing further in the second quarter and our year on year sales performance improving from Q1 to Q2 in Europe and the Americas - the business continues to perform well on a comparative basis. The second quarter gross margin percentage was consistent with actions we have taken to outperform the market and the current market circumstances. As markets recover we anticipate our gross margin returning to our longer term average range. In challenging markets we once again demonstrated our ability to manage our costs to maintain overall return on sales above 10%. Despite the global markets remaining uncertain and with very limited forward order visibility, I am confident that the Group is well positioned to leverage opportunities in our target markets. In August we were encouraged by the return to year on year growth of 0.4%. We remain cautious, but by providing our customers with unparalleled service and with continued focus on optimising share gains, gross margin, costs and cash, and with easier comparators in addition to the benefit of a 53 rd week we continue to expect growth to return in the second half. Risk and Uncertainties The principal risks and uncertainties facing the Group for the remaining six months of the year and the ways in which they are mitigated are unchanged since they were described in the Company s 2012 Annual Report and Accounts on pages 62 to 64. This includes the risks associated with uncertainty over the Eurozone economy and the currency and other risks associated. 7

8 . Three Year Success Metrics - Our performance against our success metrics is as follows: Key Performance Indicators Goal Achieved in Q2 Sales per day growth 6-8% -1.6% Gross margin % Stability 38.5% Return on sales % 12%-15% 10.1% (MDD 11.0%) Return on net operating assets % >30% 35.6% Working capital as a % of sales <22% 25.0% Free cash flow as a % of sales 6% 4.7% % of MDD sales from ecommerce 70% 56.7% % of MDD sales from EDE 50%-70% 50.0% % all sales from international growth markets 30% 22.5% MDD active customer growth 6% 1% 8

9 Condensed Consolidated Income Statement For the second quarter and half year ended 29 July / / / / /12 Second Second First First Full quarter quarter half half year unaudited unaudited unaudited unaudited audited Notes Continuing operations Revenue Cost of sales (146.4) (147.7) (291.4) (297.4) (588.1) Gross profit Net operating expenses - adjusted operating expenses (67.7) (70.2) (137.7) (144.5) (277.7) - adjusting items 5 (0.4) - (7.9) Total net operating expenses (68.1) (70.2) (145.6) (126.7) (261.6) Operating profit - adjusted operating profit adjusting items 5 (0.4) - (7.9) Total operating profit Finance income Finance costs - interest payable (4.4) (3.4) (8.5) (6.7) (14.6) - preference dividends (0.9) (0.9) (1.8) (1.8) (3.5) - premium on redemption of preference shares (0.2) (0.2) (0.4) (0.4) (0.8) Total finance costs (5.5) (4.5) (10.7) (8.9) (18.9) Profit before taxation Taxation 6 (5.3) (6.5) (9.2) (16.2) (27.7) Profit for the period attributable to ordinary shareholders Earnings per share 7 Basic 3.6p 4.5p 6.2p 13.4p 21.2p Diluted 3.6p 4.5p 6.2p 13.2p 20.9p Ordinary dividends Interim - proposed p 4.4p 4.4p Final - proposed 6.0p Paid 6.0p 6.0p 10.4p Impact on shareholders' funds () Condensed Consolidated Statement of Comprehensive Income For the second quarter and half year ended 29 July / / / / /12 Second Second First First Full quarter quarter half half year unaudited unaudited unaudited unaudited audited Profit for the period attributable to ordinary shareholders Net exchange adjustments (0.8) 0.9 (1.8) Recycling of cumulative translation adjustments on disposal of subsidiary undertaking (0.8) (0.8) Actuarial losses on pensions and other post-retirement obligations (10.0) (4.5) (14.7) (4.5) (10.0) Deferred tax credit on actuarial losses on pensions and other post retirement obligations Deferred tax charge on share based payments (2.3) Net fair value gains/(losses) on cash flow hedges (0.5) (0.4) 2.2 Other comprehensive income/(expense) for the period (6.4) (0.9) (12.5) (4.3) (8.0) Total comprehensive income for the period attributable to ordinary shareholders The accompanying notes form an integral part of this unaudited condensed consolidated financial information.

10 Condensed Consolidated Balance Sheet As at 29 July July 31 July 29 January unaudited unaudited audited Notes ASSETS Non-current assets Goodwill Other intangible assets Property, plant and equipment Deferred tax assets Total non-current assets Current assets Inventories Financial assets Trade and other receivables Current tax receivable Cash and cash equivalents Total current assets LIABILITIES Current liabilities Financial liabilities 8 (103.6) (1.8) (1.3) Trade and other payables (137.6) (120.4) (113.4) Current tax payable (15.1) (26.2) (15.6) Total current liabilities (256.3) (148.4) (130.3) Net current assets Non-current liabilities Financial liabilities 8 (255.7) (300.1) (355.0) Retirement and other post-employment benefits (57.6) (38.9) (43.8) Deferred tax liabilities (3.2) (3.5) (6.4) Total non-current liabilities (316.5) (342.5) (405.2) NET ASSETS EQUITY Ordinary shares Equity element of preference shares Share premium Capital redemption reserve Hedging reserve 0.9 (1.2) 1.4 Cumulative translation reserve Retained earnings (25.7) (23.8) (17.6) TOTAL EQUITY Consolidated Statement of changes in Equity For the second quarter and half year ended 29 July / / /12 First First Full half half year unaudited unaudited audited Total equity at beginning of period Profit for the period Other comprehensive expense (12.5) (4.3) (8.0) Total comprehensive income Transactions with owners: Ordinary dividends paid (21.8) (21.8) (37.8) Ordinary share capital subscribed Purchase of ordinary shares - (5.8) (5.8) Share-based payments Total transactions with owners (19.9) (24.1) (39.5) Total equity at end of period The accompanying notes form an integral part of this unaudited condensed consolidated financial information.

11 Condensed Consolidated Statement of Cash Flows For the second quarter and half year ended 29 July / / / / /12 Second Second First First Full quarter quarter half half year unaudited unaudited unaudited unaudited audited Notes Cash flows from operating activities Operating profit Adjusting items: - net income statement impact (17.8) (16.1) - cash impact (2.2) - (3.1) - (2.2) Non cash impact of adjusting items (1.8) (17.8) (18.3) Depreciation and amortisation Changes in working capital 3.2 (4.3) 2.7 (20.5) (13.6) Additional funding for post retirement defined benefit plans (0.7) (0.7) (1.5) (1.5) (3.4) Other non-cash movements 0.5 (0.5) Total cash generated from operations Interest received Interest paid (6.4) (4.5) (7.8) (5.9) (11.0) Dividends paid on preference shares (1.8) (1.8) (1.8) (1.8) (3.5) Taxation paid (7.1) (10.8) (9.4) (14.8) (26.9) Net cash generated from operating activities Cash flows from investing activities Net inflow from disposal of businesses (net of tax paid) - (0.6) Net outflow from purchase of business (2.7) - (2.7) - - (Purchase of)/proceeds from disposal of property, plant and equipment (1.9) 0.7 (3.0) (2.5) (9.1) Purchase of intangible assets (computer software) (3.5) (6.3) (7.3) (8.5) (12.6) Net cash (used in)/generated from investing activities (8.1) (6.2) (13.0) Cash flows from financing activities Purchase of ordinary shares - (5.8) - (5.8) (5.8) Issue of ordinary shares New borrowings Repayment of borrowings - (6.7) - (18.7) (118.9) Dividends paid to ordinary shareholders (21.8) (21.8) (21.8) (21.8) (37.8) Net cash (used in)/generated from financing activities (21.3) (4.8) (21.0) (16.3) 14.8 Net (decrease)/increase in cash, cash equivalents and bank overdrafts (15.0) (2.0) Cash, cash equivalents and bank overdrafts at beginning of period Exchange gains/(losses) 2.0 (1.1) 0.6 (1.4) 0.5 Cash, cash equivalents and bank overdrafts at end of period Reconciliation of net financial liabilities Net financial liabilities at beginning of period (237.1) (262.9) (262.9) Net increase in cash, cash equivalents and bank overdrafts Increase in debt (0.2) (8.6) (55.7) Premium on redemption of preference shares (0.4) (0.4) (0.8) Derivative financial instruments (0.8) (0.2) 3.2 Amortisation of arrangement fees (0.5) (1.0) (2.1) Exchange movement (1.5) 3.2 (1.8) Net financial liabilities at end of period 8 (234.3) (251.3) (237.1) The accompanying notes form an integral part of this unaudited condensed consolidated financial information.

12 Notes 1 General information Premier Farnell plc (the "Company") is a company incorporated and domiciled in the UK and is listed on the London Stock Exchange. The address of the Company's registered office is Farnell House, Forge Lane, Leeds, LS12 2NE, England. The Company's registered number is This condensed consolidated financial information was approved for issue on 13 September This condensed consolidated financial information does not comprise statutory accounts within the meaning of Section 498 of the Companies Act Statutory accounts for the financial year ended 29 January 2012, were approved by the board of directors on 19 April 2012 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 237 of the Companies Act 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 2 Basis of preparation This condensed consolidated financial information for the second quarter and half year ended 29 July 2012, has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with IAS 34, Interim Financial Reporting, as adopted by the European Union. The condensed consolidated financial information in this report has been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union, and applying the accounting policies disclosed in the Group's 2012 Annual Report and Accounts on pages 122 to 125. 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 29 January The interim financial information has not been audited or reviewed by auditors pursuant to the Auditing Practices Board's guidance on Review of Interim Financial Information. There are no new IFRSs or IFRICs that are effective for the first time in the current financial year which have had a significant impact upon the Group. Going concern The Group meets its day-to-day working capital requirements through its banking facilities (see note 8 for the current funding position). The Group's business activities and financial position, the factors likely to affect its future development and performance, and its objectives and policies in managing financial risks to which it is exposed are disclosed in the Group's 2012 Annual Report and Accounts on pages 62 to 64. 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 condensed interim financial statements. 3 Acquisition On 26 June 2012, the Group completed its acquisition of the entire issued share capital of Shenzhen Embest Technology Co Ltd (Embest), a leading provider of embedded system development boards and tools, as well as design engineering services. Of the total consideration of 3.4 million, 0.2 million relates to the provisional fair value of net assets acquired and 3.2 million relates to goodwill attributable to the future profitability of the business. The total consideration includes deferred consideration of 0.8 million dependent on the performance of the acquired business over the next two years. In accordance with IFRS 3 Business Combinations, acquisition costs of 0.4 million have been charged to administrative expenses and shown as an adjusting item in the consolidated income statement for the period. Both the trading results of Embest 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. 4 Segment information 2012/13 Second quarter unaudited 2011/12 Second quarter unaudited Before Adjusting items After Before Adjusting items After adjusting items (note 5) adjusting items adjusting items (note 5) adjusting items Revenue Marketing and Distribution Division Americas Europe and Asia Pacific Other Distribution Businesses Total Marketing and Distribution Division Industrial Products Division Operating profit Marketing and Distribution Division Americas Europe and Asia Pacific 15.2 (0.4) Other Distribution Businesses Total Marketing and Distribution Division 24.3 (0.4) Industrial Products Division Head Office costs (3.4) - (3.4) (3.1) - (3.1) 24.1 (0.4) /13 First half unaudited 2011/12 First half unaudited Before Adjusting items After Before Adjusting items After adjusting items (note 5) adjusting items adjusting items (note 5) adjusting items Revenue Marketing and Distribution Division Americas Europe and Asia Pacific Other Distribution Businesses Total Marketing and Distribution Division Industrial Products Division Operating profit Marketing and Distribution Division Americas 13.2 (0.6) Europe and Asia Pacific 33.4 (7.3) Other Distribution Businesses Total Marketing and Distribution Division 51.5 (7.9) Industrial Products Division Head Office costs (7.0) - (7.0) (6.9) - (6.9) 50.1 (7.9)

13 4 Segment information (continued) 2011/12 Full year audited Before Adjusting items After adjusting items (note 5) adjusting items Revenue Marketing and Distribution Division Americas Europe and Asia Pacific Other Distribution Businesses Total Marketing and Distribution Division Industrial Products Division Operating profit Marketing and Distribution Division Americas Europe and Asia Pacific 71.0 (2.2) 68.8 Other Distribution Businesses 9.3 (0.1) 9.2 Total Marketing and Distribution Division (1.5) Industrial Products Division Head Office costs (13.8) (0.2) (14.0) July 31 July 29 January unaudited unaudited audited Segment assets Marketing and Distribution Division Americas Europe and Asia Pacific Other Distribution Businesses Total Marketing and Distribution Division Industrial Products Division Head Office Segment assets Unallocated assets: Cash and cash equivalents Deferred tax assets Financial assets Current tax receivable Total assets Operating profit 2012/ / / / /12 Statutory operating profit is stated after (charging)/crediting the following: Second Second First First Full quarter quarter half half year unaudited unaudited unaudited unaudited audited - Restructuring costs - - (7.5) - (2.8) - Acquisition costs (0.4) - (0.4) Gains on disposal of businesses (0.4) - (7.9) Due to their significance and nature, adjusted operating expenses and adjusted operating profit has been disclosed on the face of the income statement which exclude these items above. 6 Taxation The taxation charge represents an effective tax rate for the 2012/13 financial year on profit before tax and preference dividends of 27.5% (2011/12: 27.5% before tax on gains from business disposals). 7 Earnings per share Basic earnings per share is calculated by dividing the profit attributable to ordinary shareholders for the period by the weighted average number of ordinary shares in issue during the period, excluding those shares held by the Premier Farnell Executive Trust. For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume issue of all dilutive potential ordinary shares, being those share options and awards with a non-market based performance condition granted to employees where the exercise price is less than the average market price of the Company's ordinary shares during the period, and those shares with a market based performance condition based on the current estimate of the number of shares that will vest under the performance criteria. Reconciliations of earnings and the weighted average number of ordinary shares used in the calculations are set out below. 2012/13 First half unaudited 2011/12 First half unaudited Basic per Diluted per Basic per Diluted per Earnings share amount share amount Earnings share amount share amount pence pence pence pence Earnings per share Profit attributable to ordinary shareholders Restructuring costs Tax attributable to restructuring costs (2.1) (0.6) (0.6) Acquisition costs Tax attributable to acquisition costs (0.1) Gains on disposal of businesses (17.8) (4.9) (4.9) Tax on gains on disposal of businesses Adjusted profit attributable to ordinary shareholders Number Number Weighted average number of shares 363,932, ,830,794 Dilutive effect of share options 3,317,041 7,109,034 Diluted weighted average number of shares 367,249, ,939,828

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15 7 Earnings per share (continued) 2011/12 Full year audited Basic per Diluted per Earnings share amount share amount pence pence Earnings per share Profit attributable to ordinary shareholders Restructuring costs Tax attributable to restructuring costs (0.7) (0.2) (0.2) Gains on disposal of businesses (18.9) (5.2) (5.1) Tax on gains on disposal of businesses Adjusted profit attributable to ordinary shareholders Number Weighted average number of shares 363,091,496 Dilutive effect of share options 4,952,153 Diluted weighted average number of shares 368,043,649 Adjusted Earnings per share has been provided in order to facilitate year on year comparison. 8 Net financial liabilities 29 July 31 July 29 January unaudited unaudited audited Cash and cash equivalents Unsecured loans and overdrafts (297.0) (239.1) (294.2) Net financial liabilities before preference shares and derivatives (173.3) (188.5) (177.3) Preference shares (62.2) (61.4) (61.8) Derivative financial instruments (net) 1.2 (1.4) 2.0 Net financial liabilities (234.3) (251.3) (237.1) Net financial liabilities are analysed in the balance sheet as follows: Current assets Cash and cash equivalents Derivative financial instruments Current liabilities Other loans (1.2) (0.4) (1.0) 5.9% US dollar Guaranteed Senior Notes payable 2013 (102.3) - - Derivative financial instruments (0.1) (1.4) (0.3) (103.6) (1.8) (1.3) Non-current liabilities Bank loans (17.7) (118.2) (18.9) 5.9% US dollar Guaranteed Senior Notes payable (96.8) (100.8) 3.0% US dollar Guaranteed Senior Notes payable 2016 (54.7) - (54.0) 5.2% US dollar Guaranteed Senior Notes payable 2017 (19.4) (18.4) (19.1) 4.4% US dollar Guaranteed Senior Notes payable 2018 (37.5) - (37.0) 4.8% US dollar Guaranteed Senior Notes payable 2021 (58.6) - (57.8) Other loans (5.6) (5.3) (5.6) Preference shares (62.2) (61.4) (61.8) (255.7) (300.1) (355.0) At 29 July 2012, the Group's syndicate bank facilities totalled 200 million expiring in October Based on these facilities, the headroom on bank borrowings at 29 July 2012 was 180 million. 9 Pension commitments The valuation of the Group's defined benefit pension schemes in the UK and the US has been updated at 29 July 2012 on an actuarial basis, applying current discount and inflation rate assumptions and incorporating the market value of assets at 29 July The actuarial losses in the first half of 14.7 million ( 10.2 million net of associated deferred tax) has been taken through the statement of other comprehensive income. 10 Exchange rates The principal average exchange rates used to translate the Group's overseas profits were as follows: 2012/ / / / /12 Second Second First First Full quarter quarter half half year US dollar Euro Ordinary dividend An interim dividend of 4.4 pence per share (2011/12: 4.4 pence per share) will be paid on 17 October 2012 to ordinary shareholders on the register at close of business on 21 September 2012, absorbing 16.0 million of shareholders' funds (2011/12: 16.0 million). Statement of Directors' Responsibilities The directors named below confirm that, to the best of their knowledge and belief, this condensed consolidated interim financial information has been prepared in accordance with IAS 34 as adopted by the European Union, and that the interim management report herein includes a fair review of the information required by DTR and DTR By order of the Board Laurence Bain Nicholas Cadbury Chief Executive Officer Chief Financial Officer 13 September September 2012