Results for the Second Quarter and Half Year ended 3 August 2008 of the Financial Year ending 1 February 2009

Transcription

1 Premier Farnell plc 11 September 2008 Results for the Second Quarter and Half Year ended 3 August 2008 of the Financial Year ending 1 February 2009 Key Financials m Continuing operations Q2 08/9 Q2 07/8 Q2 H1 08/9 H1 07/8 H1 (Unaudited) Revenue % (a) % (a) Operating profit % (a) % (a) Profit before tax % % Adjusted profit before tax (b) % % Earnings per share - total - continuing operations Adjusted earnings per share (b) - total - continuing operations Interim ordinary dividend per share Notes: (a) (b) 3.5p 3.5p 3.5p 3.5p 3.0p 3.0p 3.0p 3.0p 17% 17% 17% 17% 8.4p 8.4p 7.4p 7.4p 2.6p 6.3p 2.5p 6.2p 223% 33% 196% 19% 4.2p 4.0p 5% 4.2p 4.0p 5% Throughout this statement, in order to reflect underlying business performance, sales is based on sales per day for continuing businesses at constant exchange rates and for like periods, and in operating profit is calculated at constant exchange rates. Adjusted profit before tax and adjusted earnings per share exclude the gain on the purchase and cancellation of preference shares in the first quarter of 3.6m (2007/8 Q2: 0.2m). Strategic Highlights Another quarter of outperforming the markets as we continue to invest in and deliver on our strategy which differentiates us. Continued robust performance in MDD North America, with sales of 5.5% in the second quarter and 5.8% in the first half as we further embed the strategy and strengthen our EDE and web propositions. MDD Europe and Asia Pacific sales at 5.5% in the second quarter despite challenging markets. Farnell UK continues to outperform the market. Internationalisation plans continue to deliver significant, with second quarter sales in China up 67% and in Eastern Europe up 82%. Our Indian business grew 50% on its first quarter performance. Second quarter web sales up 42% at Newark and web penetration in China now over 30% as we continue to make progress in all regions. MDD ecommerce sales are now more than 30% of total. Financial Highlights Second quarter gross margin at 39.9% (2007/8: 39.6%), representing the eleventh consecutive quarter of gross margin stability. Stable operating margin in the first half, despite continued investment in our strategy. 1

2 Profit before tax from continuing operations up 11.0% in the second quarter and 24.6% in the first half. Adjusted profit before tax (excluding the gain on the purchase and cancellation of preference shares) up 12.4% and 14.6%, respectively. Earnings per share from continuing operations up 16.7% in the second quarter and 33.3% in the first half. Adjusted earnings per share up 16.7% and 19.4%, respectively. Continued strong cash performance with cash generated from continuing operations in the first half representing 103% (2007/8: 101%) of operating profit. The Board s continued confidence in the delivery of our strategy is being demonstrated through a 5% increase to our interim dividend, which will now pay 4.2 pence per share. Commenting on the results, Harriet Green, Group Chief Executive, said: We have seen progress in the quarter as the execution of our strategy focused on the electronic design engineering segment, the web and internationalisation continues to differentiate us in the industry. Premier Farnell is evolving as all elements of our strategy become more embedded in our businesses. The success we have seen in higher markets and in providing customers with the value they demand encourages us to invest further. This, combined with our operational execution leads the Board to anticipate further progress in the second half in line with its expectations. For further information, contact: Harriet Green, Chief Executive Officer Mark Whiteling, Chief Financial Officer Premier Farnell plc +44 (0) Richard Mountain Financial Dynamics +44 (0) Premier Farnell s announcements and presentations are published at together with business information, the 2008 Annual Report and Accounts, and links to all other Group web sites. The results for the third quarter of the financial year to 1 February 2009 will be announced on 11 December

3 Premier Farnell plc SECOND QUARTER STATEMENT Results for the Second Quarter and Half Year ended 3 August 2008 of the Financial Year ending 1 February 2009 Premier Farnell, the leading multi-channel, high service distributor supporting millions of engineers and purchasing professionals globally, announces its results for the second quarter and half year ended 3 August Note: Throughout this statement, in order to reflect underlying business performance, sales is based on sales per day for continuing businesses at constant exchange rates and for like periods, and in operating profit is calculated at constant exchange rates. Chief Executive s Operational Overview The first half of the year for Premier Farnell saw the continued execution of, and investment in, our strategy for profitable. As a result, we have achieved good results and once again outperformed our core markets. We are further differentiating ourselves through our strategy, which continues to focus on the higher opportunities Electronic Design Engineering, the web and internationalisation. Ongoing investment in products and tools for our Electronic Design Engineer (EDE) customers, whilst providing them with our high service proposition, remains fundamental to our proposition. We are embedding and accelerating the strategy across the business to ensure Premier Farnell solidifies its position as a market leader. For our MDD Division the second quarter saw continued robust performance in all major markets where, despite the more challenging economic conditions, we have outperformed for the sixth successive quarter. Particularly worthy of note is the year on year of 5.5% in North America, whilst the UK outperformed the market to deliver 2.2% year on year. MDD Europe and Asia Pacific grew 5.5% against the prior year, with our new international markets delivering continued strong performances; sales in China were up 67%, Eastern Europe grew by 82% in the quarter, while India, now in its second quarter with Premier Farnell, traded up more than 50% on the first quarter. Gross margin for the Group has now remained stable for nearly three years. First half operating margin is stable despite increased investment in the strategy reflecting the accelerated pace of and transformation. Cash performance has also been strong with cash generated from continuing operations at 103% of operating profit. In our constant quest to delight our customers, exceed expectations and drive higher performance across our business we continue to raise the bar by which we measure our own standards. This remains at the very heart of our high service business model. Currently 99.6% of our orders are shipped the same day or next day to meet our customers requirements new internal measures will provide fuller information to enable us to improve further. EDE Focusing on the EDE segment globally continues to create new opportunities for customer acquisition and this remains a key area of investment. We continue to add technical support resources, including the expansion of our Global Technology Centres that provide round the clock support to design engineers worldwide. EDEs face a constant challenge to source the latest technologies and products in a timely manner to ensure their products remain at the forefront of their market, delivering new products when required. In Q2 alone we have added a further 15,000 lines of new product to our portfolio and continue to partner with more of the world's leading suppliers. New product sales in Europe are at record levels, reflecting our strong position as the distributor of choice for the EDE segment. During the quarter we signed five new greenhouse niche suppliers, an important global agreement with Solid State Inc, and subsequent to quarter end we signed a global contract with Cree, the market leader in Power LED's, an emerging technology - all combining to ensure our customers can access 3

4 the widest range of products from us to meet the ongoing demands of the electronics consumer in this fast paced, constantly changing environment. The NXP (formerly Philips Semiconductor) franchise signed last quarter is now fully launched with a significant investment in new products and personnel to support it, whilst plans to bring Altera's leading edge product range to our customers continue, another significant addition. Multi-channel, multi-vendor technology marketing campaigns continue to be successful as we target specific, relevant marketing activity to the different customer segments. Our technology marketing remains a key driver for customer acquisition. Web Our web business continues to grow year on year as part of our multi-channel sales approach, ensuring that customers can reach us however, and whenever, they choose. We continue to implement new functionality on our transactional websites and the additions made in Q2 have been well received, with more being piloted ready for imminent launch. All parts of the Group are constantly pulsing our customers for feedback, testing new enhancements and understanding how we can further add value to our customers experience. Each day we invite customers to give us feedback on every aspect of our performance and their feedback is carefully considered, providing invaluable insight as we invest, develop and grow further. Our latest eprocurement tool i-buy was launched in Europe and Asia Pacific during Q2 to very positive response. ecommerce business now accounts for over 30% of total MDD sales globally and continues to grow as we recruit and strengthen our ecommerce teams to keep pace with the rate of change and ensure our web offering remains well suited to customer need. Web sales is evident across the business with Newark up 42% on the prior year, and 30% of China s sales now coming via the website, which is fully translated into Mandarin. During the quarter we officially launched the new Indian website and implemented a multilanguage search facility in Poland. We will shortly launch a new website in Slovenia with more East European developments planned. Our online community offering, targeted at EDEs and providing an area where they can collaborate, network and share is now in the final preparation stages and customers will begin testing it during the current quarter. Our community offering will further improve the support we provide to global EDEs. As we strengthen our supplier partnerships we have been working closely with a number of them on some commercially innovative initiatives, now at pilot stage and poised to continue to differentiate us. Internationalisation Our internationalisation plans continue at pace as we now work to drive the success of our new businesses and capitalise on the opportunities they afford us to support the growing number of EDEs with a localised, multi-channel approach. EDE centric product sales in Asia are up by over 17% year on year as the region transitions and EDE now accounts for 50% of China s total sales a key metric of our business transformation plans reached eighteen months early. Asia Pacific remains a region of unparalleled opportunity and as the business expands rapidly our constant search for talented performers to join the business continues. We have made a number of significant appointments across the business as we develop the talent within our teams, share best practice and learnings across the group and attract industry specialists to join our growing operation. IPD Combined second quarter sales for our two main IPD businesses were flat year on year reflecting the slowdown in certain key elements of the local US market, particularly the automotive segment. However, here as elsewhere across the business, a rigorous focus on developing new products and new international markets, as well as diversifying into new segments continues to deliver opportunities for. Akron Brass saw its international business grow 20% year on year, with a 100% increase in China, where product has been used in industrial applications, and even for fire support at the Beijing Olympics. TPC has seen strong progress in the non-automotive markets and, like Akron, continues to control costs very effectively and deliver a strong operating margin. 4

5 Dividend The second quarter and first half year has shown profitable. The Board s continued confidence in the execution of our strategy and our ability to accelerate our pace of change has resulted in an increased interim dividend of 5% to 4.2 pence per share. Financial Results Revenue Half Year Sales for the first half from continuing operations were million (2007/8: million or million at constant exchange rates). Sales per day from continuing businesses increased 5.4% on the prior year with the MDD Division achieving sales of 6.2%, in line with our strategic target. The average exchange rate for the US dollar against sterling was $1.98 (H1 2007/8: $1.99) and the average exchange rate for the Euro against sterling was Euro 1.28 (H1 2007/8: Euro 1.48). Second Quarter Sales for the second quarter from continuing operations were million (2007/8: million or million at constant exchange rates). Sales per day from continuing operations increased 4.7% on the prior year with MDD at 5.5%. The average exchange rate for the US dollar against sterling was $1.98 (Q2 2007/8: $2.01) and the average exchange rate for the Euro against sterling was Euro 1.27 (Q2 2007/8: Euro 1.48). Margins and Operating Profit Half Year The gross margin from continuing operations in the first half was 40.0%, an increase of 0.3 percentage points on the prior year, continuing our track record of maintaining margin stability. Operating profit from continuing operations was 46.2 million (2007/8: 42.7 million) producing an operating margin of 11.7% (2007/8: 11.8%). There was a beneficial impact on operating profit of 1.6 million from the translation of overseas results compared with the prior year, primarily as a result of the relative strength of the Euro. At constant exchange rates, the increase in operating profit compared with the prior year was 4.3%. Second Quarter The gross margin from continuing operations in the second quarter was 39.9%, an increase of 0.3 percentage points on the prior year. This represents the eleventh consecutive quarter of gross margin stability, which continues to differentiate us in the industry. Operating profit from continuing operations was 22.0 million (2007/8: 20.5 million), producing an operating margin of 11.2% (2007/8: 11.5%), reflecting the continued investment in our strategy to drive further from EDE, international markets and via the web. There was a beneficial impact on operating profit of 1.0 million from the translation of overseas results compared with the prior year, principally as a result of the strength of the Euro. At constant exchange rates, the increase in operating profit compared with the prior year was 2.3%. 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 one cent movement in the exchange rate between the Euro and sterling currently impacts the Group s operating profit by approximately 100,000 per annum. Finance Costs Net finance costs in the first half were 4.1 million (2007/8: 8.9 million). This comprises net interest payable of 5.5 million (2007/8: 5.4 million), which was covered 8.4 times by operating profit, and a net credit of 1.4 million (2007/8: net charge of 3.5 million) in respect of the Company s convertible preference shares. 5

6 During the first quarter, the Company purchased and cancelled 1,784,302 of its preference shares for a total cash consideration of 23.1 million. This resulted in a one-time benefit to finance costs in the half of 3.6 million, being the difference between the book value and fair value of the debt element of the preference shares at the date of purchase. In the second quarter of the prior year, a gain of 0.2 million was recognised from the purchase and cancellation of preference shares. Excluding these gains, the charge in respect of preference shares in the first half was 2.2 million (2007/8: 3.7 million), reflecting the benefit of lower preference dividends and a lower redemption premium as a result of the reduction in the number of preference shares in issue over the last year. Profit Before Tax and Taxation Charge Reported profit before tax from continuing operations in the first half was 42.1 million (2007/8: 33.8 million) an increase of 24.6% on the prior year. Excluding the gain arising from the purchase and cancellation of preference shares, profit before tax in the first half was 38.5 million (2007/8: 33.6 million) an increase of 14.6% on the prior year. Reported profit before tax from continuing operations in the second quarter was 18.1 million (2007/8: 16.3 million) an increase of 11.0% on the prior year, or 12.4% excluding gains on the purchase and cancellation of preference shares. The taxation charge from continuing operations for the first half was at an effective rate of 29.0% of profit before tax, preference dividends and the gain on purchase of preference shares (2007/8: 29.7%). Return on Net Operating Assets Return on net operating assets for the first half, based on continuing operations, was 30.6% (2007/8: 29.0%), remaining above our strategic target. Earnings per Share Total earnings per share for the first half were 8.4 pence (2007/8: 2.6 pence). Earnings per share from continuing operations for the first half were 8.4 pence (2007/8: 6.3 pence), an increase of 33.3% on the prior year. Excluding gains on the purchase and cancellation of preference shares, earnings per share from continuing operations were 7.4 pence (2007/8: 6.2 pence), an increase of 19.4% on the prior year. Interim Dividend The Board is declaring an interim dividend of 4.2 pence per share (2007/8: 4.0 pence per share), an increase of 5%, to be paid on 15 October 2008 to shareholders on the register on 19 September Cash Flow and Net Financial Liabilities Net cash generated from continuing operations in the second quarter was 25.4 million (2007/8: 23.6 million), representing 115% (2007/8: 115%) of operating profit. Working capital increased only slightly in the quarter. Net cash generated from continuing operations in the first half was 47.5 million (2007/8: 43.0 million) representing 103% (2007/8: 101%) of operating profit. Free cash flow in the first half, being cash generated from continuing operations less net capital expenditure, interest, preference dividends and tax payments, was 24.9 million (2007/8: 13.5 million) including proceeds from the sale of surplus property of 3.3 million (2007/8: 0.1 million). During the first half, 23.1 million (2007/8: 3.6 million) was spent on purchasing and cancelling the Company s preference shares, and 2.8 million (2007/8: 2.5 million) was spent on purchasing ordinary shares for the Premier Farnell Executive Trust. Proceeds received from prior year business disposals amounted to 0.7 million (2007/8: 24.5 million). Net financial liabilities at the end of the first half were million (29 July 2007: million), including 59.5 million (29 July 2007: million) attributable to the Company s preference shares. 6

7 Operations Marketing and Distribution Division (MDD) MDD comprises: Newark, Farnell, MCM and CPC. Continuing Q2 08/9 Q2 07/8 Q2 H1 08/9 H1 07/8 H1 businesses Revenue % % Operating profit % % Operating margin % 12.1% 12.3% 12.6% 12.6% Second quarter sales grew 5.5% on the prior year as we continued to outperform the market through focus on our strategic initiatives. First half sales was 6.2%, in line with our target of 6-8%. Operating margin for the second quarter was slightly below the prior year, reflecting our revenue investment in the strategy. First half operating margin was 12.6%, in line with the prior year. There was a beneficial impact on operating profit in the first half from the translation of overseas results of 1.5 million, due primarily to the relative strength of the Euro. Investment in high performance ecommerce tools continues to help us drive the online customer experience and improve functionality, with web sales in the second quarter up 28.5% and total ecommerce sales now accounting for 31.3% of total MDD sales. The Americas Newark and MCM. Q2 08/9 Q2 07/8 Q2 H1 08/9 H1 07/8 H1 Revenue % % Operating profit % % Operating margin % 8.7% 8.8% 9.3% 9.3% Statistics from the Semiconductor Industry Association (SIA) show a year on year decline in billings in the Americas for the three months ended July 2008 of -3.8%. Despite the challenging market conditions, sales in MDD Americas in the second quarter increased 5.5% on the prior year supported by the benefits from our strategic investments. First half sales was 5.8% and first half operating margin was in line with the prior year. Newark s sales grew 5.8% during the quarter as the business continued to embed the strategy in all areas of its operations. Newark s sales and marketing model, particularly the effectiveness of our inbound and outbound call centres and the delivery of technology solutions for high sectors, including Automation and Motion Control were well received by the design engineer community. Specifically, in the quarter Newark delivered over 7,100 new products, new technical support services and a Technology First Journal, a magazine written for design engineers. These strategic initiatives helped support the 36% second quarter sales in our small and emerging customer segment. Web sales in the Americas continued to show significant, up 37.0% on the prior year, with Newark up 42.0%, reflecting further improvements to our web functionality including multi-channel order history, the pilot of an eprocurement tool i-buy, which has already been launched in the UK and Europe, and other products, tools and solutions to support design engineers. I-Buy will be officially rolled out in the Americas during the third and fourth quarters. MCM s second quarter sales grew 1.6%, an improvement on the first quarter s rate. This performance is despite the continuing decline in the North American housing market, which impacts the home security and home entertainment segments of the business, as MCM continues to actively target customers outside of these segments through improvements to 7

8 online and offline marketing campaigns and increased prospecting for new customers. The business has improved its operating margin through successfully controlling its costs and optimising its pricing and inventory positions. ecommerce sales now account for 45.3% of total sales in this business. Europe and Asia Pacific Farnell and CPC. Continuing businesses Q2 08/9 Q2 07/8 Q2 H1 08/9 H1 07/8 H1 Revenue % % Operating profit % % Operating margin % 15.2% 15.6% 15.5% 15.8% Sales were up 5.5% in the quarter and operating profit increased 3.7% on last year as we continue our revenue investment in the strategy, particularly our internationalisation plans in Eastern Europe and the Asia Pacific region as we continue to pursue the many opportunities in these regions. Revenue by region Continuing businesses Q2 08/9 Q2 07/8 Revenue H1 08/9 H1 07/8 Revenue UK (including exports) % % Mainland Europe % % Asia Pacific % % In mainland Europe, Farnell s sales grew 7.8% in the quarter as we continued to outperform the market and benefit from our strategic investments and web enhancements. We have now deployed feedback management systems across Europe which will enable us to capture customer feedback, and adapt and invest in the areas that they value. Our investments in Eastern Europe continue to deliver strongly, with sales in the quarter of 82%. CPC s sales were in line with last year, with improved marketing effectiveness, driving in both traditional product areas and private label, offseting a decline in demand for high value consumer goods, reflecting the current economic climate. CPC has seen a 40% increase in online visitors in the quarter driving a 20% increase in the number of new accounts opened. Sales of the Farnell brand in the UK grew 1.2% in the quarter and continue to outperform the market, with the Association of Franchised Distributors of Electronic Components (AFDEC) reporting a sales decline in the UK of -3.0%, in the same period, excluding Farnell. Web sales for the division grew 26.1% in the second quarter, aided by our high performance tools and reporting software, enabling us to continually improve our ecommerce offering to meet customer needs. Total ecommerce sales in the quarter accounted for 41.7% of total sales for the division. Our Asia Pacific region continues to accelerate, with second quarter sales of 14.1%. The China business grew sales by 66.8%, with EDE products now accounting for over 50% of total sales. Expansion of the customer base continues, reflecting the value that Chinese design engineers associate with our high service proposition, including next day delivery to over 110 Chinese cities and our Mandarin and English websites. More than 30% of our business in China is now transacted via the web. Our Indian business, which was acquired at the end of last year, is now fully integrated in the division and had another successful quarter, with its official opening attracting many potential customers who were impressed by our strategic proposition. With eight fully operational offices and recruitment underway for a ninth office in Calcutta, we are well placed to benefit from the investments we have made in the fast growing Indian market. Sales in India grew by more than 50% on the first quarter. Sales in Australia and New Zealand declined 2.6% in the first half as this market continues to be challenging. We are in the process of taking definitive steps to improve this performance. 8

9 Industrial Products Division (IPD) Q2 08/9 Q2 07/8 Q2 H1 08/9 H1 07/8 H1 at Revenue % % Operating profit % % Operating margin % 18.8% 19.3% 19.2% 19.1% Combined second quarter sales for Akron Brass and TPC Wire & Cable, which together represent 93% of the IPD Division, were flat year on year. Cadillac Electric sales, which represent 7% of total IPD sales and 0.6% of Group sales, declined 16% in the quarter reflecting the planned wind down of specific trading activity. Akron Brass Sales at Akron Brass grew 0.7% during the second quarter, compared to the first quarter year on year decline of 0.8%, despite last year benefiting from the tail end of an acceleration of orders from North American fire equipment manufacturers, driven by changes in regulatory requirements. Sales in international markets, which increased 20%, and new product developments continued to offset lower order levels in the fire and school bus markets which are being affected by the rising cost of fuel. New product development continues, with a focus on industrial markets, and lighting products for international ambulance and bus markets. Operating margins remained strong reflecting manufacturing efficiencies and tight material cost controls. TPC Wire & Cable TPC s second quarter sales declined 5.4% reflecting the tough automotive and automotive related OEM (original equipment manufacturers) markets as businesses delay projects. However, TPC continues to make strong progress in its non-automotive markets including steel, electrical connectors, energy and food. The business continues to manage costs effectively and maintain margins. Cadillac Electric Cadillac Electric s sales in the quarter were 1.2 million (0.6% of Group sales), a decline on the prior year of 16.4% reflecting the continued, planned wind down of specific trading activity. We have now taken the necessary actions on the remaining business to stabilise operations and align its cost base to the lower level of revenue. However, the future of this business is unlikely to be in the Group. 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 largely unchanged since they were described in the Company s 2008 Annual Report and Accounts on pages 39 to 41and are: RoHS legislation This relates to the potential risk of stock write-offs greater than those for which provision has been made. The Group s internal targets to reduce any stock write-off in Europe have been met and the Group considers that it is well placed to minimise its exposure in North America. Market migration 9

10 The Group continues to mitigate the risk of its core EDE and MRO markets migrating to lower cost economies by increasing in the EDE segment of the Group s customer base, together with increasing presence in developing markets such as China and Eastern Europe. Systems and infrastructure A significant proportion of customer orders are despatched from the Group s distribution facilities in South Carolina (US), Leeds (England) and Leige (Belgium). The Group minimises the potential impact of damage to, or destruction of, these facilities through physical measures to restrict loss, business continuity planning and, in the case of the Group s UK and European businesses, the ability to switch order fulfilment between Leeds and Leige. The Group continues to review its IT infrastructure and develop plans to address and, where relevant, test and rectify areas of potential weakness. Competitive pressures The Group s MDD Division faces numerous competitors in a fragmented market. It is therefore fundamental that the Division s proposition to its customers remains attractive and at the forefront of it s chosen markets. The Group responds to the risk that it fails to do so by seeking to ensure that it is continually aware of market developments and that its customer proposition is attractive, appropriately focused, and differentiated from that of its competitors. Foreign currency As a result of the proportion of the Group s trade which takes place in North America, the Group s reported results could be adversely affected by a major weakening of the US dollar against sterling. The Group has denominated a significant proportion of its external borrowings in US dollars in order to provide a hedge against dollar denominated operating cash flows and the Group s US investments. Human resources As a service business, Premier Farnell relies heavily on its employees and mitigates the risk implicit in this reliance by seeking to attract and retain personnel at key management levels. The Group invests in training and career development and has adopted processes to ensure that employees have structured input on their past and expected performance. Legal risks The Group s risk of non-compliance with its legal obligations is increased by the number of countries in which it operates and the large number of customers and suppliers with whom it deals. The Group addresses this risk through a variety of controls. Web resilience This is an additional risk that has been identified since the Annual Report. As the amount of the Group s business that is transacted via the web grows, it is increasingly important to ensure that the Group s websites are available to customers. In common with many other organisations, the Group s websites are occasionally subject to denial of service attacks by third parties and to attempts to extract large volumes of data. This risk is addressed by regular testing of the security of the websites using both internal and external security scans and vulnerability tests. IP addresses identified as the source of attacks are blocked so that they cease to have access to the websites. In addition, all sites have redundant servers that can be used in the event that the operating server is not available for any reason. Credit Risks Premier Farnell supplies a variety of industries in a variety of geographic markets. Not only does no customer account for more than 2% of sales, no supplier accounts for more than 5% of product. We support customers in over 156 different industry types. This diversification of geography, customers segments and suppliers limits the Company's exposure to regionalised economic cycles. Additionally in the MDD Division, which accounts for 91% of Group sales, 10

11 personal credit is rarely extended to customers as orders are relatively low average value and customers frequently pay at the time of order. Outlook We have seen progress in the quarter as the execution of our strategy focused on the electronic design engineering segment, the web and internationalisation continues to differentiate us in the industry. Premier Farnell is evolving as all elements of our strategy become more embedded in our businesses. The success we have seen in higher markets and in providing customers with the value they demand encourages us to invest further. This, combined with our operational execution leads the Board to anticipate further progress in the second half in line with its expectations. This press release contains certain forward-looking statements relating to the business of the Group and certain of its plans and objectives, including, but not limited to, future capital expenditures, future ordinary expenditures and future actions to be taken by the Group in connection with such capital and ordinary expenditures, the expected benefits and future actions to be taken by the Group in respect of certain sales and marketing initiatives, operating efficiencies and economies of scale. By their nature forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. Actual expenditures made and actions taken may differ materially from the Group's expectations contained in the forward-looking statements as a result of various factors, many of which are beyond the control of the Group. These factors include, but are not limited to, the implementation of initiatives supporting the Group s strategy, the effect of RoHS and similar legislation and regulatory enactments, recruitment and integration of new personnel, the implementation of cost-saving initiatives to offset current market conditions, continued use and acceptance of e-commerce programs and systems, the ability to expand into new markets and territories, the implementation of new sales and marketing initiatives, changes in demand for electronic, electrical, electromagnetic and industrial products, rapid changes in distribution of products and customer expectations, the ability to introduce and customers acceptance of new services, products and product lines, product availability, the impact of competitive pricing, fluctuations in foreign currencies, and changes in interest rates and overall market conditions, particularly the impact of changes in world-wide and national economies. The Group does not intend to update the forward-looking statements made herein. 11

12 Condensed Consolidated Income Statement For the second quarter and half year ended 3rd August /9 2007/8 2008/9 2007/8 2007/8 Second Second First First Full quarter quarter half half year (13 weeks) (13 weeks) (26 weeks) (26 weeks) (53 weeks) unaudited unaudited unaudited unaudited audited Notes m Continuing operations Revenue Cost of sales (117.6) (108.1) (236.9) (218.6) (449.2) Gross profit Net operating expenses (56.2) (50.3) (112.0) (101.2) (207.5) Operating profit Finance income (interest receivable) Finance costs - interest payable (3.0) (2.8) (5.9) (5.7) (11.7) - preference dividends (0.9) (1.5) (1.8) (3.1) (5.6) - premium on redemption of preference shares (0.2) (0.3) (0.4) (0.6) (1.3) - gain on purchase of preference shares Total finance costs (4.1) (4.4) (4.5) (9.2) (17.7) Profit before taxation Taxation 5 (5.5) (5.3) (11.7) (10.9) (21.4) Profit after taxation from continuing operations Loss after taxation from discontinued operations (13.5) (13.5) Profit for the period (attributable to ordinary shareholders) Earnings per share 6 Basic 3.5p 3.0p 8.4p 2.6p 10.0p Diluted 3.4p 3.0p 8.3p 2.6p 9.9p Earnings per share from continuing operations 6 Basic 3.5p 3.0p 8.4p 6.3p 13.7p Diluted 3.4p 3.0p 8.3p 6.3p 13.6p Ordinary dividends Interim - proposed 4.2p 4.0p 4.0p Final - proposed 5.2p Paid 5.2p 5.0p 9.0p Impact on shareholders' funds ( m) Condensed Consolidated Statement of Recognised Income and Expense For the second quarter and half year ended 3rd August /9 2007/8 2008/9 2007/8 2007/8 Second Second First First Full quarter quarter half half year (13 weeks) (13 weeks) (26 weeks) (26 weeks) (53 weeks) unaudited unaudited unaudited unaudited audited Notes m Profit for the period Net exchange adjustments 0.1 (0.3) Actuarial gains on pensions and other post-retirement obligations (1.8) Deferred tax credit on actuarial losses Net gains/(losses) not recognised in the income statement (0.2) Total recognised income for the period

13 Condensed Consolidated Balance Sheet As at 3rd August rd August 29th July 3rd February unaudited unaudited audited Notes m ASSETS Non-current assets Goodwill Other intangible assets Property, plant and equipment Retirement benefit asset Deferred tax assets Total non-current assets Current assets Inventories Financial assets Trade and other receivables Cash and cash equivalents Total current assets LIABILITIES Current liabilities Financial liabilities 7 (3.5) (0.6) (3.0) Trade and other payables (87.9) (82.4) (84.3) Current tax payable (22.6) (27.3) (22.2) Total current liabilities (114.0) (110.3) (109.5) Net current assets Non-current liabilities Financial liabilities 7 (289.8) (288.5) (288.7) Retirement and other post-employment benefits (20.6) (28.1) (22.0) Deferred tax liabilities (32.1) (29.7) (33.0) Total non-current liabilities (342.5) (346.3) (343.7) NET ASSETS EQUITY Ordinary shares Equity element of preference shares Share premium Capital redemption reserve Hedging reserve (0.7) 0.4 (2.9) Cumulative translation reserve 5.4 (3.0) 3.7 Retained earnings (25.6) (53.8) (39.7) SHAREHOLDERS' FUNDS

14 Condensed Consolidated Cash Flow Statement For the second quarter and half year ended 3rd August /9 2007/8 2008/9 2007/8 2007/8 Second Second First First Full quarter quarter half half year (13 weeks) (13 weeks) (26 weeks) (26 weeks) (53 weeks) unaudited unaudited unaudited unaudited audited Notes m Cash flows from operating activities Operating profit from continuing operations Depreciation and amortisation Changes in working capital (0.4) (1.2) (6.2) (8.4) (4.7) Additional pension scheme funding (UK defined benefit plan) (0.8) (0.8) (1.5) (1.5) (3.1) Other non-cash movements (1.5) Cash generated from continuing operations Cash generated from discontinued operations - (0.7) - (1.0) (1.2) Total cash generated from operations Interest received Interest paid (4.5) (4.3) (5.9) (5.9) (11.8) Dividends paid on preference shares (1.8) (3.1) (1.8) (3.1) (5.6) Taxation paid (8.4) (9.1) (11.0) (12.4) (23.1) Net cash generated from operating activities Cash flows from investing activities Acquisition of business (0.6) Disposal of business 0.7 (1.3) Proceeds from sale of property, plant and equipment Purchase of property, plant and equipment (1.7) (0.9) (2.9) (3.3) (7.1) Purchase of intangible assets (computer software) (2.4) (2.0) (4.7) (4.2) (10.4) Net cash (used in)/generated from investing activities (0.1) (4.1) (3.6) Cash flows from financing activities Issue of ordinary shares Purchase of ordinary shares (0.1) (2.5) (2.8) (2.5) (2.5) Purchase of preference shares - (3.6) (23.1) (3.6) (17.7) New bank loans Repayment of bank loans (27.8) (29.3) Dividends paid to ordinary shareholders (18.8) (18.2) (18.8) (18.2) (32.7) Net cash used in financing activities (4.1) (2.1) (17.6) (29.3) (48.7) Net increase in cash, cash equivalents and bank overdrafts Cash, cash equivalents and bank overdrafts at beginning of period Exchange gains/(losses) 0.2 (0.1) 0.2 (0.3) (0.2) Cash, cash equivalents and bank overdrafts at end of period Reconciliation of net financial liabilities Net financial liabilities at beginning of period (254.1) (281.3) (281.3) Net increase in cash, cash equivalents and bank overdrafts (Increase)/decrease in debt (26.7) 6.4 (2.8) Decrease in preference shares Premium on redemption of preference shares (0.4) (0.6) (1.3) Derivative financial instruments (2.8) Exchange movement (0.6) 4.2 (0.9) Net financial liabilities at end of period 7 (244.8) (258.5) (254.1)

15 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 11th September This condensed consolidated financial information does not comprise statutory accounts within the meaning of Section 240 of the Companies Act Statutory accounts for the financial year ended 3rd February 2008, were approved by the Board of Directors on 22nd April 2008, 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 3rd August 2008, 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. This condensed consolidated financial information should be read in conjunction with the consolidated financial statements included in the Company's Annual Report and Accounts for the financial year ended 3rd February 2008, which have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. 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. 3 Accounting policies Except as described below, the accounting policies adopted are consistent with those of the consolidated financial statements for the year ended 3rd February 2008, as described in those annual financial statements in the basis of preparation. The following new standards, amendments to standards or interpretations are mandatory for the first time for the financial year beginning 4th February 2008 and have been adopted by the Group: - IFRIC 11, 'IFRS 2 - Group and Treasury Share transactions'. This has not had a material impact on the Group's financial results. - IFRIC 14, 'IAS 19 - The limit on a defined benefit asset, minimum funding requirements and their interaction'. This has not had a material impact on the Group's financial results. Taxes on income in the interim periods are accrued using the estimated effective tax rate that would be applicable to expected total annual earnings. 4 Segment information 2008/9 2007/8 2008/9 2007/8 2007/8 Second Second First First Full quarter quarter half half year (13 weeks) (13 weeks) (26 weeks) (26 weeks) (53 weeks) unaudited unaudited unaudited unaudited audited m Revenue Marketing and Distribution Division Americas Europe and Asia Pacific Total Marketing and Distribution Division Industrial Products Division Operating profit Marketing and Distribution Division Americas Europe and Asia Pacific Total Marketing and Distribution Division Industrial Products Division Head Office costs (2.9) (2.7) (5.8) (5.4) (11.2) Taxation The taxation charge represents an effective tax rate for the period on profit before tax, preference dividends and gain on purchase of preference shares of 29.0% (2007/8: 29.7%), being the estimated effective rate of taxation for the financial year ending 1st February 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 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. 2008/9 First half (26 weeks) unaudited 2007/8 First half (26 weeks) unaudited 2007/8 Full year (53 weeks) audited Basic per Basic per Basic per Earnings share amount Earnings share amount Earnings share amount m pence m pence m pence Earnings per share Profit attributable to ordinary shareholders Gain on purchase of preference shares (3.6) (1.0) (0.2) (0.1) (0.9) (0.3) Profit attributable to ordinary shareholders before gain on purchase of preference shares Earnings per share from continuing operations Profit after taxation from continuing operations Gain on purchase of preference shares (3.6) (1.0) (0.2) (0.1) (0.9) (0.3) Profit attributable to ordinary shareholders before gain on purchase of preference shares Number Number Number Weighted average number of shares 362,529, ,716, ,476,320 Dilutive effect of share options 4,110,506 1,653,381 1,913,997 Diluted weighted average number of shares 366,639, ,369, ,390,317 Earnings per share before the gain on purchase of preference shares have been provided in order to facilitate year on year comparison.

16 7 Net financial liabilities 3rd August 29th July 3rd February unaudited unaudited audited m Cash and cash equivalents Unsecured loans and overdrafts (233.1) (189.1) (202.9) Net financial liabilities before preference shares and derivatives (184.6) (158.9) (165.3) Preference shares (59.5) (100.0) (85.9) Derivative financial instruments (0.7) 0.4 (2.9) Net financial liabilities (244.8) (258.5) (254.1) Net financial liabilities are analysed in the balance sheet as follows: Current assets Financial assets (derivative financial instruments) Cash and cash equivalents Current liabilities Bank overdrafts Other loans Derivative financial instruments (2.7) (0.5) - (0.1) (0.1) (0.1) (0.7) - (2.9) (3.5) (0.6) (3.0) Non-current liabilities Bank loans (112.9) (75.1) (85.7) 5.3% US dollar Guaranteed Senior Notes payable 2010 (33.5) (32.5) (33.5) 5.9% US dollar Guaranteed Senior Notes payable 2013 (80.7) (78.3) (80.7) Other loans (3.2) (2.6) (2.9) Preference shares (59.5) (100.0) (85.9) (289.8) (288.5) (288.7) 8 Consolidated statement of changes in shareholders' equity 2008/9 2007/8 2007/8 First First Full half half year (26 weeks) (26 weeks) (53 weeks) unaudited unaudited audited m Shareholders' funds at beginning of year Profit for the period Net gains and losses recognised directly in equity Ordinary dividends paid (18.8) (18.2) (32.7) Ordinary shares issued Purchase of ordinary shares (2.8) (2.5) (2.5) Purchase of preference shares (note 9): - reduction in equity element (4.7) (0.7) (3.2) - gain arising on equity element deferred tax Share-based payments Derivative financial instruments (2.8) Shareholders' funds at end of period During the first quarter, the Premier Farnell Executive Trust acquired 1,476,627 of the Company's ordinary shares, through purchases on the London Stock Exchange for a total cash consideration of 2.8 million, in order to meet future obligations under the Company's performance share plan. This amount has been deducted from shareholders' equity. 9 Purchase of preference shares During the first quarter the Company purchased and cancelled 1,784,302 of its preference shares at a total cash cost of 23.1 million. Based on the book value and fair value of the instrument at the date of purchase, the financial liability element of the preference shares was reduced by 26.8 million and the equity element by 4.7 million. A gain of 3.6 million was recognised in the income statement being the difference between the book value and fair value of the financial liability element at the date of purchase. The gain arising from the difference between the book value and fair value of the equity element of 4.7 million was recognised as a movement in retained earnings. A deferred tax credit of 0.8 million arose which is recognised as a movement in retained earnings. A transfer from retained earnings of 1.8 million to non-distributable reserves was made in order to maintain the legal nominal value of share capital. In the prior year, the Company purchased and cancelled 1,236,500 of its preference shares at a total cash cost of 17.7 million, resulting in a gain of 0.9 million ( 0.2 million in the second quarter and 0.7 million in the fourth quarter) being recognised in the income statement. At 3rd August 2008, the Company had 3,989,419 preference shares in issue (3rd February 2008: 5,773,721). 10 Exchange rates The principal average exchange rates used to translate the Group's overseas profits were as follows: 2008/9 2007/8 2008/9 2007/8 2007/8 Second Second First First Full quarter quarter half half year US dollar Euro Ordinary dividend An interim dividend of 4.2 pence per share (2007/8: 4.0 pence per share) will be paid on 15th October 2008 to ordinary shareholders on the register at close of business on 19th September Statement of Directors' Responsibilities The directors named below confirm that, to the best of their knowledge and belief, this condensed set of financial statements 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 The directors of Premier Farnell plc are listed in the Company's 2008 Annual Report and Accounts. John Roques and Cary Nolan both retired from the Board with effect from 17th June By order of the Board Harriet Green Mark Whiteling Chief Executive Officer Chief Financial Officer 11th September th September 2008