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The attached slides were used at the Analyst Presentation by John Hirst and Andrew Fisher on the 12t

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Title: The attached slides were used at the Analyst Presentation by John Hirst and Andrew Fisher on the 12t


1
  • The attached slides were used at the Analyst
    Presentation by John Hirst and Andrew Fisher on
    the 12th September 2002.
  • The slides could be incomplete without the oral
    commentary.

2
  • Cautionary Statement for Purposes of the "Safe
    Harbor" Provisions of the United States Private
    Securities Litigation Reform Act of 1995 The
    U.S. Private Securities Litigation Reform Act of
    1995 provides a "safe harbor" for forward-looking
    statements. This presentation contains certain
    forward-looking statements relating to the
    business of Premier Farnell plc and its
    consolidated subsidiaries as a group (the
    "Group") and certain of the Group's plans and
    objectives, including, but not limited to, future
    capital expenditures, future ordinary
    expenditures and future actions to be taken by
    the Group in connection with such capital and
    ordinary expenditures, the introduction of new
    information technology and e-commerce platforms,
    the expected benefits and future actions to be
    taken by the Group in respect of certain sales
    and marketing initiatives, operating
    efficiencies, economies of scale and the expected
    benefits to be realised from the acquisition of
    Buck Hickman Limited. By their nature
    forward-looking statements involve risk and
    uncertainty because they relate to events and
    depend on circumstances that will occur in the
    future. Actual expenditures made and actions
    taken may differ materially from the Group's
    expectations contained in the forward-looking
    statements as a result of various factors, many
    of which are beyond the control of the Group.
    These factors include, but are not limited to,
    the implementation of cost-saving initiatives to
    offset current market conditions, integration of
    new personnel and new information systems,
    continued use and acceptance of e-commerce
    programs and systems and the impact on other
    distribution systems, the ability to open new
    facilities to increase service levels and reduce
    costs, the ability to expand into new markets
    and territories, the implementation of new sales
    and marketing initiatives, the integration of
    Buck Hickman Limited into the Group, 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.

3
Second quarter and half year results
  • For the period ended 4th August 2002

4
Agenda
  • Andrew Fisher
  • Half year financial results
  • John Hirst
  • Strategic progress
  • Performance highlights

5
Over the last 18 months we have seen
  • Unprecedented electronics market decline
  • Global economic recession
  • We responded positively and professionally
  • Robust defence of margins
  • Tight control of costs and working capital
  • Dedicated support of customer service
  • Commitment to our strategic development
  • The benefits have been
  • Resilient financial performance
  • Better than market sales - especially in focus
    areas
  • A continually improving business

6
During the 1st Half
  • Market flat overall
  • Continued resilient financial performance
  • Business initiatives showing good progress
  • Plus
  • Significant improvement in capital structure
  • EPS enhanced and strategic options created

7
Andrew Fisher
  • Group Finance Director

8
Financial Summary26 weeks ended 4th August 2002
  • Sales 392.6m - up 1.0
  • Operating profit 41.9m - operating margin 10.7
    (before goodwill amortisation)
  • No visible improvement in major markets
  • Tight cost and working capital controls
  • Cash flow, financial gearing, EPS and dividend
    cover benefits from preference share conversion
  • Net debt reduced to 213.7m - interest cover 5.4
    times

9
Financial Summary
Year on year sales per day growth at constant
exchange rates
10
Financial SummaryGroup
Continuing businesses at constant exchange rates
Note Gross margin is measured after net cost of
freight, packaging, discounts and inventory
adjustments
11
Financial SummaryGroup
Overall first half sales performance flat
Continuing businesses at constant exchange rates
Note Gross margin is measured after net cost of
freight, packaging, discounts and inventory
adjustments
12
Financial SummaryGroup
Operating margin maintained robust gross
margins and tight cost management
Continuing businesses at constant exchange rates
Note Gross margin is measured after net cost of
freight, packaging, discounts and inventory
adjustments
13
North America Sales Per Day
MDD
m
2000/1
2001/2
1999/0
2002/3
14
North America Sales Per Day
MDD
m
2000/1
2001/2
1999/0
2002/3
15
North America SPD and growth rates
MDD
m
1999/0
2000/1
2001/2
2002/3
16
Europe Asia Pacific SPD and growth
rates(excluding Buck Hickman)
MDD
20
k
0
-20
2000/1
2001/2
1999/0
2002/3
17
UK SPD and growth rates(excluding Buck Hickman)
MDD
20
k
0
-20
2000/1
2001/2
1999/0
2002/3
18
Buck Hickman SPD and growth rates
MDD
20
k
0
-20
2000/1
2001/2
1999/0
2002/3
19
European SPD and growth rates
MDD
40
20
k
0
-20
2000/1
2001/2
1999/0
2002/3
20
Asia Pacific and Rest of World SPD and growth
rates
MDD
40
20
k
0
-20
2000/1
2001/2
1999/0
2002/3
21
E-commerce SPD
k
2000/1
2001/2
2002/3
22
Gross margin progression
All businesses robust through difficult market
conditions
Farnell
Newark
CPC
BH
2000/1
2001/2
2002/3
Note Gross margin is measured after cost of
freight, packaging, discounts and inventory
adjustments
23
Profit and loss accountSecond quarter and first
half to 4th August 2002
24
Exceptional item
25
Taxation
26
Summarised cash flowsSecond quarter and first
half to 4th August 2002
  • m 2002/3
  • Q2 Q1 H1
  • Operating profit 18.9 21.7 40.6
  • Depreciation non-cash items 3.5 3.0 6.5
  • Working capital 1.0 1.7 2.7
  • Operating cash flow 23.4 26.4 49.8
  • 119
  • Capital expenditure (net)
    (3.9) (4.6) (8.5)
  • Interest preference dividend
    (15.0) (0.1) (15.1)
  • Tax (4.3) (2.2)
    (6.5)
  • Free cash flow 0.2 19.5
    19.7

27
Operating cash flow operating profit
Continued strong cash conversion

2001/2
2002/3
28
Debtor days
Strong performance releasing further cash

2001/2
2002/3
29
Inventory
Stockturn maintained and cash released through
downturn
m
Turns
2001/2
2002/3
30
Capital expenditure
  • m 2002/3
  • Front office systems 3.4
  • IT 3.2
  • Other 2.2
  • Total 8.8
  • Sale of fixed assets (0.3)
  • Net capital expenditure 8.5

31
Summarised cash flowsSecond quarter and first
half to 4th August 2002
  • m 2002/3
  • Q2 Q1 H1
  • Operating profit 18.9 21.7 40.6
  • Depreciation non-cash items 3.5 3.0 6.5
  • Working capital 1.0 1.7 2.7
  • Operating cash flow 23.4 26.4 49.8
  • 119
  • Capital expenditure (net)
    (3.9) (4.6) (8.5)
  • Interest preference dividend
    (15.0) (0.1) (15.1)
  • Tax (4.3) (2.2)
    (6.5)
  • Free cash flow 0.2 19.5
    19.7

32
Movement in net debt
  • m First half
  • Opening net debt (236.4)
  • Free cash flow 19.7
  • Ordinary dividends (13.6)
  • 6.1
  • Disposal of business 3.2
  • Capital reorganisation (9.2)
  • Issue of ordinary shares 0.5
  • Cash inflow 0.6
  • Translation 22.1
  • Closing net debt (213.7)
  • US Senior Notes due 2003 2006
    (197.4)
  • Net borrowings and other loans (16.3)
  • (213.7)

33
  • John Hirst
  • Group CEO

34
Market Conditions
  • Short improvement in February to March not
    maintained
  • However
  • Competitive advantage through strategic
    investment in talent, technology and service
  • Market share gains - especially in focus segments
  • Continuing build of platform for long term
    profitable growth
  • and
  • Markets are large and there is plenty of scope

35
Progress - facilitating activities at Group
  • Continued investment in management and talent
  • Major improvement in capital structure
  • Conversion of 70 of preference share stock to
    89m ordinary shares
  • Additional purchase on market of 644k Preference
    Shares for cancellation
  • Fixed charge cover improved
  • Significant EPS enhancement - 15
  • Cash flow improved by 9m p.a.
  • More flexible capital structure opens strategic
    options

36
MDD - Americas
  • Key accounts now 12 of total sales
  • 5 significant additions this half
  • H 1 sales much better than market
  • US Government contract showing good progress
  • Integrated account management processes
    delivering
  • Productivity and service benefits from transfer
    of smaller customers to call centres
  • Now 163 stock room solutions in place

37
MDD - Americas
  • eProcurement
  • 23 eProcurement partnerships this year - now 115
  • H 1 eProcurement sales 67 over last year
  • 50 potential customers in discussion
  • Mexico launched with 3rd Party warehouse
  • Continuing service enhancement
  • Pulaski warehouse closed
  • Working capital improvement

38
MDD - Europe Asia Pacific
  • Key accounts
  • UK - 21 contracts signed including 12 new
    customers
  • Farnell and Buck Hickman working together
  • Key segments
  • Education - share and sales improvements
  • Health and safety
  • Service enhancements for Design engineers etc
  • Productivity and service benefits from technology
    investment
  • Now 169 stock room solutions in place

39
MDD - Europe Asia Pacific
  • eCommerce
  • Websites rolled out to 10 new countries
  • Web sales up 87 YoY
  • Continuous enhancement of functionality
  • eProcurement
  • 79 live partnerships (39 added this year)
  • 54 in discussion
  • Key influence in major account wins

40
MDD - Europe Asia Pacific
  • Geographic expansion
  • China offices and stock
  • Sales representation in Eastern Europe
  • Continuing service enhancement
  • Liege operational

41
Progress this year - Industrial Products Division
  • Disposal completed - D-A Lubricant
  • Akron
  • Productivity, service and margin up
  • TPC
  • Automotive Steel industry
  • New product sales
  • Excellent operating margins
  • Kent
  • Sales force methods improved
  • Product range increased

42
Summary
  • Resilient performance in difficult markets
  • Market share gains
  • Significant progress on key initiatives
  • Major improvement in capital structure with EPS
    and cash improvements
  • Gross margins maintained
  • Costs and working capital under tight control
  • Strong operating cash flow conversion

43
Outlook
  • Continue to manage tightly on basis of no
    improvement in market
  • No discernable change in major market conditions
  • Larger customer wins and market share gains
  • Well positioned with particular sales potential
    as markets turn
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