Interim Results

Electrocomponents PLC 7 November 2001 Embargoed to 7.00am 7 November 2001 INTERIM STATEMENT Electrocomponents plc, the major electronic, electrical and industrial supplies distribution Group, today announces its results for the half-year ended 30 September 2001. The highlights of the Group compared to the first half of last year are as follows: Sales of continuing operations £381.3m Down 3.7% Operating profit of continuing operations* £51.6m Down 10.3% Profit before tax* £49.6m Down 7.3% Earnings per share* + 8.1p Down 6.9% Dividend per share 4.90p Up 15.3% Net debt £91.3m Lower by £14.9m * Before amortisation of goodwill arising from the Allied acquisition. + After restatement of prior year for application of FRS19. Commenting on the results, Mr Bob Lawson, the Chairman said: Management actions taken on costs, gross margin and working capital will have their full impact on the second half, which is normally stronger in terms of sales and profits. It is too early to judge the full impact of recent events on the second half as a whole, but given the volatility of sales that we have experienced over the past two months and the weak economies in our major markets, we anticipate trading to remain difficult over the short term. Our businesses are well positioned to respond rapidly if the cyclical recovery is brought forward by the stimulus from lower interest rates and other actions to support economic growth. I remain very confident about the medium and long-term growth prospects of the Group. Bob Lawson 7 November 2001 Enquiries: Bob Lawson, Chairman Electrocomponents plc 0207 567 8000 * Ian Mason, Chief Executive Electrocomponents plc 0207 567 8000 * Jeff Hewitt, Deputy Chairman / Finance Electrocomponents plc 0207 567 8000 * Director Diana Soltmann / Andy Berry Flagship Consulting 0207 299 1500 Ltd * Available to 15:00 on 7 November, thereafter 01865 204000. The results and analyst presentation are published on the Corporate website at http://www.electrocomponents.com. CHAIRMAN'S STATEMENT First Half Results The weaker trading in the second half of last year continued through the first half of this year as anticipated in our statement at the Annual General Meeting in July. Sales of the Group have declined by 4.7% (adjusted for exchange rates, trading days and the closure of Pact) to £381.3m from £396.0m and profit before tax and amortisation of goodwill by 7.3% to £49.6m from £53.5m. Allied's results have been particularly affected by the reversal of the electronics cycle in the United States which reached its peak a year ago and most of the overall decline in profit may be attributed to the Allied business. Strategic investment increased and consequently depressed profits relative to sales. This includes our continuing investments in Japan and China, whilst the most significant new development has been the upgrade of our e-Commerce capabilities across Europe. In the first half, the revenue costs of our e-Commerce activities were £3.5m compared to £1.7m last year. Discretionary marketing and other costs have been managed tightly in light of the deteriorating trading environment. Gross margin was a percentage point higher than in the first half of last year. Actions to reduce the effect of lower sales on our operating margins were taken progressively and purposefully through the half-year and the full impact should be felt in the second half. The reduction in the share price since the year-end resulted in the charge for the vesting of the Long- Term Incentive Plan being £2.2m lower than in the first half of last year, while exchange rate movements improved operating profit by £0.7m, which for continuing operations declined 10.3% to £51.6m from £57.5m. Lower average net debt and lower interest rates reduced the interest charge to £2.0m from £3.6m. After restating last year's results to reflect the implementation of the new Financial Reporting Standard 19 on Deferred Tax, the tax rate (based on profit before tax, goodwill amortisation and adjusted for exceptional items) has remained at 29.5%. This is the anticipated rate for the full year. Before amortisation of goodwill, earnings per share declined 6.9% to 8.1p from 8.7p (restated for the tax change). After amortisation of goodwill the decline was 9.5% to 6.7p from 7.4p (restated). Assets have been well controlled. Compared to the first half of last year stock turn increased to 2.6x from 2.5x with improved customer service whilst debtor days also shortened. Hence, even after a substantial increase in capital expenditure to £21.4m from £7.5m, net debt declined to £91.3m from £106.2m. Ian Mason's report to you provides a more detailed review of the Group's trading performance. Interim Dividend Consistent with the Board's view of the prospects for the Group's long-term profitable growth, the interim dividend has been increased by 15.3% to 4.90p from 4.25p. Our strategic investments and the pressures of the trading cycle have depressed the cover of these dividends by reported earnings, but the liquidity of the Group remains very strong as demonstrated by the first half cash flow. Board Changes The Board changes announced in May have now been completed. The executive team has settled well with Ian Mason providing the required leadership to continue the Group's development. Roy Cotterill has retired today and during his seven years as Chairman the Group has evolved to being focused on high service distribution with a global footprint. We all owe Roy a vote of thanks and wish him and his wife, Shirley, all happiness in their retirement. Recent Events The terrorist attacks in the United States on 11 September and subsequent events had a noticeable impact on Allied's trading, although by the end of October its sales had broadly recovered to the early September levels. Sales elsewhere in the second half of September and in October were volatile. Sales in the Rest of Europe continued to grow, but UK trading was weak. We anticipate that the increased uncertainty will exacerbate underlying economic weakness in the United States and in our other major markets. Customers in certain sectors such as defence will benefit, but the overall effect on economic activity is likely to be negative in the short term. We continue to manage our costs, gross margin and working capital tightly. Our over-riding objective, however, is to improve service levels wherever possible in these testing times as service is now even more critical to customers and a distinct source of competitive advantage. Importantly, we have not changed our stance on maintaining the strategic momentum of the Group by continuing to support the required strategic investments. Managers across the Group are very experienced and know that they cannot beat the economic cycle, but they are well prepared and equipped to optimise returns. However, if recent events cause sales to deteriorate significantly then at some point the relative impact on our profits will increase, given our commitment to maintain customer service and strategic investment. Current Trading Management actions taken on costs, gross margin and working capital will have their full impact on the second half, which is normally stronger in terms of sales and profits. It is too early to judge the full impact of recent events on the second half as a whole, but given the volatility of sales that we have experienced over the past two months and the weak economies in our major markets, we anticipate trading to remain difficult over the short term. Our businesses are well positioned to respond rapidly if the cyclical recovery is brought forward by the stimulus from lower interest rates and other actions to support economic growth. I remain very confident about the medium and long-term growth prospects of the Group. Bob Lawson Chairman 7 November 2001 CHIEF EXECUTIVE'S STATEMENT During the first half, economic conditions in almost all our markets became more difficult. Our businesses around the world are not immune from these economic effects; however, their resilience has again been demonstrated: we serve a wide range of customers with a wide range of products across many technologies. Reasonable sales growth has been achieved in Europe, China and Japan. The UK and the other markets of Asia experienced modest sales declines and Allied, our US business, suffered a significant sales decline against the very strong performance last year. Tight gross margin and cost management partly offset the impact of sales shortfalls on profit. The economic outlook remains uncertain; however, we remain focused on achieving the long-term high growth potential of our business and will not be distracted by short-term pressures. United Kingdom The return to modest growth last year has reversed with the renewed pressure on manufacturing as illustrated by the drop in the purchasing managers' index. Sales declined by 3.9% to £199.7m from £207.8m. Good growth with customers in the non-manufacturing sectors was not sufficient to offset the weakness of manufacturing related customers. The focus on non-manufacturing customers continues through sales and marketing actions. Internet trading continued to grow strongly, reaching 8% of sales in September, whilst our e-Purchasing programme again achieved good levels of pilots and customer adoption. Despite lower sales, a contribution margin of 31.4% was achieved which was the same as last year, whilst customer service levels have improved. Customer service enhancements continue to add value to existing customers and help attract a significant number of new customers every month. New, more convenient delivery options have had a high take up rate by customers and our managed stock replenishment service (stores management on behalf of our larger customers) has been very popular. New campaign management systems have been used to target customers in the more attractive sectors and to improve our overall marketing effectiveness. Selling activities have also been tailored to ensure that customers fully appreciate the value of our offer, especially during times when trading is difficult for them. Rest of Europe Sales in the Rest of Europe grew by 9.1% (adjusted for exchange rates and trading days) and now amount to £100.5m, up from £91.2m last year. Across each of the markets, the trading pattern over the half-year was broadly similar with early strong sales growth rates that declined as economic conditions became more difficult. France (adjusted sales growth 9.2%), Germany (12.7%) and Italy (5.9%) followed this pattern. In the other markets, Spain was the most buoyant while Ireland was depressed because of the weakness of their technology based customers. We continue to manage these markets on a more common basis and a number of successful initiatives developed in one market have been rolled out to the other markets. Encouragement of the sharing and transfer of best practice is a strong and continuing theme. We continue to develop the potential of these markets, which is very large, by growing the customer base and product offer. The number of customers served in France, Germany and Italy has increased by around 3% since the end of the year and the number of products by around 2%. New warehouse facilities in Germany and Italy are being developed to plan and these expenditures form part of the higher capital expenditure in the half-year. The roll-out of our more advanced e-Commerce capabilities, which were developed in the UK, commenced with successful launches in France, Germany, Italy and Austria and will be completed across our other European markets by the end of November. We have clear leadership in the use of internet trading for industrial components and this powerful new trading capability across Europe will be used to accelerate sales growth. Extensive sales and marketing programmes have been developed for the launch of each site, and initial customer reaction has been very favourable. On 28 September we acquired the business assets of our long-standing distributor in Norway for £0.8m and commenced trading on 1 October. This activity will complement our other owned businesses in Scandinavia. Euro base change has been completed to schedule and all relevant markets are now trading in Euros. The contribution margin improved again by 0.7 percentage points to 17.6% from 16.9% in the first half of last year, due partly to economies of scale. Service levels have also been improved. The success of our strategy continues to be demonstrated across Europe. North America As our only purely electronics business, Allied has been significantly impacted by the cyclical collapse in electronics demand compounded by the US economic slowdown. The sales decline of 26.6% (adjusted) in the half-year must be compared with the growth in the first half of last year of 36.8%. The peak of the cycle, reflected by Allied's sales, was in September 2000, and the rate of decline increased progressively through the first half. Allied's sales per day have shown signs of greater stability on a month-to-month basis and the order book became healthier. The Allied sales decline almost entirely resulted from lower order values as customers last year were placing larger orders to secure availability of products that were then difficult to obtain. This is a normal feature of electronics cycles. Allied has however improved its gross margin by about 2 percentage points and taken together with tight cost management this has limited the impact of lower sales on profits, though the contribution margin declined to 14.7% from 18.1% last year. The actions taken during the first half should have a full impact on the second half. Allied continues to improve its customer service so as to be in a strong position to take business from less robust competitors. New marketing campaigns have been successful in attracting new customers and internal process improvements have been made so that Allied can respond more rapidly to customers' needs. Japan The relevance of the RS business model to the Japanese market continues to be demonstrated by sales growth of 26.0% (adjusted). New customer acquisition continues at a high rate although the rate of sales growth was reduced by the effect of the economic slowdown on the purchases of established customers, particularly those in the electronics industry. The planned migration of our business from electronic to industrial distribution is progressing with 7,000 new products added in the September catalogue. e-Commerce has grown to around 20% of sales and the roll-out of our more advanced UK-developed internet functionality is planned for later this year. A move to a new warehouse will take place next year to accommodate the growth of the business and further improve the service offer. Contribution losses reduced during the half-year to £2.8m from £3.2m last year. Rest of World China has been the strongest market in the Asia region with 18.0% (adjusted) sales growth. The resilience of the Chinese economy has been a major factor. Towards the end of the period our fulfilment facility in Shanghai received partial customs clearance to ship goods direct to customers, rather than suffering long documentation delays, and so we will now be able to provide customers with a much higher service level. We have operated a Chinese language internet site for some time, but trading has increased rapidly such that e-Commerce sales grew to over 30% of sales in recent months. The second annual edition of the Chinese language catalogue was issued in April and again has made a very positive impact in confirming our long-term commitment to the market. Our markets in Hong Kong, Taiwan and Singapore were weak though volatile due to the relative importance of electronics and the United States market. Malaysia achieved good sales growth. A programme to intensify the training of all our sales force in the region has been introduced. The Asia product range has been considerably strengthened with the addition of US specification products through Allied and also by locally sourced products. Elsewhere, Australasia had flat sales in a difficult market whilst South Africa achieved good sales growth. Overall, the businesses in this segment had modest sales growth and broadly broke even after the costs of the further investment in China. e-Commerce e-Commerce now represents 6.0% of sales, up from 3.2% in the first half of last year. We continue to occupy a clear leadership position in e-Commerce and have about 400 large customers around the world trading through various forms of e-Commerce partnerships. The aim of each one is to reduce the customer's transaction costs. Our strength is that we can do business over the web and deliver real cost savings, not just talk about it. Our ability to deliver is the key differentiator after the widespread 'hype' of a year ago. The value of the channel in building relationships and growing revenue with customers continues to be demonstrated. We are starting to exploit the customer targeting capability of the channel and our experience is that customers respond much more positively to offers focused on them. A central team co-ordinates the sales and marketing of our e-Commerce activities to ensure the rapid sharing of best practice across markets. Processes Our Processes provide a global infrastructure to support the activities of all our businesses: sourcing the products, producing the catalogues, managing stock and providing the systems. Information Systems represents the largest part of the Process cost base and considerable work is underway on creating consistent databases across the Group. A major three year programme to provide more standardised platforms and operational procedures is underway at an overall cost of around £40m. This initiative accounts for the largest part of the capital expenditure increase in the half-year. A robust and integrated platform for our upgraded e-Commerce capabilities has now been established. Supply Chain management has achieved very high levels of 'order fill' in all markets. 'Order fill' is our primary measure of customer service and is the percentage of orders despatched complete to customers on the day of receipt. At the same time this team has managed a reduction in stock, which is a significant achievement given the increase in number of products and economic uncertainty. Further investments in stock management systems have been made as part of the overall systems investment. The Media Publishing Process has continued to generate economies through printer and paper rationalisation. All forms of our product content are now managed by a single process so as to improve further the management of the considerable expertise in product content across the Group. Sharing of best practice is leading to more effective targeting of our direct marketing material on customer groups supported by more efficient production. Product Management continues to improve the quality and effectiveness of our overall product offer. New product performance has also been improved through streamlining the process. Process costs amounted to £34.4m, little changed from £34.1m last year. Summary Our strategy remains unchanged. As a Group we have huge growth potential in the markets we serve. Even during the current economic difficulties, continued progress has been demonstrated, as has our capability for strong gross margin and cost management. Despite the current cyclical downturn, which we will successfully manage through, we are committed and confident about our future. Ian Mason Chief Executive 7 November 2001 GROUP RESULTS 6 months to 6 months to Year to 30.9.2001 30.9.2000 31.3.2001 (unaudited) (unaudited) (audited) - Note 6 Note (as (as restated) restated) £m £m £m Turnover - continuing operations 381.3 396.0 823.9 - discontinued operations - 19.0 31.2 1 381.3 415.0 855.1 Operating profit - continuing operations - 51.6 57.5 130.9 before amortisation of goodwill - continuing operations - (6.0) (5.7) (11.6) amortisation of goodwill - continuing operations 45.6 51.8 119.3 - discontinued operations - (0.4) - 1 45.6 51.4 119.3 Exceptional loss on closure - - (6.9) Net interest payable (2.0) (3.6) (6.8) Profit on ordinary activities before 43.6 47.8 105.6 taxation Profit before taxation, amortisation of 49.6 53.5 124.1 goodwill and exceptional loss Taxation on profit on ordinary 2, 9 (14.6) (15.8) (34.6) activities Profit on ordinary activities after 29.0 32.0 71.0 taxation Interim dividend (21.3) (18.6) (18.4) Final dividend - - (41.4) Retained profit for the period 7.7 13.4 11.2 Recognised gains and losses Profit on ordinary activities after 29.0 32.0 71.0 taxation Translation differences (7.4) 12.0 24.4 Total recognised gains and losses 21.6 44.0 95.4 relating to the period Prior year adjustment: implementation 9 (1.1) of FRS 19 Total gains and losses recognised since 20.5 last annual report Per share information Basic earnings per share Before amortisation of 3 8.1p 8.7p 20.2p goodwill and exceptional loss After amortisation of goodwill 3 6.7p 7.4p 16.4p and exceptional loss Dividend per share Interim 4 4.90p 4.25p 4.25p Final 9.55p GROUP BALANCE SHEET 30.9.2001 30.9.2000 31.3.2001 Note (unaudited) (unaudited) (audited) Note 6 (as (as restated) restated) £m £m £m Fixed assets Intangible fixed assets - goodwill 207.3 216.6 219.7 Tangible fixed assets 145.2 126.7 133.3 Investments 0.3 0.2 0.3 352.8 343.5 353.3 Current assets Stocks 157.1 169.9 165.3 Debtors 149.8 161.9 168.9 Investments - 5.1 6.7 Cash at bank and in hand 8.4 9.8 10.6 315.3 346.7 351.5 Creditors: amounts falling due within (163.8) (178.3) (202.1) one year Net current assets 151.5 168.4 149.4 Total assets less current liabilities 504.3 511.9 502.7 Creditors: amounts falling due after (78.3) (96.7) (76.6) more than one year Provisions for liabilities and 9 (8.3) (11.5) (10.7) charges 417.7 403.7 415.4 Capital and reserves Called-up share capital 43.4 43.4 43.4 Share premium account 36.9 34.4 34.9 Profit and loss account 337.4 325.9 337.1 Equity shareholders' funds 7 417.7 403.7 415.4 GROUP CASH FLOW STATEMENT 6 months to 6 months to Year to 30.9.2001 30.9.2000 31.3.2001 Note (unaudited) (unaudited) (audited) (as (as restated) restated) £m £m £m Net cash inflow from operating 55.7 53.1 138.0 activities of continuing operations Returns on investments and servicing of (2.2) (3.8) (6.7) finance Taxation (13.8) (11.0) (32.6) Capital expenditure and financial (21.4) (7.5) (24.3) investment Free cash flow of continuing operations 18.3 30.8 74.4 Free cash flow of discontinued 4.5 (1.3) 4.2 operations Total free cash flow 22.8 29.5 78.6 Acquisitions (0.8) - - Equity dividends paid (41.4) (35.9) (54.3) Cash (outflow) inflow before use of (19.4) (6.4) 24.3 liquid resources and financing Management of liquid resources 6.7 19.5 18.2 Financing Shares 2.0 3.3 3.8 Loans 7.7 (16.3) (46.6) (Decrease) increase in cash 8 (3.0) 0.1 (0.3) Reconciliation of operating profit to net cash inflow from operating activities of continuing operations Operating profit of continuing 45.6 51.8 119.3 operations Amortisation of goodwill 6.0 5.7 11.6 Depreciation and other amortisation 10.2 9.4 21.4 Decrease (increase) in stocks 5.4 (4.9) (8.6) Decrease (increase) in debtors 14.7 1.6 (4.5) (Decrease) in creditors (26.2) (10.5) (1.2) Net cash inflow from operating 55.7 53.1 138.0 activities of continuing operations NOTES TO THE INTERIM STATEMENT 1 Segmental analysis 6 months to 6 months to Year to 30.9.2001 30.9.2000 31.3.2001 (unaudited) (unaudited) (audited) - Note 6 (as (as restated) restated) £m £m £m By class of business Turnover: RS / Allied - continuing 381.3 396.0 823.9 operations Pact - discontinued operations - 19.0 31.2 381.3 415.0 855.1 Operating RS / Allied - continuing 86.0 91.6 196.6 profit: operations Pact - discontinued operations - (0.4) - Contribution 86.0 91.2 196.6 Groupwide process costs (34.4) (34.1) (65.7) Amortisation of goodwill - (6.0) (5.7) (11.6) Allied 45.6 51.4 119.3 Net assets: RS / Allied - continuing 360.1 330.6 341.5 operations Pact - discontinued operations - 19.0 5.9 Net operating assets 360.1 349.6 347.4 Net debt (91.3) (106.2) (75.5) Unallocated net assets 148.9 160.3 143.5 417.7 403.7 415.4 Unallocated net assets comprise: Intangible fixed assets: goodwill - Allied 206.5 216.6 219.7 (North America) goodwill - RS 0.8 - - Norway (Rest of Europe) Corporation tax (28.8) (26.2) (24.1) Proposed dividend (21.3) (18.6) (41.4) Provisions for liabilities and (8.3) (11.5) (10.7) charges 148.9 160.3 143.5 By geographical destination Turnover: United Kingdom - continuing 192.8 201.2 412.4 operations United Kingdom - discontinued - 19.0 31.2 operations Rest of Europe 102.6 93.3 209.8 North America 57.6 74.5 147.9 Japan 4.2 3.6 8.6 Rest of World 24.1 23.4 45.2 381.3 415.0 855.1 1 Segmental analysis continued 6 months to 6 months to Year to 30.9.2001 30.9.2000 31.3.2001 (unaudited) (unaudited) (audited) - Note 6 (as (as restated) restated) By geographical origin £m £m £m Turnover: United Kingdom - continuing 199.7 207.8 426.0 operations United Kingdom - discontinued - 19.0 31.2 operations Rest of Europe 100.5 91.2 203.6 North America 57.9 74.7 148.7 Japan 4.2 3.6 8.6 Rest of World 19.0 18.7 37.0 381.3 415.0 855.1 Operating United Kingdom - continuing 62.8 65.2 136.2 profit: operations United Kingdom - discontinued - (0.4) - operations Rest of Europe 17.7 15.4 38.5 North America 8.5 13.5 26.4 Japan (2.8) (3.2) (6.3) Rest of World (0.2) 0.7 1.8 Contribution 86.0 91.2 196.6 Groupwide process costs (34.4) (34.1) (65.7) Amortisation of goodwill - (6.0) (5.7) (11.6) Allied (North America) 45.6 51.4 119.3 By geographical location Net assets: United Kingdom - continuing 229.6 216.8 220.1 operations United Kingdom - discontinued - 19.0 5.9 operations Rest of Europe 66.4 49.3 54.4 North America 32.6 34.9 38.1 Japan 4.0 4.0 3.1 Rest of World 27.5 25.6 25.8 Net operating assets 360.1 349.6 347.4 Net debt (91.3) (106.2) (75.5) Unallocated net assets 148.9 160.3 143.5 417.7 403.7 415.4 The United Kingdom segment includes the discontinued operations of Pact for the 6 months to 30 September 2000 and for the year to 31 March 2001. All other segments relate entirely to continuing operations. 2 Taxation on the profit of the Group 6 months to 6 months to Year to 30.9.2001 30.9.2000 31.3.2001 (unaudited) (unaudited) (audited) - Note 6 (as restated) (as restated) £m £m £m United Kingdom taxation 13.7 11.2 25.7 Overseas taxation 0.9 4.6 8.9 14.6 15.8 34.6 3 Earnings per share Profit on ordinary activities after taxation 29.0 32.0 71.0 Exceptional loss on closure - - 6.9 Tax on exceptional loss on closure - - (1.8) Amortisation of goodwill (excluding tax effect) 6.0 5.7 11.6 Profit on ordinary activities after taxation and before 35.0 37.7 87.7 amortisation of goodwill and exceptional loss Weighted average number of shares 433.8m 432.6m 433.1m Basic earnings per share Before amortisation of goodwill and 8.1p 8.7p 20.2p exceptional loss After amortisation of goodwill and 6.7p 7.4p 16.4p exceptional loss 4 Interim Dividend The timetable for the payment of the interim dividend is: Ex-dividend date 12 December 2001 Dividend record date 14 December 2001 Dividend payment date 22 January 2002 5 Acquisition On 28 September 2001, the Group purchased part of the business and certain assets of Jacob Hatteland Supply AS, a company registered in Norway, for a cash consideration of £0.8m. Goodwill amounting to £0.8m has been capitalised and will be amortised on a straight line basis over its estimated useful life. RS Components AS (Norway) commenced business with effect from 1 October 2001. 6 Audited figures for the year ended 31 March 2001 The figures for the year to 31 March 2001 are based on the audited financial statements for that year, adjusted for the effects of FRS19 (Note 9). 7 Reconciliation of movements in shareholders' funds 6 months to 6 months to Year to 30.9.2001 30.9.2000 31.3.2001 (unaudited) (unaudited) (audited) - Note 6 (as (as restated) restated) Note £m £m £m Profit for the period 29.0 32.0 71.0 Dividends (21.3) (18.6) (59.8) Retained profit for the period 7.7 13.4 11.2 Write back of goodwill on closure - - 1.0 Translation differences (7.4) 12.0 24.4 New share capital subscribed 2.0 3.3 3.8 Net addition to equity 2.3 28.7 40.4 Equity shareholders' funds at the 416.5 374.5 374.5 beginning of the period as originally stated Prior year adjustment: 9 (1.1) 0.5 0.5 implementation of FRS 19 Equity shareholders' funds at the 415.4 375.0 375.0 beginning of the period Equity shareholders' funds at the 417.7 403.7 415.4 end of the period 8 Reconciliation of net cash flow to movement in net debt 6 months to 6 months to Year to 30.9.2001 30.9.2000 31.3.2001 (unaudited) (unaudited) (audited) (as (as restated) restated) £m £m £m (Decrease) increase in cash (3.0) 0.1 (0.3) Management of liquid resources (6.7) (19.5) (18.2) Financing - loans (7.7) 16.3 46.6 Change in net debt relating to cash (17.4) (3.1) 28.1 flows Translation differences - net debt 1.6 (7.3) (7.8) Movement in net debt for the period (15.8) (10.4) 20.3 Net debt at the beginning of the (75.5) (95.8) (95.8) period Net debt at the end of the period (91.3) (106.2) (75.5) Net debt at the end of the period comprises: Cash at bank and in hand 8.4 9.8 10.6 Overdrafts (1.0) (0.6) (0.4) Current instalments of loans (28.6) (34.9) (23.4) Loans repayable after more than one (70.1) (85.6) (69.0) year Current asset investments - 5.1 6.7 (91.3) (106.2) (75.5) 9 Prior year adjustment: implementation of FRS 19 The Group has adopted FRS 19 Deferred tax in the current year. This standard requires companies to change from a policy of partial provision for deferred tax to full provision, and states that a prior year adjustment should be made in the first year of application to reflect this change in accounting policy. The effect of the change in accounting policy has been to increase the taxation charge in the current and prior periods as set out below: 6 months to 6 months to Year to 30.9.2001 30.9.2000 31.3.2001 £m £m £m Taxation on profit on ordinary activities: (0.8) (0.8) (1.6) overseas taxation Profit for the period (0.8) (0.8) (1.6) The adjustments to the provisions for liabilities 30.9.2000 31.3.2001 and charges at 30 September £m £m 2000 and at 31 March 2001 are as follows: Provision for deferred taxation (0.3) (1.1) Equity shareholders' funds (0.3) (1.1) 10 Principal exchange rates Average for the period 6 months to 6 months to Year to 30.9.2001 30.9.2000 31.3.2001 US Dollar 1.43 1.51 1.48 Euro 1.63 1.64 1.63 Japanese Yen 175 162 164 Australian Dollar 2.83 2.61 2.68 Period end 30.9.2001 30.9.2000 31.3.2001 US Dollar 1.47 1.48 1.42 Euro 1.61 1.68 1.61 Japanese Yen 175 160 178 Australian Dollar 2.98 2.73 2.91 11 Basis of preparation The financial information has been prepared under the historical cost convention and in accordance with applicable accounting standards, using the accounting policies set out in the Annual Report for the year ended 31 March 2001, except for the adoption in the period of FRS 19 Deferred tax. The financial information included in this document does not comprise statutory accounts within the meaning of Section 240 of Companies Act 1985. The statutory accounts for the year to 31 March 2001 have been filed with the Registrar of Companies. The report of the auditors was unqualified and did not contain a statement under Section 237 (2) or (3) of the Companies Act 1985. The interim financial information is unaudited but has been subject to a limited review by KPMG Audit Plc. Independent review report by KPMG Audit Plc to Electrocomponents plc Introduction We have been instructed by the Company to review the financial information set out in the Group Results, Group Balance Sheet, Group Cashflow Statement and Notes 1 to 11 and we have read the other information contained in the Interim Report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. Directors' responsibilities The Interim Report, including the financial information contained therein, is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the Interim Report in accordance with the Listing Rules of the Financial Services Authority which require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where they are to be changed in the next annual accounts in which case any changes, and the reasons for them, are to be disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4: Review of interim financial information issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of Group management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review is substantially less in scope than an audit performed in accordance with Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly, we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 September 2001. KPMG Audit plc Chartered Accountants London 7 November 2001 Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

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