Interim Results
Electrocomponents PLC
09 November 2004
Embargoed to 7:00am Tuesday 9 November 2004
INTERIM STATEMENT
Electrocomponents plc, the major international high service distributor of
electronic, electrical, industrial and commercial supplies, today announces its
results for the half year ended 30 September 2004.
The summary results, against the first half of last year, were:
Sales £379.5m Up 5.8%*
Before amortisation of goodwill
Operating profit £51.6m Up 12.2%
Profit before tax £51.5m Up 13.7%
Earnings per share 8.4p Up 13.5%
After amortisation of goodwill
Operating profit £46.8m Up 15.3%
Profit before tax £46.7m Up 17.0%
Earnings per share 7.3p Up 17.7%
Dividend per share 5.8p Up 3.6%
Net debt £61.1m Better by £8.2m
* Adjusted for trading days and exchange rates
Bob Lawson, Chairman, commented:
After the strong second half of last year, I am pleased to report further
improvement in the Group's performance.
Management's priorities remain to drive sales growth and to manage successfully
the major changes in systems that will occur during the coming year. The
Purchasing Managers Indices have weakened in recent months and we remain
cautious on the trading backdrop in our major markets.
The half year performance demonstrates the sales and profit potential of the
Group and our continued investment underlines our confidence in our long term
prospects.
Bob Lawson
9 November 2004
Enquiries:
Bob Lawson, Chairman Electrocomponents plc 0207 567 8000*
Ian Mason, Chief Executive Electrocomponents plc 0207 567 8000*
Jeff Hewitt, Deputy Chairman /
Finance Director Electrocomponents plc 0207 567 8000*
Diana Soltmann / Andy Berry Flagship Consulting Ltd 0207 886 8440
* Available to 15:00 on 9 November, thereafter 01865 204000.
The results and analyst presentation with accompanying audiocast are published
on the Corporate website at www.electrocomponents.com
CHAIRMAN'S STATEMENT
After the strong second half of last year, I am pleased to report further
improvement in the Group's performance, which reflects improved trading
conditions and consistent investment in developing our businesses. Adjusted
sales grew by 5.8% to £379.5m and profits before tax and goodwill amortisation
(£4.8m) grew by 13.7% to £51.5m. Earnings per share before amortisation of
goodwill increased 13.5% to 8.4p. Cash flow also remained strong. Free cash flow
of £28.3m was slightly above last year despite the stock build to support our
sales growth.
All of our regions shared in the sales growth, which is particularly
encouraging, with highlights being:
a. the high growth in Allied of over 20% and Japan of 30%
b. the return to growth of our UK business to over 2%
c. good growth in the Rest of Europe apart from France
d. the exciting early results of our same day offer in Shanghai generating
almost 40% sales growth
e. the continued success of e-Commerce with growth of 42%, constituting 20% of
Group sales in September up from 15% last year
In the second half and next year we will bear higher costs from the
implementation of our Europe-wide enterprise business system project in the UK,
including our world-wide Processes, which should be complete by the end of
calendar 2005. From our knowledge of using the system, gained in France and
Asia, I have every reason to believe that we will thereafter increasingly
generate benefits from improved stock management, operational efficiencies,
eliminating costs in legacy systems and, fundamentally, by providing greatly
improved services to our customers.
We are clear that more work needs to be done to raise our sales growth in the
UK, but I remain confident in the long term prospects for our business, based as
it is in the world's key markets. The positive profit performance in the first
half demonstrates clearly the profit potential that there is for us from
increasing sales. We are continuing to invest to realise this potential.
Interim Dividend
The Board has decided to increase the interim dividend by 3.6% to 5.8p from
5.6p.
Board
Following the retirement of David Winterbottom at the Annual General Meeting I
am delighted that Kevin Abbott has joined the Board as a Non-Executive Director.
Kevin is CEO of Alpha Airports Group Plc and brings a wealth of international
experience to the Board.
Current Trading and Outlook
In October our sales growth has been about 5% with a regional pattern similar to
the first half.
Management's priorities remain to drive sales growth and to manage successfully
the major changes in systems that will occur during the coming year. The
Purchasing Managers Indices have weakened in recent months and we remain
cautious on the trading backdrop in our major markets.
The half year performance demonstrates the sales and profit potential of the
Group and our continued investment underlines our confidence in our long term
prospects.
Bob Lawson, Chairman 9 November 2004
OPERATING REVIEW
Group sales increased by 5.8% (adjusted for exchange rates and trading days)
over the same period last year. Unadjusted sales increased 2.9% to £379.5m from
£368.8m, whilst profit before tax and goodwill amortisation (£4.8m) increased by
13.7% to £51.5m from £45.3m last year. Return on sales thereby increased by 1.3
percentage points to 13.6% from 12.3%.
Changes in exchange rates, particularly the Euro, had an impact on the Group's
reported sales and profits. At constant exchange rates, the increase in sales
would have been £11.5m higher and the increase in profit before tax and
goodwill, £0.7m higher.
The gross margin of 53.5% was the same as in the first half of last year though
this partly reflects the high sales growth of Allied, which has a gross margin
lower than that of the rest of the Group.
Progress on our enterprise business system (EBS) projects continued during the
half year. The UK business, which encompasses our world-wide Supply Chain and
other Groupwide Process activities, is preparing to implement the new system
during the second half of calendar 2005. Implementations carried out in France,
Australasia, and South Asia last year continue to operate well. Process costs
fell to 10.0% from 10.8% of sales.
Cash flow has remained strong and the conversion of operating profit (before
amortisation of goodwill) to operating cash flow was high at 109%, although
lower than the 117% of last year. This followed a working capital cash outflow
of £6.1m arising largely from the stock build to support higher sales growth and
the beginning of the stock build to support the forthcoming implementation of
EBS in the UK, as well as the high service initiative in China. Capital
expenditure increased to £12.2m from £11.8m reflecting expenditure on the EBS
and catalogue systems projects. Free cash inflow of £28.3m was £1.2m higher than
last year.
Closing net debt was £61.1m, an improvement of £8.2m over last year. Exchange
movements since 30 September 2003 had a positive impact of £6.0m mainly as a
result of the weaker US Dollar. As in previous years, financial ratios remained
strong with high interest cover and low gearing.
United Kingdom
Sales in our UK business showed a welcome return to growth of 2.3% (against the
first half of last year) to £180.0m. The first half sales growth was depressed
by lower growth in September, partly due to a re-phasing of the catalogue launch
to 1 October from 1 September.
We have continued to broaden our presence in the growing service and public
sectors of the economy, though the overall impact on sales was modest in the
half year. We have seen growth in some manufacturing sectors, despite the
continued difficulties faced by our manufacturing customers.
Our investment in sales and marketing was sustained and there was a small
increase in customer numbers. Our 'Do Great Things' advertising and promotional
initiatives continued during the half year and together with the announcement of
Britain's Hero at Work 2004 and further press activity had a positive impact in
increasing awareness of 'RS'.
e-Commerce has continued to show strong growth in the UK and increased 32.3%
over last year, reaching 22.2% of sales in September.
The catalogue still remains our most important sales channel. In a project
extending over much of the last 12 months, the UK catalogue has been
fundamentally redesigned to make it easier for our customers to use. The number
of volumes was reduced from seven to five. Products are presented in ranges
making it easier for customers to find, select, and buy the products they need.
The catalogue was launched a month later than last year on 1 October 2004 and
has been well received by customers, although it is too early to judge its
overall impact on sales.
Our 15 trade counters have shown significant growth during the half year. The
Managed Stock Replenishment service, whereby we manage customers' stocks in
their warehouses on a regular basis from a local trade counter, has again been
successful as it reduces the customers' cost of managing their stock.
A small decline in gross margin, further investment in selling costs and higher
pension costs reduced the profit contribution to £54.8m from £56.8m, being 30.4%
and 32.3% of sales respectively.
Rest of Europe
Sales in the Rest of Europe grew by 2.6% (adjusted) to £114.3m although the
weakening of the Euro resulted in flat reported sales in Sterling. With the
exception of France, Europe returned to good growth of around 6%. In particular,
Austria, Spain, and the Benelux countries recorded double-digit growth.
Sales in France were impacted by the implementation of EBS in June 2003. The
problems have now been resolved and customer service levels restored. Day
adjusted sales declined by 3.5% in the second half of last year, 2.6% during the
first half of this year, but were at the same level as last year in September.
Whilst we have not lost customers in France our service problems have meant they
have placed less of their business with us and it is taking time to win this
business back. The profitability of the business has improved year on year.
In our growing German business, e-Commerce has expanded strongly, now accounting
for over a quarter of all sales. PurchasingManager(TM) has been particularly
successful with installations and sales increasing significantly. Sales grew
well in Italy, driven by an increase in both customer numbers and increased
sales to larger customers. Our smaller businesses all performed well.
Overall, e-Commerce sales grew by 52.9% reaching 23.2% of total Rest of Europe
sales in September.
The profit contribution increased to £25.0m from £21.7m, being 21.9% and 19.0%
of sales respectively, due to a further increase in gross margin and effective
cost management.
North America
Sales in our North American business, Allied, grew by 23.5% (adjusted) to £56.2m
although the weakening of the US Dollar resulted in reported Sterling growth of
9.8%.
The sales increase reflects both the impact of our continued sales and marketing
initiatives and improvements in the US economy. The 'Customer First' programme
launched last year to revitalise the branch network has continued to be
successful and the new format catalogue issued in October 2003 also had a
positive impact. We have been particularly active in penetrating larger accounts
with our improved product and service offers. e-Commerce remains underdeveloped
in our North America business and we are intent on increasing our sales via this
channel.
Allied's gross margin remained at around 38% though the increasing average order
value in the business from our larger customers has put pressure on gross
margins. Profit contribution increased to £7.5m from £5.8m and as a percentage
of sales increased to 13.3% from 11.3%, reflecting the operating leverage of the
business.
Japan
Sales in Japan grew by 29.7% (adjusted) to £7.8m with a further increase in both
customer numbers and the frequency with which customers buy. The reported growth
in Sterling was 23.8%.
e-Commerce continues to grow rapidly reaching 47.5% of total sales in September,
up from 39% last year. Sales through our PurchasingManagerTM and e-Procurement
applications have also grown rapidly.
Following recent positive experiences in Europe, catalogue issue frequency has
been reduced from twice a year to once a year commencing September 2004, with
interim product updates. As in Europe, the number of catalogues issued has been
increased. The number of products offered was increased to 50,000 from 47,000 to
broaden further the business base.
The business achieved a profit contribution of £0.6m during the half year; an
improvement of £1.2m from the loss of £0.6m during the same period last year.
Rest of World
The Rest of World region achieved sales of £21.2m, an increase of 7.0%
(adjusted) though reported growth in Sterling was 1.0%.
The main businesses are in Asia where double-digit growth was achieved with
China performing strongly. Total sales in North Asia (China/Hong Kong) grew by
14.3% (adjusted), whilst in China sales grew by 17.5% and reached over 30% in
September, enhanced by our high service same day offer project in the Shanghai
region. This offer will be extended to Beijing in the second half. South Asia
enjoyed a return to significant growth whilst Australasia maintained its good
rate of growth. e-Commerce is developing rapidly in Asia and jumped to 19% of
sales in September from 7% last year. Elsewhere, sales in South Africa declined
due to the impact of exchange rate fluctuations on our selling prices.
e-Commerce
The Group's e-Commerce sales continued to grow strongly by 42.3% (adjusted) to
£71.1m or 18.7% of sales for the half year, whilst in September they reached
20.3% of sales. In the first half of last year, e-Commerce accounted for only
13.9% of sales.
The usual way for customers to access our e-Commerce offer is through our 68
websites in 16 languages around the world. However, our PurchasingManagerTM
application has continued to show strong growth and there are now 2,700 customer
accounts, an increase of around 240% since March 2004.
Enterprise Business System
We are progressing with our systems and change management projects in Europe,
including the UK, and in Asia. Through these projects we will standardise our
operating procedures and data structures on robust systems platforms so as to
support our business growth strategies. The core systems will be common for the
businesses in Europe and for the businesses in Asia, with ancillary applications
to manage customer contacts, sales force planning, product information, stock
forecasting, and warehouse operations. Legacy systems, which are increasingly
costly to maintain, will be replaced.
The projects started four years ago with an initial phase to determine the best
operating practices that should form the template. France, our second largest RS
business, was chosen for the first European implementation of this template with
the initial build, testing, and training completed with the go-live in June
2003. Though there were initial operating problems in some areas, which had an
impact on service levels, the template works well. The system and operations are
robust and service levels have been restored to the previous high levels.
The next European implementation will be in the UK, encompassing our Groupwide
Supply Chain and other Process activities, and we expect this to take place in
the second half of calendar 2005. Follow-on rollouts will be in Germany, Italy,
and the remainder of Europe. These implementations will benefit from the
availability of the system operating in France as users can see how the system
works in practice ahead of their own go-live. Testing and training can therefore
be more hands-on, more operational and so will be more extensive than was
possible in France.
To achieve successful implementations elsewhere in Europe, starting with the UK,
additional costs of around £3m this year and around £8m next year will be
incurred together with a stock build above normal requirements of £13m in the
current year. These additional costs include extra staff to support customer
service levels during the testing, training and post go-live phases together
with the costs of further developing the template to meet the particular
requirements of the UK implementation. This implementation will trigger an
increase of depreciation of about £5m on an annualised basis.
In North Asia the project has made good progress, following the successful
implementations in South Asia and Australasia during 2003.
Around 81% of the planned capital expenditure for completion of the overall EBS
project has been spent. When fully implemented the new systems and procedures
are expected to generate significant operating and financial benefits. The
maintenance and support expense of legacy systems will be eliminated
immediately. After a settling-in period, stock turn improvements and operational
efficiencies will be realised. Customers will benefit from improved and wider
services, for example by having access to more information on product
availability and product choice.
Groupwide Processes
Process costs declined 4.5% to £38.1m from £39.9m, partly due to lower systems
costs in this half year. Process costs will rise with the implementation of EBS
in the UK next year, due to additional costs and higher depreciation.
Our Supply Chain management has continued to be effective as shown by the higher
stock turn of 2.6x (last year 2.5x) whilst at least maintaining customer service
levels. The stock build to support the UK implementation will result in a
temporary reduction in the stock turn.
In Media Publishing we have invested in a new catalogue publishing and content
system first used to launch the UK catalogue on 1 October 2004. This allows the
presentation of products in ranges rather than the previous modular format so
that the products are much easier to find and compare. More information on each
product is provided together with links to complementary products. Our aim is to
make it easier and quicker for the customer to find the product they require
from more coherent and relevant ranges.
Pensions
The triennial valuation of the defined benefit section of the UK pension scheme
was carried out during the half year and the draft valuation is currently under
review. This shows a deficit of £47.7m, or £33.4m net of deferred tax as at 31
March 2004. We have not adopted FRS 17 and do not intend to do so, as we expect
to move to International Financial Reporting Standards next year. Under FRS 17
the estimated net deficit would be £28m.
We expect that UK pension costs will increase by £2.8m this year as a result of
the valuation. Of this, £1.4m has been included in the first half results.
International Financial Reporting Standards
We will implement International Financial Reporting Standards for the year
ending 31 March 2006 and our preparations are well advanced. We plan to indicate
the impact of the transition to IFRS on both the opening balance sheet and
ongoing profit and loss account after our next year end when our application of
the accounting policies will have been fully determined.
Summary
Both sales growth and operational gearing have been demonstrated by these
results, most notably in North America and Japan. e-Commerce has again grown
strongly.
Our enhanced selling and marketing activities are important continuing
investments. The EBS projects gather pace with the UK implementation during next
year. This is a critical implementation for the Group as a whole and is being
managed and resourced as such.
Our investments reflect our commitment to realising the profitable opportunities
available to the Group, as reflected in the first half results.
Ian Mason, Group Chief Executive
Richard Butler, Chief Process Officer
Jeff Hewitt, Deputy Chairman and Group Finance Director
9 November 2004
Note: The term 'adjusted' relating to sales growth means adjusted for exchange
rates and trading days.
CONSOLIDATED RESULTS
Year to
6 months to 6 months to 31.3.2004 as
30.9.2004 30.9.2003 restated
(unaudited) (unaudited) (unaudited)
Note £m £m £m
Turnover 1 379.5 368.8 759.3
________________________________________________________________________
Operating profit
- before amortisation of goodwill 51.6 46.0 108.5
- amortisation of goodwill (4.8) (5.4) (10.2)
________________________________________________________________________
1 46.8 40.6 98.3
Net interest payable (0.1) (0.7) (1.4)
________________________________________________________________________
Profit on ordinary activities before taxation 46.7 39.9 96.9
________________________________________________________________________
Profit before taxation and amortisation of goodwill 51.5 45.3 107.1
________________________________________________________________________
Taxation on profit on ordinary activities 2 (14.9) (13.1) (31.0)
Profit on ordinary activities after taxation 31.8 26.8 65.9
________________________________________________________________________
Interim dividend (25.2) (24.3) (24.3)
Final dividend - - (54.8)
________________________________________________________________________
Retained profit (loss) for the period 6.6 2.5 (13.2)
________________________________________________________________________
Recognised gains and losses
Profit on ordinary activities after taxation 31.8 26.8 65.9
Translation differences 5.7 (7.3) (29.2)
________________________________________________________________________
Total recognised gains and losses 37.5 19.5 36.7
________________________________________________________________________
Prior year adjustment: Implementation of UITF 38 6 (1.3)
36.2
Total recognised gains and losses since last annual report
________________________________________________________________________
Per share information
Basic earnings per share
________________________________________________________________________
Before amortisation of goodwill 3 8.4p 7.4p 17.5p
After amortisation of goodwill 3 7.3p 6.2p 15.2p
________________________________________________________________________
Dividend per share
________________________________________________________________________
Interim 4 5.8p 5.6p 5.6p
Final 12.6p
________________________________________________________________________
GROUP BALANCE SHEET
30.9.2003 31.3.2004
30.9.2004 as restated as restated
(unaudited) (unaudited) (unaudited)
Note £m £m £m
Fixed assets
Intangible fixed assets 140.1 162.9 141.8
Tangible fixed assets 165.6 167.3 163.3
Investments 0.1 0.1 0.1
_________________________________________________________________________
305.8 330.3 305.2
Current assets
Stocks 139.6 138.2 128.7
Debtors 144.1 141.3 151.6
Investments 25.0 11.0 65.4
Cash at bank and in hand 24.9 9.4 7.9
_________________________________________________________________________
333.6 299.9 353.6
Creditors: amounts falling due within one year (171.7) (157.7) (210.0)
_________________________________________________________________________
Net current assets 161.9 142.2 143.6
_________________________________________________________________________
Total assets less current liabilities 467.7 472.5 448.8
Creditors: amounts falling due after more than one year (97.5) (82.2) (92.8)
Provisions for liabilities and charges (13.5) (8.3) (11.6)
_________________________________________________________________________
356.7 382.0 344.4
_________________________________________________________________________
Capital and reserves
Called-up share capital 43.5 43.5 43.5
Share premium account 38.4 38.4 38.4
Profit and loss account 274.8 300.1 262.5
_________________________________________________________________________
Equity shareholders' funds 5 356.7 382.0 344.4
_________________________________________________________________________
CONSOLIDATED CASH FLOW STATEMENT
Year to
6 months to 6 months to 31.3.2004
30.9.2004 30.9.2003 as restated
(unaudited) (unaudited) (unaudited)
Note £m £m £m
Net cash inflow from operating activities 56.4 53.6 134.8
Returns on investments and servicing of finance (0.1) (0.7) (1.3)
Taxation (15.8) (17.1) (31.3)
Capital expenditure and financial investment
Net additions to fixed assets (12.2) (8.7) (19.2)
________________________________________________________________________
Free cash flow 28.3 27.1 83.0
________________________________________________________________________
Equity dividends paid (54.8) (51.1) (75.4)
________________________________________________________________________
Cash (outflow) inflow before use of liquid resources and (26.5) (24.0) 7.6
financing
Management of liquid resources 40.6 13.1 (41.6)
Financing
Shares - 0.1 0.1
Loans 2.7 17.0 42.0
________________________________________________________________________
Increase in cash 7 16.8 6.2 8.1
________________________________________________________________________
Reconciliation of operating profit to net cash inflow from operating activities
Operating profit 46.8 40.6 98.3
Amortisation of goodwill 4.8 5.4 10.2
Depreciation and other amortisation 10.9 11.2 22.8
(Increase) decrease in stocks (9.8) (4.2) 1.0
Decrease (increase) in debtors 5.9 4.0 (8.4)
(Decrease) increase in creditors (2.2) (3.4) 10.9
________________________________________________________________________
Net cash inflow from operating activities 56.4 53.6 134.8
________________________________________________________________________
NOTES TO THE INTERIM STATEMENT
6 months to Year to
6 months to 30.9.2003 31.3.2004
30.9.2004 as restated as restated
(unaudited) (unaudited) (unaudited)
1 Segmental analysis £m £m £m
By geographical destination
Turnover: United Kingdom 173.3 169.7 348.2
Rest of Europe 116.2 116.3 245.0
North America 55.6 50.8 102.2
Japan 7.8 6.3 14.4
Rest of World 26.6 25.7 49.5
___________________________________________________________________________
379.5 368.8 759.3
___________________________________________________________________________
By geographical origin
Turnover: United Kingdom 180.0 176.0 361.0
Rest of Europe 114.3 114.3 241.1
North America 56.2 51.2 102.8
Japan 7.8 6.3 14.4
Rest of World 21.2 21.0 40.0
___________________________________________________________________________
379.5 368.8 759.3
___________________________________________________________________________
Operating profit: United Kingdom 54.8 56.8 117.8
Rest of Europe 25.0 21.7 51.0
North America 7.5 5.8 13.3
Japan 0.6 (0.6) 0.0
Rest of World 1.8 2.2 4.0
___________________________________________________________________________
Profit contribution - before 89.7 85.9 186.1
amortisation of goodwill
Groupwide process costs (38.1) (39.9) (77.6)
Amortisation of goodwill
- Allied (North America) (4.7) (5.3) (10.0)
- RS Norway (Rest of Europe) (0.1) (0.1) (0.2)
___________________________________________________________________________
46.8 40.6 98.3
___________________________________________________________________________
By geographical location
Net Assets: United Kingdom 211.8 211.1 206.3
Rest of Europe 67.7 73.8 68.9
North America 28.3 26.3 23.5
Japan 3.1 3.1 2.4
Rest of World 22.9 25.1 22.2
___________________________________________________________________________
Net operating assets 333.8 339.4 323.3
Net debt (61.1) (69.3) (34.5)
Unallocated net assets 84.0 111.9 55.6
___________________________________________________________________________
356.7 382.0 344.4
___________________________________________________________________________
Unallocated net assets comprise:
Intangible fixed assets:
Goodwill - Allied (North America) 139.4 162.3 141.1
Goodwill - RS Norway (Rest of 0.4 0.6 0.4
Europe)
Other Intangibles 0.3 - 0.3
Corporate tax (17.4) (18.4) (19.8)
Proposed dividend (25.2) (24.3) (54.8)
Provisions for liabilities and (13.5) (8.3) (11.6)
charges
___________________________________________________________________________
84.0 111.9 55.6
___________________________________________________________________________
6 months to 6 months to Year to
30.9.2004 30.9.2003 31.3.2004
(unaudited) (unaudited) (unaudited)
2 Taxation on the profit of the Group £m £m £m
United Kingdom taxation 9.9 10.9 23.6
Overseas taxation 5.0 2.2 7.4
___________________________________________________________________________
14.9 13.1 31.0
___________________________________________________________________________
Year to
6 months to 6 months to 31.3.2004
30.9.2004 30.9.2003 as restated
(unaudited) (unaudited) (unaudited)
3 Earnings per share £m £m £m
Profit on ordinary activities after taxation 31.8 26.8 65.9
Amortisation of goodwill (excluding tax effect) 4.8 5.4 10.2
_____________________________________________________________________________
Profit on ordinary activities after taxation and before amortisation 36.6 32.2 76.1
of goodwill
_____________________________________________________________________________
Weighted average number of shares 434.9m 434.9m 434.9m
_____________________________________________________________________________
Basic earnings per share
Before amortisation of goodwill 8.4p 7.4p 17.5p
After amortisation of goodwill 7.3p 6.2p 15.2p
_____________________________________________________________________________
4 Interim dividend
The timetable for the payment of the interim dividend is:
Ex-dividend date 15 December 2004
Dividend record date 17 December 2004
Dividend payment date 20 January 2005
Year to
6 months to 6 months to 31.3.2004
30.9.2004 30.9.2003 as restated
(unaudited) (unaudited) (unaudited)
5 Reconciliation of movements in shareholders' funds £m £m £m
Profit for the period 31.8 26.8 65.9
Dividends (25.2) (24.3) (79.1)
_________________________________________________________________________________________
Retained profit (loss) for the period 6.6 2.5 (13.2)
Translation differences 5.7 (7.3) (29.2)
New share capital subscribed - 0.1 0.1
_________________________________________________________________________________________
Net addition (reduction) to equity 12.3 (4.7) (42.3)
_________________________________________________________________________________________
Equity shareholders' funds as originally stated 345.7 388.2 388.2
Prior year adjustment: implementation of UITF38 (1.3) (1.5) (1.5)
_________________________________________________________________________________________
Equity shareholders' funds at the beginning of the period 344.4 386.7 386.7
_________________________________________________________________________________________
Equity shareholders' funds at the end of the period 356.7 382.0 344.4
_________________________________________________________________________________________
6 Prior year adjustment: Implementation of UITF 38
The Group adopted UITF 38 Accounting for ESOP Trusts, effective from 22 June
2004, in the current year. This abstract requires that own shares held be
disclosed as equity rather than as an asset. A prior year adjustment has been
made in the current year to reflect this change.
The effect of the change in accounting policy has been to increase operating
profit in the current and prior periods as set out below.
6 months to 6 months to Year to
30.9.2004 30.9.2003 31.3.2004
(unaudited) (unaudited) (unaudited)
£m £m £m
Operating profit 0.1 - 0.2
_________________________________________________________________________
Profit for the period 0.1 - 0.2
_________________________________________________________________________
The adjustments to investments at 30 September 2003 and at 30.9.2003 31.3.2004
31 March 2004 are as follows: £m £m
Investments (1.5) (1.3)
_________________________________________________________________________
Equity shareholders' funds (1.5) (1.3)
_________________________________________________________________________
6 months to 6 months to Year to
30.9.2004 30.9.2003 31.3.2004
(unaudited) (unaudited) (unaudited)
7 Reconciliation of net cash flow to movement in net debt £m £m £m
Increase in cash 16.8 6.2 8.1
Management of liquid resources (40.6) (13.1) 41.6
Financing - loans (2.7) (17.0) (42.0)
_________________________________________________________________________
Change in net debt relating to cash flows (26.5) (23.9) 7.7
Translation differences (0.1) 1.5 4.7
_________________________________________________________________________
Movement in net debt for the period (26.6) (22.4) 12.4
Net debt at the beginning of the period (34.5) (46.9) (46.9)
_________________________________________________________________________
Net debt at the end of the period (61.1) (69.3) (34.5)
_________________________________________________________________________
Net debt at the end of the period comprises:
Cash at bank and in hand 24.9 9.4 7.9
Overdrafts (0.7) (0.9) (0.7)
Current instalments of loans (27.4) (22.2) (24.2)
Loans repayable after more than one year (82.9) (66.6) (82.9)
Current asset investments 25.0 11.0 65.4
_________________________________________________________________________
(61.1) (69.3) (34.5)
_________________________________________________________________________
6 months to 6 months to Year to
8 Principal exchange rates 30.9.2004 30.9.2003 31.3.2004
Average for the period
Euro 1.49 1.43 1.44
Japanese Yen 198 190 192
United States Dollar 1.82 1.62 1.70
30.9.2004 30.9.2003 31.3.2004
Period end
Euro 1.46 1.43 1.50
Japanese Yen 199 185 193
United States Dollar 1.81 1.66 1.85
9 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 2004, except
for the adoption in the period of UITF 38 Accounting for ESOP Trusts.
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 2004 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 which
comprises the Consolidated results, Group balance sheet, Consolidated cash flow
statement and notes 1 to 9 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.
This report is made solely to the Company in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the Listing
Rules of the Financial Services Authority. Our review has been undertaken so
that we might state to the Company those matters we are required to state to it
in this report and for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the Company for
our review work, for this report, or for the conclusions we have reached.
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 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 2004.
KPMG Audit Plc
Chartered Accountants
London
9 November 2004
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