REG-Electrocomponents Half Yearly Report - Part 1
Released: 13/11/2009
http://pdf.reuters.com/Regnews/regnews.asp?i=43059c3bf0e37541&u=urn:newsml:reuters.com:20091113:RnsM4478C
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RNS Number : 4478C
Electrocomponents PLC
13 November 2009
HALF-YEARLY FINANCIAL REPORT
Electrocomponents plc, the leading high service distributor to engineers
worldwide, today announces its results for the half year ended 30 September
2009.
SUMMARY RESULTS
H1 2009/10 H1 2008/09 Change
Revenue £447.2m £488.1m (15.3)%(1)
Profit before tax - headline £24.8m £42.2m (41.2)%
Profit before tax - reported £24.8m £59.2m (58.1)%
Earnings per share - headline 3.9p 6.6p (40.9)%
Earnings per share - reported 3.9p 9.4p (58.5)%
Free cash flow £42.7m £38.5m 10.9%
Interim dividend per share 5.0p 5.0p -
(1) Underlying revenue growth, adjusting for currency and trading days
Financial Highlights
* Group revenue and profits impacted by economic conditions.
* Sales trends improved towards the end of the half year.
* Operating costs reduced by 10%and on track for £18m p.a. cost reductions.
* Continued strong free cash flow of £42.7m, up 11% from last year with 250%
cash conversion.
* Robust financial metrics with interest cover of 15 times and net debt
toEBITDA of 1.7 times.
* Interim dividend maintained at 5p per share.
Operating Highlights
* 3% Group e-Commerce sales growth with a particularly strong performance in
North America.
* Group e-Commerce share of 41%, up from 34% last year, exiting at 43%.
* Electronics offer strengthened with the successful launch of 18,000 new
products from leading suppliers.
* Electronics production packaging range expanded to over 50,000 components.
* Further engagement with strategic suppliers in all regions: Agilent, Tyco
Electronics, Schneider, ABB.
* Successful large customer acquisition programme with 9 new accounts won
across the UK and Europe.
* Five new websites launched in Eastern European markets with local language
and pricing.
CURRENT TRADING AND OUTLOOK
Group sales declined by 17% in the first quarter, by 13% in the second quarter
and by around 8% in October. This trend was seen across all regions. In October,
sales declined by around 8% in both the UK and International. Within
International, Continental Europe declined by around 8%, North America by around
11% and Asia Pacific by around 4%. Although the macroeconomic outlook remains
uncertain, the sales trend is encouraging, which gives us confidence in the
out-turn for the full year.
IAN MASON, GROUP CHIEF EXECUTIVE, COMMENTED:
"We have taken decisive actions to reduce costs, deliver another strong free
cash flow performance and maintain a strong balance sheet.
We have also made good progress implementing our strategy and have strengthened
our position in all regions through the expansion of the electronics and
e-Commerce offers and increased engagement with strategic suppliers.
The Group is well positioned having an extensive International business, a broad
product range and large customer base. We remain focused on managing the
business tightly and exploiting the opportunities in the market."
Enquiries:
Ian Mason, Group Chief Executive Electrocomponents plc 020 7567 8000*
Simon Boddie, Group Finance Director Electrocomponents plc 020 7567 8000*
John Sunnucks/David Allchurch Tulchan Communications Group 020 7353 4200
* Available to 11:00 on 13 November 2009, thereafter 01865 204000.
The results and presentation to analysts are published on the corporate website
at www.electrocomponents.com
Definitions of terms:
Underlying revenue growth: in order to reflect underlying business performance,
comparisons of revenue between periods have, unless otherwise stated, been
adjusted for exchange rates (where applicable) and the number of trading days.
Changes in profit: cash flow, debt and share related measures such as earnings
per share are, unless otherwise stated, at reported exchange rates.
Sign conventions: % changes in revenue and costs are disclosed as positive if
improving profit and negative if reducing profit.
Headline profit: in H1 2008/09 net income of £17.0m was reported in the half
year for items excluded from headline profit. Details of the items are given
below the Income Statement and in note 2.
Key performance measures such as return on sales and EBITDA use headline profit
figures.
Notes to editors:
Electrocomponents plc is the leading high service distributor to engineers
worldwide. The company which was founded in 1937 is listed on the London Stock
Exchange, employs around 6,000 people and has operations in 27 countries,
serving another 43 countries through distributors. The Group satisfies the small
quantity needs of its customers who are typically electronics or maintenance
engineers in business. Electrocomponents sells around half a million products to
1.5m customers, through catalogues, over the internet and through trade
counters. Products include electronics, electrical, mechanical, automation and
health and safety components. The offer to engineers is valuable to many of our
2,500 suppliers, who would otherwise find the small order and immediate dispatch
requirements of such customers difficult and costly to satisfy.
A large number of high quality goods are stocked, which are dispatched the same
day that the order is received. The average customer order value is around £100
although the range of order values is wide. The Group's large number of
customers is from a wide range of industry sectors with diverse product demands.
OVERVIEW AND STRATEGY
Electrocomponents is the leading high service distributor to engineers worldwide
with the broadest range of product technologies. Around 65% of the Group's
sales come from our International business, which includes Continental Europe,
North America and Asia Pacific while more than 40% of sales are via the
e-Commerce channel.
The Group continues to concentrate on the following key areas to drive future
performance:
* Focus on International markets.
* Develop the Group's electronics and maintenance offers.
* Exploit the full potential of e-Commerce.
* Leverage the Group's global infrastructure and increase operating margins.
* MaintainUK profitability.
Focus on International markets
The Group has a strong market position in each of its three International
regions, all of which have significant growth potential.
The regionalisation of the business within Europe and Asia Pacific has involved
the creation and recent strengthening of management teams with responsibility
for directing the activities of these regions as a whole. The aim being to
implement the Group's strategy faster and improve performance whilst maintaining
the benefits of a local sales presence in the markets. This has helped deliver a
significant number of consistent sales and marketing initiatives across these
markets.
In North America, our Allied business has continued to implement its strategy
based upon its local customer relationships, supplier engagement programmes and
e-Commerce offer. The business's e-Commerce revenue grew by 60% in the first
half of the year.
Develop the Group's electronics and maintenance offers
Our electronics offer is focused on electronics design and production engineers
and buyers. We are building our offer across the design cycle from concept
design within R&D to supporting small production runs.
During the first half of the year we expanded our electronics range
significantly, introducing around 18,000 new products from major brand
suppliers, including Microchip, Osram, Molex, Agilent and Tyco Electronics. This
built upon the 10,000 new electronics products introduced last year. These
ranges are particularly focused on leading edge technologies including solid
state lighting, solar power and thermal management.
Each of these new product introductions was launched across our Continental
Europe, UK and Asia Pacific businesses. They were supported by consistent
marketing programmes to connect with our electronic design engineer customers
and the professional purchasing community. These campaigns included press
releases, e-mails, on-line landing pages, in journey banners and merchandising
and Twitter feeds. We have also optimised the on-line search engine visibility
of these campaigns.
Last year, we successfully launched our electronics small batch production
capability across the UK, Continental Europe and Asia Pacific. We have added
further products during the half year and the range has been expanded to over
50,000 components. Promotional activity has been driven through value-added
on-line services, as well as extensive off-line literature.
The prices of over 80,000 electronic components have been changed in the UK and
Continental Europe to ensure that we have competitive pricing at all our volume
levels.
We continue to improve our market leading offer to maintenance engineers
worldwide. We have increased our engagement with strategic maintenance
suppliers. With SMC, the world's leading pneumatics manufacturer, we have
expanded the product range and developed a number of joint e-Commerce activities
including a search engine marketing campaign. We have started a programme that
will see SMC transfer a number of its directly serviced customers to RS. We
continue to develop the RS brand product range and have supported this with
price realignment and a series of pan European marketing campaigns.
Large customers have been targeted and in the first half we won nine large
account contracts in the UK and Continental Europe. In many markets we have
targeted industries where performance has been more robust in the current
economic environment including utilities, food production and alternative
energy. The web has been used to provide additional services including the
launch of the energy resource centre. This provides our UK customers with
practical ideas on how they can reduce their energy costs through the use of our
product range. We have also leveraged our global sourcing capability to improve
product costs.
Exploit the full potential of e-Commerce
e-Commerce provides our customers with an improved service offer through the
provision of more tailored information, the rapid introduction of new products,
the provision of a wider product range and benefits from the deepening of
supplier relationships. It also allows the business to reduce off-line costs.
We have significant e-Commerce capability across the Group with a single website
platform which supports our UK, Continental Europe and Asia Pacific businesses.
This provides real time links to transactional systems which allow our customers
to obtain on-line stock visibility and weekly content updates. We have built a
large on-line customer base with over 1.6 million unique visitors per month to
the RS sites. In the first half there was an 11% increase in unique visitors to
the RS sites. In addition to the acceleration of our paid search programme, our
focus on search engine optimisation of the websites has seen the number of
Google natural search web pages that we are indexed on grow dramatically to
around 10 million.
In North America, the website's functionality has been further enhanced, which,
together with strong support from the local sales branches, has enabled strong
growth of 60% with the business exiting with an e-Commerce revenue share of
around 28% up from 12% during the last half year.
RS's e-Commerce offer has been enhanced with additions to the "My Account"
functionality. A quote redemption tool is now available which enables customers
to access quotes on-line and customers are able to access copy invoices direct
from the website.
The website is also available to mobile phone users and traffic has increased
throughout the period with 135,000 unique visitors accessing the RS mobile site
globally in September. During the period, we have increased our focus on social
networking with active communities now in place on Twitter, Facebook and
YouTube.
During the half year, five new websites were launched in the Eastern European
markets with local language and prices; since the period end a further six local
language websites have been launched. Purchasing Manager, the Group's market
leading on-line purchasing support tool, has been enhanced and has been an
important element in helping win large accounts across the UK and Continental
Europe.
Group e-Commerce revenue increased by 3% in the first half and the Group's
e-Commerce share of revenue increased from 34% to 41%, year on year and exited
at 43%, with the UK and Continental Europe exiting with an e-Commerce share
around 50%.
Leverage the Group's global infrastructure and increase operating margins
We have global infrastructure and systems including a global e-Commerce
platform, integrated systems, centralised purchasing and supplier management,
and global inventory, logistics and supply chain management.
A significant proportion of the Group's operating cost base is fixed so does not
vary directly with sales. This enables cost leverage to be delivered when sales
increase, however it also requires such costs to be proactively reduced when
sales decline. Therefore actions were taken principally in the final quarter of
the last financial year to achieve annualised cost savings of £18m, including a
net reduction of around 500 employees, as well as other significant measures to
reduce costs including process optimisation between the UK and Continental
Europe businesses. In the first half logistics activity was successfully
redistributed between the Group's two UK warehouses and the Group benefited from
recent freight tenders and further catalogue cost efficiencies.
In the first half of the year this cost reduction programme was the principal
reason for the reduction in operating costs by 10% at constant foreign exchange
rates. The Group is on target to deliver its £18m p.a. cost reduction target
announced last year and to realise around £15m of benefit in this financial
year.
Maintain UK profitability
The impact of the business's sales decline and reduction in gross margin, due to
increasing price competitiveness in the market, customer mix and foreign
exchange was partially offset by the actions taken to reduce operating costs.
Costs were reduced by 10% (£4.3m) from the first half of last year through the
ongoing benefit of the Continuous Improvement programme and the strengthening of
the business's non-stock purchasing team.
OPERATING PERFORMANCE AND KEY PERFORMANCE INDICATORS
Operating performance H1 2009/10 H1 2008/09
Revenue £447.2m £488.1m
Gross margin 48.7% 49.3%
Market contribution £80.6m £99.5m
Group Process costs (£53.4)m (£54.1)m
Headline operating profit £27.2m £45.4m
Operating profit £27.2m £62.4m
Interest (net) (£2.4)m (£3.2)m
Headline profit before tax £24.8m £42.2m
Profit before tax £24.8m £59.2m
Free cash flow £42.7m £38.5m
Headline earnings per share 3.9p 6.6p
Earnings per share 3.9p 9.4p
Interim dividend per share 5.0p 5.0p
Key performance indicators H1 2009/10 H1 2008/09
Group sales growth(1) (15.3)% 0.8%
International(1) (16.6)% 3.1%
United Kingdom(1) (12.8)% (3.2)%
e-Commerce revenue share 41% 34%
Headline Group return on sales(2) 6.1% 9.3%
Stock turn (per year) 2.8x 2.8x
Net debt to headline 12 month EBITDA(3) 1.7x 1.3x
Interest cover (headline EBITA(4) / net interest) 15x 18x
(1) Underlying revenue growth, adjusting for currency (where applicable) and
trading days
(2) Headline operating profit expressed as a percentage of revenue
(3) EBITDA: earnings before interest, tax, depreciation and amortisation
(inc. government grants)
(4) EBITA: earnings before interest, tax and amortisation (inc. government
grants)
BUSINESS PERFORMANCE
Group revenue was £447.2m, a decline of 15.3% (8.4% reported decline). Revenue
declines were reported across all the Group's regions, reflecting the difficult
worldwide economic environment. The International business declined by 16.6%
(5.1% reported decline) and the UK declined by 12.8% (14.2% reported). The
sales decline reduced during the first half in all regions with a first quarter
decline of 17% being followed by a 13% decline in the second quarter.
Group gross margin declined by around 0.6% points from the first half last year
with a stable gross margin in the International business and a reduction in the
UK, principally reflecting improving price competitiveness, increasing customer
discounts due to the stronger performance of larger customers and foreign
exchange.
Headline operating costs at constant foreign exchange were reduced by 10% on the
first half of last year. This reflects the effects of the cost reduction
activities undertaken principally in the fourth quarter of the last financial
year, the continued strong cost control across the entire business and the
reduction in variable costs due to the lower sales.
Headline operating profit was £27.2m, a decline of 45.6% at constant foreign
exchange (40.1% reported decline).
Group net interest cost in the first half of the year was around £0.8m lower
than last year mainly due to the current lower interest rates.
Headline pre tax profit of £24.8m was 41.2% lower than the first half of last
year principally due to the impact of the Group sales decline and high operating
leverage which was only partially offset by lower operating costs and lower
interest costs.
Reported profit before tax was £24.8m down by £34.4m on the comparative half
year. The principal reasons for this movement were the £17.4m reduction in
headline pre tax profit in the period and the one off £17.0m net income shown
below headline profit and reported in the first half last year. This prior
period net income comprised the accounting benefits of the changes made to the
UK defined benefit pension scheme in June 2008 net of reorganisation costs.
The effective tax rate was maintained at 31%.
Headline earnings per share were 3.9p down 2.7p on the first half of last year.
Cash flow
The Group continued to deliver a strong cash flow of £42.7m, up 11% on the first
half of last year with a cash conversion ratio of 250%. The main contributors to
the Group's free cash flow were the net working capital inflow of £18.8m and
capital expenditure at less than half of depreciation and amortisation. Within
working capital, stock turn was maintained at 2.8 times and debtor days were
reduced by four days year on year. The first half cash flow was favourably
impacted by around £15m due to the stock reduction programme which commenced in
the final quarter of the previous financial year.
Financial position
The Group continued to report strong financial metrics during the first half of
the year. Free cash flow was £42.7m up 11% year on year, EBITA interest cover
was 15 times and net debt to EBITDA (based upon proforma twelve months ended 30
September 2009 financials) was 1.7 times, with significant headroom to the
Group's banking covenants. The headroom between net borrowings of £176.2m and
committed bank facilities at 30 September 2009 was £127.2m. Of the £303m
committed facilities available, £271m have a maturity date of September 2012.
Under IAS 19, the combined gross deficit of the Group's defined benefit schemes
was £19.6m at 30 September 2009 having reduced from £38.0m at 30 September 2008
mainly due to increasing asset values.
Dividend
The Board has decided to maintain the interim dividend of 5p per share which
will be paid in January next year.
INTERNATIONAL
H1 2009/10 H1 2008/09 Change Change
Reported (Constant
Exchange)
Revenue £296.4m £312.5m (5.1)% (16.6)%(1)
Gross margin 47.8% 47.8%
Operating costs £(98.4)m £(97.8)m (0.6)% 12.2%
Contribution £43.2m £51.6m (16.3)% (26.0)%
Contribution % of revenue 14.6% 16.5%
(1) Underlying revenue growth, adjusting for currency and trading days
The International business now represents 66% of the Group's revenue. The
business comprises three regions: Continental Europe (53% of International
business revenue), North America (30%) and Asia Pacific (17%).
On a reported basis, including the beneficial effect of the weakening of
Sterling, revenue reduced by 5.1%. Underlying revenue declined by 16.6%, with
Continental Europe declining by 15.5%, North America by 19.4% and Asia Pacific
by 14.8%.
The gross margin of 47.8% was stable with the first half of last year.
Operating costs at constant exchange reduced by 12.2% on the first half of last
year principally due to the actions taken in each region to reduce costs.
The impact of the decline in revenue was only partially offset by the reduction
in operating costs with contributions down by £8.4m from the first half last
year at £43.2m.
Continental Europe
H1 2009/10 H1 2008/09 Change Change
Reported (Constant
Exchange)
Revenue £156.6m £169.9m (7.8)% (15.5)%(1)
Contribution £29.9m £32.9m (9.1)% (17.9)%
Contribution % of revenue 19.1% 19.4%
(1) Underlying revenue growth, adjusting for currency and trading days
Continental Europe comprises eight businesses. The largest of these are France,
Germany and Italy, which together account for around 75% of the region's
revenue. The remaining, smaller businesses are Austria, Benelux, Ireland,
Scandinavia and Spain.
Sales in Continental Europe declined in the half year by 15.5% (reported decline
7.8%) reflecting the difficult economic conditions across the region. However,
the decline lessened as the half year progressed.
The regionalisation of Continental Europe continued with the newly created
European Executive Management Team directing the region's activities more
rapidly. This has led to the delivery of more efficient, consistent and
effective pan European sales, marketing and supplier initiatives. The region has
successfully won six large customer accounts against strong competition, with
high service levels, broad product range and strong web offer being important
factors in the wins. More resilient industries including utilities have also
been targeted.
e-Commerce is a key focus area for the region and has continued to grow revenue
share exiting the first half at 49% of revenue, with three of the eight
businesses reporting revenue share above 50%. The region is increasingly
trialling new e-Commerce initiatives which can be quickly implemented across the
business.
The European team has continued to strengthen its relationships with strategic
suppliers. With increasing use of joint sales and marketing promotions these
suppliers are out performing the market. These relationships are being developed
further with longer term planning and shared sales targets.
The implementation of the region's Continuous Improvement programme is already
showing benefits through cost reductions and improving customer satisfaction.
North America
H1 2009/10 H1 2008/09 Change Change
Reported (Constant
Exchange)
Revenue £88.3m £90.9m (2.8)% (19.4)%(1)
Contribution £10.3m £13.2m (22.0)% (35.6)%
Contribution % of revenue 11.7% 14.5%
(1) Underlying revenue growth, adjusting for currency and trading days
Allied, the Group's North American business, has developed its strategy further
through its local customer relationships, supplier programmes and by increasing
e-Commerce sales.
During the half year, sales declined by 19.4% (reported decline 2.8%) in keeping
with the tough market conditions although the decline reduced as the half year
progressed.
Allied has introduced a number of new and successful sales and marketing
activities to exploit opportunities identified in the local market through its
extensive branch network. These have included successful promotions of products
which provide cost reduction opportunities for customers such as sponsoring
strategic suppliers' seminars presenting new products for design engineers and
monthly national campaigns of key suppliers' products.
The business has improved the functionality of its website including a quote
redemption tool and has developed new on-line promotions and marketing
initiatives. As a result the business's e-Commerce site has maintained its
strong, market leading growth. Sales through this channel have grown by 60% in
the half year with 24% e-Commerce revenue share compared to 12% share in the
first half last year.
Asia Pacific
H1 2009/10 H1 2008/09 Change Change
Reported (Constant
Exchange)
Revenue £51.5m £51.7m (0.4)% (14.8)%(1)
Contribution £3.0m £5.5m (45.5)% (50.0)%
Contribution % of revenue 5.8% 10.6%
(1) Underlying revenue growth, adjusting for currency and trading days
The Group's business in Asia Pacific operates across twelve countries, with
eight warehouses and local language catalogues, including those in Japan and
China. Sales declined by 14.8% (reported decline 0.4%) reflecting the general
economic slowdown. As with the rest of the Group this decline lessened in the
second quarter.
The Asia Pacific business has applied new sales and marketing practices in
response to the difficult trading environment aided, in part, by its more
regionalised structure which was created towards the end of the previous
financial year.
More focus has been given to identifying, resourcing, and then exploiting sales
opportunities across the whole Asia Pacific region. These have included the
realignment of the local sales forces to better meet customer needs and the
creation of dedicated teams in all the operating companies to identify new
business opportunities. Other actions have included local industry focused sales
initiatives. In China industries that have benefited from the RMB 4 trillion
government economic stimulus plan have been targeted including infrastructure
and alternative energy. More recently a cross region customer reward programme
was introduced to encourage customer buying behaviour.
e-Commerce has continued to perform well with more targeted on-line marketing
campaigns and the introduction of new functionality. As a result, the region's
e-Commerce revenue share has grown during the half year exiting at 35% share,
with significant e-Commerce revenue growth in China of around 25%.
The increasing electronics product offer across Asia Pacific has been driven by
specific sales and marketing resource, more competitive pricing and a recent
strategic supplier conference, promoting our offer in this important market
place.
UNITED KINGDOM
H1 2009/10 H1 2008/09 Change Change
Reported (Constant
Exchange)
Revenue £150.8m £175.6m (14.2)% (12.8)%(1)
Gross margin 50.6% 51.8%
Operating costs £(38.8)m £(43.1)m 9.9% 9.9%
Contribution £37.4m £47.9m (21.9)% (21.9)%
Contribution % of revenue 24.8% 27.3%
(1) Underlying revenue growth, adjusting for trading days
In line with the weakened economic environment, the UK's revenue declined by
12.8% (14.2% reported), with the decline slowing during the second quarter.
The business has focused on exploiting opportunities in the market whilst
customer management strategies have been developed which allow the business to
deliver more tailored and relevant sales and marketing campaigns to our
customers. These have led to the winning of three large customer accounts and
the renewal of numerous existing large customer accounts against strong
competition. The business's high customer service offer, broad product range and
flexible pricing were also key factors in securing these wins. Revenue in our
existing large customer accounts have improved, with increased sales from our
more recent customer wins last year.
The UK has benefited from the Group's electronics strategy with the expansion of
the product range, production packaging offer and competitive pricing. This
improved offer has been sold to electronics design engineers through the
separate electronics sales division. The result has been that electronics has
been the best performing product category in the UK.
Actions have been undertaken to further drive e-Commerce performance. A number
of on-line campaigns have been designed to address customer needs, for example
value for money promotions complemented with price check data and a 'buyer's
hub' which brings together product offers and also highlights the available
purchasing tools. The recently introduced on-line customer loyalty programme has
proved to be popular with smaller customers.
Gross margin has reduced by 1.2% points principally reflecting improving price
competitiveness, increasing customer discounts due to the mix effect of stronger
performance of larger customers and foreign exchange.
Operating costs have been reduced by £4.3m (9.9%) driven by the impact of the
prior year cost reduction programme, the ongoing impact of the Continuous
Improvement programme and benefits from the strengthening of the business's
non-stock purchasing team.
PROCESSES
H1 2009/10 H1 2008/09 Change Change
Reported (Constant
Exchange)
Process costs £(53.4)m £(54.1)m 1.3% 5.2%
The Processes support our operating companies by ensuring that they have the
products, infrastructure and expertise to provide consistently high service
levels around the world.
The developments in the half year have included the continued implementation of
the electronics, e-Commerce and maintenance strategies as well as the successful
redistribution of activity between the Group's two UK warehouses and benefits
from recent freight tenders.
Actions have been taken as part of the Group's cost reduction programme that
have reduced Process costs by around 5% at constant foreign exchange.
RISKS AND UNCERTAINTIES
The business's key risks for the remaining six months of the financial year
remain those detailed in the section entitled 'Risks' in the Business Review on
page 17 of the Electrocomponents plc Annual Report and Accounts for the year
ended 31 March 2009. These include the effects of the macroeconomic environment,
the implementation of our Group strategy, the dependence on our information and
communication systems, the pricing of our product offers and the management and
utilisation of our people. A copy of the 2009 Annual Report and Accounts is
available on the company's website at www.electrocomponents.com.
CURRENT TRADING AND OUTLOOK
Group sales declined by 17% in the first quarter, by 13% in the second quarter
and by around 8% in October. This trend was seen across all regions. In October,
sales declined by around 8% in both the UK and International. Within
International, Continental Europe declined by around 8%, North America by around
11% and Asia Pacific by around 4%. Although the macroeconomic outlook remains
uncertain, the sales trend is encouraging, which gives us confidence in the
out-turn for the full year.
Ian Mason, Group Chief Executive
Simon Boddie, Group Finance Director
13 November 2009
Responsibility Statement of the Directors in respect of the half-yearly
financial report
We confirm that to the best of our knowledge:
* The condensed set of financial statements has been prepared in accordance
with IAS 34 Interim Financial Reporting as adopted by the EU;
* The interim management report includes a fair review of the information
required by:
* DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of
important events that have occurred during the first six months of the financial
year and their impact on the condensed set of financial statements; and a
description of the principal risks and uncertainties for the remaining six
months of the year; and
* DTR 4.2.8R of the Disclosure and Transparency Rules, being related party
transactions that have taken place in the first six months of the current
financial year and that have materially affected the financial position or
performance of the entity during that period; and any changes in the related
party transactions described in the last annual report that could do so.
Ian Mason, Group Chief Executive
Simon Boddie, Group Finance Director
13 November 2009
Condensed Consolidated Income Statement
Note 6 months 6 months Year to
to to 31.3.2009
30.9.2009 30.9.2008
£m £m £m
Revenue 1 447.2 488.1 974.6
Cost of sales (229.4) (247.7) (492.5)
Gross profit 217.8 240.4 482.1
Distribution and marketing expenses (186.8) (174.5) (370.0)
Administrative expenses (3.8) (3.5) (8.6)
Operating profit 27.2 62.4 103.5
Financial income
Bank interest receivable 0.8 2.7 4.2
Other interest receivable - 0.3 0.6
Financial expenses
Bank interest payable (3.2) (6.2) (11.6)
Other interest payable - - (0.2)
Profit before tax 1 24.8 59.2 96.5
Income tax expense 3 (7.7) (18.4) (30.3)
Profit for the period attributable to equity shareholders
17.1 40.8 66.2
Earnings per share - Basic 4 3.9p 9.4p 15.2p
Earnings per share - Diluted 4 3.9p 9.4p 15.2p
Dividends
Amounts recognised in the period:
Final dividend for the year ended 31 March 2009 5 6.0p 12.6p 12.6p
Interim dividend for the year ended 31 March 2009 5 - - 5.0p
An interim dividend of 5.0p per share has been recognised since the period end.
Headline profit
Headline operating profit
Operating profit 27.2 62.4 103.5
Pension changes/reorganisation (net credit) 2 - (17.0) (9.9)
27.2 45.4 93.6
Headline profit before tax
Profit before tax 24.8 59.2 96.5
Pension changes/reorganisation (net credit) 2 - (17.0) (9.9)
24.8 42.2 86.6
Condensed Consolidated Statement of Comprehensive Income
6 months 6 months Year to
to to 31.3.2009
30.9.2009 30.9.2008
£m £m £m
Profit for the period 17.1 40.8 66.2
Other comprehensive income
Foreign exchange translation differences (16.5) 9.7 34.8
Actuarial (loss) on defined benefit pension schemes (2.8) (26.9) (4.4)
Gain (loss) on cash flow hedges 3.3 7.9 (0.4)
Taxation relating to components of other comprehensive (0.3) 5.3 (1.1)
income
Other comprehensive income for the financial period (16.3) (4.0) 28.9
Total comprehensive income for the financial period 0.8 36.8 95.1
Condensed Consolidated Balance Sheet
Note 30.9.2009 30.9.2008 31.3.2009
£m £m £m
Non-current assets
Intangible assets 211.0 200.6 234.6
Property, plant and equipment 114.8 112.9 121.4
Investments 0.5 0.5 0.5
Other receivables 3.5 3.5 3.3
Deferred tax assets 11.1 14.6 10.7
340.9 332.1 370.5
Current assets
Inventories 171.4 177.2 180.8
Trade and other receivables 153.3 169.8 167.0
Income tax receivables 1.7 2.2 1.1
Cash and cash equivalents 6 8.5 24.9 2.0
334.9 374.1 350.9
Current liabilities
Trade and other payables (139.6) (144.8) (140.9)
Loans and borrowings (11.9) (11.5) (4.0)
Income tax liabilities (10.7) (16.7) (15.2)
(162.2) (173.0) (160.1)
Net current assets 172.7 201.1 190.8
Total assets less current liabilities 513.6 533.2 561.3
Non-current liabilities
Other payables (9.5) (8.0) (9.1)
Retirement benefit obligations (19.6) (38.0) (16.9)
Loans and borrowings (172.8) (194.2) (201.2)
Deferred tax liabilities (33.1) (28.2) (31.3)
(235.0) (268.4) (258.5)
Net assets 278.6 264.8 302.8
Equity
Called-up share capital 43.5 43.5 43.5
More to follow, for following part double-click [nRn2M4478C]