Final Results

RNS Number : 3997H

Electrocomponents PLC

27 May 2011

 



PRELIMINARY STATEMENT

Electrocomponents plc, the world's leading high service distributor of electronic and maintenance products, today announces its results for the year ended 31 March 2011.

SUMMARY OF RESULTS

'Strategic initiatives delivering record sales and increasing margins'.

	2011	2010	Change
Revenue	£1,182.2m	£972.6m	21.0% (1)
Profit before tax - headline	£114.0m	£74.4m	53.2%
Profit before tax - reported	£114.0m	£76.0m	50.0%
Return on sales - headline	10.1%	8.1%	2.0% pts
Earnings per share - headline	18.0p	11.8p	52.5%
Earnings per share - reported	18.0p	12.1p	48.8%
Dividend per share (2)	11.5p	11.0p	4.5%
Free cash flow	£57.4m	£71.9m	(20.2)%

(1)   Underlying revenue growth, adjusting for currency and trading days

(2)   2011: includes 5p interim and 6.5p proposed final dividend

Financial Highlights

·      Strong underlying sales growth of 21%, with all regions delivering double digit growth

·      Gross margin stable through the year

·      Significant cost leverage with operating costs reducing by 3% points of sales to 37%

·      Headline profit before tax increasing by more than 50%

·      Return on capital employed increasing by 7.5% points to 24.2%

·      £57m free cash flow with significant working capital investment to drive sales growth

·      Full year proposed dividend increased by 5% to 11.5p per share

Operational Highlights

·      International business now contributing 70% of Group sales with 25% sales growth

·      Electronics the fastest growing category with 30% growth supported by 37k new products

·      DesignSpark, the Group's online design tool attracting 400k visitors since launch

·      37% Group eCommerce growth with revenue share now over 50%

·      Strong UK business recovery with profit now above pre-recession levels

·      Successful expansion into large Eastern European market

CURRENT TRADING AND OUTLOOK

In the first seven weeks of the new financial year sales growth rates have remained strong at around 16% with the UK growing by 8% and the International business by 19%.  Within International, Continental Europe has grown by 20%, North America by 18% and Asia Pacific by 17%.

Whilst recognising the more demanding comparatives ahead, we believe that the progress the Group has made on its strategic priorities and the investment that we continue to make in our International markets, electronics and eCommerce initiatives positions us well to make good progress in the coming year.

IAN MASON, GROUP CHIEF EXECUTIVE, COMMENTED:

"It has been an excellent year for Electrocomponents with Group sales exceeding £1 billion for the first time and an increase in headline profits of over 50%. We have delivered very strong underlying sales growth of 21%, with all regions reporting double digit increases. With 70% of the Group's revenues now coming from the International business we are well placed to benefit from the long term structural growth opportunity along with improving margins from operating cost leverage.  As a result we are recommending an increase in our final dividend of 8%.

"eCommerce and electronics continue to transform our business. Over half of our sales are now made through the web and we are continuing to enrich the online customer experience as we accelerate progress towards our target of 70% of Group revenues coming from eCommerce. Our ongoing investment in the electronics portfolio with the introduction of over 37,000 new products from leading suppliers has helped drive 30% electronics revenue growth.

"Electrocomponents is the leading high service distributor globally in a growing and highly fragmented marketplace. This year we have continued to take share from smaller competitors who cannot match our product range and unrivalled customer service, and as the market leader we see excellent long-term growth potential for the Group."

Enquiries:

Ian Mason, Group Chief Executive	Electrocomponents plc	020 7567 8000*
Simon Boddie, Group Finance Director	Electrocomponents plc	020 7567 8000*
Nigel Main, Group Corporate Communications John Sunnucks / David Allchurch	Electrocomponents plc Tulchan Communications	020 7567 8000* 020 7353 4200

* Available to 15:00 on 27 May 2011, thereafter 01865 204000

The results and presentation to analysts are published on the corporate web site at www.electrocomponents.com

Definitions of terms:

In order to reflect underlying business performance, comparisons of revenue between periods have been adjusted for exchange rates and the number of trading days (underlying revenue growth).  Changes in profit, cash flow, debt and share related measures such as earnings per share are, unless otherwise stated, at reported exchange rates.

Headline profit: during the year ended 31 March 2010 headline profit excluded net income of £1.6m. Details are given in note 5. Key performance measures such as return on sales, EBITDA and ROCE use headline profit figures. 

Notes to editors:

Electrocomponents plc is the world's leading high service distributor of electronics and maintenance products, with operations in 32 countries.  Founded in 1937 the business is listed on the London Stock Exchange and employs around 5,800 people.  Today, through our trading brands of RS and Allied, we offer 550,000 products through catalogues, the internet and at trade counters to 1.6 million customers and have a market-leading reputation for service excellence.  Our products, sourced from 2,500 leading suppliers, include electronics, electrical, mechanical, automation and health and safety components.

The business satisfies the small quantity needs of its customers who are typically electronics or maintenance engineers in business. 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 £140 although the range of order values is wide. The Group's large number of customers come from a wide range of industry sectors with diverse product demands.

Overview and Strategy implementation

Market overview

Our strategy continues to transform the business, enabling us to take market share from the large number of small operators with whom we compete around the world and deliver sales growth well ahead of GDP growth.

The global market opportunity available to the Group is large and growing.  We estimate that the value of the available market is around £30 billion globally; split evenly between electronics and maintenance products.  The overall electronics market has on average grown at around twice the rate of GDP growth and the maintenance market at around GDP growth, but higher than this in emerging markets such as Asia Pacific.

We operate in highly fragmented markets which are primarily served by a large number of small local and regional distributors.  There are five international high service distributors, including Electrocomponents, which together have around 15% of the available global market.  They are gaining market share from smaller distributors who are not able to match their broad product range and high customer service. 

Electrocomponents, through its brands of RS and Allied Electronics, is the number one high service distributor in the world. RS is the leading distributor in the UK, Europe and Asia Pacific, while Allied is ranked third in the North American market.  As a result we are well placed to benefit from this competitive consolidation in the markets in which we operate representing around 90% of the world's GDP.

Strategy Implementation

To capture this structural growth opportunity our business strategy centres on our customers, offering them the widest possible product range with the quickest delivery, with eCommerce transforming the customer experience and offering improved flexibility and convenience.

Our strategy remains focused on five core areas:

§ Focus on international markets

§ Develop our electronics and maintenance offers

§ Exploit the full potential of eCommerce

§ Leverage our global infrastructure and increase operating margins

§ Maintain UK profitability

Focus on International Markets

Revenues from international markets now account for 70% of our total revenues and nearly 60% of contribution. Revenue share has increased from 40% in 2000, and during the year all our regions delivered double-digit sales growth. Over the last five years our International business has achieved average annual sales growth at around double the rate of average annual global GDP growth.  Our international businesses are an important driver of profits, delivering around 70% of our contribution growth this year.  We are expecting that International revenue share will continue to grow and our focus remains on delivering our International sales target growth of 7-10% pa over the medium term.

Continental Europe continued to benefit from management's action to move the business from a federation of national businesses to a regional structure led by a single management team. Our ability to now run our customer marketing on a regional basis and leverage our eCommerce offer continues to drive the business and increase both average order frequency and the number of customers. Our externally benchmarked customer satisfaction ratings have improved further, ranking us close to the top decile of participating businesses.  During the year we expanded into the large and growing Eastern European market providing customers in Poland, the Czech Republic and Hungary with local language and priced web sites.

The growth strategy of Allied, our North American business, is based upon exploiting its unique network of local sales offices, supplier relationships and eCommerce to attract new customers and expand our business with existing customers.

In Asia Pacific, the RS business has a leading market position.  This is our most diverse business region both geographically and culturally and our sales offices are able to offer next day delivery to our customers across twelve countries.

Towards the end of the year we doubled our warehouse capacity in Shanghai, building on our leading position in the market. We can now offer our customers in China an additional 50,000 products and an improved local service offer which will be supported by a further £10m of locally held stock.

Develop our Electronics and Maintenance Offers

Electronics

Our electronics portfolio represents over 40% of our total revenues, growing by 30% over last year. During the year around 37,000 new electronics products were introduced from leading suppliers such as TE Connectivity, Panasonic, Texas Instruments and Analog Devices. Our investment has driven a 60% growth in global semiconductor sales in 2011.

DesignSpark, our online gateway for resources for electronics engineers, was launched in the summer of 2010, and has had more than 400,000 visitors to date. In addition, DesignSpark PCB, our free online design tool for electronics engineers, recorded 75,000 downloads since its launch, while there have been more than 30,000 downloads of our 3D CAD models. These online tools enable us to build a direct relationship with this influential customer segment and drive additional sales through this channel.

Maintenance

Our maintenance portfolio is a key differentiator between Electrocomponents and our competitors as we are the global high service distributor with the broadest range of process, control and automation, maintenance, repair and operations products.  During the year our maintenance offer sales grew by 16%, supported by 11,000 new maintenance products introduced during the year.

In order to build on our strong market leading position and to further accelerate growth we have reviewed our maintenance strategy and as a result we are strengthening our global pricing and service offer.  This includes an increased focus on better serving the needs of our maintenance customers with enhanced offers in our Automation and Control product ranges.  Our support product range, which is a key differentiator for our customers, will be further developed, with an emphasis on our RS branded range of products.

We continue to develop deeper relationships with our strategic suppliers, co-operating further on range development, joint marketing and sales activities, eCommerce development and customer transfers.  During the year sales of products from our strategic supplier partners grew ahead of the overall business.    

Exploit the Full Potential of eCommerce

Our sales through eCommerce continue to grow with eCommerce now generating 53% of Group revenues, up from 46% last year end.  eCommerce revenues grew strongly across all regions with 80% growth in North America, 42% in Asia Pacific, 34% in Continental Europe and 24% in the UK. For the Group as a whole eCommerce sales grew by 37% for the year.

Our eCommerce channel offers considerable advantages over our traditional catalogue channel allowing us to offer our customers flexible and targeted pricing, the ability to view 17,000 3D product models online, and the convenience of 24 hour purchasing from desktop PCs, laptops, smartphones and Internet tablets, including an RS iPhone app.  Earlier this year, we launched eTech, our magazine for electronics engineers as an iPad app. This was very well received by our worldwide customer base.

The Internet gives us an unparalleled ability to reach customers locally at the point of need, and is vital for market penetration. We have around 60 web sites across the world, with the majority in respective local languages. During the year we further extended our eCommerce reach by creating new web sites in South Korea, Switzerland, Hungary, Poland, the Czech Republic, and more recently, Mexico.

Our focus this year has been on redefining and strengthening our eCommerce strategy. Our redefined strategy embraces a multi-channel approach to growth with eCommerce at the heart of the business. In parallel with the development of our strategy, we have increased our activities in search engine marketing around the world to generate more traffic for our web sites. As a result, traffic levels have grown significantly throughout the year.

During the coming summer we will be launching our new RS web sites around the world offering a greatly improved customer experience in key phases of the customer journey.

Leverage our Global Infrastructure and Increase Operating Margins

We have 17 distribution centres globally which enable us to provide our high service levels to around 90% of the world's GDP.  We operate directly in 32 countries with distributors in a further 37 countries. Our product range is continually refreshed, with 76,000 new products added globally in 2011. During the year we also strengthened our relationship with our global strategic suppliers, with sales from our twelve leading suppliers growing ahead of the overall business.

The UK is our largest individual market with a return on sales around 10% points higher than that of our International business principally due to economies of scale.  Therefore as the International business grows it is able to deliver increasing operating leverage. Overall, the Group's operating costs as a percentage of sales have decreased by 5% points over the past five years increasing our operating leverage.

During the year return on sales has grown by 2% points to 10.1% and we see significant opportunities to increase our return on sales as the Group grows.

In addition to fixed cost leverage, we have delivered a number of cost reduction programmes in 2011.  These have included regionalising our supply chain, more cost-effective freight forwarding and improved efficiency in our warehouses. We have also reduced our catalogue production costs as eCommerce sales increase and more people buy our products online, while our Continuous Improvement programme seeks to further eliminate inefficiencies and remove unnecessary costs in our operating processes.  Our gross margin has remained stable during the year.

Maintain UK Profitability

The UK's strategy is focused on:

§ Maintaining its leadership position in the high margin "immediate delivery" business

§ Leveraging the Group's improved customer offers, especially electronics and eCommerce

§ Developing new incremental regular revenue streams including corporate accounts and larger orders (orders over £1,000)

§ Continuing to manage gross margin, cost and cash effectively

This year has been very successful for our UK business achieving double digit sales growth for the first time in 15 years as the business successfully leveraged the benefits of the Group's strategy.  This included the increased electronics and maintenance product offers, exploiting the eCommerce offer, a strong sales and marketing customer focus all supported by ongoing cost control. Contribution in the UK returned to over £100m and is now above pre-recession levels.

People

Building a Great Place to Work and so improving our employee engagement is an important area of focus for us across the Group, with Continuous Improvement and Health and Safety being key elements of this strategy.  We launched "Face2Face", our award winning employee communication programme in the UK, and have held similar sessions around the globe.  We regularly measure progress against our employee engagement targets through employee surveys and have achieved consistently positive results.

OPERATING PERFORMANCE AND KEY PERFORMANCE INDICATORS

Operating Performance	2011	2010
Revenue	£1,182.2m	£972.6m
Gross margin	47.1%	48.1%
Headline contribution	£248.0m	£190.7m
Group Process costs	£(128.2)m	£(111.5)m
Headline operating profit	£119.8m	£79.2m
Interest (net)	£(5.8)m	£(4.8)m
Headline profit before tax	£114.0 m	£74.4m
Free cash flow	£57.4m	£71.9m
Headline earnings per share	18.0p	11.8p
Dividend per share (1)	11.5p	11.0p
Key Performance Indicators	2011	2010
Group sales growth(2)	21.0%	(5.0)%
International(2)	25.3%	(4.7)%
UK(2)	12.1%	(5.6)%
eCommerce revenue share	49%	43%
Headline Group return on sales(3)	10.1%	8.1%
Headline ROCE (4)	24.2%	16.7%
Stock turn (per year)	2.7x	2.8x
Revenue per head (5) (£'000)	204	176
Number of customers (millions)	1.6	1.5
Net debt to headline EBITDA	1.1x	1.6x
Interest cover (6)	23.4x	19.6x

(1)        2011: includes 5p interim and 6.5p proposed final dividend

(2)        Underlying revenue growth, adjusting for currency and trading days

(3)        Headline operating profit expressed as a percentage of revenue

(4)        Headline operating profit expressed as a percentage of net assets plus net debt

(5)        Revenue on a like for like basis (2011 and 2010) adjusting for trading days and foreign exchange

(6)        Based upon headline EBITA:  Earnings before interest, tax and amortisation (inc. government grants)

BUSINESS PERFORMANCE

Revenue

Group revenue of £1,182.2m exceeded £1bn for the first time in the Group's history. Revenue grew by 21% year on year with all the Group's regions delivering double digit sales growth.  The sales growth was 25% in the International business and 12% in the UK.  Within the International business Continental Europe grew by 22%, North America by 34% and Asia Pacific by 21%.  Electronics was the fastest growing product category with growth of 30% and eCommerce revenue grew by 37%.

Gross margin

Gross margin at 47.1% was stable through the year.  Year on year gross margin declined by 1% point with the principal drivers being the strong growth of the lower margin North American business and gross margin declines in the UK and International business principally due to increased sales to large customers, growth of new revenue streams and prior year electronics price repositioning.

Costs

Headline operating costs as a percentage of sales reduced by 3.0% points as the business delivered strong operating leverage.  Headline operating costs, at constant foreign exchange, grew by 11.6% year on year as volume related costs increased in line with sales and the business invested in sales and marketing initiatives to drive performance.  These impacts were partially offset by the cost reduction initiatives which included the catalogue cost reduction programme, Supply Chain cost reductions and ongoing reduction of offline costs. Revenue per head increased by 16% to £204,000.

Profitability

The Group's return on sales grew by 2.0% points to 10.1%.  Return on capital employed has increased by 7.5% points to 24.2%, which is approaching the Group's medium term target of over 25%.

Profit before tax

Headline profit before tax was £114m, an increase of £39.6m (53%) over last year.  All regions contributed to this increase with International contribution increasing by £39.1m (36%) and the UK increasing by £18.2m (22%).  The contribution increase was partially offset by £16.7m (15%) higher Process costs and £1m higher interest costs.  The increased interest charge was impacted by the decision made last year to fix a proportion of the Group's debt for a longer period.  Foreign exchange movements reduced operating profit by around £2m compared to the prior year principally due to the strengthening of Sterling against the Euro.

Reported profit before tax increased by £38m year on year with the £39.6m increase in headline profit before tax being reduced by the absence this year of one-off income of £1.6m.

Earnings per share

Headline earnings per share of 18.0p increased 53% year on year in line with the increase in headline pre tax profits.

Dividends

The Board intends to recommend the payment of a final dividend of 6.5p per share to be paid on 22 July 2011 representing an 8% increase.  As a result the total dividend for the financial year will be increased by 5% to 11.5p per share.

The Group maintained a high level of pay out during the recession recognising the importance of dividends to shareholders. As a result of the strong financial performance of the business and our confidence in the Group's prospects, the Board is proposing to recommend an increased final dividend for the year.  The business has significant opportunities to invest for growth and therefore intends to maintain a strong balance sheet.  

Cash flow

The Group's free cash flow for the year of £57.4m, representing 73% of profit after tax, was lower than the previous year by £14.5m. This movement was caused by the increase in the Group's profits offset by the £41.7m net investment in working capital during the year, due to the strong sales performance and stock turn reducing by 0.1 times to 2.7 times.  This small reduction in stock turn reflected the business's drive to both maintain its high service levels and also to invest in additional stock to drive sales performance in its international markets.

In 2012 we are planning to invest further to drive sales growth including an additional £10m stock investment in China and capital expenditure up from £22m to higher expenditure in the region of £35m.  The capital expenditure in 2012 is expected to include the costs of implementing a new system in North America and further investment in the Group's strategic initiatives including eCommerce.

Financial position

At 31 March 2011 net debt was £160.7m, which was £11.4m lower than last year, due to free cash flow of £57.4m exceeding dividend payments of £47.9m, with the balance of the movement largely being due to foreign exchange.  At 31 March 2011 the Group had committed debt facilities and loans of £298.6m with undrawn committed facilities of £133.4m.

Year end net debt comprised gross borrowings of £167.0m (currency split: £59m US Dollars, £53m Sterling, £37m Euros, £10m Japanese Yen and the balance in other currencies) and financial assets of £6.3m. The currency mix is designed to help hedge the Group's translation exposures. The peak month-end net borrowing during the year (using monthly exchange rates) was £176.9m.

The Group's main sources of finance are a syndicated multicurrency facility from ten banks for US$97m, £102m and €47m maturing in September 2012 and $150m of Private Placement notes, split $65m maturing June 2015 and $85m maturing June 2017. Cross currency interest rate swaps have been put in place to swap $60m of the Private Placement notes from fixed $ to floating £ and $40m from fixed $ to floating €.

INTERNATIONAL

	2011	Restated(2) 2010	Growth reported	Growth underlying(1)
Revenue	£825.9m	£654.9m	26.1%	25.3%
Gross margin	46.2%	47.2%
Operating costs	£(235.6)m	£(201.8)m	(16.7)%	(15.7)%
Contribution	£146.3m	£107.2m	36.5%	38.5%
Contribution % of revenue	17.7%	16.4%

(1)        Adjusted for currency; revenue also adjusted for trading days

(2)        See Note 2 to the notes to the Preliminary Statement

The International business represents 70% of Group revenue and comprises three regions: Continental Europe (50% of the International business), North America (32%) and Asia Pacific (18%). 

During the year, underlying revenue increased by 25% with Continental Europe increasing by 22%, North America by 34% and Asia Pacific by 21%. 

Gross margin was stable across the year, however year on year the International gross margin declined by around 1.0% points.  This decline was impacted by the strong growth of the lower gross margin North America business and gross margin reduction in the Continental Europe region due to the successful growth of new revenue streams such as larger orders together with growing sales to larger customers attracting higher customer discounts.

The International business has delivered cost leverage, with costs as a percentage of sales reducing by 2.3% points year on year.  Contribution increased by 36% year on year and the International contribution margin increased 1.3% points to 17.7%.

CONTINENTAL EUROPE

	2011	Restated(2) 2010	Growth reported	Growth underlying(1)
Revenue	£413.6m	£350.0m	18.2%	22.3%
Contribution	£90.5m	£75.8m	19.4%	24.6%
Contribution % of revenue	21.9%	21.7%

(1)        Adjusted for currency; revenue also adjusted for trading days

(2)        See Note 2 to the notes to the Preliminary Statement

Our business is the largest high service distributor in Continental Europe and comprises ten markets. The largest of these are France, Germany and Italy and the remaining businesses are Austria, Benelux, Eastern Europe (comprising Poland, the Czech Republic and Hungary), Ireland, Scandinavia, Spain and Switzerland.

During the year Europe reported strong underlying revenue growth of 22% and contribution growth of 19% (25% at constant foreign exchange).  The benefits of costs reducing as a % of sales were partially offset by the gross margin reduction due to the growth in large customer revenues driven by around 30 large customer account wins and the growth of new revenue streams including larger orders.

The pan European focus of the regional management team has been a key driver in supporting the efficient and rapid application of effective sales and marketing initiatives across the entire region.  Recent activities have involved the territory sales forces moving to a more customer portfolio approach with increased targeting of customers where sales potential has been identified.  Other improvements to salesforce effectiveness include greater use being made of dedicated internal sales teams to more speedily and effectively manage customer queries and needs. The centrally coordinated marketing team have continued to promote the business offer with mass marketing activities across the business exploiting the huge customer audience and acquiring more customers and growing customer order frequency by more than 10%.

The introduction across the region of around 37,000 new market leading electronics products has been supported by cross region marketing campaigns and the use of the Group's online marketing resources such as DesignSpark and DesignSpark PCB.  In Germany these electronics product launches and supporting initiatives have been very successful with particularly strong electronics sales growth.

We have further developed our maintenance offer across Continental Europe with a particular initiative to create a common product offer across the region.  This activity is now substantially complete and this unique and broad pan European offer has already delivered increased sales.

eCommerce grew by 34% during the year and exited with a revenue share of 59% up from 53% last year.  This strong performance was driven by increased search engine marketing and improved quotes functionality. Sales force activities have also been directed towards increasing customer visits to the region's web sites together with promotional campaigns growing customers' order values.  

Significant activities during the year included the launch of the web site in Switzerland and, in January, of the Eastern Europe business.  The Eastern Europe business is a full eCommerce offer providing customers in Poland, the Czech Republic and Hungary with local language and priced web sites.  These offer over 550,000 electronics and maintenance products with the same day despatch that is offered to our other customers in the European region.  To date customer reaction has been very positive with sales to both local and larger multinational customers.

NORTH AMERICA

	2011	Restated(2) 2010	Growth reported	Growth underlying(1)
Revenue	£262.3m	£191.5m	37.0%	33.5%
Contribution	£42.5m	£24.9m	70.7%	66.6%
Contribution % of revenue	16.2%	13.0%

(1)        Adjusted for currency; revenue also adjusted for trading days

(2)        See Note 2 to the notes to the Preliminary Statement

Allied, our North American business, reported strong underlying sales growth of 34% during the year.  This sales performance, combined with ongoing cost control and the business's operating cost leverage, resulted in a 71% increase in contribution (67% at constant foreign exchange). Contribution as a percentage of sales increased 3.2% points to 16.2%.

During the year, the Allied management team has continued to implement its longstanding and consistently executed strategy.  This has involved particular focus on further developing customer relationships through the unique sales office network, accelerating customer acquisition, adding new products and growing eCommerce revenue.

Sales and marketing activities are centred on the business's unique network of 54 sales offices.  These included targeted joint sales and marketing customer calls and visits with suppliers which have resulted in the business winning an increasing number of new customer accounts with the final quarter acquisition rate running at around 50% higher than 18 months earlier.

During the year, Allied added a further 28,000 new products to its portfolio with nine new suppliers including Hoffman, Kingbright and APEM.  The business has continued its focus on building its brand awareness with national and cable television campaigns to exploit Allied's strong product areas.

eCommerce revenue grew by 80% with eCommerce revenue share exiting at 39% compared to 32% last year.  This performance has been driven by a more than doubling of search engine marketing, links to relevant social networking sites and increasing use of online email campaigns and prize draws.  As web traffic has increased so has the business's investment with increased web site capacity, improved online quotes functionality and recently the introduction of market leading search engine functionality.   

The project to replace the legacy system in Allied with a new SAP based ERP system is progressing well with a planned go live date in the first half of calendar year 2012.  The delivery team includes our North American employees, Group Information Systems function and employees from the rest of the Group with experience of the Group's earlier ERP projects.  This implementation will give the business a more robust platform for growth as well as delivering operating benefits.  The total cash cost estimate remains at around £15m with planned cost expenditure during the coming financial year of around £3m and £9m capital expenditure.

ASIA PACIFIC

	2011	Restated(2) 2010	Growth reported	Growth underlying(1)
Revenue	£150.0m	£113.4m	32.3%	20.7%
Contribution	£13.3m	£6.5m	104.6%	77.6%
Contribution % of revenue	8.9%	5.7%

(1)   Adjusted for currency; revenue also adjusted for trading days

(2)   See Note 2 to the notes to the Preliminary Statement

The Group's business in Asia Pacific is the region's market leader operating across twelve countries with around 900 employees complemented by local language web sites.

During the year the region reported underlying sales growth of 21% which together with operating leverage created a more than doubling of contribution (78% at constant foreign exchange).  Contribution as a percentage of sales increased by 3.2% points to 8.9%.

We have continued to develop initiatives to further strengthen our number one position in the region.  In Japan we have benefited from our larger electronics product range and last year's semiconductors' price repositioning to drive sales growth of 29%.  In Australasia the sales and marketing teams have successfully focused on sales opportunities with larger corporate customers and the growing resource sector. 

eCommerce revenue grew by 42% during the year, with eCommerce revenue share exiting at 51% up from 35% last year end.  This performance was driven by ongoing investment in improved functionality including online quotes and additional payment methods which together with increased search engine marketing increased the number of online customers by the year end by around 60%.  During the year eCommerce supported the region's expansion with a new local language web site being launched in South Korea to a positive local customer reaction.

In China our electronics products had strong growth with semiconductor (integrated circuits) sales increasing by 79% year on year. To extend our leadership position in the huge Chinese market we opened a new warehouse in Shanghai.  This investment will enable a ca. 50,000 increase in locally stocked product lines, enhancing the local service offer, and in the next financial year it is anticipated that £10m of additional stock will be made available in the warehouse.

Our business in Japan was not directly impacted by the earthquake that hit the country in mid March and our team has worked hard and continued to operate the business and meet customers and supplier's needs.  In the second half of March sales in Japan, which represent around 3% of the Group, were at similar levels to the previous year.

UK

	2011	Restated(2) 2010	Growth reported	Growth underlying(1)
Revenue	£356.3m	£317.7m	12.1%	12.1%
Gross margin	49.0%	50.1%
Operating costs	£(72.8)m	£(75.6)m	3.6%	3.6%
Contribution	£101.7m	£83.5m	21.8%	21.8%
Contribution % of revenue	28.5%	26.3%

(1)        Revenue adjusted for trading days

(2)        See Note 2 to the notes to the Preliminary Statement

The UK continued to grow throughout the year reporting underlying sales growth of 12% and operating costs reduced by nearly 4% as a result of continued cost management. Consequently the business reported 22% contribution growth and a 2.2% point increase in contribution as a percentage of sales to 28.5%.  Contribution at over £100m is now above pre-recession levels.

The UK management team has successfully leveraged the Group's strategy, in particular the electronics offer and growing eCommerce channel, as well as further developing new revenue streams whilst closely controlling its costs.

The electronics offer has been further improved with 37,000 new market leading products supported by technical marketing campaigns promoting our market leading online tools including 3D CAD, DesignSpark and DesignSpark PCB.  These initiatives, together with the benefits of the UK's specialised sales force, resulted in electronics being the best performing category.

eCommerce revenue grew by 24% during the year, with eCommerce revenue share exiting at 57% up from 52% last year end. This strong performance was driven by a number of initiatives.  These included increased search engine marketing bringing more customers to the UK's web site, promotional activities with, for example, value for money flags being used throughout the customer journey to increase order conversion rates and targeted campaigns increasing customer order values. 

New revenue opportunities have been developed with the UK's flexible pricing offer, which satisfies larger customer orders at competitive prices, proving successful with customers using this service growing at more than double the rate of the rest of the business as a whole. 

Underlying gross margin was stable through the year. The business's success in developing new business through large customer accounts, new revenue streams and prior year electronics price repositioning, together with the effect of weaker Sterling resulted in a year on year decline in gross margin of 1.1% points.

The business has continued to focus on cost control and efficiency which has led to operating costs reducing by around 20% over the last five years.

This year, despite the significant increase in sales, operating costs have reduced by around £3m principally due to lower catalogue print volumes (in line with increasing online usage) and other print efficiencies, benefits from recent freight carrier changes and the warehouse site specialisation last year together with lower pension costs.

PROCESSES

	2011	2010	Change reported	Change underlying(1)
Process costs	£(128.2)m	£(111.5)m	(15.0)%	(14.6)%
Costs % of revenue	(10.9)%	(11.5)%

(1)        Adjusted for currency

The Groupwide Processes principally comprise Maintenance, Electronics, eCommerce, Supply Chain and Information Systems.  Between them these Processes have responsibility for the identification, introduction and sourcing of the Group's products, managing supplier relationships, developing the Group's eCommerce strategy and development, managing the Group's stock (both quantity and location) and the Group's worldwide IT infrastructure.

During the year, the Processes accelerated their activities delivering an increasing number of initiatives to support the delivery of the Group's strategy.

The Electronics division introduced 37,000 new products from strategic suppliers including Panasonic, Tyco Electronics, Texas Instruments and Analog Devices, and in July launched the Group's market leading online design tool for electronics engineers:  DesignSpark.  The Maintenance team has focused on growing markets introducing new Process, Control and Automation products and products required in renewable energy applications.  Across Europe the Maintenance offer was levelled up to create an unequalled and common offer across the entire region driving further sales growth.

The new leadership of the Group's eCommerce team has renewed the strategic focus on transforming the customer experience and placing eCommerce at the heart of our business and its sales and marketing strategies. The eCommerce team launched five new web sites during the year across South Korea, Switzerland, Poland, Hungary and the Czech Republic to support the Asia Pacific and European regional growth strategies.  During the year the team introduced a number of new and innovative applications.  These included the launch on the iPad of the Group's already popular eTech magazine for electronics design engineers.   This is an industry first, providing a new way to display product information with additional detail, images and video animation.  More recently, during April, we launched RS Partsfinder: an easy to use plug in browser enabling instant access to the RS database.  This provides an even easier mechanism for engineers to find, buy and design with the components that they need.

Supply Chain maintained the business's high service levels to customers whilst controlling stock and reducing costs as a percentage of sales. During the year, the team implemented market leading stock forecast and planning systems together with supporting team structures and managed changes to a number of freight providers and more recently the moving of the Shanghai, China warehouse to a new larger location.

The Group's Information Systems Process oversees and manages the Group's transactional systems and eCommerce platform.  During the year the team has also provided support and assistance to our North American business who are progressing with activities to implement its new SAP based ERP systems in the first half of calendar 2012.

Process costs as a percentage of sales reduced by 0.6 % points as the business benefited from the leveraging of the fixed cost base.  The continued investment in the implementation of the electronics and eCommerce strategies, together with increased variable costs associated with the strong International sales growth and new product introductions resulted in Process costs increasing by 14.6% at constant exchange rates.

TAXATION

The Group's effective tax rate was 31% of headline profit before tax, which was the same as the prior year.  The Group's current effective tax rate includes the effect of a significant and continuing increase in the deferred tax liability due to the tax amortisation of overseas goodwill.  This deferred tax liability is not expected to crystallise in the foreseeable future.  This combined with the impact of the phasing of tax payments means that the effective tax rate was significantly higher than the cash tax rate of 19%.

PENSION

The Group has defined benefit pension schemes in the UK, Ireland and Germany.  All these schemes are closed to new entrants and in Germany the pension scheme is closed to accruals for future service.

Under IAS 19, the combined gross deficit of the Group's defined benefit schemes was £5.4m at 31 March 2011. This balance comprised a £4.8m deficit in Germany, £0.4m deficit in the Republic of Ireland and £0.2m deficit in the UK.

The largest defined benefit scheme is in the UK where the accounting valuation as at 31 March 2011 disclosed a surplus of £24.9m, which was an improvement of £35.1m on last year.  This improvement was principally caused by reducing liabilities due to weaker mortality assumptions following a detailed review, increased discount rates and lower inflation assumptions together with actuarial gains caused by member experience and returns on assets being higher than expected.  The £24.9m surplus has not been recognised in the Group accounts, as per IFRIC14, which results in a small £0.2m deficit.

The triennial funding valuation of the UK defined benefit pension scheme as at 31 March 2010 has now been completed and disclosed a deficit of £1.6m.  A recovery plan has been agreed with the Pension Scheme Trustees and consequently the Group made £0.75m deficit recovery contributions to the pension scheme during the financial year ended 31 March 2011 and will make contributions of around £0.3m p.a. for the next four years.

CURRENT TRADING AND OUTLOOK

In the first seven weeks of the new financial year sales growth rates have remained strong at around 16% with the UK growing by 8% and the International business by 19%.  Within International, Continental Europe has grown by 20%, North America by 18% and Asia Pacific by 17%.

Whilst recognising the more demanding comparatives ahead, we believe that the progress the Group has made on its strategic priorities and the investment that we continue to make in our International markets, electronics and eCommerce initiatives positions us well to make good progress in the coming year.

Ian Mason, Group Chief Executive

Simon Boddie, Group Finance Director

27 May 2011

Group Income Statement

For the year ended 31 March 2011

		2011	2010
	Note	£m	£m
Revenue	1	1,182.2	972.6
Cost of sales		(625.8)	(504.5)
Gross profit		556.4	468.1
Distribution and marketing expenses		(427.6)	(379.2)
Administrative expenses		(9.0)	(8.1)
Operating profit		119.8	80.8
Financial income		3.0	1.5
Financial expenses		(8.8)	(6.3)
Profit before tax	1,2	114.0	76.0
Income tax expense	3	(35.8)	(23.4)
Profit for the year attributable to equity shareholders		78.2	52.6
Earnings per share - Basic	4	18.0p	12.1p
Earnings per share - Diluted	4	17.7p	12.0p
Earnings per share - Headline	4	18.0p	11.8p
Dividends
Amounts recognised in the period:
Final dividend for the year ended 31 March 2010	6	6.0p	6.0p
Interim dividend for the year ended 31 March 2011	6	5.0p	5.0p
		11.0p	11.0p
A final dividend of 6.5p per share relating to the year has been proposed since the period end.

Headline profit
Headline operating profit
Operating profit		119.8	80.8
Pension changes/reorganisation (income)	5	-	(1.6)
		119.8	79.2
Headline profit before tax
Profit before tax		114.0	76.0
Pension changes/reorganisation (income)	5	-	(1.6)
		114.0	74.4

Consolidated Statement of Comprehensive Income

For the year ended 31 March 2011

		2011	2010
		£m	£m
Profit for the year		78.2	52.6
Other comprehensive income
Foreign exchange translation differences		(5.8)	(7.5)
Actuarial gain (loss) on defined benefit pension schemes		31.7	(6.0)
Movement in unrecognised pension surplus		(25.1)	-
Gain on cash flow hedges		1.4	6.3
Taxation relating to components of other comprehensive income		(2.4)	0.2
Other comprehensive expense for the year		(0.2)	(7.0)
Total comprehensive income for the year		78.0	45.6

Group Balance Sheet

As at 31 March 2011

		2011	2010
	Note	£m	£m
Non-current assets
Intangible assets	8	202.6	215.8
Property, plant and equipment	9	114.1	117.5
Investments		0.7	0.6
Other receivables		4.1	3.8
Other financial assets	10	2.2	1.7
Deferred tax assets		9.3	9.9
		333.0	349.3
Current assets
Inventories		232.8	182.7
Trade and other receivables		215.9	182.6
Income tax receivables		1.1	1.9
Cash and cash equivalents	10	6.3	5.5
		456.1	372.7
Current liabilities
Trade and other payables		(207.8)	(166.8)
Loans and borrowings	10	(2.0)	(10.7)
Income tax liabilities		(14.5)	(13.1)
		(224.3)	(190.6)
Net current assets		231.8	182.1
Total assets less current liabilities		564.8	531.4
Non-current liabilities
Other payables		(11.5)	(9.6)
Retirement benefit obligations	7	(5.4)	(16.2)
Loans and borrowings	10	(167.2)	(168.3)
Other financial liabilities	10	-	(0.3)
Deferred tax liabilities		(45.4)	(33.9)
Net assets		335.3	303.1
Equity
Called-up share capital		43.6	43.5
Share premium account		38.8	38.7
Retained earnings		232.4	195.5
Cumulative translation reserve		23.6	29.5
Other reserves		(3.1)	(4.1)
Equity attributable to the shareholders of the parent		335.3	303.1

Group Cash Flow Statement

For the year ended 31 March 2011

		2011	2010
	Note	£m	£m
Cash flows from operating activities
Profit before tax		114.0	76.0
Depreciation and other amortisation		27.0	26.9
Equity-settled transactions		1.9	2.4
Finance income and expense		5.8	4.8
Non-cash movement on investment in associate		(0.1)	(0.1)
Non-recurring non-cash pension change		-	(4.8)
Operating cash flow before changes in working capital, interest and taxes		148.6	105.2
Increase in inventories		(51.2)	(3.7)
Increase in trade and other receivables		(34.0)	(17.5)
Increase in trade and other payables		43.5	30.5
Cash generated from operations		106.9	114.5
Interest received		3.0	1.5
Interest paid		(9.1)	(6.0)
Income tax paid		(21.5)	(21.7)
Net cash from operating activities		79.3	88.3
Cash flows from investing activities
Capital expenditure and financial investment		(22.1)	(16.4)
Proceeds from sale of property, plant and equipment		0.2	-
Net cash used in investing activities		(21.9)	(16.4)
Free cash flow		57.4	71.9
Cash flows from financing activities
Proceeds from the issue of share capital		0.2	-
New loans		76.8	24.7
Loans repaid		(85.4)	(45.3)
Equity dividends paid		(47.9)	(47.9)
Net cash used in financing activities		(56.3)	(68.5)
Net increase in cash and cash equivalents		1.1	3.4
Cash and cash equivalents at the beginning of the year		4.3	0.8
Effect of exchange rates on cash		0.2	0.1
Cash and cash equivalents at the end of the year	10	5.6	4.3

Consolidated Statement of Changes in Equity

For the year ended 31 March 2011

			Other reserves
	Share capital	Share Premium account	Hedging reserve	Own shares held	Cumulative translation	Retained earnings	Total
	£m	£m	£m	£m	£m	£m	£m
At 1 April 2010	43.5	38.7	(2.4)	(1.7)	29.5	195.5	303.1
Profit for the year	-	-	-	-	-	78.2	78.2
Foreign exchange translation differences	-	-	-	-	(5.8)	-	(5.8)
Actuarial gain on defined benefit pension schemes	-	-	-	-	-	31.7	31.7
Movement in unrecognised pension surplus	-	-	-	-	-	(25.1)	(25.1)
Gain on cash flow hedges	-	-	1.4	-	-	-	1.4
Taxation relating to components of other comprehensive income	-	-	(0.4)	-	(0.1)	(1.9)	(2.4)
Total comprehensive income	-	-	1.0	-	(5.9)	82.9	78.0
Equity-settled transactions	-	-	-	-	-	1.2	1.2
Dividends paid	-	-	-	-	-	(47.9)	(47.9)
Shares allotted in respect of share awards	0.1	0.1	-	-	-	-	0.2
Related tax movements	-	-	-	-	-	0.7	0.7
At 31 March 2011	43.6	38.8	(1.4)	(1.7)	23.6	232.4	335.3
At 1 April 2009	43.5	38.7	(6.9)	(1.7)	36.7	192.5	302.8
Profit for the year	-	-	-	-	-	52.6	52.6
Foreign exchange translation differences	-	-	-	-	(7.5)	-	(7.5)
Actuarial loss on defined benefit pension schemes	-	-	-	-	-	(6.0)	(6.0)
Gain on cash flow hedges	-	-	6.3	-	-	-	6.3
Taxation relating to components of other comprehensive income	-	-	(1.8)	-	0.3	1.7	0.2
Total comprehensive income	-	-	4.5	-	(7.2)	48.3	45.6
Equity-settled transactions	-	-	-	-	-	2.4	2.4
Dividends paid	-	-	-	-	-	(47.9)	(47.9)
Related tax movements	-	-	-	-	-	0.2	0.2
At 31 March 2010	43.5	38.7	(2.4)	(1.7)	29.5	195.5	303.1

Notes to the Preliminary Statement

For the year ended 31 March 2011

1. Analysis of income and expenditure

	2011	2010
	£m	£m
Revenue	1,182.2	972.6
Cost of sales	(625.8)	(504.5)
Distribution and marketing expenses	(308.4)	(277.4)
Headline contribution before Process costs	248.0	190.7
Distribution and marketing expenses within Process costs	(119.2)	(103.4)
Administrative expenses within Process costs	(9.0)	(8.1)
Group Process costs	(128.2)	(111.5)
Headline operating profit	119.8	79.2
Net financial expense	(5.8)	(4.8)
Headline profit before tax	114.0	74.4
Pension changes/reorganisation income
Distribution and marketing expenses	-	1.6
Profit before tax	114.0	76.0

Distribution and marketing expenses within headline contribution comprise local costs incurred relating to the selling and distribution of the Group's products, and are attributable to the region to which they relate.

Distribution and marketing expenses within Process costs comprise the identification, introduction and sourcing of the Group's products, managing supplier relationships, developing the Group's eCommerce strategy and development, managing the Group's stock (both quantity and location) and the Group's worldwide IT infrastructure.

2. Segmental reporting

In accordance with IFRS 8 Operating Segments, Group management has identified its operating segments.  The performance of these operating segments is reviewed, on a monthly basis, by the Group Chief Executive and the senior management team (the Group Executive Committee).

These operating segments are: the United Kingdom, Continental Europe, North America and Asia Pacific.  The United Kingdom comprises operations in the United Kingdom and exports to distributors where the Group does not have a local operating company.  Continental Europe comprises operations in France, Germany, Italy, Austria, Denmark, Norway, Sweden, Republic of Ireland, Spain, Switzerland, the Netherlands, Belgium, Poland, Hungary and the Czech Republic.  North America comprises operations in the United States of America and Canada.  Asia Pacific comprises operations in Japan, Australia, New Zealand, Singapore, Malaysia, Philippines, Thailand, Hong Kong, Taiwan, People's Republic of China, South Korea, Chile and South Africa.

Each reporting segment derives its revenue from the high service level distribution of electronics and maintenance products.

Intersegment pricing is determined on an arm's length basis, comprising sales of product at cost and a handling charge included within Distribution and Marketing expenses.

During the period the Group reviewed the allocation of costs associated with its component and production packaging offering.  As a result, costs of £3.3m for the year ended 31 March 2010 which were previously charged in the UK where the work was undertaken have been reallocated to the reporting segments where the products were sold.  This reallocation has no affect on any of the Group profit measures.

			2011 £m	2010 £m
Revenue from external customers
	United Kingdom		356.3	317.7
	Continental Europe		413.6	350.0
	North America		262.3	191.5
	Asia Pacific		150.0	113.4
			1,182.2	972.6

			2011	Restated 2010
			£m	£m
Headline contribution
	United Kingdom		101.7	83.5
	Continental Europe		90.5	75.8
	North America		42.5	24.9
	Asia Pacific		13.3	6.5
	Headline contribution		248.0	190.7
Reconciliation of headline contribution to profit before tax
	Headline contribution		248.0	190.7
	Group Process costs		(128.2)	(111.5)
	Net financial expense		(5.8)	(4.8)
	Headline profit before tax		114.0	74.4
	Pension changes/reorganisation income		-	1.6
	Profit before tax		114.0	76.0

			2011	2010
			£m	£m
Segment assets
	United Kingdom		259.3	232.5
	Continental Europe		171.8	148.3
	North America		263.3	259.5
	Asia Pacific		75.8	62.7
	Segmental assets		770.2	703.0
	Unallocated assets
	Cash at bank and in hand		6.3	5.5
	Deferred tax assets		9.3	9.9
	Income tax assets		1.1	1.9
	Other financial assets		2.2	1.7
	Total assets		789.1	722.0

			2011	2010
			£m	£m
Segment liabilities
	United Kingdom		116.6	105.9
	Continental Europe		63.0	51.2
	North America		21.1	16.3
	Asia Pacific		24.0	19.2
	Segmental liabilities		224.7	192.6
	Unallocated liabilities
	Income tax liabilities		14.5	13.1
	Deferred tax liabilities		45.4	33.9
	Loans and overdrafts		169.2	179.0
	Other financial liabilities		-	0.3
	Total liabilities		453.8	418.9

The Group derives its revenue from two product types:

	2011	2010
	£m	£m
Electronics	489.3	373.0
Maintenance	692.9	599.6
	1,182.2	972.6

3. Income tax expense

	2011	2010
	£m	£m
United Kingdom taxation	8.8	5.4
Overseas taxation	27.0	18.0
Total income tax expense in income statement	35.8	23.4
Profit before tax	114.0	76.0
Effective tax rate	31%	31%
Effective tax rate - Headline	31%	31%

4. Earnings per share

	2011	2010
	£m	£m
Profit for the year attributable to equity shareholders	78.2	52.6
Pension changes/reorganisation (income)	-	(1.6)
Tax impact of pension changes/reorganisation	-	0.5
Headline profit for the year attributable to equity shareholders	78.2	51.5
Weighted average number of shares (million)	435.3	435.1
Earnings per share - Basic	18.0p	12.1p
Earnings per share - Diluted	17.7p	12.0p
Earnings per share - Headline	18.0p	11.8p

5. Pension changes/reorganisation (income) costs

Pension changes/reorganisation (income) costs arising in the year are as follows:

	2011	2010
	£m	£m
Redundancy costs	-	0.2
Pension scheme changes and curtailment	-	(1.9)
Other initiatives	-	0.1
	-	(1.6)

Pension scheme changes in 2010 represented a curtailment gain of £1.8m and a settlement gain of £3.0m for the German pension scheme (non-recurring non-cash pension changes).  These were partially offset by a Company cash payment of £2.9m to members to settle a proportion of the scheme's liabilities resulting in a net accounting credit of £1.9m.

6. 2011 final dividend

The timetable for the payment of the proposed final dividend is:

Ex-dividend date	22 June 2011
Record date	24 June 2011
Annual General Meeting	15 July 2011
Dividend payment date	22 July 2011

A final dividend of 6.5p per share relating to the year has been proposed since the period end.

7. Pension schemes

The principal assumptions used in the valuations of the liabilities of the Group's schemes were:

	2011 United Kingdom	Germany	Republic of Ireland	2010 United Kingdom	Germany	Republic of Ireland
Discount rate	5.50%	5.00%	5.00%	5.40%	4.60%	4.60%
Rate of increase in salaries	2.55%	3.00%	3.00%	2.55%	3.00%	3.00%
Rate of increase of pensions in payment	3.20%	2.00%	2.00%	3.30%	2.00%	2.00%
Inflation assumption	3.30%	2.00%	2.00%	3.40%	2.00%	2.00%

The expected long term rates of return on the schemes' assets as at 31 March 2011 were:

	2011 United Kingdom	Germany	Republic of Ireland	2010 United Kingdom	Germany	Republic of Ireland
Equities	7.40%	n/a	7.50%	7.50%	n/a	7.50%
Corporate bonds	5.00%	n/a	n/a	4.75%	n/a	n/a
Government bonds	3.90%	n/a	4.00%	4.00%	n/a	4.00%
Diversified growth funds	6.90%	n/a	n/a	7.00%	n/a	n/a
Enhanced matching funds	3.80%	n/a	n/a	3.70%	n/a	n/a
Hedge funds	n/a	n/a	n/a	7.50%	n/a	n/a
Credit funds	6.50%	n/a	n/a	6.50%	n/a	n/a
Cash	0.00%	n/a	n/a	0.00%	n/a	n/a
Other	n/a	n/a	3.50%	n/a	n/a	3.37%

Based upon the demographics of scheme members, the weighted average life expectancy assumptions used to determine benefit obligations were:

	2011 United Kingdom Years	Germany Years	Republic of Ireland Years
Member aged 65 (current life expectancy) - male	21.1	18.8	21.9
Member aged 65 (current life expectancy) - female	23.1	22.9	24.1
Member aged 45 (life expectancy at aged 65) - male	23.3	22.1	24.4
Member aged 45 (life expectancy at aged 65) - female	25.7	26.1	26.6

The net (income) costs recognised in the Income Statement were:

	2011 UK £m	Germany £m	Republic of Ireland £m	Total £m	2010 UK £m	Germany £m	Republic of Ireland  £m	Total £m
Current service cost	4.5	0.1	0.1	4.7	3.6	-	0.1	3.7
Interest cost	16.9	0.2	0.2	17.3	15.2	0.4	0.2	15.8
Effect of curtailment	-	-	-	-	-	(1.8)	-	(1.8)
Effect of settlement	-	-	-	-	-	(3.0)	-	(3.0)
Expected return on assets	(19.7)	-	(0.2)	(19.9)	(14.9)	-	(0.1)	(15.0)
Total Income Statement  charge (credit)	1.7	0.3	0.1	2.1	3.9	(4.4)	0.2	(0.3)

The valuations of the assets of the schemes as at 31 March were:

	2011 United Kingdom £m	Germany £m	Republic of Ireland £m	2010 United Kingdom £m	Germany £m	Republic of Ireland £m
Equities	103.6	n/a	2.2	86.8	n/a	2.0
Corporate bonds	18.4	n/a	1.0	17.4	n/a	-
Government bonds	6.5	n/a	-	6.1	n/a	0.4
Diversified growth funds	139.1	n/a	-	126.7	n/a	-
Enhanced matching funds	41.0	n/a	-	37.5	n/a	-
Hedge funds	-	n/a	-	15.8	n/a	-
Credit funds	12.9	n/a	-	12.2	n/a	-
Cash	1.3	n/a	-	2.1	n/a	-
Other	-	n/a	0.1	-	n/a	0.4
Total market value of assets	322.8	-	3.3	304.6	-	2.8

 No amount is included in the market value of assets relating to either financial instruments or property occupied by the Group.

The amount included in the balance sheet arising from the Group's obligations in respect of its defined benefit pension schemes was:

	2011 UK £m	Germany £m	Republic of Ireland £m	Total Valuation £m	2010 UK £m	Germany £m	Republic of Ireland £m	Total Valuation £m
Total market value of assets	322.8	-	3.3	326.1	304.6	-	2.8	307.4
Present value of schemes' liabilities	(297.9)	(4.8)	(3.7)	(306.4)	(314.8)	(5.2)	(3.6)	(323.6)
Schemes' surplus/ (deficit)	24.9	(4.8)	(0.4)	19.7	(10.2)	(5.2)	(0.8)	(16.2)
Unrecognised pension surplus	(25.1)	-	-	(25.1)	-	-	-	-
Schemes' adjusted deficit	(0.2)	(4.8)	(0.4)	(5.4)	(10.2)	(5.2)	(0.8)	(16.2)

As at 31 March 2011 the UK defined benefit pension scheme reported a surplus of £24.9m (2010: £10.2m deficit). In accordance with the requirements of IAS 19 Employee benefits the company has not recognised this pension surplus in its financial statements.

Sensitivity analysis of the impact of changes in key IAS 19 assumptions

Effect on obligation of a 0.1% increase to the assumed discount rate	Liabilities reduce by £6.0m
Effect on obligation of a 0.1% increase to the assumed inflation rate	Liabilities increase by £4.4m
Effect on obligation of an assumed increase in one year's life expectancy	Liabilities increase by £6.5m

8. Intangible assets

			Other
	Goodwill	Software	intangibles	Total
Cost	£m	£m	£m	£m
At 1 April 2010	172.2	126.6	0.3	299.1
Additions	-	11.4	-	11.4
Translation differences	(8.5)	0.2	-	(8.3)
At 31 March 2011	163.7	138.2	0.3	302.2
Amortisation
At 1 April 2010		83.2	0.1	83.3
Charged in the year		16.0	-	16.0
Translation differences		0.3	-	0.3
At 31 March 2011		99.5	0.1	99.6
Net book value
At 31 March 2011	163.7	38.7	0.2	202.6
At 31 March 2010	172.2	43.4	0.2	215.8

9. Property, plant and equipment

	Land and	Plant and	Computer
	buildings	machinery	systems	Total
Cost	£m	£m	£m	£m
At 1 April 2010	113.2	123.8	68.8	305.8
Additions	0.6	4.8	3.6	9.0
Disposals	(0.3)	(2.5)	(2.3)	(5.1)
Translation differences	(1.0)	(0.4)	(0.1)	(1.5)
At 31 March 2011	112.5	125.7	70.0	308.2
Depreciation
At 1 April 2010	30.3	100.3	57.7	188.3
Charged in the year	2.3	5.6	3.1	11.0
Disposals	(0.3)	(2.4)	(2.3)	(5.0)
Translation differences	(0.1)	(0.1)	-	(0.2)
At 31 March 2011	32.2	103.4	58.5	194.1
Net book value
At 31 March 2011	80.3	22.3	11.5	114.1
At 31 March 2010	82.9	23.5	11.1	117.5

10. Cash and cash equivalents / net debt

	2011	2010
	£m	£m
Bank balances	4.4	4.5
Call deposits and investments	1.9	1.0
Cash and cash equivalents in the balance sheet	6.3	5.5
Bank overdrafts	(0.7)	(1.2)
Cash and cash equivalents in the cash flow statement	5.6	4.3
Current instalments of bank loans	(1.3)	(9.5)
Bank loans repayable after more than one year	(71.4)	(143.6)
Private Placement Notes @ 4.41% due 2015	(41.0)	(10.6)
Private Placement Notes @ 5.14% due 2017	(54.8)	(14.1)
Fair value of swaps hedging fixed rate borrowings	2.2	1.4
Net debt	(160.7)	(172.1)

Analysis of movement in net debt			2011	2010
			£m	£m
Net debt at 1 April 2010			(172.1)	(203.2)
Free cash flow			57.4	71.9
Equity dividends paid			(47.9)	(47.9)
New shares issued			0.2	-
New finance leases			(1.3)	-
Translation differences			3.0	7.1
Net debt at 31 March 2011			(160.7)	(172.1)

11. Principal exchange rates

	2011	2011	2010	2010
	Average	Closing	Average	Closing
United States Dollar	1.56	1.60	1.60	1.52
Euro	1.18	1.13	1.13	1.12

12.  Basis of preparation

Electrocomponents plc (the "Company") is a company domiciled in England.  The Group accounts for the year ended 31 March 2011 comprise the Company and its subsidiaries (together referred to as the "Group") and the Group's interest in a jointly controlled entity.  Subsidiaries are entities controlled by the Company.  All significant subsidiary accounts are made up to 31 March and are included in the Group accounts.  Further to the IAS Regulation (EC 1606/2002) the Group accounts have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted for use by the EU ("adopted IFRS").

The accounts were authorised for issue by the Directors on 27 May 2011.

The accounts are presented in £ Sterling and rounded to £0.1m.  They are prepared on the historical cost basis and adopt the going concern basis.

The preparation of accounts in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses.   The estimates and associated assumptions are based on historical experience and various other factors believed to be reasonable, under the circumstances, the results of which form the basis of making the judgements about carrying values and liabilities that are not readily apparent from other sources.   Actual results may differ from these estimates.

The financial information set out above does not constitute the Group's statutory accounts for the years ended 31 March 2011 or 2010.  Statutory accounts for 2010 have been delivered to the Registrar of Companies, and those for 2011 will be delivered in due course.  The auditors have reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006 in respect of the accounts for 2010 and 2011.

Copies of the Annual Report and Accounts for the year ended 31 March 2011 will be available from 15 June 2011 from the Company Secretary, Electrocomponents plc, International Management Centre, 8050 Oxford Business Park North, Oxford OX4 2HW, United Kingdom.  Telephone [phone].  The Report will also be published on the Corporate web site at www.electrocomponents.com.

The Annual General Meeting will be held at Electrocomponents plc, International Management Centre, 8050 Oxford Business Park North, Oxford OX4 2HW, United Kingdom on Friday 15 July 2011 at 12.00.

Safe Harbour:

This preliminary statement contains certain statements, statistics and projections that are or may be forward-looking. The accuracy and completeness of all such statements including, without limitation, statements regarding the future financial position, strategy, projected costs, plans and objectives for the management of future operations of Electrocomponents plc and its subsidiaries is not warranted or guaranteed. These statements typically contain words such as "intends", "expects", "anticipates", "estimates" and words of similar import. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. Although Electrocomponents plc believes that the expectations reflected in such statements are reasonable, no assurance can be given that such expectations will prove to be correct. There are a number of factors, which may be beyond the control of Electrocomponents plc, which could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements.  Other than as required by applicable law or the applicable rules of any exchange on which our securities may be listed, Electrocomponents plc has no intention or obligation to update forward-looking statements contained herein.

 

END

 

 

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