Interim Results
Electrocomponents PLC
9 November 1999
INTERIM RESULTS
Electrocomponents plc, the major electronic, electrical and industrial
supplies distribution Group, today announces its results for the half year
ended 30 September 1999.
Allied Electronics was acquired on 2 July and its results have been
consolidated for the 3 months since that date. The highlights of the Group
results are:
Sales £350.1m up 6.0%
Operating profit* £52.5m up 4.6%
Profit before tax* £52.4m down 1.9%
Earnings per share* 8.6p up 1.2%
Dividend per share 3.7p up 13.8%
Net debt £95.7m
* Before amortisation of goodwill arising from the Allied acquisition.
Commenting on the results, Mr Roy Cotterill, Chairman said:
'Trading has improved in recent weeks in the RS businesses in the UK and the
rest of Europe, whilst Asia continues to recover. Allied is making very good
progress and the response to our second catalogue in Japan has been
encouraging. Though economic uncertainties have not disappeared and Sterling
continues to be strong, we look forward with more confidence than would have
been appropriate six months ago.'
9 November 1999
Enquiries:
Roy Cotterill, Chairman Electrocomponents plc 0171 5678000*
Bob Lawson, Chief Executive Electrocomponents plc 0171 5678000*
Jeff Hewitt, Finance Director Electrocomponents plc 0171 5678000*
Diana Soltmann Millbank Public Relations 0171 4362100
* Available to 17:00 on 9 November, thereafter 01865 204000.
STATEMENT BY THE CHAIRMAN ON THE INTERIM RESULTS
The consistent long term strategy of Electrocomponents has been to build
leadership worldwide in high service distribution of critical components to
technical users.
In this half year major steps forward have been taken which put us in a
position to become a unique and truly global company. After maintaining a
watching brief in the United States for several years, in July we acquired
Allied Electronics which gives us a substantial presence in the largest
distribution market in the world. Since acquisition the progress of Allied
has been very good and I am sure that both parts of the organisation will
benefit and gain strength from each other.
Our strategic alliance with Avnet, the previous owner of Allied and the
largest volume distributor of electronic components in the world, is beginning
to take form and will initially be focused on semiconductors in Europe.
In early March we began trading in Japan, the second largest distribution
market in the world. We have made excellent progress in establishing a
quality customer base that is attracted to the RS offer and performance is
ahead of plan.
In addition our internet activities continue to excite interest and trading
via this medium has become significant. We are working closely with relevant
customers to make the internet a powerful business to business trading tool.
The trends experienced in the second half of last year persisted into this
year and our major markets remained difficult for much of the first half.
Including Allied for three months, sales increased by 6.0% over the first half
of last year to £350.1m; operating profit (before £2.7m amortisation of
goodwill arising from the Allied acquisition) increased 4.6% to £52.5m.
Without the Allied contribution, sales declined 2.0% adjusted for trading days
and at constant exchange rates, whilst operating profit declined 4.0%. Profit
before tax and before amortisation of goodwill declined 1.9% to £52.4m, but
after a lower tax rate, earnings per share increased 1.2% to 8.6p. Including
goodwill amortisation, profit before tax was £49.7m and earnings per share
8.0p.
Following our launch in Japan, the planned investment resulted in losses of
£3.5m. These were £2.4m higher than in the first half of last year, which
accounted for the overall decline in operating profit before the inclusion of
Allied. In the rest of the Group, sales growth with margin improvement in
Europe and Asia offset profit reduction due to lower RS and Pact sales in the
UK. Process costs were held after several years when investment in the
Groupwide processes grew faster than sales. Cash management has been strong
and the debt incurred by the $380m acquisition of Allied is reducing ahead of
expectations.
Your Board continues to have confidence in the prospects of the Group, this
being reflected in the 13.8% increase in the interim dividend to 3.70 pence.
In view of its limited use by shareholders your Board has decided to terminate
the dividend reinvestment plan with immediate effect.
Although our major markets have been unhelpful for quite a long period we have
not diverted from our long term strategy and continue to make the investments
that improve our future potential. Sustained investments in our people and in
systems are all aimed at improving further our service to customers.
Just a few days before he was due to retire, Ron Artus very sadly died at his
London home. His contribution to this Board and to its Committees was
enormous and we will miss his extraordinary wit and friendship. We again send
our condolences to Joan his wife, and to all his family.
During this half-year we were delighted to welcome Keith Hamill to the Board
as a non-executive director. Keith is Group Finance Director of WH Smith Group
PLC and has joined the Audit, Remuneration and Nomination Committees.
Trading has improved in recent weeks in the RS businesses in the UK and the
rest of Europe, whilst Asia continues to recover. Allied is making very good
progress and the response to our second catalogue in Japan has been
encouraging. Though economic uncertainties have not disappeared and Sterling
continues to be strong, we look forward with more confidence than would have
been appropriate six months ago.
Roy Cotterill, Chairman
9 November 1999
STATEMENT BY THE CHIEF EXECUTIVE ON THE INTERIM RESULTS
The short term progress of the Group has reflected the trends seen in the
second half of the previous financial year.
Sales in RS UK declined by 6% to £196m but there has been a gentle improvement
in trend in the last two months. The product range has continued to be
refined and grew by 2% year on year though the underlying increase was higher.
The July paper catalogue format has been reworked to enable those customers
who prefer this medium to use it more easily and early feedback is favourable.
The size of the customer base has been stable, but as in the prior year the
move towards strengthening our position in the service sector has continued.
Our service level to customers remains unmatched within the industry. Our
productivity has continued to improve as a result of adopting more effective
working practices. The UK market has remained tough and hence we have
continued to stimulate demand by focused marketing initiatives. Beyond our
normal support for customers these have included developing information
technology solutions in the workplace and meeting the specific requirements of
maintenance engineers.
International sales have increased by 36% to £131m including Allied for 3
months. On a like for like basis, sales have increased by 8% at constant
rates, day adjusted and excluding Allied.
In France, the slowdown during the first three months of the calendar year
continued with adjusted growth of 7%. Recently the sales growth trend has
improved, but it is not yet possible to identify a firm trend. However, we
now offer 71,000 products to the market, active customers have grown by 10%
and the economies of scale are now becoming evident with a further increase in
the contribution margin. The growth in active customers is perhaps the best
indicator of future prospects.
In Germany, which we believe to be our largest potential market in Europe, we
now offer 65,000 products and sales are up by 11% (adjusted). More
importantly, the customer base has increased by 17% and the service level has
been markedly improved by the full introduction of cross border fulfilment.
The latter has the additional advantage of deferring the need for a new
warehouse.
In Italy sales increased by 10% (adjusted) and substantial changes in the
product range have taken place to target the offer on the specific needs of
the Italian customer. Active customers in Italy have grown by 11% and, as
with Germany, the benefits of cross border fulfilment are flowing through to
improved customer satisfaction.
In the other European markets, Benelux grew by 25% (adjusted) and Spain by 18%
(adjusted), while our operation in Denmark has been transformed into a hub to
serve the Scandinavian markets. Scandinavia had a more difficult half year,
but continues to offer good potential.
The South African business, based in Johannesburg is now growing strongly at
over 50% (adjusted), giving leadership in the market. A trade counter will be
opened in Cape Town by the end of this financial year.
Exports declined by 6% (adjusted), reflecting the continuing strength of
Sterling and weakness in the markets of the Middle East.
Asia remains a region of strategic investment. Hong Kong and China achieved
adjusted growth of 9% with a strong advance in China, but continued weakness
in Hong Kong. The prospects remain large and exciting in China. South Asia
grew by 28% (adjusted), reflecting our increased penetration of the market and
the region's economic recovery.
Tough market conditions together with internal disruption due to moving the
main office from Perth to Sydney resulted in flat sales in Australia.
The new Japanese operation has exceeded our expectations in its first six
months and is achieving growth rates higher than any of our previous
greenfield start-ups. The trading relationship with customers has the
characteristics of the RS model with regular orders averaging over £80. The
second catalogue has been launched on schedule in September with 27,000
products and has provided a further stimulus to sales and new customer growth.
Allied Electronics, acquired from Avnet has exceeded our expectations in its
first quarter under Electrocomponents ownership with a sales growth of nearly
11% on a like for like basis. More importantly, our pre-acquisition
perception of a strong and effective company with a shared strategic vision
has been confirmed. Specific actions delivered during our brief ownership
are:
a) The launch of a market-leading Internet site, combined with a CD-ROM that
enables customers to merge rich graphic data from the CD with variable data
such as price and availability on line. Customers have acclaimed this
functionality.
b) Two additional sales offices have been opened with more to follow.
c) Warehouse capacity has been expanded by 40% to enable the company to cope
with anticipated customer demand and enhance customer service standards.
Morale and enthusiasm within Allied is at a high level, as we jointly begin to
think through and to develop the opportunities available to the enlarged
Group.
The strategic alliance with Avnet, one of the world's largest electronic
component distributors, is continuing to evolve. Our focus at this time is to
develop the systems interfaces that will be key to enabling the alliance to
serve customers effectively. We will launch to market in the first half of the
next calendar year.
Internet Trading has wide ranging strategic opportunities for the Group and
already represents nearly 2% of RS UK sales. The site continues to develop
additional portals for specific customer segments. For our larger customers,
RS is piloting Internet-based purchasing processes that will offer significant
efficiencies, but as always such initiatives have to be underpinned by
exemplary customer service. The geographic roll out is continuing and all
major Group operations will have Internet functionality within 12 months.
Pact experienced a sales decline of 8% (adjusted) and margins came under
pressure in a difficult retail market.
As the Group has developed its geographic network, it has become evident that
the provision and sharing of knowledge is a strategic weapon. Accordingly, we
are beginning the first phase of a major initiative to implement an
information-rich enterprise business system which will be underpinned by
consistent databases for customers, suppliers and products. The provision of
this and its effective deployment will enable the Group to provide an
unequalled mix of products, services and information to customers wherever
they may be.
Year 2000 Readiness
As anticipated in our 1999 Annual Report, the Group's Year 2000 fix and test
programmes were substantially complete by the end of the half-year. Some non
critical systems remain to be tested, but no operational difficulties are
anticipated. Allied has also tested all its separate information systems and
embedded components and a fully integrated order to despatch test is scheduled
shortly.
Surveys of customer preparedness are carried out regularly. Readiness and
concern varies by country and this has influenced our local preparations. In
general the Group will be trading as normal over the millennium period whilst
for certain customers our capability to support unexpected needs forms part of
their contingency planning.
We continue to monitor the compliance of our product range. Effective
procedures are in place to notify our customers of any instance where
suppliers alter their compliance statements and to offer an appropriate
remedy.
Supplier reviews have been carried out over a considerable period and we have
addressed concerns over availability of key products by bringing forward our
purchasing schedule. At the half-year these actions increased stocks by about
£6m. Non-product related suppliers have also been reviewed.
The Group will have a control centre operating over the millennium period to
manage any unforeseen difficulties that might arise and help ensure business
continuity.
The Group has contingency plans to reduce major risks over critical periods,
but there can be no absolute assurance that the impact of Year 2000 issues on
the Group's business will not be significant and have a material effect on the
Group given the interdependencies on numerous third parties.
As estimated last year, the Group's direct spend on Year 2000 issues amounts
to approximately £3.6m. Almost all of this expenditure has now taken place,
with £1m being expended in the first half. The spend in Allied was minimal.
Summary
Our markets have remained tough through the first half but the Group has
remained singularly focused on the attainment of its strategic objectives and
invested accordingly. As a management team, we remain confident of the medium
term objectives as we work towards achieving global leadership in our chosen
segment.
Bob Lawson, Chief Executive
9 November 1999
GROUP RESULTS
6 months to 6 months to Year to
30.09.99 30.09.98 31.03.99
Note (unaudited) (unaudited) (audited)
£m £m £m
Turnover
Existing operations 324.5 330.3 677.1
Acquisitions 25.6 - -
_______ _______ _______
1 350.1 330.3 677.1
======= ======= =======
Operating profit
Existing operations 48.2 50.2 106.0
Acquisitions
- before amortisation of 4.3 - -
goodwill
- amortisation of 6 (2.7) - -
goodwill
_______ _______ _______
1 49.8 50.2 106.0
Net interest (payable) (0.1) 3.2 6.4
receivable
Profit on ordinary 49.7 53.4 112.4
activities before
taxation
------------------------------------------------------------------------------
Profit before taxation 52.4 53.4 112.4
and amortisation of
goodwill
------------------------------------------------------------------------------
Taxation on profit on 2 (15.2) (17.1) (36.0)
ordinary activities
_______ _______ _______
Profit on ordinary 34.5 36.3 76.4
activities after taxation
Interim dividend (16.0) (13.9) (13.9)
Final dividend - - (31.2)
_______ _______ _______
Retained profit for the 18.5 22.4 31.3
period
======= ======= =======
Recognised gains and
losses
Profit for the period 34.5 36.3 76.4
Translation differences (7.5) - -
- goodwill
Translation differences - 2.1 3.8 1.7
other
_______ _______ _______
Total recognised gains 29.1 40.1 78.1
and losses relating to
the period
======= ======= =======
Per share information
Basic earnings per share
Before amortisation of 3 8.6p 8.5p 17.8p
goodwill
After amortisation of 3 8.0p 8.5p 17.8p
goodwill
======= ======= ======
Dividend per share
Interim 4 3.70p 3.25p 3.25p
Final - - 7.25p
======= ======= =======
Turnover and operating profit relate exclusively to continuing operations.
The reconciliation of movements in shareholders' funds is at note 8.
GROUP BALANCE SHEET
Note 30.09.99 30.09.98 31.03.99
(unaudited) (unaudited) (audited)
£m £m £m
Fixed assets
Intangible fixed assets - 6 204.6 - -
goodwill
Tangible fixed assets 132.2 130.3 129.7
Investments 0.1 0.2 0.3
______ ______ ______
336.9 130.5 130.0
______ ______ ______
Current assets
Stocks 153.3 136.7 129.5
Debtors 149.7 136.3 145.1
Short-term investment 15.4 79.6 91.2
deposits
Cash at bank and in hand 20.2 34.4 33.3
______ ______ ______
338.6 387.0 399.1
Creditors: amounts falling (163.7) (144.6) (157.2)
due within one year
______ _______ _______
Net current assets 174.9 242.4 241.9
______ _______ _______
Total assets less current 511.8 372.9 371.9
liabilities
Creditors: amounts falling (130.9) (14.7) (6.5)
due after more than one year
Provisions for liabilities (12.3) (12.4) (12.1)
and charges
______ _______ _______
368.6 345.8 353.3
====== ======= =======
Capital and reserves
Called-up share capital 43.2 43.0 43.1
Share premium account 24.8 17.7 22.7
Profit and loss account 300.6 285.1 287.5
______ ______ _______
Equity shareholders' funds 8 368.6 345.8 353.3
====== ====== =======
GROUP CASH FLOW STATEMENT
Note 6 months to 6 months to Year to
30.09.99 30.09.98 31.03.99
(unaudited) (unaudited) (audited)
£m £m £m
Net cash inflow from 63.5 45.7 122.0
operating activities
Returns on investments and 2.1 3.2 5.9
servicing of finance
Taxation (6.3) (3.8) (40.3)
Capital expenditure and (9.9) (8.4) (18.3)
financial investment
______ ______ ______
Free cash flow 49.4 36.7 69.3
Acquisitions (241.6) - -
Equity dividends paid (31.2) (25.1) (39.0)
______ ______ ______
Cash inflow before use of (223.4) 11.6 30.3
liquid resources and
financing
Management of liquid 75.9 (14.8) (27.1)
resources
Financing
Shares 2.2 1.6 2.3
Loans 131.4 0.9 1.3
_______ ______ ______
(Decrease) increase in cash 9 (13.9) (0.7) 6.8
======= ====== ======
Reconciliation of operating
profit to net cash inflow
from operating activities
Operating profit 49.8 50.2 106.0
Depreciation and 9.7 9.3 19.9
amortisation
Amortisation of goodwill 2.7 - -
(Increase) in stocks (8.5) (8.2) (1.2)
Decrease in debtors 5.2 8.3 0.2
Increase (decrease) in 4.6 (13.9) (2.6)
creditors
______ ______ ______
Continuing operations 63.5 45.7 122.3
Cash flow in respect of - - (0.3)
prior year closures
______ ______ ______
Net cash inflow from 63.5 45.7 122.0
operating activities
======= ====== ======
NOTES TO THE INTERIM STATEMENT
6 months to 6 months to Year to
30.09.99 30.09.98 31.03.99
(unaudited) (unaudited) (audited)
£m £m £m
1 Segmental analysis
By class of business
Turnover
RS/Allied 327.0 305.2 621.2
Pact 23.1 25.1 55.9
_____ ______ _____
350.1 330.3 677.1
===== ====== =====
Operating profit
RS/Allied 79.7 76.1 158.8
Pact - 0.9 2.8
_____ ______ _____
Contribution - before 79.7 77.0 161.6
amortisation of goodwill
Groupwide process costs (27.2) (26.8) (55.6)
Amortisation of goodwill* (2.7) - -
_____ ______ _____
49.8 50.2 106.0
===== ====== =====
Net assets
RS/Allied 302.6 296.2 283.0
Pact 20.6 17.8 19.3
_____ _____ _____
Net operating assets 323.2 314.0 302.3
Net (debt) funds (95.7) 102.2 120.6
Unallocated net assets (liabilities) 141.1 (70.4) (69.6)
_____ _____ _____
368.6 345.8 353.3
===== ===== =====
Unallocated net assets
(liabilities) comprise:
Intangible fixed assets - goodwill* 204.6 - -
Investments - own shares - 0.1 -
Corporation tax (35.2) (44.2) (26.3)
Proposed dividend (16.0) (13.9) (31.2)
Provisions for liabilities and (12.3) (12.4) (12.1)
charges
_____ ______ _____
141.1 (70.4) (69.6)
===== ====== =====
* Goodwill relates to the acquisition of Allied Electronics Inc.
6 months to 6 months to Year to
30.09.99 30.09.98 31.03.99
(unaudited) (unaudited) (audited)
£m £m £m
By geographical destination
Turnover
United Kingdom 219.4 234.1 471.0
Rest of Europe 84.2 78.0 170.3
North America 25.6 - -
Japan 0.7 - -
Rest of World 20.2 18.2 35.8
_____ _____ _____
350.1 330.3 677.1
===== ===== =====
By geographical origin
Turnover
United Kingdom 225.0 239.9 482.8
Rest of Europe 82.5 76.4 166.6
North America 25.6 - -
Japan 0.7 - -
Rest of World 16.3 14.0 27.7
_____ _____ _____
350.1 330.3 677.1
===== ===== =====
Operating profit
United Kingdom 64.2 67.4 136.2
Rest of Europe 13.0 10.5 26.9
North America 4.8 - -
Japan (3.5) (1.1) (4.0)
Rest of World 1.2 0.2 2.5
_____ _____ _____
Contribution 79.7 77.0 161.6
Groupwide process costs (27.2) (26.8) (55.6)
Amortisation of goodwill* (2.7) - -
_____ _____ _____
49.8 50.2 106.0
===== ===== =====
* Goodwill relates to the acquisition of Allied Electronics Inc.
6 months to 6 months to Year to
30.09.99 30.09.98 31.03.99
(unaudited) (unaudited) (audited)
£m £m £m
By geographical location
Net assets
United Kingdom 226.9 243.2 224.9
Rest of Europe 45.1 56.2 51.5
North America 25.5 - -
Japan 3.8 - 2.7
Rest of World 21.9 14.6 23.2
_____ _____ _____
Net operating assets 323.2 314.0 302.3
Net (debt) funds (95.7) 102.2 120.6
Unallocated net assets 141.1 (70.4) (69.6)
(liabilities) _____ _____ _____
368.6 345.8 353.3
===== ===== =====
2 Taxation on the profit of the
Group
United Kingdom taxation 12.6 15.1 30.3
Overseas taxation 2.6 2.0 5.7
____ _____ _____
15.2 17.1 36.0
===== ===== =====
3 Earnings per share
6 months to 6 months to Year to
30.09.99 30.09.98 31.03.99
(unaudited) (unaudited) (audited)
£m £m £m
Profit on ordinary activities 34.5 36.3 76.4
after taxation
Amortisation of goodwill 2.7 - -
______ _____ _____
Profit on ordinary activities 37.2 36.3 76.4
after taxation and before goodwill
_______ _____ _____
Weighted average number of shares 430.5m 428.7m 429.4m
______ ______ _____
Basic earnings per share
Before amortisation of goodwill 8.6p 8.5p 17.8p
After amortisation of goodwill 8.0p 8.5p 17.8p
______ ______ ______
4 Interim dividend
The timetable for the payment of the interim dividend is:
Ex-dividend date 13 December 1999
Dividend record date 17 December 1999
Dividend payment date 24 January 2000
5 Acquisition of Allied Electronics Inc.
Book value at Fair value Provisional
acquisition adjustments fair value
Note £m £m £m
Tangible fixed assets 2.8 - 2.8
Stocks 17.8 (0.9) 16.9
Debtors 12.9 - 12.9
Creditors: amounts (5.8) - (5.8)
falling due within one
year
_____ _____ _____
Fair value of net 27.7 (0.9) 26.8
assets acquired
===== =====
Goodwill acquired 6 214.8
_____
Cash consideration for 241.6
subsidiary undertakings
=====
Allied Electronics Inc. was acquired on 2 July 1999.
The fair value adjustment represents an increase in the stock provision under
the Group's policy of provisioning and valuing stocks.
6 Goodwill arising on acquisition
The £214.8m of goodwill arising on the acquisition of Allied has been
capitalised and is being amortised over a period of twenty years. The charge
for the period from 2 July to 30 September 1999 was £2.7m.
7 Restatement of prior period figures
The segmental analysis figures reflect a change in the geographic analysis of
the Group's activities to include the results and net assets of Japan in a
separate segment. The £1.1m of costs expensed in the six months ended 30
September 1998 were previously shown within Groupwide process costs. There
were no material net operating assets in Japan as at 30 September 1998.
8 Reconciliation of movements in shareholders'funds
6 months to 6 months to Year to
30.09.99 30.09.98 31.03.99
(unaudited) (unaudited) (audited)
£m £m £m
Profit for the period 34.5 36.3 76.4
Dividends (16.0) (13.9) (45.1)
_____ _____ _____
Retained profit for the 18.5 22.4 31.3
period
Translation differences - (7.5) - -
goodwill
Translation differences - 2.1 3.8 1.7
other
New share capital subscribed 2.2 1.6 2.3
(net of Quest)
Scrip dividends - 1.5 1.5
______ _____ ____
Net addition to equity 15.3 29.3 36.8
Equity shareholders' funds 353.3 316.5 316.5
at the beginning of the
period
______ _____ _____
Equity shareholders' funds 368.6 345.8 353.3
at the end of the period
====== ===== =====
9 Reconciliation of net cash flow to movement in net funds
6 months to 6 months to Year to
30.09.99 30.09.98 31.03.99
(unaudited) (unaudited) (audited)
£m £m £m
(Decrease) increase in cash (13.9) (0.7) 6.8
Management of liquid (75.9) 14.8 27.1
resources
Financing - loans (131.4) (0.9) (1.3)
______ _____ ____
Change in net funds relating (221.2) 13.2 32.6
to cash flows
Translation differences - 4.9 1.1 0.1
net funds
______ _____ ____
Movement in net funds for (216.3) 14.3 32.7
the period
Net funds at the beginning 120.6 87.9 87.9
of the period
_______ _____ _____
Net (debt) funds at the end (95.7) 102.2 120.6
of the period
====== ===== =====
Net (debt) funds at the end
of the period comprise:
Cash at bank and in hand 20.2 34.4 33.3
Overdrafts (0.2) (8.7) (0.1)
Debts due within one year (11.3) (2.8) (3.6)
Debts due after more than (119.8) (0.3) (0.2)
one year
Short-term investment 15.4 79.6 91.2
deposits
______ _____ _____
(95.7) 102.2 120.6
====== ===== =====
10 Principal exchange rates Average for the period
6 months to 6 months to Year to
30.09.99 30.09.98 31.03.99
Australian Dollar 2.48 2.70 2.67
Deutschmark 2.98 2.96 2.90
French Franc 10.00 9.92 9.71
Italian Lira 2,951 2,920 2,863
Japanese Yen 187 230 213
US Dollar 1.61
Period end 30.09.99 30.09.98 31.03.99
Australian Dollar 2.52 2.87 2.56
Deutschmark 3.02 2.84 2.92
French Franc 10.14 9.52 9.80
Italian Lira 2,994 2,808 2,893
Japanese Yen 175 232 191
US Dollar 1.65
11 Basis of preparation
The financial information has been prepared under the historical cost
convention and in accordance with applicable accounting standards, using the
accounting policies set out in the Annual Report for the year ended 31 March
1999.
The financial information included in this document does not comprise
statutory accounts within the meaning of Section 240 of Companies Act 1985.
The statutory accounts for the year to 31 March 1999 have been filed with the
Registrar of Companies. The report of the auditors was unqualified and did
not contain a statement under Section 237 (2) or (3) of the Companies Act
1985. The interim financial information is unaudited but has been subject to
a limited review by KPMG Audit Plc.
Independent review report by KPMG Audit Plc to Electrocomponents plc
Introduction
We have been instructed by the Company to review the financial information set
out on pages 7 to 15 and we have read the other information contained in the
Interim Report and considered whether it contains any apparent misstatements
or material inconsistencies with the financial information.
Directors' responsibilities
The Interim Report, including the financial information contained therein, is
the responsibility of, and has been approved by, the Directors. The Listing
Rules of the London Stock Exchange require that the accounting policies and
presentation applied to the interim figures should be consistent with those
applied in preparing the preceding annual accounts except where they are to be
changed in the next annual accounts in which case any changes, and the reasons
for them, are to be disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin
1999/4: Review of interim financial information issued by the Auditing
Practices Board. A review consists principally of making enquiries of Group
management and applying analytical procedures to the financial information and
underlying financial data and, based thereon, assessing whether the accounting
policies and presentation have been consistently applied unless otherwise
disclosed. A review is substantially less in scope than an audit performed in
accordance with Auditing Standards and therefore provides a lower level of
assurance than an audit. Accordingly, we do not express an audit opinion on
the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 September 1999.
KPMG Audit Plc
Chartered Accountants
9 November 1999
Copies of the Interim Report will be sent to all shareholders shortly, and
will be available from Alison Cox at Electrocomponents plc, International
Management Centre, 5000 Oxford Business Park South, Oxford OX4 2BH, United
Kingdom. Telephone 01865 204000. Fax 01865 207400. The report is also
available on our website: http://www.electrocomponents.com.
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