Premier Farnell plc Annual Report and Accounts 2003
Premier Farnell plc
Annual Report and 
Accounts 2003
Our customers’ needs 
drive our business
ready
Group Headquarters
25/28 Old Burlington Street
London
W1S 3AN
UK
T +44 (0) 20 7851 4100
F +44 (0) 20 7851 4110
150 Armley Road
Leeds
LS12 2QQ
UK
T +44 (0) 870 129 8608
F +44 (0) 870 129 8611
www.premierfarnell.com Premier Farnell plc Five Year Record
Annual Report and Accounts 2003
2003 2002 2001 2000 1999
£m £m £m £m £m
Turnover 759.0 806.4 876.2 752.1 705.0
Operating proﬁt before amortisation of goodwill 82.9 88.4 115.0 103.7 122.2
Amortisation of goodwill (2.6) (1.5) – – –
Total operating proﬁt 80.3 86.9 115.0 103.7 122.2
Proﬁt before taxation, amortisation of goodwill and
exceptional items 67.2 72.5 102.1 91.8 110.4
Amortisation of goodwill (2.6) (1.5) – – –
Exceptional items (4.8) (11.0) – – (10.0)
Proﬁt before taxation 59.8 60.0 102.1 91.8 100.4
Proﬁt after taxation 41.6 38.6 71.3 66.2 66.6
Preference dividends (10.8) (26.1) (25.3) (23.7) (23.2)
Proﬁt attributable to ordinary shareholders 30.8 12.5 46.0 42.5 43.4
Ordinary dividends (32.6) (24.5) (24.5) (24.5) (24.5)
Retained (loss)/proﬁt (1.8) (12.0) 21.5 18.0 18.9
Shareholders’ funds – equity (23.2) (375.2) (375.4) (357.5) (367.7)
– non-equity 126.7 486.7 474.4 431.3 426.1
Equity minority interests – – 0.3 0.3 0.3
Total capital employed 103.5 111.5 99.3 74.1 58.7
Dividend per share (pence) 9.0 9.0 9.0 9.0 9.0
Basic earnings per share (pence) 9.3 4.6 16.9 15.6 16.0
Exceptional items (pence) 1.9 4.6 – – 2.5
Adjusted earnings per share (pence) 11.2 9.2 16.9 15.6 18.5
Five Year Record
01 Our mission
02 Group at a glance
04 Chairman’s statement
06 Chief Executive’s statement
Operating review
10 Marketing and 
Distribution Division
22 Industrial Products Division
26 Board of Directors and Ofﬁcers
28 Group Leadership T eam
30 Finance Director’s review
34 Social responsibility report
38 Directors’ report
40 Remuneration report
46 Corporate governance
48 Consolidated proﬁt 
and loss account
49 Consolidated balance sheet
50 Company balance sheet
51 Consolidated statement of 
cash ﬂow
52 Statement of accounting
policies
53 Notes to the accounts
74 Directors’ responsibilities
74 Auditors’ report
75 Shareholder information
76 Advisers
Five year record delivering
Our mission describes what we
aim to achieve.
A group of focused businesses
using industry leading talent,
technology and unsurpassed
service to provide our business
customers with electronic, MRO
and specialist products and
services – on a global scale.
We understand our markets and
our customers’needs completely
and offer unparalleled flexibility
with combinations of channels,
products and services, that are
demonstrably better than they
can get elsewhere. We deliver
economic benefit and peace of
mind to our customers, suppliers,
employees and shareholders.
Premier Farnell plc Our mission
Annual Report and Accounts 2003
1 Premier Farnell plc Group at a glance
Annual Report and Accounts 2003
2
Premier Farnell plc
Group at a glance
global
Group sales
£759m
$1,161m
Group statistics 2003
Group operating profit*
£83m
$127m
Group net operating assets
£289m
$474m
Gross margin
41.1%
41.3% 
2002
Interest cover 
5.3x
5.6x
2002 
Operating margin*
10.9%
11.0%
2002 
Basic earnings per share 
9.3p
4.6p
2002
Adjusted earnings
per share**
11.2p
9.2p
2002
Operating cashflow
£92.0m
£107.1m
2002
Dividend per share 
9.0p
9.0p
2002 
1 Americas 50%
2 UK 33%
3 Europe & Asia Pacific 17%
1 Americas 51%
2 UK 40%
3 Europe & Asia Pacific 9%
1 Americas 40%
2 UK 46%
3 Europe & Asia Pacific 14%
* before amortisation of goodwill
** before amortisation of goodwill
and disposal of businesses Premier Farnell plc Group at a glance
Annual Report and Accounts 2003
3
Marketing and Distribution
Division
Businesses and the primary
markets they serve
Newark InOne
US / Canada / Mexico / Brazil 
MCM, an InOne company
US 
Farnell InOne
UK / Europe / Asia Pacific
CPC
UK 
BuckHickman InOne
UK 
Description
The division specialises in the
marketing and distribution of
electronic components,
maintenance, repair and operations
products and specialist services
Divisional sales and sales growth
£660m
1.0%*
†
Employees
3,950
Industrial Products Division
Businesses and the primary
markets they serve
Akron Brass
US / Canada
TPC Wire and Cable
US / Canada / Mexico
Kent
Europe
Description
The division supplies high-
performance fire fighting equipment
for public fire services and industrial
facilities, high-endurance cable and
connector assemblies for use in
aggressive environments and
high-performance, consumable
products to the automotive crash
repair industry
Divisional sales and sales growth
£99m
2.8%*
Employees
950
Key characteristics
Wide customer base 
>1million
Wide supplier base 
> 3,000
Wide product base in stock 
> 400,000
Access to
> 6 million
products
Global coverage
Offices in 21 countries
High barriers to entry
Leading brand names
Over 400,000 products in stock 
Strategic relationships with suppliers
Market-leading eCommerce
capability
Technical support
Added value services
Vendor managed inventory
Same day despatch
1 Americas 47%
2 UK 38%
3 Europe / Asia Pacific 15%
1 Americas 64%
2 UK 2%
3 Europe / Asia Pacific 34%
reach
* based on sales per day for continuing businesses
at constant exchange rates
†
including BuckHickman InOne, acquired July 2001 Premier Farnell plc Chairman’s statement
Annual Report and Accounts 2003
4
Chairman’s statement
Overview
Market share gains and some 
large customer contract wins 
attest to a year of achievement 
in difficult economic circumstances.
Markets for the most part, remained
slow particularly in North America
but, despite this, we have continued
to improve our ability to service 
our customers. Gross margins 
have been maintained and costs
tightly controlled, so that net margins
have remained robust while working
capital has continued to be closely
managed.
We have gained major financial
benefits through the capital
restructuring announced in April
2002, including increased earnings
per share and dividend cover,
improved cash flow of £9 million 
for this and future years, reduced
financial gearing and a more
balanced capital structure.
We have developed comprehensive
skills to capitalise on the accelerating
demand by major companies to
improve the effectiveness of their
indirect materials procurement and
inventory management. These skills
have opened access to large
customers and we are achieving
significant success which would
previously have been beyond our
reach. There remains significant
potential to gain market share and the
Group is in a strong position for further
progress when markets improve. 
Financial results
Group sales for the year were 
£759.0 million (2002: £806.4 million)
reflecting the tough market
conditions, although on a sales per
day basis the Group’ s businesses
returned to year on year growth in
the second half of the year and were
up 2.8 per cent in the fourth quarter.
Profit before tax and goodwill
amortisation and loss on disposal 
of businesses was £67.2 million
(2002: £72.5 million), with adjusted
earnings per share of 11.2 pence
(2002: 9.2 pence). 
Statutory profit before tax was
£59.8 million (2002: £60.0 million)
and basic earnings per share were
9.3 pence (2002: 4.6 pence).
The Board is recommending a final
dividend of 5 pence (2002: 5 pence),
making a total for the year of 9 pence
(2002: 9 pence). The dividend is
covered 1.1 times. The final dividend
is payable on 25th June 2003 to
shareholders on the register on
30th May 2003.
Strategic progress
The Group has continued to 
execute its strategy of forging 
closer relationships with customers
by understanding and satisfying 
their needs. The Group has
strengthened its competitive position
in all its major territories by improving
performance and introducing new
products and added value services.
Work has been focused on winning
additional sales in the absence of any
help from the market. This has been
achieved through concentrating on
improving operational effectiveness
and increasing share by targeting
specific market segments. Closer
customer relationships are being built
using the newly installed customer
relationship management software.
Added value services are helping
customers increase their own
productivity and reduce the overall
cost of indirect material procurement.
Evidence of the success of this
strategy is demonstrated by the
agreements signed with Vauxhall,
Lockheed Martin and the US
Government in 2002 and
Rolls-Royce in March of this year. Premier Farnell plc Chairman’s statement
Annual Report and Accounts 2003
5
Business portfolio
Early in the year, the Group sold
D-A Lubricants, the specialist oil
blending business based in
Indianapolis. This resulted in a loss
before tax on the disposal of
£4.9 million, including £2.6 million of
goodwill previously eliminated against
reserves.
Buck & Hickman, the leading UK
distributor of tools and industrial
products, acquired in July 2001, 
has been successfully integrated 
into the Group. The Buck & Hickman
product range and its expertise in
vendor managed inventory services
both contributed to the Group being
awarded important supply contracts
by Vauxhall and Rolls-Royce. 
Balance sheet
In April 2002, the Company
announced a special right, 
for a limited period, for Preference
Shareholders to convert their
Cumulative Redeemable Preference
Shares into Ordinary Shares, 
at an enhanced conversion rate. 
This resulted in 70 per cent of the
Company’ s Preference Shares 
being converted and 89.8 million
new Ordinary Shares, arising from
the conversion, were issued. 
The conversion has resulted in
increased earnings per share and
reduced financial gearing. It has also
improved cash flow by more than 
£9 million this year, enhanced
dividend cover and provided a more
balanced capital structure. 
The Company’ s borrowings include
$155 million 7.0 per cent Senior
Notes, repayable in June 2003. 
In anticipation of this repayment, 
the Company has secured additional
funding, to be drawn in June 2003,
of $225 million, comprising
$159 million Senior Notes payable
2013 at an effective interest rate 
of 5.9 per cent and $66 million
Senior Notes payable 2010 at an
effective interest rate of 5.3 per cent.
The additional funds will be used to
repay other loans. This refinancing, 
at investment grade interest rates,
demonstrates the financial
soundness of the Group. 
Staff
On behalf of the Board, I particularly
wish to thank all our employees 
for their hard work and commitment
during what has been another
challenging year. It is their
determination and effort that has
resulted in the quality of the Group’ s
businesses being further enhanced
and it is the reliability and
resourcefulness of our employees
which encourages our customers 
to buy repeatedly from the Group.
We have pleasure in welcoming
William Korb to the Board as a 
Non-Executive Director. Mr Korb, 
a US citizen, was President and 
CEO of Gilbarco Incorporated, 
the leading manufacturer of retail
petrol pumps, from 1988 to 1999.
He is a non-executive director of
Cambrex Corporation, which is 
listed on the NYSE.
Outlook
The Group’ s principal businesses
have secured market share gains
against a background of harsh
economic and industry conditions.
This progress has been supported
by important initiatives in many areas,
including customer eProcurement
arrangements, vendor managed
inventory installations, increased
product ranges, improved service
levels and geographic expansion.
The Group has further enhanced its
proposition to customers during the
year, enabling them to increase
productivity. Notwithstanding the
global political and economic outlook
and the lack of confidence in major
industrial markets, the Board remains
confident that it is pursuing the
appropriate strategy.
Sir Malcolm Bates
Chairman
progress
The Group’s principal
businesses have secured
market share gains against 
a background of harsh
economic and industry
conditions. Premier Farnell plc Chief Executive’s statement
Annual Report and Accounts 2003
6
Market overview 
In the last two years, we have
experienced an unprecedented
decline in the electronics market, 
and we have also seen an overall
economic slowdown in the 
majority of the markets in which we
operate. In the first quarter of each of
the last two years, some forecasters
have anticipated a recovery in the
second half of the year, particularly in
North America, although there was
no certainty about the pace and
precise timing. We said then that we
were not going to count on help from
the market, but that we would work
on the assumption that there would
be no improvement and be ready to
react as we saw the market move 
up or down. As soon as we saw 
the early signs of a downturn in
2001, we acted quickly and removed
a significant amount of cost from 
the business. During the last twelve
months, we have not repeated this
scale of cost reduction, but have
maintained a very tight control overall
and taken opportunities to cut out
waste and duplication. We believed
that we should turn our focus to
delivering better and additional
services to our customers. 
Apart from Asia, where there was
some uplift, particularly in the middle
and second half of 2002, our markets
have now been, at best, flat for
around eighteen months, proving
that we were right to maintain our
cautious view.
Maintaining our strategic focus
We have maintained determined
progress on our key initiatives: putting
in the software and the systems that
we need to service our customers
better; building services and
improving the quality of our people.
Despite the poor market conditions
we have maintained our investment
in these areas. 
We have continued to focus on
improving the way we do business.
Our ongoing investment in
information technology is based 
on competitive advantage in our 
kind of business increasingly moving
from the traditional, and still
important, control of the physical 
flow of goods to the management
and understanding of the information
associated with that flow.
We constantly strive to improve 
our customer service levels. 
We have added eProcurement
capabilities and developed new
services. ProductFind gives our
customers access to six million
products beyond those which we
have in stock and ProductWatch™
alerts our design engineer customers
when components are due to go
obsolete so that they do not use them
in new products. We have focused
on breaking down our customer
base into appropriate segments to
enable us to satisfy their particular
needs more effectively.
Chief Executive’s statement Premier Farnell plc Chief Executive’s statement
Annual Report and Accounts 2003
7
We have continued to strengthen 
our management team. Laurence
Bain was appointed Group Chief
Operating Officer in July 2002 and 
a new Global Accounts Director,
senior personnel in marketing and
strategic development in North
America and a new Group Director
of Strategic Marketing and Planning
were also appointed during the year.
T wo of these are internal
appointments, which is of particular
significance following a period where
most of our senior appointments
were made from outside. We are
now beginning to bring through
talent from within the organisation.
Investing for growth
Our business strategy is designed 
to deliver profitable growth. 
Sales growth can come from new
customers, new markets and higher
spend from existing customers. 
This explains the focus of our
activities in the following areas:
– Expansion of our product range
– International development
– Deeper understanding of our
customers and markets through
segmentation
– Greater penetration of existing
multi-national and large accounts
– Ongoing improvement of
customer service.
Expansion of our product range
continues to be one of our areas 
of development. Over the last year
we have added 46,000 products 
to the Marketing and Distribution
Division and there will be more this
year, particularly in North America. 
In March 2003, we doubled our
American range of passive
components by adding 11,000 
new products. That is a significant
step forward in improving our
product coverage and enables 
us to win more of our existing
customers’ spending and to 
attract new customers. 
We have continued to build our
international presence to satisfy 
our customers’ needs and we 
have opened offices in Italy, Belgium,
Austria and Mexico over the last
twelve months. 
We have clear examples of
significant progress in the market
segments that we have particularly
chosen to focus on. Our health 
and safety business in the UK 
grew around 29 per cent overall 
last year and in the final quarter 
was higher still, the result of merging
the capabilities of our three UK
businesses in this area. The differing
needs of design and maintenance
engineers are better understood 
and our attention to these two
groups of customers reflects their
importance to us.
Our focus on large customers
produced encouraging results. Sales
to the US Government through an
agreement with the General Services
Administration (GSA) awarded in May
2002, are up 12 per cent despite
Federal budget approval delay. Sales
to designated major corporate
accounts are up 3 per cent in North
America and we have secured
agreements with 37 new large
customers across the Marketing and
Distribution Division. Each one of
these deals requires different
combinations of products and
services and has been secured as a
direct result of our flexibility in
deploying the very wide range of
services we can provide.
eCommerce continues to offer a
major growth opportunity. At Newark
InOne, sales through all our
electronic channels, including the
Internet and eProcurement, are up
8 per cent, at Farnell InOne by
82 per cent. Sales through the
eProcurement channel alone are up
52 per cent in North America. Some
customers transact between 30 per
cent and 50 per cent of their
business with us in their first year of
utilising eProcurement.
control
Competitive advantage in our
kind of business is increasingly
moving from the traditional, 
and still important, control of the
physical flow of goods, to the
management and understanding
of the information associated
with that flow. Premier Farnell plc Chief Executive’s statement
Annual Report and Accounts 2003 continued
8
There were 43 new eProcurement
partnerships established in North
America during the year, which takes
our total to 118, and a further 42 are
under negotiation. The demand from
new companies wishing to take
advantage of the available
economies and efficiencies that
eProcurement offers appears not to
diminish. Sixty-seven new
eProcurement partnerships in Europe
this year takes our total to 108 and a
further 36 are under negotiation or
development. 
It is important to remember the 
basic elements of our business.
Customers come to us first and
foremost because we have a very
wide product range which they know 
will be in stock and delivered reliably
and swiftly. Beyond that, we offer
significant benefits from our flexibility
in recognising and responding 
to customers’ particular needs, 
our vendor managed inventory
solutions and our eProcurement
capability, where we have established
a reputation for being the best in our
class. In a market where customers
are continually striving to reduce the
number of suppliers, manage costs
and increase productivity we are well
placed to take a share of that
business through our ability to deliver
efficiencies to their procurement
processes. 
We have a focused approach and
dedicated team of people who are
well educated and well equipped to
manage this kind of business. The
number of stock rooms now under
our management or influence in
North America is 246 compared to
98 at this time last year. In Europe,
the number is 157 and our sales
through the stockrooms we manage
rose by 27 per cent over last year.
Managing customers’ stockrooms
creates a close relationship with
these customers, one it is difficult for
our competitors to match.
Where appropriate opportunities
arise, we are also growing by
acquisition as one potential route 
to expanding our product or
geographic coverage. BuckHickman
InOne, acquired in July 2001, 
has been a significant success 
for us. In a market that has declined,
BuckHickman InOne sales in the
fourth quarter were up 16 per cent.
This excellent performance comes
not only from the closer collaboration
of our businesses in the UK, 
but also from our extensive range 
of services. Significant amongst
these are our vendor managed
inventory expertise and our ability 
to help our customers gain
productivity benefits from managing
their inventories. T wo major business
wins which reflect this capability are
the contracts we have been awarded
by Vauxhall, announced in November
2002, and Rolls-Royce in March
2003. This is business that we would
not have been in a position to tender
for eighteen months ago.
The main businesses in the Industrial
Products Division, Akron Brass, 
TPC Wire & Cable and Kent have
continued to make sound progress
in difficult market conditions by
adding products and services that
have driven sales. Greater
productivity and improved margins
have been realised at Akron Brass
following the investment in new plant.
Sales productivity has improved at
Kent after restructuring. 
focus Premier Farnell plc Chief Executive’s statement
Annual Report and Accounts 2003 continued
9
Communicating our capabilities
and working together to deliver
In February, we announced our
intention to rebrand a number of 
the businesses in the Marketing 
and Distribution Division. Over the
last few years, we have made major
investments which have substantially
improved the quality of our
information management. We have
increased our understanding of our
customers and market segments
and we have added a wide range 
of services. Our businesses are now
working together more effectively 
to give customers the service they
expect. It is appropriate, therefore, 
to signal to the market the range and
depth of the services our businesses
provide and how they work together
in providing these services globally.
Rebranding with a new visual identity
and the addition of the suffix InOne
gives us the opportunity to
communicate our progress at the
same time as retaining the historical
value which resides in our existing
business names. We have rebranded
those businesses which operate 
with the same kind of customers:
BuckHickman InOne, Farnell InOne
and Newark InOne. Rebranding 
is a signal of our past achievements,
our current capabilities and our 
future aspirations.
Continuing to strengthen 
our business
We prefer to work on what we see
as the realities of the market place,
rather than what various forecasters
might say. When our markets
improve we are ready to take full
advantage of their recovery. In the
meantime, we are working on the
basis that markets will continue as
they are and we will continue to push
hard to gain market share. We have
gained significant strength this year.
Tight control of costs has made our
margins more robust in withstanding
the market cycle. 
We have increased our market share
progressively over the last couple of
years by concentrating on the things
that enhance our customer’ s
experience. We have continued to
improve the performance of our
business and we have demonstrated
the benefits of acquiring
BuckHickman InOne. We believe 
we are in a very strong position for
continued market share growth and
to take advantage of the market
upturn when it comes.
John Hirst
Group Chief Executive
flexible Marketing and
Distribution  As we rigorously pursue our strategy of
achieving growth through our focus on
understanding and satisfying our customers’
needs, we are investing our time and
resources in developing our product range
and new tailored services which are aligned
with our customers’ requirements. Premier Farnell plc Operating review
Annual Report and Accounts 2003
12
Description of businesses
Our businesses within the Marketing
and Distribution Division specialise in
the marketing and distribution of
electronic components, maintenance,
repair and operations (MRO) products
and specialist services.
We focus on the small volume, high
service requirements for these types
of products of customers working in
research and design, small volume
manufacturing and maintenance,
repair and operations activities.
Our area of operation is characterised
by a very wide range of products,
some 400,000 in stock, and a large
number of customers across almost
every industry and sector of
economic activity .
Customers typically range in size
from small, privately owned specialist
businesses to large, multi-national
corporations. The need they have in
common is for a comprehensive and
wide range of products, in stock and
available for same day despatch,
backed by services which meet
their specific requirements.
As we rigorously pursue our strategy
of achieving growth through our focus
on understanding and satisfying our
customers’ needs, we are investing
our time and resources in developing
our product range and new tailored
services which are aligned with our
customers’ requirements.
We are able to do this as a result of
the progress we have made on our
key strategic initiatives. We have
reached the final stages of
implementation of the software and
systems that provide the capability to
exploit the vast quantities of
information generated by the sheer
numbers of transactions which are a
feature of our kind of business. We
have continued to improve the quality
of our people, giving us the capability
to turn that information into
knowledge. We are using our growing
capabilities to build closer relationships
with our existing customers, to win
new business from new customers
and to enter new markets.
A number of the businesses in the
Marketing and Distribution Division
are being rebranded this year . These
are BuckHickman InOne, Farnell
InOne and Newark InOne. Over the
last few years, we have made major
investments which have substantially
improved the quality of our
information management. We have
increased our understanding of our
customers and market segments
and we have added a wide range of
services. Our businesses are now
working together more effectively
to give customers the service they
expect. The new branding
communicates to our customers
the range and depth of the services
our businesses provide and how they
work together in providing these
services globally . The new visual
identity and the addition of the suffix
InOne gives us the opportunity to
communicate our progress at the
same time as retaining the historical
value which resides in our existing
business names.
Building our capabilities
Our three year programme of
investment in front office systems,
which enable us to gather and use
customer data more effectively is
now substantially complete in our
major markets. These systems,
which include customer relationship
management software, data
warehousing and data mining tools
were integrated with our transactional
systems in the UK in November
2002 and in the US in March 2003.
During the final stages of development
and testing during 2001, they were
used on a stand alone basis. This
assisted learning and the gathering
of historical customer data in advance
of becoming fully operational.
The customer relationship
management software provides us
with visibility of all customer contacts
and transactions regardless of the
Wherever and whenever we
achieve a better understanding
of the needs of particular
groups of customers we reap
the reward of increased sales
Marketing and
Distribution Division
Newark InOne
US
Canada
Mexico
Brazil
46 sales branches
2 business contact centres
3 distribution centres
Farnell InOne
UK
Europe
Asia Pacific
Offices in 17 countries
Business contact centre in UK
6 distribution centres
BuckHickman InOne
UK 
31 sales branches 
1 distribution centre
MCM, an InOne company
US
1 business contact centre
1 distribution centre
CPC
UK
1 business contact centre
1 distribution centre
We focus on the small volume, 
high service requirements of
customers working in research 
and design, small volume
manufacturing and maintenance,
repair and operations activities.
With twelve distribution centres
worldwide and offices in 
21 countries, we are well placed 
to service customers around 
the world. Vauxhall’s Ellesmere Port manufacturing plant
produces over 3,000 cars a week. If a production
line stops because of machine failure, the delay
could cost thousands of pounds as new parts
are sourced.
In October 2002, the Vauxhall management team
awarded us sole responsibility for managing the
supply of all non-production, maintenance
consumables, the components that service the
plant’s needs and keep the lines running. Our
solution is a comprehensive vendor-managed
inventory (VMI) system, under which state-of-
the-art inventory control software constantly
monitors use and depletion of on site stocks.
This information is fed back to us for
replenishment. Many of the regularly used items
are placed directly beside the production lines
for immediate use, while others can be ordered
rapidly from the place of use. 
The system gives Vauxhall fast access to a
range of nearly 240,000 products.
The software also enables Vauxhall management
to track performance in each production area.
The VMI solution, which offers Vauxhall huge
potential in terms of time, cost and efficiency
savings, has enabled them to reduce their
roster of maintenance, repair and operations
suppliers from several hundred to just one –
Premier Farnell.
efficiency service
In May 2002, Newark InOne secured a five-year
agreement from the General Services
Administration (GSA) under which Newark InOne
is eligible to provide US government agencies
with more than 90,000 stock lines, including
cable, tools, test equipment and datacom
products from over 350 leading manufacturers.
The GSA is the US government’s in-house
purchasing department, responsible for
negotiating contracts with suppliers of all goods
bought by government departments. Under the
agreement, Newark InOne’s existing catalogue
has been added to GSA Advantage, the
department’s own eCommerce platform, from
which engineers, scientists and other procuring
officers can search for and select products for
use in their facilities. 
The process of enhancing customer service 
is already underway. T o assist customers with
selection, ordering and billing, Newark InOne
has set up a dedicated team in Independence,
Ohio, with a telephone hotline and information
point on its own website. The MCM catalogue 
is now being integrated under the schedule,
significantly extending the product range.
Newark InOne’s main US government sector
customers are the Department of Defense and
the Department of Energy and the value of sales
is expected to grow substantially over the life 
of the agreement.  Premier Farnell plc Operating review
Annual Report and Accounts 2003 continued
15
sales channel customers choose to
use. This enables us to identify
purchasing habits and buying potential
and to develop services and solutions
which meet the requirements of
specific segments of customers.
With the acquisition of BuckHickman
InOne, we significantly added to our
expertise in managing our customers’
inventory on their behalf. We have
made marked progress in extending
our capabilities in this area and have
developed a wide range of solutions.
As part of our ongoing investment in
eCommerce, we are migrating to a
‘One Platform’ approach for all of our
websites. This means that our
eBusiness team will only have one
platform to support and develop,
enabling us to achieve much faster
roll-outs of new sites, functionality
and products.
The requirement for flexibility is at the
heart of our eProcurement strategy .
Our technology enables us to connect
with any procurement system which
a customer may use. We have the
capability to develop an electronic
catalogue tailored to the specific
requirements of the customer . This
delivers many benefits to the customer ,
including more effective purchasing
procedures, better control of
purchasing processes and improved
management reporting.
In addition to the ongoing
development of our capabilities, as
we develop our understanding of our
customers’ needs, we continue to
develop our product range. The
acquisition of BuckHickman InOne in
July 2001, added 48,000 industrial
products. Combined with the offer
from CPC and Farnell InOne, we now
have one of the widest ranges of
products from one source in the
UK. This was a key contributory factor
in the contracts we have won with
Vauxhall and Rolls-Royce.
Over the last year we have added
46,000 products to the division.
In March of this year , we added
11,000 new products to Newark
InOne’ s range of passive components,
thereby doubling our range and
significantly strengthening our offer to
design engineers.
Developing closer relationships
with our customers
Wherever and whenever we achieve
a better understanding of the needs
of particular groups of customers
we reap the reward of increased sales.
Grouping customers according to their
type of occupation and by the industry
sector they work in, enables us to
focus our efforts and to develop greater
knowledge of product requirements
and purchasing behaviour .
For example, our focus on customers
who specify and purchase health
and safety products in the UK, which
has included the publication of a
specialist catalogue and mailers, has
resulted in sales of these products
increasing by around 29 per cent
compared to last year .
Our agreement with the National
Universities Working Party on
Electronic Components (NUWPEC)
has been extended for a further two
years until 2004 as a direct result of
our investment in improving the
service we offer to our education
customers, including upgrading the
functionality of the dedicated website
we have developed for them.
In the US, we have secured a five-
year agreement with the General
Services Administration (GSA) under
which we are eligible to provide the
US government with 90,000 products.
This agreement represents a major
opportunity to develop our
understanding of the specific
requirements and ways of working
of government purchasing agents.
We have established a dedicated
sales team within Newark InOne’ s
business contact centre in
Independence, Ohio, to handle calls
from US government agencies. 
US government sales in the year
T elesales is one of many 
channels through which we reach
out to our customers.
Local websites, with local language
catalogues and mailers, open
up sales channels cost effectively.
Flexibility is at the heart of
our eProcurement strategy
enabling us to connect with
any procurement system a
customer may use
Americas
Sales £312m
Growth –9.7%*
Operating profit £33m
*Based on sales per day for
continuing businesses at constant 
exchange rates
Europe Asia Pacific
Sales £348m
Growth +13.3%*
†
Operating profit £42m
†Including BuckHickman InOne,
acquired in July 2001 Premier Farnell plc Operating review
Annual Report and Accounts 2003 continued
16
advanced by 12 per cent over the
previous year . We are confident that
the schedule will add sales over its
five-year term.
T ailoring our offer to meet our
customers’ needs
Our substantial investment in
information technology signals our
belief in the growth opportunity that
eCommerce offers to our type of
business. It enables us to speed up
the introduction of new products to
our range, to make technical
information readily available, to track
buying behaviour and tailor our offer
more precisely . Sales through the
eCommerce channels accounted for
8 per cent of divisional turnover in
2002, with year on year sales up
28 per cent.
Our eCommerce strategy has two
main areas of focus – transaction
websites and eProcurement.
We have fully transactional websites
for each of the major countries in
which we operate and, together
with customer specific sites, the
total number of sites is 30. Each one
is customised for the local market
or customer , with business and
country-specific data and reflects
the feedback we have received
from customers.
Customers worldwide are now
downloading more than 70,000
technical datasheets and over 3,000
semiconductor application directories
each week from our websites in a
matter of seconds, whereas
previously they would have had to
request them by telephone and wait
for them to be posted or faxed.
Our online services enable us to
speed up the process of introducing
new products to our range and to the
market. For example, the test
equipment manufacturer T ektronix
used our websites for the global
launch of their new oscilloscopes in
April 2002. Potential buyers also
received emails and mailers
promoting the new products
and increased sales resulted from
this multi-channel sales and
marketing programme.
The ongoing development of our
eProcurement capabilities is driven
by our commitment to be flexible
enough to integrate with our
customers’ systems regardless of
what technology they are using.
Many large corporations have
made significant investment in
in-house eProcurement systems and
need suppliers like ourselves who
are capable of integrating with
their systems.
We have the capability to design
each installation to the customer’ s
particular specification. In many
cases, this takes the form of a
customised electronic catalogue,
accessible online by designated
employee-purchasers. We compile
the catalogue in conjunction with
the customer , choosing specific
products for particular needs.
For customers, the advantages of
eProcurement are reduced total cost
of procurement and increased
control. By reducing supplier
numbers, the cost of administration
overhead is significantly lowered, and
purchasing process automation
contributes to further cost
containment. By restricting buyers
to specific products and suppliers,
customers can curtail unauthorised
spending. The electronic catalogue
can be updated rapidly to reflect
changing requirements.
Developing customised eProcurement
solutions enables us to build the
closest possible understanding of the
customers’ product requirements and
purchasing patterns. Integrating our
systems with those of our customers
builds our relationship, ensuring that
we can consistently satisfy their
evolving needs.
Sales through eProcurement in
North America have increased by
Our online services enable us 
to speed up the process of
introducing new products to our
range and to the market
A key characteristic of our
business is our wide range
of products, some 400,000
in stock.
Achieving growth
We export products to over
100 countries to realise sales
potential where we do not
have our own operations. Lockheed Martin, a leading US aerospace and
defence contractor, has 25 separate
manufacturing and assembly facilities spread
across the eastern USA. The company’s
commodity procurement requirements are
consolidated within the Northern Material
Acquisition Center (NMAC), a new distribution
centre located in New Jersey. 
In order further to streamline segments of its
$650 million procurement programme and
rationalise its supplier base, Lockheed Martin
has appointed 11 strategic suppliers to work
with them on site at NMAC. Newark InOne was
the first to be selected, and is now operating as
one of the company’s dedicated suppliers of
electronic components for research and
development and maintenance, repair and
operations usage. 
Having signed a global supplier agreement with
the company in 2001, Newark InOne had
already established a good relationship with
Lockheed Martin. The new arrangement at
NMAC is a further demonstration of how we
can develop customised eProcurement
solutions that fit the requirements of world-
class customers. In this case, Lockheed Martin
employees anywhere in the world can access
Newark InOne’s online catalogue. Having
chosen a product, they can place an order
through Exostar, the global aerospace online
trading exchange. The order passes to the
Newark InOne representative on site at NMAC
who organises fulfilment and generates the
associated back office data. 
connected Rolls-Royce is one of the world’s leading
manufacturers of gas turbine engines for use
in aircraft, ships and power generation
facilities. With annual sales of nearly £6 billion,
it serves a customer base of more than 500
airlines, 4000 other aircraft operators and 2000
marine customers including 50 navies.
In March 2003, we were awarded a three-year
contract (subject to annual review) by
Rolls-Royce to supply a broad range of
industrial consumables such as hand tools,
safety products, abrasives and electronic
components to eight of its UK sites. The
contract, anticipated to generate annual sales
of around £10 million, is our largest to date.
For business critical maintenance, repair and
operations items, we supply Rolls-Royce with
product at point-of-use, via our vendor
managed inventory stocking solution. This
uses electronic inventory control software, to
automatically re-order the stock required, with
next day replenishment of stocking locations.
This is backed up by a tailored online
catalogue through Exostar, the aerospace and
defence trading exchange, for on-demand
ordering of standard consumable products.
technology Our ProductWatch™ service
suggests appropriate alternatives
or replacements for obsolete and
end of line products.
Increasingly, customers are
recognising our growing 
expertise in managing inventory 
on their behalf.
Premier Farnell plc Operating review
Annual Report and Accounts 2003 continued
19
52 per cent this year . The adoption of
eProcurement continues apace with
our larger customers. The uptake
varies with some customers
transacting between 30 per cent and
50 per cent of their business with us in
their first year of utilising eProcurement
for their electronic and MRO
product requirements.
The demand from new companies
wishing to take advantage of the
available economies and efficiencies
that eProcurement offers has not
diminished. Newark InOne
established 43 new eProcurement
partnerships this year , taking the total
to 118 and a further 42 are under
negotiation. Sixty-seven new
eProcurement partnerships were
finalised in Europe during the year
bringing the total to 108 and a
further 36 are under negotiation
or development.
Adding value with our services
In our market, the critical factors in
purchasing decisions for our
customers are availability of product
and speed of delivery . However ,
the market for the supply of indirect
materials is one in which the cost
of acquisition of the product can
be greater than the cost of the
product itself. Our customers are
continually looking to control and
reduce the cost of acquisition of
products and increase productivity
and often seek to reduce the number
of suppliers they have to achieve
this. We are continually improving
our capability to assist our customers
to deliver efficiencies in their
procurement processes.
We offer a wide choice of channels
through which our customers can
transact with us, including customer
contact centres, web sites,
eProcurement, field sales and our
network of sales offices and branches.
Customers can choose the channels
which are the most appropriate for
their needs. Increasingly, customers
are recognising our growing expertise
in managing inventory on their behalf.
This can range from the provision
of specialist software and systems
to having a member of our staff
permanently based on the customer’ s
site to manage their stockroom.
Every solution is different as each
one is tailored to meet the customer’ s
specific requirements.
Boston Scientific, for example, a
worldwide developer , manufacturer
and marketer of medical devices with
14,000 employees, decided that a
common supplier for its MRO
requirements would increase the
efficiency of its four sites in Ireland.
It would allow the company to
leverage spend in these commodities,
reduce the complexity of procuring
items and allow the company to focus
on other value-adding activities. The
company set out to find the best
solution to fit its business needs and
selected Farnell InOne to take
complete charge of the management
of its key MRO commodities. Boston
Scientific requested an onsitesupplier
based permanently at its facilities,
helping it to set up, organise and
manage individual plant stock rooms,
as well as offering customised
services such as a personalised
website and specialist sourcing
capabilities. Farnell InOne’ s flexibility
and willingness to adapt its services
to meet Boston Scientific’ s product
needs, meant it was well placed to
win the tender , replacing more than
250 suppliers in the process.
We also add value by identifying
common problems faced by
customers and developing services
to address them. ProductWatch™
was developed on the strength of
research carried out with design
engineers and, since its well-received
launch early in 2002, has proven
itself an invaluable tool to thousands
of customers, providing advanced
warning of obsolete, end-of-line and
end-of-stock items. The proactive
system saves design engineers the
headache of designing-in a
component, only to discover later
that it is no longer available. Premier Farnell plc Operating review
Annual Report and Accounts 2003 continued
20
The service suggests appropriate
alternatives or replacements, saving
customers the significant amounts
of time, money and effort that finding
substitutes requires.
Our ProductFind service, which is
being rolled out internationally helps
customers cut the time spent sourcing
products. The service is specifically
designed to help customers source
products which are hard to find
quickly and easily . The service is
supported by our database of over
six million products sourced from
more than 3,000 suppliers.
Winning new business
As large corporations have achieved
increased efficiencies, greater
productivity and better control of
costs in their procurement of
production line materials, they are
increasingly turning their attention to
delivering the same improvements
to the procurement of indirect
materials. With our broad product
portfolio, state-of-the-art systems,
expertise in managing inventory and
logistics experience, we are well
placed to offer a solution tailored
to their particular needs.
The strategy of targeting large
corporations has produced a number
of major successes in the past
twelve months.
In August 2002, Newark InOne was
selected by Lockheed Martin, to act
as an on site procurement specialist
at its Northern Material Acquisition
Centre in New Jersey, which
consolidates research and
development and maintenance, repair
and operations product purchasing
for twelve locations. Lockheed Martin
employees can now access Newark
InOne’ s catalogue online and can buy
centrally from anywhere in the world,
with orders passing through the
Exostar online trading exchange to
the dedicated Newark InOne onsite
representative. This custom-made
solution was designed after close
consultation with Lockheed Martin
procurement personnel, which
enabled us to determine exactly what
level of service they required.
In May 2002, Farnell InOne won a
valuable preferred supplier contract
with Deutsche Bahn, the German
state railway company and has
continued to develop sales with the
French Department of Defence and
manufacturers Audi, Siemens, Philips,
and Daimler Chrysler .
In October , we secured a five-year
contract with Vauxhall, the UK arm
of General Motors. Under this
agreement, we supply maintenance,
repair and operations materials and
consumables to the company’ s
Ellesmere Port automotive
manufacturing facility . The contract,
expected to be worth some
£40 million in sales over its lifetime,
was won against stiff competition.
Three factors helped us to secure the
contract: our unique service capability ,
our range of 240,000 products
available from Farnell InOne,
BuckHickman InOne and CPC and
our proposal for a vendor-managed
inventory system. We have replaced
several hundred suppliers and helped
to cut Vauxhall’ s costs by streamlining
its procurement process.
In November, we received a
prestigious Supplier Excellence
Award from the major US electronics
group Honeywell. This award
recognised our wide-ranging
technical support during the
introduction of their eProcurement
system, the overall quality and
responsiveness of our staff, and
the efficiency of our product
delivery system.
In our market, the critical factors
in purchasing decisions are
availability of product and speed
of delivery.
Expansion of our product
range continues to be an area
of ongoing development. Premier Farnell plc Operating review
Annual Report and Accounts 2003 continued
21
In March 2003, we were awarded a
three-year contract (subject to annual
review) by Rolls-Royce to supply a
range of industrial consumables, such
as hand tools and health and safety
equipment, to eight of their UK
manufacturing sites. The contract,
anticipated to generate annual sales
of around £10 million, is the largest we
have ever won on an annualised basis.
Overall, sales to large customers
increased during the year , compared
to last year . Newark InOne’ s 36
designated major corporate accounts
contributed 13 per cent of Newark
InOne’ s sales and sales per day on
these accounts improved by 3 per
cent over last year .
In the UK, sales to designated major
corporate accounts increased
16 per cent compared to last year.
New contracts were signed with
19 customers in the UK during the
year , and all are now in the process
of development.
Developing into new markets
With twelve distribution centres
worldwide and offices in 21 countries,
we are well placed to service
customers around the world. The
international expansion of our
operations is driven by demand from
existing or potential customers in a
region or country , where on the basis
of thorough market analysis we can
direct our operations at known
customer demand. This year has
seen us expand the international
reach of our business in a controlled
and effective way .
In Europe, we have recently opened
sales offices in Italy and Belgium. In
each case, we initially tested the
demand for our products and
services through sales and marketing
activity undertaken by country
nationals from an existing company
base. In the case of Italy , for example,
this involved Italian nationals based in
our Leeds business contact centre.
Local websites, along with local
language catalogues and mailers,
open up the sales channels cost
effectively . Once sales have reached
the level that we consider justifies the
investment, we then open a sales
office in the territory concerned.
We established a representative office
in China in 2001 and also have sales
representation in Eastern Europe.
Increasingly multi-national customers
are looking to us to supply the
maintenance, repair and operations
products and services required to
support their manufacturing facilities in
all the countries in which they operate.
In Mexico, we have opened a sales
office, published a local catalogue,
launched a dedicated website and
taken on warehouse space to supply
our fastest-moving products. The
free-trade area of Mexico has a large
number of US and European owned
manufacturing companies, with many
of which we have strong relationships.
From this base we will be able to 
reach beyond them to the whole of
the Mexican market.
In the established markets of
Continental Europe, the small order ,
high service distribution sector in
which we operate is characterised by
regional and local distributors who
do not have our breadth of product
range or service offer . The opportunity
to grow our sales in these markets
is significant. Our new warehouse in
Liege, Belgium, became operational
in September 2002 and will improve
service levels and the cost
effectiveness of our logistics to
Western Europe. In January 2003,
we acquired the customer list of the
electronic component distributor
Merkelbach, based in Essen, Germany
in order to strengthen our sales
presence in Northern Germany .
Our on site support helps
customers organise and arrange
their stock rooms.
The opportunity to grow
our sales in Continental Europe
is significant. Industrial
Products  Ohio-based Akron Brass, the market leader in
the US, manufactures and sells nozzles and
other specialist equipment for firefighting.
In line with Group strategy, the company has
been looking to expand into new markets as a
potential source of new business. Malaysia is
one example of note. The country has a
developing infrastructure with good growth in
the industrial sector and Akron Brass looked for
a suitable local distributor. They soon found that
the best candidate was already representing
some of their main competitors.
Determined to reach an exclusive deal with the
distributor, the Akron team launched a
campaign to prove to the distributor and the
end-user market that the Akron Brass range
represents excellent value for money. 
The time, money, equipment and personnel that
were committed to this project were fully
justified when the distributor succeeded in
getting Akron Brass products specified on more
than 200 fire trucks being built for the Malaysian
Fire Service. Over the past eighteen months,
Akron Brass has increased its sales to Malaysia
and sales are forecast to grow again this year. Premier Farnell plc Operating review
Annual Report and Accounts 2003 continued
24
The majority of the sales are
generated by three businesses. 
Akron Brass
Akron Brass is the US market leader
in the manufacture of high
performance, fire-fighting equipment
for firetruck manufacturers, public fire
services and industrial facilities.
Its principal markets remained slow
but stable during the year. However,
the completion of a $7 million
expansion and upgrade of the
company’ s Wooster, Ohio facility, 
in 2001 has significantly enhanced
manufacturing capacity and
efficiency enabling the company 
to generate a higher gross margin 
for its products. 
Sales per day were 4.0 per cent
above last year with sales to the US
municipal and original equipment
markets improving, although the
industrial segment has been weaker. 
The business has strengthened its
efforts to penetrate the industrial
market, adding sales personnel and
an engineering support group. In
particular, Akron is targeting the oil,
gas and petrochemical industries
where upstream and downstream
installations, such as refineries and
distribution terminals, require high
level fire-fighting capability.
TPC Wire & Cable
TPC Wire & Cable, based in the 
US, is a specialist distributor of high
endurance cable and connector
assemblies for use in aggressive
environments. These cables are
widely used, for example, to control
robot arms during manufacturing
processes.
The company’ s major markets are
the steel and automotive industries,
both of which have continued to
suffer from downturns, now lasting
several years. T o reduce TPC’ s
dependence on these markets, the
management team has concentrated
on broadening the customer base,
expanding geographic reach and
developing new product sales. 
Despite the market difficulties, sales
per day increased by 3 per cent over
last year.
The Company has identified new
sectors in which its products can be
utilised. In particular, it has focused
on the mining, food and tyre
manufacturing industries. In many
cases, this has required the
company to re-specify its products in
order to achieve industry-specific
ratings. Once the re-specified
products were in place, the company
successfully used its field and inside
sales resources to secure orders
from these markets.
The company’ s efforts to boost overall
sales through the development and
marketing of new products were also
successful, with new product sales
accounting for 16 per cent of total
revenue over the year.
In Mexico, TPC took on a new
warehouse just outside Mexico 
City and appointed an in-country
sales manager.
Kent
Kent is an own-brand distributor of
high performance consumable
products sold into the automotive
repair and industrial maintenance
sectors. It has offices in nine
European countries and a network of
sub-distributors throughout the world.
In the face of difficult market
conditions, sales per day were
1 per cent below last year. 
The company’ s development 
during the year has concentrated 
on improving the product range,
developing closer relationships 
with customers, focusing on key
accounts and expanding the range
of channels to market.
The company’ s product portfolio 
has been extended substantially, 
and now includes some 4,000 items.
This not only provides customers
with a broader choice, but also
expands the potential customer base.
An important step forward this year
has been the decision to move the
sales force from commission-only 
to a salary-based scheme, enabling
the business to retain quality people
and remunerate them appropriately.
Despite some disruption in France,
sales productivity levels have 
generally increased. 
The renewed focus on key accounts
has been successful, with sales to
these customers rising by 18 per
cent over the year. Of particular note,
Ferrari has decided to specify Kent
Screenfix 212 windscreen adhesive
for the 360 Challenge models, 
and volume producers SEAT ,
Hyundai and VW have all approved
Kent Quickseal for use in their
manufacturing operations.
In slow-moving markets,
the Industrial Products Division
has concentrated on
re-engineering aspects of its
manufacturing and marketing
functions, to improve its 
overall sales proposition.
Industrial Products Division 
Akron Brass
US
Canada
TPC Wire & Cable
US
Canada
Mexico
Kent
Europe
Sales £99m
Growth +2.8%*
Operating profit £15m
Kent’s product portfolio has been
extended substantially, and
includes some 4,000 items. This
provides customers with a broader
choice and also expands the
potential customer base.
*Based on sales per day for 
continuing businesses at constant 
exchange rates TPC Wire & Cable has saved a major
automotive manufacturer significant sums 
in running costs by finding an effective 
solution to a component problem.
The manufacturer’s plant was experiencing
repeated interruptions caused by failure of 
the power assemblies they were using. They
turned to TPC for a more robust product. 
TPC’s field sales representative worked 
closely with plant personnel to identify 
the problem. A new bracket was designed 
to fit onto the assemblies and prevent the 
problem from re-occurring. 
benefits Premier Farnell plc Board of Directors and Officers
Annual Report and Accounts 2003
26
Board of Directors 
and Officers Premier Farnell plc Board of Directors and Officers
Annual Report and Accounts 2003
27
1 Sir Malcolm Bates* Hon.D.Litt.,
M.Sc FCIS, FRAeS, CCMI
Aged 68
Appointed Chairman 1997.
Chairman, London Transport, AMP
(UK) plc (includes AMP Pearl
Assurance, AMP NPI and AMP
London Life). Non-Executive Director
AMP Ltd (Australia).
2 John R Hirst BA, FCA, 
ACT , CCMI
Aged 50
Appointed Group Chief Executive
1998. Formerly 19 years with
Imperial Chemical Industries plc,
where he held a number of senior
posts, including divisional Chief
Executive of ICI Performance
Chemicals, Chief Executive of
ICI Autocolor and Group Treasurer.
3 Andrew C Fisher BA FCA
Aged 45
Appointed Group Finance 
Director 1994. Previously a partner 
at Price Waterhouse.
4 Sir Robert Horton* B.Sc, 
SM, LLD, DSc
Aged 63
Appointed Non-Executive Director
1995. Chairman, Chubb plc and
Non-Executive Director Emerson
Electric Co (US). Formerly Chairman
of Railtrack plc and Chairman and
CEO, BP .
5 Cary J Nolan* BA B.S.E.E.
Aged 60
Appointed Non-Executive Director
1999. Formerly President, CEO
Picker International Inc., President
Cooper Surgical and President Xerox
Medical Systems Division. Non-
Executive Director of T oshiba Medical
and T omotherapy Inc.
6 D John S Roques* CA
Aged 64
Appointed Non-Executive Director
1999. Chairman, Portman Building
Society. Non-Executive Director, BBA
Group plc and Chubb plc. Formerly
senior partner Deloitte & T ouche. 
7 Michael Lester* MA Oxon
Solicitor, Aged 63
Appointed Non-Executive Director
1998. Director, BAE SYSTEMS plc.
Formerly a Director and
Vice-Chairman, The General Electric
Company plc.
8 Steven Webb LLB
Solicitor, Aged 40
Appointed Company Secretary and
General Counsel December 2000.
Previously Company Secretary and
General Counsel of Kelda Group plc
and Company Secretary of Kalon
Group plc.
9 William B Korb*
Aged 63
Appointed Non-Executive Director
January 2003. Formerly President
and CEO of Gilbarco Incorporated.
Non-Executive Director of Cambrex
Corporation. 
*Non-Executive
Audit Committee
John Roques (Chairman)
Sir Malcolm Bates
Michael Lester
Cary Nolan
Nominations Committee
Sir Malcolm Bates (Chairman)
John Hirst
Sir Robert Horton
Remuneration Committee
Michael Lester (Chairman)
Sir Malcolm Bates
William Korb
Cary Nolan
John Roques
Organisation & Management
Development
Sir Robert Horton (Chairman)
Sir Malcolm Bates
John Hirst
William Korb Premier Farnell plc Group Leadership T eam
Annual Report and Accounts 2003
28
Group Leadership
T eam
1 Graham Johnson
Global Business Systems
Director
Previously a management consultant
specialising in major IT related
change initiatives. Also worked for
British T elecom and
PricewaterhouseCoopers.
2 Brian J Lewis
Group Director Human Resources
Previously Corporate Vice President,
Human Resources at Borealis A/s,
VP Human Resources, Coca Cola
South-East and West Asia. Own
consultancy in Asia.
3 Nicholas P G Ross
Group Director Communications
Formerly CEO, Industrial Products
Division, Europe. Prior to that,
Director of Business Development.
4 Steven Webb
Company Secretary and 
General Counsel
(see page 27)
5 John R Hirst
Group Chief Executive
(see page 27)
6 Peter Costello
Chief Executive Officer,
IPD North America
Previously CEO, Product
Manufacturing Division. Premier Farnell plc Group Leadership T eam
Annual Report and Accounts 2003
29
7 Andrew C Fisher
Group Finance Director
(see page 27)
8 Michael W Ruprich
Chief Executive Officer,
MDD, Americas
Formerly CEO, Newark Electronics.
Previously President and Chief
Executive, JLK Direct Distribution, Inc.
9 Laurence Bain
Group Chief Operating Officer
Previously Vice President and
Director of Operations for Motorola 
in Europe, Middle East and Africa.
10 Matt T oogood
Group Director Strategic
Marketing and Planning
Formerly Strategic Marketing
Director, MDD, Europe and
Asia Pacific.
11 Chris Haworth
Chief Operating Officer, MDD,
Europe and Asia Pacific
Formerly CEO, Appliance Spares
Division. Joined CPC in 1975, where
he was Managing Director when it
was acquired by the Group in 1995. Group sales and operating profit
Group sales for the financial year (52 weeks) were £759.0 million
(2002: £806.4 million, 53 weeks). There was a negative impact resulting
from the translation of overseas sales of £22.2 million due principally to the
weakness of the US dollar against sterling. Similarly, profit before tax, goodwill
amortisation and exceptional items of £67.2 million (2002: £72.5 million) was
reduced by £0.9 million.
Group sales for the year, based on year on year sales per day for continuing
businesses and at constant exchange rates, increased by 1.2 per cent
including the benefit of the BuckHickman InOne acquisition made in
July 2001. Excluding BuckHickman InOne, year on year sales decreased by
5.1 per cent, although the rate of decline narrowed during the year.
Significantly, the Group moved back into positive year on year growth in the
second half and sales grew by 2.8 per cent in the fourth quarter.
Premier Farnell plc Finance Director’s Review
Annual Report and Accounts 2003
30
Finance Director’s
Review
Americas SPD and year on 
year growth rates
Europe & Asia Pacific SPD 
and year on year growth rates
(excluding BuckHickman InOne)
2.0
1.8
1.6
1.4
1.2
1.0
0
-10
-20
-30
($m) (%)
Q1 Q2 Q3 Q4
1.2
1.0
0.8
0.6
10
0
-1 0
(£m) (%)
Q1 Q2 Q3 Q4
BuckHickman InOne SPD and
year on year growth rates
0.5
0.4
0.3
0.2
20
10
0
-10
(£m) (%)
Q1 Q2 Q3 Q4
Note: All sales growth rates are based on sales per day for continuing
businesses at constant exchange rates. Premier Farnell plc Finance Director’s Review
Annual Report and Accounts 2003
31
The Marketing and Distribution Division represented 87 per cent of the
Group’ s sales. General industrial demand and activity in the electronics
industry remained weak throughout the year in the Division’ s primary North
American and European markets. In the Americas, sales per day were
9.7 per cent below the prior year, although sales per day have remained
relatively stable since May 2002. In Europe and Asia Pacific, year on year
sales per day increased by 13.3 per cent, including the benefit of the
BuckHickman InOne acquisition. Excluding BuckHickman InOne, year on
year sales per day declined by 1.5 per cent, with the second half of the year
showing an improving sales trend and year on year growth of 2.6 per cent
after a decline of 5.4 per cent in the first half. In its first full year of ownership,
BuckHickman InOne has performed strongly and achieved an increase in
year on year sales of 4.6 per cent. During the year, the sales trend improved
and year on year growth in the second half was 10.5 per cent.
Sales for the Industrial Products Division increased 2.8 per cent year on
year. Sales at Akron Brass, which manufactures high-performance
fire-fighting equipment, increased 4.0 per cent and sales at TPC Wire and
Cable, a distributor of high specification cable to the North American
automotive and steel industries, also increased by 3.1 per cent. Sales at the
other main business, Kent Europe which distributes high performance
consumable products to the automotive repair industry, saw sales decline
slightly by 0.9 per cent.
The expense classification in the consolidated profit and loss account has
been restated to reflect the way in which management measure the
performance of the Group. Despite the difficult trading environment, the
gross margin for the year of 41.1 per cent has been stable and in line with
the previous year, reflecting firm management control and high customer
service levels.
Restructuring costs of £0.6 million relating to the closure of a warehouse
in North America were incurred during the year and the Group also realised
profits of £0.5 million on the disposal of surplus properties.
The Group’ s operating margin of 10.9 per cent, before goodwill amortisation,
compares with 11.0 per cent in the previous year. The Group realigned its
cost base rapidly during the period of sharp deterioration of market
conditions experienced in 2001 and has continued to exercise tight cost
control during the current year. This, together with sustained strong gross
margins, has resulted in the operating margin being maintained throughout
the year at a similar level to last year.
Re-branding
On 27th February 2003, the Group announced the rebranding of four
businesses of the Marketing and Distribution Division to demonstrate to
customers and suppliers the close alignment and global collaboration
between these businesses. The new trading names will be Newark InOne,
Farnell InOne, BuckHickman InOne and MCM, an InOne Company. The one
off cost of the rebranding of £2.4 million will be charged in the first quarter
of the coming financial year.
Disposals
On 28th June 2002, the Group sold DA Lubricants, the speciality lubricants
business of the Industrial Products Division, for net cash proceeds of
£3.3 million. The business traded at break-even during the first five months of
the financial year. The exceptional charge of £4.9 million included goodwill
previously written off against reserves of £2.6 million.
Deferred consideration of £0.1 million was received in the year which related
to prior year disposals.
Operating margin (%)
15.0
12.5
10.0
7.5
5.0
Q1 Q2
2001/2 2002/3
Q3 Q4 Q1 Q2 Q3 Q4
Gross margin (%)
45.0
40.0
35.0
Q1
Comprises continuing businesses throughout the above periods
Q2
2001/2 2002/3
Q3 Q4 Q1 Q2 Q3 Q4 Premier Farnell plc Finance Director’s Review
Annual Report and Accounts 2003 continued
32
Capital re-organisation
On 13th May 2002, shareholders approved a special conversion right which
enabled preference shareholders, for a limited period, to convert their
preference shares into ordinary shares at an enhanced rate of conversion.
As a result, 19.5 million (70 per cent) preference shares were converted into
89.8 million ordinary shares. The total number of ordinary shares in issue at
the year end was 362.4 million (2002: 272.2 million).
In addition, in July 2002, the Company purchased and cancelled a total of
644,000 of its own preference shares at a cost of £8.3 million. The total
number of preference shares in issue at the year end was 7.8 million
(2002: 27.9 million) and the ongoing annual preference dividend will be
approximately £7 million.
The restructuring has resulted in increased earnings per share and reduced
financial gearing. It also improved cash flow by more than £9 million in
the year, enhanced fixed charge cover and provided a more balanced
capital structure.
Subsequent to the year end, the Company purchased and cancelled a
further 197,000 of its own preference shares at a cash cost of £2.3 million.
Interest and fixed charges
The net interest charge of £15.7 million (2002: £15.9 million) was covered
5.3 times by the profit before interest, goodwill amortisation and loss on
disposal of businesses. Interest payments relate predominantly to fixed rate
US dollar borrowings. The effective interest rate on the Group’ s borrowings
was 7.1 per cent. Fixed charge (interest plus preference dividends) cover
was 2.7 times.
T axation
The Group’ s effective tax charge represented 28.4 per cent
(2002: 29.5 per cent) of the profit before tax, goodwill amortisation and loss
on disposal of businesses. The underlying tax rate, excluding the impact of
tax credits arising from the favourable settlement of earlier years’ liabilities,
was 29.9 per cent (2002: 30.5 per cent). A tax credit of £0.9 million arose
on business disposals in the year (2002: nil).
The UK and US corporation tax rates of 30 per cent and 35 per cent,
respectively, are significant influences on the Group’ s effective rate. In the
absence of significant changes to UK or US tax rates or regulations, the
effective rate during the coming financial year should be no greater than
31 per cent.
Dividends
The Board is recommending a final dividend of 5.0 pence which, together
with the interim dividend, amounts to a total dividend per share of 9.0 pence,
unchanged from the previous year, at a total cost for the financial year of
£32.6 million. The dividend is covered 1.1 times (2002: 1.0 times) by
attributable profits adjusted for goodwill amortisation and loss on disposal of
businesses. Maintaining the dividend at last year’ s level reflects the Board’ s
confidence in the Group’ s outlook and its strong cash flow characteristics.
Earnings per share
Basic earnings per share were 9.3 pence (2002: 4.6 pence). Adjusted
earnings per share (before amortisation of goodwill and loss on disposal of
businesses) were 11.2 pence (2002: 9.2 pence). This improvement reflects
the capital restructuring described above and the consequent reduction in
the preference dividend in the year to £10.8 million (2002: £26.1 million).
The weighted average number of ordinary shares in issue during the year
was 331.6 million (2002: 271.9 million).
Cash flow and net debt
Free cash flow available to ordinary shareholders is summarised below:
2003 2002
£m £m
Cash flow from operating activities 92.0 107.1
Capital expenditure (24.9) (24.8)
Sale of fixed assets 1.7 1.3
Interest and preference dividends (26.6) (41.7)
Tax (12.7) (27.4)
Free cash flow 29.5 14.5
Cash flow from operating activities represented 111 per cent
(2002: 121 per cent) of operating profit, before goodwill amortisation,
and reflects tight control of working capital across the Group. Inventories
increased by £9.0 million in the year, reflecting the stocking of the new
Belgium warehouse and product range expansion. Receivable days have
been maintained or improved across all major businesses, with the overall
average reducing from 55 to 52 days during the year, releasing cash of
£6 million.
Capital expenditure of £24.9 million included £18.5 million on computer
systems. £10.8 million was spent on front-office customer-facing systems
based around Siebel customer relationship management systems and a
further spend of £7.7 million was incurred in enhancing existing systems,
including expenditure at Newark InOne and Farnell InOne to facilitate the
integration of the front-office systems with their back-office systems. The
front-office systems were successfully deployed at Farnell InOne’ s UK
business in November 2002 and since the year end have been successfully
deployed across Newark InOne’ s branch and call centre infrastructure.
Expenditure on front-office systems in the coming year will be approximately
£6 million and total capital expenditure is expected to be approximately
£20 million. The depreciation charge in the coming year will increase by
approximately £7 million, mainly as a result of the deployment of front office
systems.
Payments to tax authorities benefited by £9 million as a result of tax repaid
from prior years.
The change in net debt is summarised below:
£m
Opening net debt (236.4)
Free cash flow 29.5
Ordinary dividends (28.1)
Disposal of businesses 3.3
Capital re-organisation (9.2)
Issue of ordinary shares 0.7
Net cash outflow (3.8)
Exchange movement 31.0
Closing net debt (209.2)
The Group’ s net debt comprises the following:
£m
Cash at bank and in hand 29.6
Bank loans and overdrafts (46.7)
US $310million Senior Notes due 2003 and 2006 (189.0)
Other loans (3.1)
Net debt (209.2) Premier Farnell plc Finance Director’s Review
Annual Report and Accounts 2003 continued
33
The Company has $155 million 7.0 per cent Senior Notes, repayable in June
2003. In anticipation of this repayment, the Company has secured additional
funding, to be drawn in June 2003, of $225 million, comprising $159 million
Senior Notes payable 2013 at an effective interest rate of 5.9 per cent and
$66 million Senior Notes payable 2010 at an effective interest rate of
5.3 per cent.
The resulting profile of the Group’ s loan finance and committed bank facilities
is illustrated in the chart below. This shows sound medium-term funding and
headroom in excess of £100 million.
Treasury operations
The Group is exposed to a number of different market risks, including
movement in interest rates and foreign currency exchange rates. The Group
has established policies and procedures within the treasury function to
monitor and manage the exposures arising from volatility in these markets,
with derivative instruments being entered into when considered appropriate
by management.
The Group Treasury function is responsible for sourcing and structuring
borrowing requirements, managing interest rate and foreign exchange
exposure and managing any surplus funds, which are invested mainly in
short-term deposits with financial institutions that meet the credit criteria
approved by the Board. In addition, monthly reports are produced by the
Group Treasury function which are used to monitor treasury activities.
Important treasury management decisions are approved by the Board.
Group policy prohibits speculative arrangements in that transactions in
financial instruments are matched to an underlying business requirement,
such as forecast debt and interest repayments and expected foreign
currency revenues. The Group uses derivatives only to manage its foreign
currency and interest rate risks arising from underlying business activities.
The Group Treasury function is subject to periodic independent reviews by
the internal audit department. Controls over interest rate and foreign
exchange exposures and transaction authenticity are in place and dealings
are restricted to those banks with the relevant combination of geographic
presence and suitable credit rating. The Group continually monitors the credit
ratings of its counterparties and credit exposure for each counterparty.
The Group hedges transactions primarily related to the purchase and sale
of inventories denominated in foreign currencies through foreign exchange
forward contracts. These contracts reduce currency risk from exchange rate
movements with respect to these transactions and cash flows. Gains and
losses are deferred and accounted for as part of the underlying transactions.
The Group does not hedge profit translation exposure, unless there is a
corresponding cash flow, since such hedges provide only a temporary deferral
of the effect of movements in exchange rates.
Accounting standards and policies
The Group’ s accounting policies fully reflect the requirements of the
Accounting Standards Board.
Pension accounting
The Group accounts for pensions in accordance with SSAP 24. The Group’ s
net assets include a pension asset of £82.2 million (2002: £87.0 million)
which is included in debtors due after more than one year. The consolidated
profit and loss account includes a net pension credit of £4.4 million
(2002: £5.3 million) in relation to all of the Group’ s pension schemes. It is
estimated that this credit will be reduced by approximately £1.5 million in the
coming financial year, primarily as result of the decline in the market value of
assets in the Group’ s UK and US defined benefit schemes.
The recent tri-annual valuation of the UK scheme is expected to require the
Group to recommence contributions at a rate of approximately £800,000 per
annum. The Group will continue to enjoy a contribution holiday for the
foreseeable future in relation to the US scheme.
The results do not reflect the full adoption of FRS 17, Retirement Benefits,
because this is not required until the Group’ s financial year ending
31st January 2006. If the standard had been fully adopted in 2003, profit
before tax would have been reduced by £3.2 million, comprising a charge to
operating profit of £10.2 million and a credit to interest of £7.0 million, and
consolidated net assets would have been reduced by £31.1 million. Under
FRS 17 the value of the net surplus of the UK and US defined benefit
schemes would have been £34.7 million, comprising a surplus in the
US scheme of £49.4 million and a deficit in the UK scheme of £14.7 million.
Andrew Fisher
Group Finance Director
2012
Debt profile (£m)
357
300
236
200
100
0
2004 2006 2008 2010
a Bilateral bank facilities to 2006
b $155m 7.2% Senior Notes repayable 2006
c $66m 5.3% Senior Notes repayable 2010
d $159m 5.9% Senior Notes repayable 2013
Gross debt at 2nd February 2003
a
b
c
d Premier Farnell plc Social Responsibility Report
Annual Report and Accounts 2003
34
Social Responsibility Report
safety
This is the second year for which
we have prepared a social
responsibility report and we have
found that the preparation and
issue of this report has already
helped to raise awareness of
relevant issues within the Group.
In preparing this report we have,
wherever practical, followed the
guidelines suggested by the
UK Government.
Health and safety
Our health and safety commitment
remains the simple one of
minimising accidents and injuries in
the workplace. It is therefore with
great sadness that we have to
report the death, during the year, of
a driver with our BuckHickman
InOne business who was involved
in a fatal road traffic accident. The
Coroner’s enquiry into the accident
recorded a verdict of accidental
death and no blame was
apportioned to the company or any
of its operations.
Our occupational injury rate (see
figure 1) decreased from 1.14
injuries/100,000 hours worked in
1998, to only 0.63 in 2001, and
rose slightly to 0.68 in 2002. We
understand the reasons for this
increase and have taken steps to
address them.
Last year we set a target of
reducing this rate to 0.60 by the
end of 2003. Despite the small rise
in 2002, we still believe that this
goal is achievable.
Our occupational injury rate remains
very low when compared to rates
for other industries (see figure 2).
Business segment risks
The Group’s business is
predominantly distribution.
Distribution activities with potential
for injury include manual handling,
movement of goods, lifting of
products and opening of boxes.
The Group also has a small number
of manufacturing facilities, each of
which has certain activities where a
potential for injury exists.
Actions taken to prevent
and minimise injuries
We provide targeted safety training
to relevant employees in an effort to
prevent and reduce injuries. We
provide training in ergonomics, safe
lifting, first aid/CPR/infection control,
hazard communication, emergency
evacuation, spill cleanup, fire
extinguisher use, forklift operation,
confined space entry, electrical
isolation, and the use of personal
protective equipment.
In the UK, all of our logistics
management team have undergone
training in health and safety
responsibilities and this will be
extended to cover risk assessment
and accident investigation.
Our major distribution and
manufacturing facilities are required
to conduct regular health and
safety audits. They are required to
address quickly any safety concerns
that are identified. Our goal is to
address safety concerns before
accidents occur.
In order to ensure compliance
with the large number of safety
regulations in the US, we require
facilities located there to prepare
annually and follow safety
compliance calendars. The
calendars list the safety compliance
and employee training actions that
the facility must take during the
year. These calendars not only
ensure compliance, but also
provide a safety focus throughout
the year.
A large portion of Premier Farnell
employees are office-based. For
that reason, we take proactive
actions to reduce office related
injuries. Training in the correct use
Fig. 1 Occupational injury rate
per 100,000 hours worked*
*Shown are the rates at which accidents (which involve more than basic first aid treatment)
occurred per 100,000 hours worked. The “industry average” figures were computed by
taking the averages for the industry segments in which Premier Farnell operates.
Source of industry segment averages: US Occupational Health and Safety Administration,
Bureau of Labor Statistics.
2.04
1.14
Industry Average
Premier Farnell
1998
1.71
0.72
1999
1.66
0.65
2000
1.59
0.63
2001
1.67
0.68
2002
0.00 0.50 1.00 1.50 2.00 2.50 Premier Farnell plc Social Responsibility Report
Annual Report and Accounts 2003
35
of display screens and workstations
is provided.
Additional actions to be taken in
2003 to reduce injuries
We plan to take a number of
actions in 2003 that will emphasise
safety and encourage pro-safety
attitudes. These actions are
described below.
As mentioned in last year’s report,
our MCM distribution centre in the
US has been developing a
“behaviour-based safety”
programme. Their programme has
now been finalised and
implemented. The development
and implementation of the
programme has resulted in many
positive results. At the time of this
report, the MCM distribution centre
had completed 17 consecutive
months without a recordable
workplace injury. We attribute this
accomplishment to the fact that
their behaviour-based safety
approach encourages sound safety
behaviour in a proactive manner.
We are proud of MCM’s
accomplishment and our target in
2003 is to implement a similar
“behaviour-based safety”
programme in at least one other of
the Group’s major facilities.
We are requiring all major facilities
to track and regularly report
near-miss incidents and to have
active safety committees in 2003.
One role of these committees will
be to review near-miss incidents
and take any corrective actions that
may be warranted, consistent with
our goal of preventing injuries
before they occur. The committees
will also review recordable injuries,
safety audit findings and safety
compliance and training activities.
Members of our safety staff will
make regular visits to major facilities
in 2003 to review safety practices,
attend safety committee meetings
and assist in conducting safety
audits. In the UK and Europe,
regular risk surveys of the facilities
will be conducted that will establish
baselines for improvement. This
is part of an ongoing safety
programme that was started about
18 months ago.
The environment
Our commitment in this area is to
identify and collect data on the
Group’s environmental impacts and
to reduce them.
As stated in last year’s report, we
have begun collecting data on the
amount of energy used, employee
business travel, waste disposed,
waste recycled, water consumed,
and greenhouse gas emissions.
We will compile this data annually.
The 2002 results are presented in
this report. The data is presented in
two ways. We present total quantity
of usage/generation, as well as unit
rates based on sales turnover (i.e.
quantity per £1,000 of sales).
We consider the 2002 data to be
important baseline data. We intend
to compare data for future years
with this baseline data.
We feel that it is too early for us to
set specific reduction targets until
we have a greater understanding of
the activities underlying this data.
However, we will continue our efforts
to reduce environmental impacts
wherever possible, including the
actions described later in this report.
Achievements
We are delighted to report that our
distribution centre in Gaffney, South
Carolina has been audited and
granted ISO 14001 certification.
During the registration audit, the
Fig. 2 Comparing Premier
Farnell’s occupational injury
rate with rates for other
industries*
Legal Services 0.35
Insurance Agents/Brokers 0.35
Banking 0.60
Premier Farnell 0.68
Electrical Goods – Wholesale 1.35
Chemical Industry 1.70
Electronic Equipment 2.10
Aircraft 2.55
Paper 2.75
All Manufacturing 3.50
Steel 4.00
Rubber/Plastics 4.00
Trucking 4.15
Food 4.50
Motor vehicles 6.50
Iron/Steel Foundries 7.45
(Group's injury rate in 2002)
*Shown is the company’s occupational
injury rate for 2002 compared to industry
segment rates compiled and published by
the US Department of Labor, Bureau of
Labor Statistics for 2001 (being the latest
statistics available). Premier Farnell plc Social Responsibility Report
Annual Report and Accounts 2003 continued
36
aware
independent auditors complimented
the Gaffney facility for having the
highest level of ISO 14001 related
employee awareness and training
of any company they had audited.
An activity we are particularly proud
of is the high level of recycling we
carry out. Across the Group, we
recycle over 40% of the waste we
produce. This reflects the significant
steps taken at our major distribution
centres in Leeds and Gaffney in
recycling supplier packaging. It also
reflects the significant steps taken
by our Akron Brass manufacturing
operation in Wooster, Ohio in
recycling industrial process waste.
We are also pleased by the pollution
prevention efforts taken by our
Leeds and Gaffney distribution
centres. Both have made significant
progress in using recycled material
and/or air-filled bags (instead of
polystyrene chips) as protective
packaging for the products we ship
to customers. Both distribution
centres also utilise cardboard
shipping boxes made from
recycled material.
We remain a member of the FTSE4
Good Index of Corporate and
Social Responsibility, the criteria for
which includes environmental
issues, as well as stakeholder
relations and human rights. We are
also among a small number of
companies that have participated in
the Business in the Environment
survey of Corporate Environmental
Engagement for every year since
its inception.
Business segment risks
As previously stated, the Group’s
business is predominantly
distribution. Environmental
concerns associated with this
segment include the proper
handling, storage, shipping, and
disposal of the chemical products
we distribute.
Chemical products must be
packaged and shipped in
compliance with hazardous
materials transportation laws.
Returned, damaged and
discontinued chemical products
(e.g. electrical cleaners, solders,
batteries) must be properly handled
and disposed of.
Premier Farnell has several
manufacturing facilities. These
facilities generate industrial process
waste that must be properly
handled and disposed of. In
addition, Akron Brass operates a
brass foundry that requires special
air handling equipment and air
emission permits.
Actions routinely taken to
manage environmental
concerns
We provide targeted environmental
training to relevant employees in an
effort to ensure they comply with
relevant laws and act in an
environmentally responsible manner.
We provide training in hazardous
waste disposal, spill prevention,
and hazardous materials
transportation.
In order to ensure compliance with
the large number of environmental
regulations in the US, we require
facilities located there to prepare
annually and follow environmental
compliance calendars. The
calendars list the environmental
compliance and employee training
actions that the facility must take
during the year. These calendars
not only aid compliance, but also
provide an environmental focus
throughout the year.
Energy consumed
Unit Rate
Type of Energy Used Amount Used in 2002 (per £1,000 of sales)
Electricity 34,683,988 KWh 45 KWh
Natural gas 2,088,856 cubic metres 2.7 cubic metres
Propane 4,585 kilograms .006 kilograms
Fuel oil 3,106 litres .004 litres
Petrol for company
cars/trucks 836,282 litres 1 litre
Diesel fuel for company
cars/trucks 1,269,574 litres 2 litres
Employee business travel
Unit Rate
Amount in 2002 (kilometres per £1,000
Type of Travel (kilometres) of sales)
Business use of cars/
trucks 9,196,846 12 
Business use of rented
cars/trucks 8,936,540 12 
Train use 350,546 0.2 
Short (intracontinent)
airline flights 13,833,288 18 
Long (intercontinent)
airline flights 12,700,692 16 
Total 44,888,269 58 
Waste disposed
Unit Rate
Amount in 2002 (kilograms per £1,000
Type of Waste (kilograms) of sales)
Hazardous Waste 551,618 0.7 
Industrial Process Waste 855,883 1 
Solid Waste 2,756,342 4 
Total 4,163,843 5.7  Premier Farnell plc Social Responsibility Report
Annual Report and Accounts 2003 continued
37
Additional actions to be
taken in 2003 to manage
environmental concerns
We plan to take several actions
in 2003.
As previously mentioned, our
distribution centre in Gaffney was
audited and the site was granted
ISO 14001 certification. Our 2003
goal is to achieve ISO 14001
certification at our major distribution
centre in Leeds.
We will continue our efforts to
increase recycling at our major
distribution centres in Leeds and
Gaffney. As part of this, we are
aiming for complete recycling of all
cardboard waste from supplier
packaging at all of our UK
distribution centres by the end of
January 2004. We will also continue
our industrial process waste
recycling efforts at the Akron Brass
manufacturing facilities.
Contribution to the community
The Group contributes to the wider
community in a number of ways.
A total of £51,000 was donated to
a number of charities during the
year. Equally important are the
contributions in kind which are
made by the Group. Employees are
encouraged to participate in
charitable fundraising events and to
give time, both in and outside
working hours, to good causes.
The following are just a few of
many examples.
In the UK, Farnell InOne has been a
long-term sponsor of the “Great
Yorkshire Bike Ride” which has now
raised £1 million for a variety of
charities. As well as the Group’s
sponsorship, a number of Group
employees take part every year,
raising their own contribution. The
Group has also provided two-year
sponsorship of a VSO volunteer
who is teaching English to Chinese
students in the Shaanxi Province
of China.
The Group regularly donates certain
items of stock to charities and also
donates equipment to various
charitable and educational
organisations to assist in research
programmes.
In the US, all of the Group’s
businesses participate in United
Way, a community-based umbrella
organisation supporting various
human services organisations.
Group employees have taken
leadership roles in United Way’s
fundraising activities. Also in the
US, a number of Group companies
have taken part in efforts to provide
food and clothing to local families
and individuals in need.
Akron Brass has donated vital fire
fighting equipment to the Mercy
Ships organisation, which travels to
developing nations to assist with
construction projects, as well as
providing medical and dental care.
In Singapore, Farnell InOne is
involved with the Community Chest
organisation, which co-ordinates
community efforts to raise money
for vulnerable members of society
and provides matching
contributions to those made
by employees.
Across the Group, our close links
with the education sector are
strengthened by various
sponsorships and educational
awards.
Farnell InOne reviewed the use of
polystyrene as protective loose-fill
packaging for the products it
delivers to customers. 
The reasons for the review were:
– cost
– non-biodegradable
– customer preference
As a result, Farnell InOne moved
to the use of air bags which utilise
recyclable plastic for small and
medium parcels. This reduced the
use of polystyrene by 80 per cent
and generated annual cost savings
of approximately £200,000.
Waste recycled
Unit Rate
Amount in 2002 (kilograms per £1,000
Type of Waste (kilograms) of sales)
Hazardous Waste 2,700 0.004 
Industrial Process Waste 1,294,825 1.68 
Solid Waste 1,747,141 2.27 
Total 3,044,666 3.95 
Water used
Unit Rate
Amount in 2002 (litres per £1,000
(litres) of sales)
Water Used 61,846,040 81 
Greenhouse gas emissions
Type of Energy Used Amount Used in 2002 Metric tons CO 2 Emitted
Electricity (for facilities) 34,683,988 KWh **21,397
Natural gas (for facilities) 2,088,856 cubic metres 4,555
Propane (for lift trucks) 4,585 kilograms 11
Fuel oil (for facilities) 3,106 litres 11
Petrol for company cars/
trucks 836,282 litres 1,568
Diesel fuel for company
cars/trucks 1,269,574 litres 3,390 
Petrol for rented cars/
trucks* 1,728,792 litres 3,241
Total 34,173
* assumed 10.5 kilometres per litre of petrol consumed
**conversion factor used = 0.612 kg CO 2/KWh
(equals USA 1998-99 average per US Dept. of Energy) Premier Farnell plc Directors’ Report
Annual Report and Accounts 2003
38
Principal Activities and Business Review
A detailed review of the Group’s activities, the development of its business
and an indication of likely future developments are dealt with on pages 10
to 25.
The principal activity of the Group remains unchanged and is the
distribution of electronic, electrical and industrial products to the design,
maintenance and repair sectors.
Proﬁt and Dividends
The proﬁt for the ﬁnancial year (52 weeks) attributable to ordinary
shareholders was £30.8 million (2002: £12.5 million (53 weeks)). The
Directors recommend that a ﬁnal dividend of 5.0 pence (2002: 5.0 pence)
per ordinary share be paid on 25th June 2003 to those shareholders on
the register of members at the close of business on 30th May 2003. An
interim dividend of 4.0 pence per ordinary share was paid on 25th October
2002, making a total for the year of 9.0 pence (2002: 9.0 pence) per
ordinary share. 
Acquisitions and Disposals
On 28th June 2002 the Group sold DA Lubricants, the speciality lubricants
business of the Industrial Products Division in North America for a
consideration of £4.3 million.
Further details of this disposal are given in the Finance Director’s review on
pages 30 to 33 and in notes 2 and 23 to the Financial Statements.
Share Capital
Details of changes in the issued share capital of the Company during the
year are set out in note 19 on page 64. These include the results of the
special conversion right announced in April 2002. Pursuant to this special
conversion right preference shareholders were given the right, for a limited
period, to convert their cumulative redeemable preference shares in the
Company into ordinary shares at an enhanced conversion rate. A total of
19,530,070 preference shares were converted under this right, leading to
the issue of 89,838,310 new ordinary shares. Following the expiry of the
special conversion right, the Company acquired 643,964 preference
shares in the market for cancellation at a total cost of £8.3 million. On
19th March 2003, the Company acquired a further 197,000 preference
shares in the market for cancellation at a cost of £2.3 million.
At the forthcoming Annual General Meeting, the Company will be seeking
authority to purchase its ordinary and preference shares. Authorities were
previously granted at the Annual General Meeting in 2002, but expire at
the close of the forthcoming meeting.
Fixed Assets
The Directors are of the opinion that any difference between the book
value and the market value of the land and buildings of the Company and
its subsidiary undertakings is not signiﬁcant.
Directors
The names and biographical details of the Directors who held ofﬁce
throughout the year appear on page 27. In addition, Messrs Morton L
Mandel and Patrick F Sullivan were Directors of the Company until
12th June 2002.
In accordance with the Company’s articles of association Sir Malcolm
Bates, Mr John Roques and Mr Cary Nolan will retire at the forthcoming
Annual General Meeting of the Company and offer themselves for
re-election. Mr William Korb, who was appointed during the year, will retire
and offer himself for election. All of the Directors standing for election or
re-election are Non-Executive Directors and do not have service contracts
with the Company.
Additional information relating to Directors’ remuneration, service contracts
and interests in the Company’s shares is given in the Remuneration
Report on pages 40 to 45. The details of Directors’ interests in the
Company’s shares form part of this report.
Supplier Payment Policy
The Group’s operating companies are responsible for agreeing terms and
conditions under which business transactions with their suppliers are
conducted. Payments to suppliers are made in accordance with those
terms, provided that suppliers also comply with all relevant terms and
conditions. At 2nd February 2003, the amount the Group owed its
suppliers represented 33 working days’ purchases (at 3rd February
2002: 21). The Company is a holding company and does not have any
trade creditors.
Charitable and Political Donations
In the US, the Group has an ongoing policy of donating certain items of
stock to charitable organisations. In addition, during the year the Group
made charitable donations in cash of £51,000. Further details of the
Group’s charitable activities appear in the Social Responsibility Report.
The Group continues its policy of not making contributions to political
parties, although resolutions will be proposed at the Company’s Annual
General Meeting to deal with the consequences of the Political Parties,
Elections and Referendums Act 2000. These resolutions are explained in
the notes accompanying the notice of the meeting.
Employment
The Group places great emphasis on optimising the contribution made by
employees at all levels around the world. A Group-wide Performance
Review and annual Management Audit process are in their fourth year of
operation. Two Leadership Development Programmes have been
implemented for the top 150 managers and a series of programmes for
new or inexperienced managers and supervisors have been introduced.
Product training using interactive e-learning technology has been
implemented. A change management workshop has been introduced
across the Group. In addition, there has been signiﬁcant investment in
general skill development with particular reference to computer skills,
marketing and customer service.
A formal job grading system exists across the Group to assist
remuneration practices as well as career development and organisational
planning processes.
Employees are informed of the performance of the Group and a
structured communication programme allows factors affecting their
employment to be discussed.
Working in close co-operation with elected representatives from its
European operating companies, the Group has established a European
Directors’ Report Works Council (The Premier Farnell European Forum). The Forum provides
an arena for the exchange of relevant and appropriate information and
constructive dialogue between management and employees on European
issues.
The Group gives full and fair consideration to applications for employment
from disabled persons, with regard to their particular aptitudes and
abilities. Efforts are made to continue the employment of those who
become disabled during their employment. Training, career development
and promotion are, as far as practicable, identical for all employees
according to their skills and abilities. The Group consistently seeks to
recruit, develop and employ throughout the organisation suitably qualiﬁed,
capable and experienced people, irrespective of race, religion or sex.
Environment
The Group recognises the importance of responsible environmental
management and its obligation to protect the environment. The Group
therefore gives high priority to all environmental matters. Further information
appears in the Social Responsibility Report.
Substantial Shareholdings
At 10th April 2003 the Company had been notiﬁed of the following
interests amounting to 3 per cent or more of the Company’s issued
ordinary share capital:
%
AXA SA 7.32
Prudential plc 6.12
Scottish Widows 4.77
The Capital Group Companies Inc. 4.10
Standard Life Group 3.99
HBOS plc 3.95
Royal and Sun Alliance Insurance Group plc 3.69
Legal and General plc 3.06
Independent Auditors
Following the conversion of PricewaterhouseCoopers into a limited liability
partnership from 1 January 2003, PricewaterhouseCoopers resigned as
auditors of the Company on 18th March 2003 and PricewaterhouseCoopers
LLP was appointed as auditor to ﬁll the casual vacancy which arose.
A resolution to reappoint PricewaterhouseCoopers LLP as auditors and to
authorise the Directors to determine their remuneration will be proposed at
the forthcoming Annual General Meeting of the Company.
Annual General Meeting
The notice convening the Company’s 2003 Annual General Meeting at
the Mayfair Conference Centre, Marble Arch, London on 11th June 2003
at 11.30 am is set out in a separate document issued to shareholders.
By order of the Board
Steven Webb
Secretary
Farnell House
Forge Lane
Leeds LS12 2NE
19th March 2003
Premier Farnell plc Directors’ Report
Annual Report and Accounts 2003
39 Remuneration Report
This report provides information on Directors’ remuneration. A resolution
will be put to shareholders at the Company’s Annual General Meeting
inviting them to approve this report.
Remuneration policy
The Group’s overall policy aims are to:
– attract, develop, motivate and keep talented people at all levels
throughout the Group;
– pay competitive salaries and beneﬁts to all of its people;
– encourage the holding of shares in the Company as an effective way of
aligning the interests of employees with those of shareholders; and
– focus remuneration arrangements to help each business in the Group
meet its speciﬁc targets.
The Board’s policy for executive remuneration is to:
– pay a basic salary which is competitive with other companies of similar
size and complexity;
– give executives the opportunity to increase their basic earnings by
meeting and outperforming key short term and long term measures,
thereby linking executive rewards to the Group’s performance and
shareholder interests;
– encourage executives to hold shares in the Company; and
– reward executives fairly and responsibly for their contribution to the
Group’s performance, without paying more than is necessary to achieve
this objective.
In framing this policy, the Board has given full consideration to the
provisions of the Combined Code.
This report sets out the Group’s policy on Directors’ remuneration for
2003 and, so far as practicable, for subsequent years. The inclusion in the
report of remuneration policy in respect of years after 2003 is required by
the legislation under which this report is prepared. The Remuneration
Committee is able to state its remuneration policy for 2003 with
reasonable certainty, but is less certain that this policy will continue without
amendment in subsequent years. This is because the Committee
considers that a successful remuneration policy needs to be sufﬁciently
ﬂexible to take account of future changes in the Group’s business
environment and remuneration practice. Any changes in policy for years
after 2003 will be described in future Remuneration Reports. All
statements in this report in relation to remuneration policy for years after
2003 should be read in the light of this paragraph.
As part of the process of keeping the Group’s remuneration policy under
review, two proposals will be put to shareholders at the Company’s
Annual General Meeting.
The ﬁrst proposal is for the adoption of a new executive share option
scheme which, if approved, will replace the existing executive option
schemes. In line with current best practice, the proposed new option
scheme provides for annual grants to participants (including Executive
Directors). The maximum value of an annual grant to any individual will be
equal to 100 per cent of the individual’s annual salary. Exercise of options
granted under the scheme will be subject to a performance condition.
This condition will be that the growth in the Company’s earnings per share
(EPS) over the three consecutive ﬁnancial years starting with the year of
grant exceeds the growth in the UK Retail Price Index (RPI) over the same
period by at least 9 per cent. At this level of performance half of the
options granted would be exercisable. Exercise of all options granted will
require that the Company’s EPS growth exceeds RPI over the period by at
least 15 per cent, with a sliding scale for performance between 9 per cent
and 15 per cent. If the performance condition is not met over this three
year period, options may also be exercised if the Company’s EPS growth
exceeds RPI by a minimum of 12 per cent over the four ﬁnancial years
starting with the year of grant. The same sliding scale for exercise will
apply for performance between 12 per cent and 20 per cent. If the
performance target is not met by the fourth year, the relevant options will
lapse.
Earnings per share was chosen as the appropriate measure of performance
as it provides an absolute benchmark of the Company’s performance and
is therefore a suitable balance with the relative performance measurement
used in the Company’s long-term incentive plan.
The second proposal is for certain amendments to the Company’s
long-term incentive plan (LTIP). The main performance measure under the
LTIP relates to the Company’s total shareholder return or “TSR” (share
price growth and reinvested dividends) over a three year period. The base
share price used for TSR calculation purposes is currently the average
price over the 12 month period immediately prior to the beginning of the
ﬁnancial year in which an award is made under the plan. This base share
price is compared to the share price three years later, calculated as the
average over the 12 month period immediately prior to the end of the
three year performance period.
It is proposed that both of these averaging periods are reduced to three
months and that the averaging takes place in the period immediately prior
to the date of an award. The Remuneration Committee feels that this will
create a much closer link to the Company’s performance at the time
awards are made, while mitigating the impact of share price volatility. It is
also proposed that the same averaging period is used for calculating the
maximum value of awards made to participants.
Shareholders are also asked to allow amendment to the LTIP rules to
allow grants of awards within the 42 day period following approval at the
Annual General Meeting referred to above. Further information on both
proposals is contained in the notice of Annual General Meeting sent to
shareholders with this Annual Report.
Previously, participants in the long term incentive plan did not receive
grants of executive options. During the year, the Committee revised this
approach and granted executive share options to participants in the
long-term incentive plan (including Executive Directors). The Committee
concluded that making only long-term incentive plan awards to the
Company’s most senior executives and only executive option grants to the
Premier Farnell plc Remuneration Report
Annual Report and Accounts 2003
40
Remuneration Report next tier of management was potentially divisive because of the possibility
of one group receiving different beneﬁts to the other group in respect of
the same performance by the Company. The Committee now intends that
long-term incentive awards will also be made more widely within the
Group in order that Executive Directors and senior executives receive a
balance of share options and long-term incentive awards.
The Remuneration Committee and its Role
The Remuneration Committee consists of Mr Michael Lester (chairman),
Sir Malcolm Bates, Mr William Korb, Mr Cary Nolan and Mr John Roques.
All members of the Committee are Non-Executive Directors and
considered to be independent. Mr Morton Mandel was a member of the
Committee until his retirement from the Board on 12th June 2002.
The Chief Executive attends meetings of the Committee to discuss the
performance of other executives and to make proposals where necessary,
but is not present when his own position is discussed.
The Committee makes recommendations to the Board on the Group’s
framework of executive remuneration and its cost. The Committee
determines the speciﬁc remuneration packages for Executive Directors
and the other senior executives who form the Group Leadership Team.
During the year the Committee received advice from the Chief Executive in
respect of the remuneration arrangements for other senior executives and
from Mr Brian Lewis, Group HR Director, in respect of remuneration
arrangements generally.
The Current Remuneration Package
The current elements of remuneration for Executive Directors and senior
executives are as follows:
– Salary and Beneﬁts
The Committee reviews salaries each year taking account of Group and
personal performance. The Committee also takes account of the levels
of pay awarded elsewhere in the Group.
The value of non-cash beneﬁts for Executive Directors is included in the
table of remuneration on page 43 and consists of a fully expensed car
and life and health insurance. The value of these beneﬁts is not
pensionable, but is assessable to tax.
– Short-Term Incentives
The Company operates an annual performance-related bonus scheme
for Executive Directors and senior executives. The maximum bonus
payment under the scheme is 100 per cent of base salary for Mr John
Hirst and 70 per cent (60 per cent for the year ended 2nd February
2003) of base salary for Mr Andrew Fisher. To reach this maximum
requires signiﬁcant value creation by the Group as well as achievement
of clearly deﬁned individual objectives.
– Long-Term Incentives
The Company operates a long-term incentive plan and the share option
schemes described below.
Under the long-term incentive plan, Executive Directors and senior
executives are awarded rights to acquire ordinary shares. Each award
made under the plan is subject to performance conditions which will
determine how many (if any) of the shares under the award the participant
is entitled to acquire after the three year performance period. The
maximum value of awards which can be made in any year to a participant
is equal to 100 per cent of basic salary.
The main performance condition compares the growth of the Company’s
TSR over a three year period to that of the companies in the FTSE mid-
250 Index (excluding investment trusts). The Company’s ranking amongst
the comparator companies determines the percentage of shares which a
participant can acquire. No shares may be acquired where the Company’s
ranking is below median and, to acquire the full number of shares
awarded, the Company must rank in the top quartile of the comparator
group. Between these two points, vesting is on a straight-line basis, with
20 per cent of any award vesting where the Company’s performance is at
the median. Where performance over the three year period does not
reach the median ranking, the relevant award lapses and there is no re-
testing of performance.
In addition, shares can only be acquired under any award if the
Committee is satisﬁed that the underlying performance of the Company
during the performance period justiﬁes the exercise of an award.
The performance condition was chosen as the Committee believes that
TSR is an appropriate method of comparing the performance of the
Company to that of its peers. The FTSE mid-250 Index (excluding
investment trusts) was chosen as the comparator group as there are a
limited number of companies which are directly comparable to the
Company and the index was therefore felt to be a suitable yardstick of
relative performance.
In assessing whether such performance condition has been met, the
Committee will rely on calculations of the Company’s TSR and that of the
FTSE mid-250 Index carried out on their behalf by New Bridge Street
Consultants. The requirement that the Committee must be satisﬁed that
underlying performance of the Company during the performance period
justiﬁes the exercise of an award is intended to give the Committee a
discretion to refuse to allow a particular exercise, notwithstanding the
achievement of at least a median TSR ranking. The Committee’s view is
that such circumstances are likely to be exceptional and therefore they
are difﬁcult to determine before they have arisen. In addition, the
Committee does not wish to limit its discretion in any way by attempting
to pre-determine the circumstances in which it might be exercised. If the
Committee exercised this discretion it would be in respect of all awards
made on a particular date and not in respect of a particular individual
or individuals.
Beneﬁts under the plan are not pensionable.
The Company currently operates two executive share option schemes
and has a savings related (SAYE) share option scheme. Beneﬁts under
these plans are not pensionable. As noted above, it is proposed to
replace the executive share option schemes with a new share option
Premier Farnell plc Remuneration Report
Annual Report and Accounts 2003
41 scheme for which shareholder approval is being sought at the forthcoming
Annual General Meeting of the Company.
Following the 1996 Finance Act, grants of Inland Revenue approved
options are limited to a maximum value of £30,000 per participant and are
made under the approved executive option scheme. Options in excess of
£30,000 are granted under the unapproved executive scheme. Grants
under both schemes are normally phased and the aggregate total option
value for any individual is limited to four times remuneration.
Executive options granted after 13th March 2001 may not be exercised
unless the growth in the Company’s earnings per share (EPS) over a
period of three consecutive ﬁnancial years exceeds the growth in the UK
Retail Price Index (RPI) over the same period by at least 9 per cent. For
options granted after 20th June 1996, but before 14th March 2001,
exercise is subject to the growth in EPS over three consecutive years
exceeding the growth in RPI over the same period by at least 6 per cent.
For options granted before 20th June 1996 EPS growth over three
consecutive years must match the growth in RPI over the same period
before options can be exercised. EPS was chosen as the appropriate
measure of performance at the time the executive share option schemes
were ﬁrst introduced and is the most common measure used in traditional
option schemes. The Company’s EPS performance is reported quarterly in
the Company’s ﬁnancial statements.
As noted, should the adoption of the new executive share option scheme
be approved at the Company’s Annual General Meeting, the new scheme
will replace both the existing approved and unapproved executive share
option schemes.
In common with all eligible employees of the Group, Executive Directors
are entitled to participate in the Company’s SAYE option scheme. These
options are not subject to the satisfaction of a performance condition as
this is an all employee scheme. Details of their interests in particular issues
under the scheme during the year to 2nd February 2003 are set out in the
table on page 44.
Pension Arrangements
The ﬁnal salary section of the Premier Farnell UK Pension Scheme (the
UK Scheme) was closed to new entrants during 1998. Employees who
were entitled to ﬁnal salary beneﬁts as members of the UK Scheme at
31st December 1998 now receive beneﬁts through a combination of ﬁnal
salary beneﬁts funded by the UK Scheme and the Premier Farnell Corp.
Master Pension Plan (the US Plan). In addition, contributions are made to
the money purchase section within the UK Scheme. Employees joining
the UK Scheme since 1st January 1999 are entitled to money purchase
beneﬁts only, and the UK Scheme is no longer “contracted out”.
Mr John Hirst and Mr Andrew Fisher are each entitled to a combination
of ﬁnal salary and money purchase beneﬁts under the arrangements set
out above up to the limit of the Inland Revenue earnings cap (currently
£97,200). Company contributions payable into the money purchase
arrangement on their behalf amount to 18.5 per cent of the earnings cap
for Mr Hirst and 14.3 per cent of the earnings cap for Mr Fisher, with each
making an employee contribution equal to 3 per cent of the earnings cap.
The Company makes further contributions on behalf of Mr Hirst and
Mr Fisher to unapproved schemes, determined by reference to the excess
of their salaries over the earnings cap. The cost to the Company of these
further contributions was £244,161 (2002: £142,840) for Mr Hirst and
£72,697 (2002: £60,888) for Mr Fisher.
Relative Importance of Remuneration Elements
The Committee’s view is that the performance related elements of the
remuneration package for Executive Directors should be a signiﬁcant
element of the total. This serves to align the interests of such Directors
with shareholders. Assuming full payment of all elements, more than
two-thirds of the total remuneration of Executive Directors (ignoring
pension contributions) would be performance related.
Service Contracts
In accordance with the Company’s policy, both Mr Hirst and Mr Fisher
have service contracts which are terminable by the Company and by the
Executive on twelve months’ notice. Mr Hirst’s service contract, dated
13th November 1998, allows the Company to make a payment of salary
in lieu of the whole or part of his notice period and Mr Fisher’s contract,
dated 24th November 1994, contains provisions entitling him to a
payment equal to 12 months’ salary and beneﬁts in the event of early
termination. The Company’s policy is generally not to include a provision
providing for payment of a ﬁxed sum on termination and to endeavour to
minimise any payment on early termination by insisting on mitigation of
any loss. The provisions in Mr Fisher’s contract were agreed as part of the
reduction in his notice period from 24 months during 2001.
Non-Executive Directors
The fees for the Non-Executive Directors are determined by the Board as
a whole. Business expenses are also reimbursed. In addition to the base
fee, an additional £5,000 per annum is paid to the chairmen of the Audit
and Remuneration Committees.
The Non-Executive Directors do not have contracts of service, but are
appointed pursuant to letters of appointment. Such appointments are for
a three-year term. It is normal that the appointment is renewed for a
second three-year period. Thereafter, the Company’s policy is for
re-appointments to be on an annual basis. Non-Executive Directors are
not eligible to participate in any incentive plans, share options schemes or
Company pension arrangements and are not entitled to any payment in
compensation for any early termination of their appointment.
The commencement dates for the current appointments of Non-Executive
Directors are:
Sir Malcolm Bates 12th June 2002 (annual)
Sir Robert Horton 12th June 2002 (annual)
W Korb 21st January 2003 (three-year)
M Lester 4th August 2001 (three-year)
C Nolan 5th July 2002 (three-year)
D J S Roques 1st July 2002 (three-year)
All Directors’ appointments are subject to approval of the shareholders in
General Meeting, sought on a three-yearly basis.
Premier Farnell plc Remuneration Report
Annual Report and Accounts 2003 continued
42 Directors’ Remuneration Other
emoluments
Salary Annual including Total emoluments Pension contributions
or fees bonus beneﬁts 2003 2002 2003 2002
£000 £000 £000 £000 £000 £000 £000
Executive
J R Hirst 356 225 25 606 349 262 160
A C Fisher 235 116 18 369 228 87 74
Non-executive
Sir Malcolm Bates (Chairman) 100 – – 100 100 – –
Sir Robert Horton 35 – – 35 26 – –
W Korb (appointed 21st January 2003) 1 – – 1–––
M Lester 28 – – 28 26 – –
M L Mandel (retired 12th June 2002) 10 – – 10 26 – –
C J Nolan 26 – – 26 26 – –
D J S Roques 28 – – 28 26 – –
P F Sullivan (retired 12th June 2002) 10 – – 10 26 – –
829 341 43 1,213 833 349 234
No expense allowances chargeable to UK income tax were paid.
There were no amounts paid or receivable in respect of compensation for loss of ofﬁce or in connection with the termination of any Director.
The following table sets out the ﬁnal salary pension beneﬁts accruing to the Executive Directors.
Final salary Additional ﬁnal salary Transfer value of ﬁnal Transfer value of ﬁnal (B-A) -
pension accrued as at pension earned during salary beneﬁts as at salary beneﬁts as at Director’s
2nd February 2003 the year including inﬂation 3rd February 2002 2nd February 2003 Contributions
(excluding inﬂation) (A) (B)
£ p.a. £ p.a. £ £ £
J R Hirst 6,030 1,172 (1,089) 50,319 42,328 (7,991)
A C Fisher 18,382 1,400 (1,111) 135,523 96,861 (38,662)
For each of the Directors the main terms applying to their ﬁnal salary pensions are:
– Mr Hirst is aged 50 and Mr Fisher is aged 45
– payable from normal retirement age of 60
– the Directors do not make any contribution to the ﬁnal salary pension arrangements
– spouse’s pension of 50 per cent of the Director’s pension payable on death 
– pensions in payment increase in line with inﬂation, to a maximum of 5 per cent each year
The accrued ﬁnal salary pension shown at 2nd February 2003 is the combined ﬁgure for the UK Scheme and US Plan deﬁned beneﬁt accruals
and is the amount that the Director would be entitled to from normal retirement age if he left service at the end of the year.
The increase in ﬁnal salary pension during the year is the increase over the ﬁgure disclosed in last year’s accounts.
Premier Farnell plc Remuneration Report
Annual Report and Accounts 2003 continued
43 All transfer values have been calculated on the basis of actuarial advice. The transfer values of the accrued entitlement represent the value of assets
that the pension scheme would need to transfer to another pension provider on transferring the scheme’s liability in respect of the Director’s ﬁnal salary
pension beneﬁts. They do not represent sums payable to individual Directors and therefore they cannot be added meaningfully to annual remuneration.
The table above shows transfer values at the beginning and the end of the year. The decrease in transfer value is related to the substantial decline in
equity markets. Members’ contributions paid during the year were paid into the money purchase arrangement within the UK Scheme and as such are
not included in the transfer value.
Directors’ Interests
The interests of the Directors in the ordinary share capital of the Company at the beginning and end of the ﬁnancial year are set out below. There have
been no changes in the interests set out between the end of the ﬁnancial year and 10th April 2003.
2nd February 3rd February
2003 2002
Sir Malcolm Bates – beneﬁcial 35,000 35,000
A C Fisher – beneﬁcial 80,000 47,500
J R Hirst – beneﬁcial 66,050 36,050
Sir Robert Horton – beneﬁcial 13,000 13,000
W Korb – beneﬁcial 10,000 –
M Lester – beneﬁcial 30,000 10,000
C J Nolan – beneﬁcial 7,000 7,000
D J S Roques – beneﬁcial 10,000 10,000
In addition to the above beneﬁcial interests in the Company’s Ordinary Shares, the executive Directors are regarded for Companies Act purposes as
being interested in 234,000 Ordinary Shares and 35,000 ADRs (representing 70,000 Ordinary Shares) held by the Premier Farnell Executive Trust. All
employees (including Executive Directors) are potential beneﬁciaries of the trust, the purpose of which is to satisfy awards made pursuant to the
Company’s long-term incentive plan. It is not anticipated that any employee or Executive Director will be entitled to receive from the trust a greater
number of shares than that to which they are entitled on exercise of awards made to them under the long-term incentive plan. 
Share Options
At At
3rd February 2nd February Exercise Exercise
2002 Granted Exercised Lapsed 2003 Price Period
J R Hirst 300,000 – – – 300,000 305p 2nd July 2001 to 2nd July 2008
70,000 – – – 70,000 192p 31st March 2002 to 31st March 2009
– 125,000 – – 125,000 153p 21st October 2005 to 21st October 2012
A C Fisher 30,000 – – – 30,000 682p 16th May 2000 to 16th May 2007
57,856 – – – 57,856 551p 19th May 1998 to 19th May 2005
3,248 – – 3,248* – 531p 1st February 2002 to 31st July 2002
73,000 – – – 73,000 192p 31st March 2002 to 31st March 2009
– 75,000 – – 75,000 153p 21st October 2005 to 21st October 2012
* SAYE Share Options which were not subject to any performance conditions. The other options listed above are executive options which are subject
to the performance conditions described under the heading Long-Term Incentives above.
No price was paid for any option. There were no variations to the terms and conditions of any Director’s options during the year.
The market price of the Company’s shares at 2nd February 2003 was 174.5p (3rd February 2002: 273p) and the range during the year was 129p–356p.
Premier Farnell plc Remuneration Report
Annual Report and Accounts 2003 continued
44 Long-term Incentive Plan
Interests of Directors in the plan are:
At Awarded Market price Vested Lapsed At End of
3rd February at date of 2nd February performance
2002 award 2003 period
J R Hirst 62,047 – 485.5 – 62,047 – January 2003
95,541 – 305 – – 95,541 January 2004
– 94,964 347.5 – – 94,964 January 2005
A C Fisher 41,365 – 485.5 – 41,365 – January 2003
63,694 – 305 – – 63,694 January 2004
– 61,870 347.5 – – 61,870 January 2005
The conditions for the vesting of an award made under the plan are described under the heading Long-Term Incentives above.
There were no variations made to the terms and conditions of any award during the year.
Performance graph
The graph below shows the total shareholder return for a holding of the Company’s ordinary shares for the ﬁve ﬁnancial years of the Company of
which the year to 2nd February 2003 is the last. This is compared to the total shareholder return for a hypothetical holding in the FTSE mid-250 Index
(excluding investment trusts). This was chosen as it is the index of which the Company is a constituent and the index used for the purposes of the
long-term incentive plan. Total shareholder return is the growth in value of a share plus the value of dividends paid, assuming that the dividends are
reinvested in the Company’s shares on the day on which they are paid.
Elements of report subject to audit
The information above under the headings Directors’ Remuneration, Directors’ Interests, Share Options and Long-term Incentive Plan is auditable.
All other information provided in the Remuneration Report is not subject to audit.
Approved by the Board on 19th March 2003
Signed on behalf of the Board by
Michael Lester 
Chairman of the Remuneration Committee
0
20
40
60
80
100
120
140
160
180
2nd February
1998
2nd February
1999
2nd February
2000
2nd February
2001
2nd February
2002
2nd February
2003
Premier Farnell FTSE Mid-250 Index (excl. Investment Trusts)
Value (£)
Premier Farnell plc Remuneration Report
Annual Report and Accounts 2003 continued
45 The Company is committed to high standards of corporate governance
throughout the Group. The Board is accountable to the Company’s
shareholders for good governance and this statement describes how the
principles identiﬁed in the Combined Code are applied by the Company.
The Board conﬁrms that the Company now complies with all of the
provisions set out in Section 1 of the Combined Code.
After the end of the accounting period the Board nominated the Company’s
Deputy Chairman as the senior independent Non-Executive Director. The
Company’s Remuneration Committee composition has complied with the
Combined Code since Mr Mandel’s retirement from the Board and the
Committee in June 2002.
Directors
The Board consists of a Non-Executive Chairman, ﬁve other
Non-Executive Directors and two Executive Directors. All of the Non-
Executive Directors are considered by the Board to be independent.
Biographies of the Board members appear on page 27. These indicate
the high level and broad range of experience that they possess.
Appropriate training for new and existing Directors is constantly kept
under review and provided where necessary.
The role of the Board is to maximise the long-term performance of the
Group through the development of a strategy designed to create
shareholder value. The Board reviews strategic issues on a regular basis
and exercises control over the performance of each operating company
within the Group by agreeing budgetary targets and monitoring
performance against those targets.
The roles of the Chairman and Group Chief Executive are separate and
clearly deﬁned. The Group Chief Executive is responsible for the executive
management of the Group’s business while the Chairman, who has no
executive management responsibilities, runs the Board.
The Board has ﬁve scheduled meetings each year and others as required.
The Board has a schedule of matters reserved to it for decision, including
major capital expenditure, signiﬁcant investments or disposals and
treasury policy. In certain areas, speciﬁc responsibility is delegated to
committees of the Board within deﬁned terms of reference.
The principal terms of reference of the Audit, Remuneration, Nominations
and Organisation and Management Development Committees are set out
on page 47. The membership of the Committees appears on page 27.
There is an agreed procedure for Directors to take independent
professional advice at the Company’s expense if necessary in the
performance of their duties. This is in addition to the access which every
Director has to the Company Secretary. The Company Secretary is
charged by the Board with ensuring that Board procedures are followed.
To enable the Board to function effectively and assist Directors to discharge
their responsibilities, full and timely access is given to all relevant information.
In the case of Board meetings, this consists of a comprehensive set of
papers, including regular business progress reports and discussion
documents regarding speciﬁc matters. In addition, individual Directors
meet with senior management and are encouraged to make periodic site
visits, including overseas where appropriate. Senior managers are regularly
invited to Board meetings and make business presentations.
Potential appointments of both Executive and Non-Executive Directors
to the Board are considered by the Nominations Committee. The
Nominations Committee consults with Executive Directors when
considering appointments and a range of candidates is considered before
any appointment is made. The Remuneration Committee will consider any
remuneration package before it is offered to a potential appointee.
Any Director appointed during the year is required, under the provisions
of the Company’s articles of association, to retire and seek election by
shareholders at the next Annual General Meeting. The articles also require
that every Director must retire and seek re-election at least every three
years.
Full details of Directors’ remuneration and a statement of the Company’s
remuneration policy are set out in the Remuneration Report appearing on
pages 40 to 45.
Each Executive Director abstains from any discussion or voting at
full Board meetings on Remuneration Committee recommendations where
the recommendations have a direct bearing on his own remuneration
package. The details of each Executive Director’s individual package are
ﬁxed by the Committee in line with the policy adopted by the full Board.
Communication with Stakeholders
The Company places a great deal of importance on communication with
its stakeholders.
There is regular dialogue with individual institutional shareholders as well
as general presentations after the interim and preliminary results. In 1999,
the Company introduced quarterly ﬁnancial reporting in order to improve
the level of information available to all shareholders. All Company
announcements are published on the Company’s web-site, together with
presentation material.
All ordinary shareholders have the opportunity to ask questions at the
Company’s Annual General Meeting and the Group Chief Executive
makes a business presentation summarising the progress of the Group
Premier Farnell plc Corporate Governance
Annual Report and Accounts 2003
46
Corporate Governance during the year. The chairmen of the Audit, Remuneration and Nominations
Committees are available to take questions at the meeting.
As discussed in the Directors’ Report, employee communication is given
high priority. This has included the establishment of a European Works
Council.
Going Concern
After making enquiries, the Directors have a reasonable expectation that
the Company and the Group have adequate resources to continue in
operational existence for the foreseeable future. For this reason, they
continue to adopt the going concern basis in preparing the accounts.
Audit and Internal Control
The primary role of the Audit Committee is to keep under review the
Group’s ﬁnancial and other systems and controls and its ﬁnancial reporting
procedures. In fulﬁlling this role, the Committee receives and reviews work
carried out by the internal and external auditors and their ﬁndings. The
Company’s internal audit department works to an annual programme
developed in consultation with the Committee, as well as covering speciﬁc
matters arising during the year.
The Committee keeps the scope and cost effectiveness of both the
internal and external audit functions under review. The independence and
objectivity of the external auditors is also considered on a regular basis,
with particular regard to the level of non-audit fees. The split between
audit and non-audit fees for the year to 2nd February 2003 and
information on the nature of the non-audit fees incurred appear in note 4
to the Financial Statements. The non-audit fees were paid principally in
respect of assurance work (including taxation) and are considered by the
Committee not to affect the independence or objectivity of the auditors.
The Committee has recently resolved that the external auditors’
appointment will be subject to biannual review. The senior audit partner at
the Group’s external auditors is rotated every ﬁve years. During the year
the Committee also adopted a formal policy on the provision of non-audit
services by the auditors. This policy prohibits the provision of certain
services and requires that others are subject to prior approval.
Throughout the year, the Group has been in full compliance with the
Combined Code provisions on internal control.
The Board has overall responsibility for the Group’s system of internal
controls and risk management. The Audit Committee reviews and
monitors the system’s effectiveness on behalf of the Board, while
responsibility for the system rests with the Executive Directors. The system
includes an ongoing process for identifying, evaluating and managing
signiﬁcant business risks. However, any system can provide only
reasonable and not absolute assurance of meeting internal control
objectives.
The Company is subject to the requirements of the Sarbanes-Oxley Act
2002 as they apply to foreign private issuers. This US legislation requires,
amongst other things, annual certiﬁcations to be included within, or
attached to, the Company’s annual report on Form 20-F , which is ﬁled
with the US Securities and Exchange Commission. As part of the process
for ensuring that such certiﬁcations can be made, a new executive
management committee, the Disclosure and Risk Committee, has been
formed. The Disclosure and Risk Committee has subsumed within its
terms of reference the functions previously carried out by the Risk
Committee, as well as taking responsibility for reviewing disclosures made
by the Company to regulators and the investment community. As part of
this expanded role, the Disclosure and Risk Committee monitors and
reviews disclosure and risk management processes and reports to the
Audit Committee. The Audit Committee considers these reports,
alongside other reports from the internal audit department and the
external auditors, to arrive at a balanced assessment of control
effectiveness across the Group.
The Audit Committee reports on its assessment to the Board, so that the
Board can reach its own informed view on control effectiveness.
The statement of the Directors’ responsibility in relation to the accounts
appears on page 74.
Summary Terms of Reference of Board Committees
– Audit
Review the Company’s ﬁnancial and other systems and controls and
the Company’s ﬁnancial reporting.
– Remuneration
Make recommendations to the Board on the Company’s framework of
executive remuneration. Determine remuneration packages for
Executive Directors and other Senior executives.
– Nominations
Make recommendations to the Board on the appointment of Directors.
Keep the composition of the Board under review.
– Organisation and Management Development
Review the Group’s policies for ensuring that its management resource
at senior levels across the Group and the organisation and development
of such resource are compatible with the longer term needs of the
Group.
Premier Farnell plc Corporate Governance
Annual Report and Accounts 2003
47 2003 2002 2003 2002
(52 weeks) (53 weeks) (52 weeks) (53 weeks)
(restated) (restated)
Notes £m £m $m $m
Turnover 1 759.0 806.4 1,161.3 1,153.2
Cost of sales (447.0) (473.2) (683.9) (676.7)
Gross proﬁt 312.0 333.2 477.4 476.5
Net operating expenses 1
– before amortisation of goodwill (229.1) (244.8) (350.5) (350.1)
– amortisation of goodwill (2.6) (1.5) (4.0) (2.1)
Total net operating expenses (231.7) (246.3) (354.5) (352.2)
Operating proﬁt 1
– before amortisation of goodwill 82.9 88.4 126.9 126.4
– amortisation of goodwill (2.6) (1.5) (4.0) (2.1)
Total operating proﬁt 80.3 86.9 122.9 124.3
Loss on disposal of businesses 2 (4.8) (11.0) (7.4) (15.7)
Net interest payable 3 (15.7) (15.9) (24.0) (22.8)
Proﬁt before taxation 4 59.8 60.0 91.5 85.8
Taxation 6 (18.2) (21.4) (27.9) (30.6)
Proﬁt after taxation 41.6 38.6 63.6 55.2
Preference dividends (non-equity) 8 (10.8) (26.1) (16.5) (37.3)
Proﬁt attributable to ordinary shareholders 30.8 12.5 47.1 17.9
Ordinary dividends (equity) 8 (32.6) (24.5) (49.9) (35.0)
Retained loss for the year 21 (1.8) (12.0) (2.8) (17.1)
Earnings per share 9
Basic and diluted 9.3p 4.6p $0.142 $0.066
Earnings per share before amortisation of goodwill and disposals 9
Basic and diluted 11.2p 9.2p $0.171 $0.132
The translation of sterling into US dollars has been presented for convenience purposes only using the average exchange rate for the year of 1.53
(2002: 1.43).
There is no material difference between the results as disclosed in the proﬁt and loss account and the results on an unmodiﬁed historical cost basis.
All of the Group’s turnover and operating proﬁt relates to continuing operations.
The expense classiﬁcation in the consolidated proﬁt and loss account has been restated to reﬂect the way in which management measure the
performance of the Group. Further details are given in the Statement of Accounting Policies on page 52.
Statement of Total Recognised Gains and Losses
Financial year ended 2nd February 2003
2003 2002
(52 weeks) (53 weeks)
£m £m
Proﬁt after taxation 41.6 38.6
Currency translation adjustments (0.3) (1.3)
Total recognised gains for the year 41.3 37.3
Prior year adjustment on adoption of FRS 19 – 16.2
Total recognised gains since last Annual Report 41.3 53.5
Premier Farnell plc Consolidated Proﬁt and Loss Account
Annual Report and Accounts 2003
48
Consolidated Proﬁt and Loss Account
Financial year ended 2nd February 2003 2003 2002 2003 2002
Notes £m £m $m $m
Fixed assets
Intangible assets 10 48.5 51.1 79.5 72.0
Tangible assets 11 112.9 114.1 185.2 160.9
Investments 12 0.2 0.5 0.3 0.7
161.6 165.7 265.0 233.6
Current assets
Stocks 13 147.8 152.9 242.4 215.6
Debtors – due within one year 14 121.8 132.1 199.8 186.2
– due after more than one year 14 82.2 87.0 134.8 122.7
Cash at bank and in hand 29.6 28.1 48.5 39.6
381.4 400.1 625.5 564.1
Creditors – due within one year 16 (254.7) (168.6) (417.7) (237.7)
Net current assets 126.7 231.5 207.8 326.4
Total assets less current liabilities 288.3 397.2 472.8 560.0
Creditors – due after more than one year 17 (141.5) (241.5) (232.1) (340.5)
Provisions for liabilities and charges 18 (43.3) (44.2) (71.0) (62.3)
103.5 111.5 169.7 157.2
Capital and reserves
Called up share capital 19 25.9 41.5 42.4 58.5
Share premium account 21 19.2 4.4 31.5 6.2
Capital redemption reserve 21 0.6 – 1.0 –
Proﬁt and loss account 21 57.8 65.6 94.8 92.5
Shareholders’ funds 22 103.5 111.5 169.7 157.2
Shareholders’ funds comprise:
Equity interests (23.2) (375.2) (38.1) (529.0)
Non-equity interests 126.7 486.7 207.8 686.2
103.5 111.5 169.7 157.2
The translation of sterling into US dollars has been presented for convenience purposes only using the year-end exchange rate of 1.64 (2002: 1.41).
Approved by the Board on 19th March 2003.
Sir Malcolm Bates
Chairman
Premier Farnell plc Consolidated Balance Sheet
Annual Report and Accounts 2003
49
Consolidated Balance Sheet
At 2nd February 2003 2003 2002
Notes £m £m
Fixed assets
Investments 12 623.9 624.3
Current assets
Debtors – due within one year 14 0.8 1.0
– due after more than one year 14 322.8 363.2
323.6 364.2
Creditors – due within one year 16 (29.4) (52.4)
Net current assets 294.2 311.8
Total assets less current liabilities 918.1 936.1
Creditors – due after more than one year 17 (183.9) (151.2)
734.2 784.9
Capital and reserves
Called up share capital 19 25.9 41.5
Share premium account 21 19.2 4.4
Capital redemption reserve 21 0.6 –
Merger reserve 21 0.6 0.6
Proﬁt and loss account 21 687.9 738.4
Shareholders’ funds 22 734.2 784.9
Shareholders’ funds comprise:
Equity interests 607.5 298.2
Non-equity interests 126.7 486.7
734.2 784.9
Approved by the Board on 19th March 2003.
Sir Malcolm Bates
Chairman
Premier Farnell plc Company Balance Sheet
Annual Report and Accounts 2003
50
Company Balance Sheet
At 2nd February 2003 2003 2002 2003 2002
(52 weeks) (53 weeks) (52 weeks) (53 weeks)
Notes £m £m $m $m
Net cash inﬂow from operating activities 24 92.0 107.1 140.8 153.2
Returns on investments and servicing of ﬁnance
Interest received 0.6 1.3 0.9 1.9
Interest paid (16.4) (16.9) (25.1) (24.2)
Dividends paid on preference shares (non-equity) (10.8) (26.1) (16.5) (37.3)
Net cash outﬂow from returns on investments and 
servicing of ﬁnance (26.6) (41.7) (40.7) (59.6)
Taxation paid (12.7) (27.4) (19.4) (39.2)
Capital expenditure and ﬁnancial investment
Purchase of tangible ﬁxed assets (24.9) (24.8) (38.1) (35.5)
Sale of tangible ﬁxed assets 1.7 1.3 2.6 1.9
Purchase of own ordinary shares 12 – (0.6) – (0.9)
Net cash outﬂow from capital expenditure and 
ﬁnancial investment (23.2) (24.1) (35.5) (34.5)
Acquisitions and disposals
Purchase of subsidiary undertaking – (66.0) – (94.4)
Purchase of minority interest – (0.3) – (0.4)
Disposal of subsidiary undertakings 23 3.3 27.5 5.0 39.3
Net cash inﬂow/(outﬂow) from acquisitions and disposals 3.3 (38.8) 5.0 (55.5)
Equity dividends paid (28.1) (24.5) (43.0) (35.0)
Cash inﬂow/(outﬂow) before use of liquid resources
and ﬁnancing 4.7 (49.4) 7.2 (70.6)
Management of liquid resources
Decrease in short term deposits with banks – 16.3 – 23.3
Financing
Issue of ordinary shares 19 0.7 0.2 1.1 0.3
Purchase of own preference shares 19 (8.3) – (12.7) –
Preference share conversion costs 19 (0.9) – (1.4) –
New bank loans 29.1 48.0 44.5 68.6
Repayment of bank loans (23.0) (11.0) (35.2) (15.7)
Net cash (outﬂow)/inﬂow from ﬁnancing (2.4) 37.2 (3.7) 53.2
Increase in cash 2.3 4.1 3.5 5.9
The translation of sterling into US dollars has been presented for convenience purposes only using the average exchange rate for the year of 1.53
(2002: 1.43).
Reconciliation of net debt:
Opening net debt (236.4) (179.2)
Increase in cash 2.3 4.1
Decrease in short term deposits – (16.3)
Increase in debt (6.1) (37.0)
Exchange movement 31.0 (8.0)
Closing net debt 24 (209.2) (236.4)
Premier Farnell plc Consolidated Statement of Cash Flows
Annual Report and Accounts 2003
51
Consolidated Statement of Cash Flows
Financial year ended 2nd February 2003 Basis of Accounting
The accounts have been prepared under the historical cost convention
and in accordance with applicable UK accounting standards. A summary
of the more important Group accounting policies, which the Directors
consider to be the most appropriate for the Group and, with the exception
of the expense classiﬁcation referred to below, have been applied
consistently, is set out below.
Basis of Consolidation
The consolidated accounts incorporate the accounts of the Company and
each of its subsidiary undertakings for the ﬁnancial year ended
2nd February 2003 (52 weeks). Results of subsidiary undertakings
acquired or disposed of are consolidated from or up to the date on which
control passes. The ﬁnancial results for the ﬁnancial year ended
3rd February 2002 comprised a 53 week period.
Expense Classiﬁcation
The expense classiﬁcation in the consolidated proﬁt and loss account
has been restated to reﬂect the way in which management measure
and monitor the performance of the Group with respect to gross proﬁt
and operating expenses. Expenses are now classiﬁed as follows:
Cost of sales comprises the cost of goods delivered to customers
including the net cost of freight, packaging and inventory adjustments.
Distribution costs represent all operating company expenses including
sales, marketing, product and purchasing, warehousing, information
technology and e-commerce.
Administrative expenses comprise the cost of central head ofﬁce and
the Group Board.
Management consider that the above classiﬁcation of costs is the most
appropriate given the nature of the business.
In prior years, distribution costs comprised gross freight costs,
administrative expenses were as deﬁned above, and all other costs
were treated as cost of sales.
The effect of this change on the prior year results is as follows:
As previously Reclassiﬁcation As restated
reported
£m £m £m
Turnover 806.4 – 806.4
Cost of sales (676.6) 203.4 (473.2)
Total net operating expenses (42.9) (203.4) (246.3)
Total operating proﬁt 86.9 – 86.9
Goodwill
Goodwill, comprising the amount by which the consideration for
acquisitions exceeds the fair value of the net assets acquired, is capitalised
and amortised through the proﬁt and loss account on a straight line basis
over its estimated useful life, as follows:
Buck & Hickman: 20 years.
As permitted by FRS10, Goodwill and Intangible Assets, goodwill arising
on acquisitions prior to 1998 remains written off against reserves. Such
goodwill would be charged in the proﬁt and loss account on
subsequent disposal of the related business.
Goodwill arising on acquisitions is reviewed for impairment in
accordance with FRS10 and FRS11, Impairment of Fixed Assets and
Goodwill, at the end of the ﬁrst full year after an acquisition and in other
years if events or changes in circumstances indicate that the carrying
value may not be recoverable, any impairment being charged to the
proﬁt and loss account.
Tangible Fixed Assets and Depreciation
Fixed assets are stated at cost. Interest is not capitalised.
With the exception of motor vehicles, which are depreciated on a
reducing balance basis at 25% per annum, depreciation is calculated to
write off the cost of individual ﬁxed assets from the time they become
operational by equal annual instalments over their estimated useful lives,
which are principally as follows:
Plant and equipment: between 5 and 10 years.
Computer equipment: between 3 and 5 years.
Freehold buildings: 50 years.
No depreciation is provided on freehold land.
Financial Instruments
Gains and losses on forward foreign exchange contracts, entered into as
hedges of future purchases and sales denominated in foreign currency,
are carried forward and taken to the proﬁt and loss account on maturity to
match the underlying transactions.
Amounts payable or receivable in respect of interest rate hedges are
recognised as adjustments to interest payable or receivable over the life of
the hedge.
Stocks
Stocks are stated at the lower of cost and net realisable value. Provision is
made against slow moving and obsolete stock based on analysis of
historical data.
Deferred Taxation
Full provision is made, on an undiscounted basis, for deferred taxation
resulting from timing differences between proﬁts computed for taxation
purposes and proﬁts stated in the accounts to the extent that there is an
obligation to pay more tax in the future as a result of the reversal of those
timing differences.
Deferred tax assets are recognised to the extent they are expected to be
recoverable.
Pensions and Similar Obligations
The Group operates deﬁned beneﬁt and deﬁned contribution schemes.
Pension schemes are accounted for in accordance with SSAP 24.
Accordingly, the expected cost of providing pension beneﬁts under
deﬁned beneﬁt schemes and other post-retirement beneﬁts is amortised in
the proﬁt and loss account over the period beneﬁting from the employees’
services. Costs with respect to deﬁned contribution schemes are charged
to the proﬁt and loss account as they fall due.
The Group has adopted the transitional arrangements of FRS17,
Retirement Beneﬁts, details of which are given in note 27.
Foreign Exchange
The results of overseas subsidiary undertakings are translated into sterling
at the average exchange rate ruling during the year. Foreign currency assets
and liabilities are translated into sterling at the rates of exchange ruling at
the balance sheet date. Gains or losses arising in the ordinary course of
business are dealt with in arriving at operating proﬁt. Those arising on the
translation of the assets and liabilities of overseas subsidiary undertakings,
together with the exchange differences arising when the proﬁt and loss
accounts are translated at average rates and compared to the rate ruling at
the balance sheet date, are dealt with as movements in reserves.
Turnover and Revenue Recognition
Turnover comprises the value of sales to outside customers, excluding
value added and sales taxes. Turnover is recognised when the risks and
rewards of ownership have passed to the customer.
Catalogue and Advertising Costs
Catalogue costs are expensed over the life of the catalogue up to a
maximum period of one year. Advertising costs are expensed as incurred.
Leased Assets
Payments under operating leases are charged to the proﬁt and loss
account as they fall due.
Long Term Incentive Plan
The consolidated proﬁt and loss account includes the costs relating to the
Premier Farnell Performance Share Plan and the consolidated and
Company balance sheets include the appropriate assets and liabilities of
the plan. Shares in the Company, held by the trust established to
administer the plan, are shown as ﬁxed asset investments and are
amortised over the performance period of the plan to which they relate.
Where options over shares are awarded to executives, the value of the
expected award is amortised on a straight line basis over the performance
period to which the award relates.
Investments in Subsidiary Undertakings
Investments in subsidiary undertakings are included at cost. Provision is
made where, in the opinion of the directors, a permanent diminution in
value has occurred.
Premier Farnell plc Statement of Accounting Policies
Annual Report and Accounts 2003
52
Statement of Accounting Policies Premier Farnell plc Notes to the Accounts
Annual Report and Accounts 2003
53
1) Segmental Information
1) Turnover, Operating Proﬁt and Net Operating Assets
a) Business Segments
Turnover Operating Proﬁt Net Operating Assets
2003 2002 2003 2002 2003 2002
(52 weeks) (53 weeks) (52 weeks) (53 weeks)
£m £m £m £m £m £m
Marketing and Distribution Division
Americas 311.6 373.7 33.0 38.4 123.9 136.6
Europe and Asia Paciﬁc 348.6 314.5 42.2 40.2 139.6 138.7
660.2 688.2 75.2 78.6 263.5 275.3
Amortisation of goodwill* – – (2.6) (1.5) – –
660.2 688.2 72.6 77.1 263.5 275.3
Industrial Products Division 98.8 118.2 15.2 17.7 25.8 40.1
Head Ofﬁce costs – – (7.5) (7.9) – –
759.0 806.4 80.3 86.9 289.3 315.4
b) Geographical Segments by Origin
Turnover Operating Proﬁt Net Operating Assets
2003 2002 2003 2002 2003 2002
(52 weeks) (53 weeks) (52 weeks) (53 weeks)
£m £m £m £m £m £m
Americas 375.3 456.9 45.8 52.9 116.4 168.3
UK 251.6 215.5 36.4 34.1 132.1 112.7
Rest of World 132.1 134.0 8.2 9.3 40.8 34.4
Head Ofﬁce costs – – (7.5) (7.9) – –
Amortisation of goodwill (UK)* – – (2.6) (1.5) – –
759.0 806.4 80.3 86.9 289.3 315.4
*Amortisation of capitalised goodwill is in respect of the acquisition of Buck & Hickman in 2002 (Europe and Asia Paciﬁc segment).
The geographical analysis of turnover by destination is not signiﬁcantly different from that shown above.
2) Reconciliation of Net Operating Assets with Net Assets is as follows:
2003 2002
£m £m
Net operating assets 289.3 315.4
Net debt (209.2) (236.4)
Goodwill 48.5 51.1
Pension fund prepayment 82.2 87.0
Tax, dividends and other (107.3) (105.6)
Net assets 103.5 111.5
3) Net Operating Expenses
2003 2002
(restated)
£m £m
Distribution costs 220.5 236.0
Administrative expenses 10.1 9.4
Research and development expenditure 1.1 0.9
231.7 246.3
Administrative expenses in 2003 include amortisation of goodwill of £2.6 million (2002: £1.5 million).
Research and development expenditure is charged to the proﬁt and loss account as incurred.
Notes to the Accounts 2) Loss on Disposal of Businesses
2003 2002
£m £m
Loss/(gain) on net assets sold (net of costs) 2.3 (14.6)
Goodwill previously eliminated against reserves 2.6 25.6
Loss on disposal of businesses in the year (note 23) 4.9 11.0
Deferred consideration received from 2002 disposals (0.1) –
Loss on disposal of businesses 4.8 11.0
On 28th June 2002, the Company sold DA Lubricants, the speciality lubricants business of the Industrial Products Division in North America, for a
consideration of £4.3 million.
In the period up to disposal, this business contributed £5.4 million (2002: £15.3 million) of sales and incurred an operating loss of £0.1 million
(2002: operating proﬁt £0.4 million). The cash ﬂows from this business in the period up to disposal were not signiﬁcant.
A tax credit of £0.9 million arose on the disposal (2002: nil).
3) Net Interest Payable
2003 2002
£m £m
Interest receivable on short-term deposits (0.6) (1.3)
Interest payable on bank overdrafts and loans repayable within 5 years 16.2 17.0
Interest payable on loans repayable after 5 years 0.1 0.2
15.7 15.9
4) Proﬁt Before Taxation
Proﬁt before taxation is stated after charging/(crediting):
2003 2002
£m £m
Amortisation of goodwill 2.6 1.5
Depreciation 16.3 15.7
Gain on sale of ﬁxed assets (0.5) (1.5)
Restructuring costs 0.6 1.6
Performance Share Plan – 1.2
Operating lease rentals
Plant and machinery 3.6 3.1
Other 6.1 5.1
Fees paid to the Group’s auditors
Statutory audit 0.5 0.4
Further assurance services 0.1 –
Tax services 0.2 0.1
Other non-audit services 0.1 –
The audit fees and fees for further assurance services paid to the Group’s auditors shown above include £0.1 million (2002: £0.1 million) in respect of
the Company.
Tax and other fees paid to the Group’s auditors are in respect of assignments carried out on a worldwide basis. It is the Group’s policy to employ
PricewaterhouseCoopers LLP on assignments additional to their statutory duties where their expertise and experience of the Group are important, or
where they are awarded assignments on a competitive basis. PricewaterhouseCoopers LLP are not engaged in assignments that are prohibited under
rules introduced pursuant to the US Sarbanes-Oxley Act 2002.
Tax services are in respect of tax compliance and tax advice in a number of territories.
Other non-audit services provided included £0.1 million (2002: £nil) in respect of advice on the implementation of share option and long term
incentive schemes.
In the year ended 3rd February 2002, £0.1 million of fees were capitalised as part of the acquisition of Buck & Hickman. No fees were capitalised in the
year ended 2nd February 2003.
Premier Farnell plc Notes to the Accounts
Annual Report and Accounts 2003 continued
54 5) Employees and Directors
2003 2002
£m £m
Staff costs during the year were as follows:
Wages and salaries 119.5 127.3
Social security costs 18.6 19.7
Other pension costs (4.4) (5.3)
133.7 141.7
The average number of persons employed was as follows:
2003 2002
Number Number
Marketing and Distribution Division
Americas 1,654 1,858
Europe and Asia Paciﬁc 2,306 2,031
3,960 3,889
Industrial Products Division 991 1,243
Head Ofﬁce 43 42
4,994 5,174
Directors’ remuneration
A detailed analysis of directors’ remuneration, including salaries, performance-related bonuses and long-term incentives, is provided under the
headings Directors’ Remuneration, Directors’ Interests and Share Options in the Remuneration Report on pages 40 to 45. The total remuneration of the
directors comprises:
2003 2002
£m £m
Aggregate emoluments 1.2 0.8
Company contributions to money purchase pension schemes 0.4 0.3
1.6 1.1
Number of directors to whom retirement beneﬁts are accruing under a deﬁned beneﬁt scheme
and a money purchase scheme 2 2
Details of the highest paid director are given on page 43, under the heading Directors’ Remuneration.
6) Taxation
2003 2002
£m £m
UK corporation tax at 30% (2002: 30%):
Current tax for the year 13.5 11.3
Current tax in respect of prior years (0.7) (0.3)
Overseas corporate tax:
Current tax for the year 2.6 1.4
Current tax in respect of prior years 0.1 (1.2)
Deferred taxation:
Current year 3.1 9.4
Prior year (0.4) 0.8
18.2 21.4
The taxation charge for 2003 is net of a credit of £0.9 million arising from the disposal of businesses (2002: nil).
The rate of the current tax charge on proﬁts before goodwill amortisation and loss on disposal of businesses is lower than the standard rate of
corporation tax in the UK. The differences are explained below:
2003 2002
% %
Standard rate of UK tax 30.0 30.0
Impact of overseas losses and utilisation thereof – 0.1
Overseas tax rates 0.6 1.5
Timing differences (4.0) (14.1)
Other current year items (1.3) (0.2)
Prior year items (0.9) (1.9)
Effective rate of tax 24.4 15.4
Premier Farnell plc Notes to the Accounts
Annual Report and Accounts 2003 continued
55 7) Premier Farnell plc – Proﬁt and Loss Account
Premier Farnell plc has not presented its own proﬁt and loss account as permitted by Section 230 of the Companies Act 1985. The proﬁt for the
ﬁnancial year dealt with in the accounts of the Company is £1.2 million (2002: £5.6 million).
8) Dividends
2003 2002
£m £m
Preference (non-equity)
Paid July 2002 (July 2001) 7.5 13.1
Paid January 2003 (January 2002) 3.3 13.0
10.8 26.1
Ordinary (equity)
Interim paid of 4.0p (2002: 4.0p) per share 14.5 10.9
Final proposed of 5.0p (2002: 5.0p) per share 18.1 13.6
32.6 24.5
9) Earnings Per Share
Basic earnings per share are based on the proﬁt attributable to ordinary shareholders for the year and the weighted average number of ordinary shares
in issue during the year, excluding those shares held by the Premier Farnell Executive Trust (note 12). For diluted earnings per share, the weighted
average number of ordinary shares in issue is adjusted to assume issue of all dilutive potential ordinary shares, i.e. those share options granted to
employees where the exercise price is less than the average market price of the Company’s ordinary shares during the year.
Reconciliations of earnings and the weighted average number of shares used in the calculations are set out below.
Basic and Basic and
diluted diluted
per share per share
Earnings amount Earnings amount
2003 2003 2002 2002
£m pence £m pence
Proﬁt attributable to ordinary shareholders 30.8 9.3 12.5 4.6
Loss on disposal of businesses 4.8 1.4 11.0 4.0
Tax attributable to disposal of businesses (0.9) (0.3) ––
Amortisation of goodwill 2.6 0.8 1.5 0.6
Proﬁt attributable to ordinary shareholders before disposals and amortisation of goodwill 37.3 11.2 25.0 9.2
Number Number
Weighted average number of shares 331,570,659 271,879,752
Dilutive effect of share options 850,520 1,007,168
Diluted weighted average number of shares 332,421,179 272,886,920
Earnings per share
Basic 9.3p 4.6p
Diluted 9.3p 4.6p
Earnings per share before amortisation of goodwill and disposals
Basic 11.2p 9.2p
Diluted 11.2p 9.2p
Adjusted earnings per share (i.e. before amortisation of goodwill and loss on disposal of businesses) have been provided in order to facilitate year on
year comparison.
Premier Farnell plc Notes to the Accounts
Annual Report and Accounts 2003 continued
56 10) Intangible Fixed Assets
Goodwill
£m
Group
Cost
At 4th February 2002 and 2nd February 2003 52.6
Amortisation
At 4th February 2002 1.5
Charge for the year 2.6
At 2nd February 2003 4.1
Net book amount
At 2nd February 2003 48.5
At 3rd February 2002 51.1
11) Tangible Fixed Assets
Freehold land Plant and
and buildings equipment Total
£m £m £m
Group
Cost
At 4th February 2002 81.0 135.9 216.9
Additions 0.2 25.4 25.6
Disposals – (9.2) (9.2)
Businesses sold (2.4) (5.5) (7.9)
Currency translation adjustment (5.9) (10.6) (16.5)
At 2nd February 2003 72.9 136.0 208.9
Depreciation
At 4th February 2002 26.2 76.6 102.8
Charge for the year 1.1 15.2 16.3
Disposals – (7.7) (7.7)
Businesses sold (2.0) (4.2) (6.2)
Currency translation adjustment (2.8) (6.4) (9.2)
At 2nd February 2003 22.5 73.5 96.0
Net book amount
At 2nd February 2003 50.4 62.5 112.9
At 3rd February 2002 54.8 59.3 114.1
Plant and equipment includes computer hardware and software with a cost of £87.0 million (2002: £78.8 million) and accumulated depreciation of
£43.2 million (2002: £40.3 million).
Capital commitments authorised and contracted at 2nd February 2003 amounted to £3.2 million (2002: £10.6 million).
Premier Farnell plc Notes to the Accounts
Annual Report and Accounts 2003 continued
57 12) Fixed Asset Investments
Group Group Company Company
2003 2002 2003 2002
£m £m £m £m
Shares in subsidiary undertakings – – 623.7 623.8
Interests in own shares 0.2 0.5 0.2 0.5
0.2 0.5 623.9 624.3
1) Shares in subsidiary undertakings
£m
Company
At 4th February 2002 623.8
Currency revaluation adjustment (0.1)
At 2nd February 2003 623.7
The principal trading subsidiary undertakings of Premier Farnell plc are as follows:
Country of
incorporation
and operation
Farnell Electronic Components Ltd UK
Farnell Electronic Components Pty Ltd Australia
Farnell Electronic Components Limited New Zealand
Farnell Electronic Components GmbH Germany
Farnell Danmark AS Denmark
Oy Farnell (Finland) AB Finland
Farnell Components AB Sweden
Farnell AG Switzerland
Farnell Components (Ireland) Limited Eire
Farnell (France) SAS France
Farnell (Netherlands) BV Netherlands
Farnell do Brasil Ltda Brazil
Farnell Components Pte Ltd Singapore
Farnell Components (M) SDN BHD Malaysia
Farnell Components (HK) Ltd Hong Kong
Farnell Components SL Spain
Farnell Italia SRL Italy
Farnell (Belgium) NV Belgium
Combined Precision Components PLC UK
Buck & Hickman Limited UK
Newark Corporation (formerly D-A Lubricant Company Inc) USA
Newark Electronics Corporation USA
MCM Electronics Inc USA
Premier Farnell LLC USA
Premier Farnell Canada Limited (formerly Premier Fastener Limited) Canada
NV Premier Industrial Belgium SA Belgium
Premier Industrial Deutschland GmbH Germany
Premier Industrial Holland BV Holland
Premier Industrial France SARL France
Premier Industrial Italia Srl Italy
Premier Industrial (UK) Ltd UK
Premierco España SL Spain
Premier Farnell Electronics de Mexico SRL Mexico
TPC Wire & Cable de Mexico SRL Mexico
All of the above are wholly owned.
Companies incorporated in the UK are registered in England.
All companies are involved in distribution activities. Premier Farnell LLC is also involved in manufacturing activities.
A full list of subsidiary undertakings will be annexed to the Company’s next annual return.
Premier Farnell plc Notes to the Accounts
Annual Report and Accounts 2003 continued
58 Note 12 continued
2) Interests in own shares
£m
Group and Company
Cost
At 4th February 2002 and 2nd February 2003 1.1
Amortisation
At 4th February 2002 0.6
Charge for the year 0.3
At 2nd February 2003 0.9
Net book amount
At 2nd February 2003 0.2
At 3rd February 2002 0.5
The Premier Farnell Executive Trust acquires ordinary shares and ADRs (each ADR representing 2 ordinary shares) in the open market in order to meet
anticipated obligations under the Premier Farnell Performance Share Plan. The cost of these shares is being amortised over the performance period of
the plan to which they relate. The costs of administering the plan are charged to the proﬁt and loss account of the Company. The Trustees have waived
the right to receive dividends in respect of the ordinary shares and ADRs held by the Trust. At 2nd February 2003 and 4th February 2002, the Trust held
234,000 ordinary shares and 35,000 ADRs (representing 70,000 ordinary shares) with a total nominal value of £15,200. The market value of these
shares at 2nd February 2003 was £533,000 (3rd February 2002: £835,000).
13) Stocks
Group Group Company Company
2003 2002 2003 2002
£m £m £m £m
Raw materials 1.8 2.5 – –
Work in progress 3.8 3.8 – –
Finished goods and goods for resale 142.2 146.6 – –
147.8 152.9 – –
14) Debtors
Group Group Company Company
2003 2002 2003 2002
£m £m £m £m
Amounts falling due within one year:
Trade debtors 104.5 111.6 – –
Deferred tax asset (note 18) – – 0.3 0.2
Other debtors 5.9 4.8 0.3 0.2
Prepayments and accrued income 11.4 15.7 0.2 0.6
121.8 132.1 0.8 1.0
Amounts falling due after more than one year:
Amounts owed by subsidiary undertakings – – 322.8 363.2
Pension fund prepayment (note 27) 82.2 87.0 – –
82.2 87.0 322.8 363.2
Premier Farnell plc Notes to the Accounts
Annual Report and Accounts 2003 continued
59 15) Financial Instruments and Derivatives
An explanation of the Group’s objectives, policies and strategies in the use of derivatives and other ﬁnancial instruments is included in the Finance
Director’s Review under the heading Treasury Operations on page 33. The following detailed disclosures with regard to the use of ﬁnancial instruments
and derivatives exclude short term trade debtors and creditors where permitted by FRS13.
1) Foreign Currency Risk
The Group hedges transactions primarily related to the purchase and sale of inventories denominated in foreign currencies through foreign exchange
forward contracts. These contracts reduce currency risk from exchange rate movements with respect to these transactions and cash ﬂows. Gains and
losses are deferred and accounted for as part of the underlying transactions.
The Group does not hedge proﬁt translation exposure, unless there is a corresponding cashﬂow, since such hedges provide only a temporary deferral
of the effects of movements in exchange rates. Similarly, whilst a signiﬁcant proportion of the Group’s borrowings are denominated in US dollars, the
Group does not speciﬁcally hedge all of its long-term investments in overseas assets. This has resulted in currency translation losses, amounting to
£0.3 million and £1.3 million in the years ended 2nd February 2003 and 3rd February 2002, respectively, being charged to reserves in relation to the
translation of overseas assets.
At 2nd February 2003 the gross notional amount of foreign exchange forward contracts, all of which had maturities of less than one year, totalled
£14.0 million (2002: £2.9 million) and can be analysed as follows:
Commitments to sell foreign currency
Sterling equivalent Unrecognised/deferred
gains and (losses)
2003 2002 2003 2002
£m £m £m £m
Euros 11.6 – (0.1) –
Australian dollars 2.4 2.9 – –
Other currencies – – – –
14.0 2.9 (0.1) –
The increase in the gross notional amount of forward foreign exchange contracts compared to last year end reﬂects variations in the timing of entering
into contracts.
The unrecognised/deferred gains and losses in respect of foreign exchange forward contracts are estimated by reference to the amounts that the
Group would receive or pay to terminate the contracts based on year end rates.
During the ﬁnancial year, the Group has not used any other ﬁnancial instruments to hedge trading foreign exchange rate exposures.
The Group’s primary translation exposure relates to the relative values of the pound sterling and US dollar. Although the US business generates
signiﬁcant US dollar trading cash ﬂows, the Group’s borrowings are predominantly US dollar denominated. Following the conversion of a signiﬁcant
proportion of the Group’s US dollar denominated preference shares into ordinary shares during the year, the US dollar dividend obligations are
substantially reduced. However, management anticipates that the ongoing US dollar interest obligations and US dollar trade payments in the UK will
continue to preclude the need to enter into any signiﬁcant hedging of US dollar cash ﬂows.
At 2nd February 2003 the Group had the equivalent of £3.6 million (2002: £4.9 million) of (predominantly Euro denominated) net ﬁnancial assets in
non-functional currencies in relation to which future movements in foreign currencies could have a limited impact on consolidated proﬁt.
Premier Farnell plc Notes to the Accounts
Annual Report and Accounts 2003 continued
60 Note 15 continued
2) Interest Rate Risk
The Group ﬁnances its operations through a combination of retained cash ﬂow, equity and non-equity shares and bank borrowings. Procedures are in
place to monitor and manage interest rate risk with derivatives being entered into when considered appropriate by management.
Financial liabilities
The maturity proﬁle of the Group’s borrowings is as follows:
2003 2002
Fixed Floating Total Fixed Floating Total
£m £m £m £m £m £m
Due within one year 94.6 2.7 97.3 – 23.0 23.0
Due between one and two years 0.2 – 0.2 109.9 – 109.9
Due between two and ﬁve years 94.8 44.0 138.8 109.9 17.0 126.9
Due over ﬁve years 1.5 1.0 2.5 – 4.7 4.7
191.1 47.7 238.8 219.8 44.7 264.5
The Group’s borrowings are denominated in US dollars with the exception of the ﬂoating rate debt due within ﬁve years of £46.7 million which is
denominated in sterling.
The Group has multi currency bilateral bank facilities of £125 million, which are committed until 2006. The facilities carry a LIBOR based ﬂoating rate of
interest. At the year end, £44 million was drawn on these facilities (2002: £37 million).
The weighted average interest rate attributable to ﬁxed rate borrowings was 7.1% (2002: 7.1%) and the weighted average duration of ﬁxed rate
borrowings was 2.9 years (2002: 3.9 years).
Since the year end, the Group has raised $225 million (£137 million) of new funding in the private placement market, principally in order to reﬁnance the
7.0% Senior Notes repayable in June 2003. These comprise $66 million of 7 year private placement notes and $159 million of 10 year private
placement notes at ﬁxed interest rates of 5.3% and 5.9%, respectively.
Non-equity shares
A proportion of the Group’s share capital is attributable to non-equity interests, in the form of cumulative convertible redeemable preference shares.
The rights and restrictions attaching to the preference shares are described in note 19 to the accounts.
Financial assets
Cash at bank and in hand of £29.6 million (2002: £28.1 million) relates principally to overnight deposits and current account balances in various
currencies held in trading operations worldwide. All signiﬁcant balances earn interest based on local market rates appropriate for the currency
concerned.
3) Fair value of ﬁnancial instruments
An analysis of the fair values and book values of the Group’s ﬁnancial instruments is provided below.
Book value Fair value Book value Fair value
2003 2003 2002 2002
£m £m £m £m
Assets
Cash at bank and in hand 29.6 29.6 28.1 28.1
Debtors due after more than one year (pension fund prepayment) 82.2 82.2 87.0 87.0
111.8 111.8 115.1 115.1
Liabilities and derivatives
Due within one year (97.3) (98.6) (23.0) (23.0)
Due in more than one year (141.5) (150.0) (241.5) (248.2)
Commitments to sell foreign currency – (0.1) ––
(238.8) (248.7) (264.5) (271.2)
Non-equity interests (126.7) (89.5) (486.7) (387.3)
Premier Farnell plc Notes to the Accounts
Annual Report and Accounts 2003 continued
61 Note 15 continued
The fair value of borrowings is based on estimates of the current ﬁxed interest rates available for debt of the same remaining maturity.
4) Credit Risk
The Group monitors its positions with, and the credit quality of, the ﬁnancial institutions which are counterparties to its forward exchange contracts and
does not anticipate non-performance by the counterparties. The Group would not realise a material loss in the event of non-performance by
counterparties. At 2nd February 2003, neither the Group nor the counterparties were required to collateralise their respective obligations under these
ﬁnancial instruments.
16) Creditors – Due Within One Year
Group Group Company Company
2003 2002 2003 2002
£m £m £m £m
Bank overdrafts (unsecured) 2.7 3.0 6.2 8.5
Unsecured loans (note 17) 94.6 20.0 – 20.0
Trade creditors 49.3 33.8 – –
Corporate taxes 43.4 40.2 1.5 6.3
Payroll and other taxes including social security 5.9 6.2 0.2 –
Other creditors 13.8 23.8 1.2 2.6
Accruals and deferred income 26.9 28.0 2.2 1.4
Proposed ordinary dividend 18.1 13.6 18.1 13.6
254.7 168.6 29.4 52.4
17) Creditors – Due After More Than One Year
Group Group Company Company
2003 2002 2003 2002
£m £m £m £m
Unsecured loans 141.5 241.5 41.0 17.0
Amounts owed to subsidiary undertakings – – 142.9 134.2
141.5 241.5 183.9 151.2
Unsecured loans comprise:
Bank loans 44.0 37.0 41.0 37.0
7.0% US dollar Guaranteed Senior Notes payable 2003 94.5 109.9 – –
7.2% US dollar Guaranteed Senior Notes payable 2006 94.5 109.9 – –
Other loans 3.1 4.7 – –
236.1 261.5 41.0 37.0
Less: amount due within one year (94.6) (20.0) – (20.0)
141.5 241.5 41.0 17.0
Bank overdrafts and unsecured loans are repayable as follows:
Within one year 97.3 23.0 6.2 28.5
Between one and two years 0.2 109.9 – –
Between two and ﬁve years 138.8 126.9 41.0 17.0
After ﬁve years 2.5 4.7 – –
238.8 264.5 47.2 45.5
Details of the Group’s borrowing facilities are given in note 15.
Premier Farnell plc Notes to the Accounts
Annual Report and Accounts 2003 continued
62 18) Provisions for Liabilities and Charges
Group Group Company Company
2003 2002 2003 2002
£m £m £m £m
Deferred taxation 36.6 37.7 – –
Overseas post-retirement obligations 5.2 5.0 – –
Dilapidation costs 1.5 1.5 – –
43.3 44.2 – –
1) Deferred taxation
At beginning of year 37.7 27.1 (0.2) –
Charge/(credit) in the year 2.7 10.2 (0.1) (0.2)
Currency translation adjustment (3.8) 0.4 – –
Provision/(asset) at end of year 36.6 37.7 (0.3) (0.2)
Deferred tax provisions/(assets) comprise:
Accelerated capital allowances 13.5 15.1 – –
Short-term timing differences (7.6) (10.4) (0.3) (0.2)
Pension prepayment 30.7 33.0 – –
36.6 37.7 (0.3) (0.2)
No provision has been made for deferred UK taxation and foreign withholding taxes relating to unremitted earnings of overseas subsidiaries where
remittance of these earnings is not anticipated in the foreseeable future.
2) Overseas post-retirement obligations (note 27)
At beginning of year 5.0 4.8 – –
Increase in year 1.0 – – –
Currency translation adjustment (0.8) 0.2 – –
At end of year 5.2 5.0 – –
3) Dilapidation costs
At beginning of year 1.5 – – –
Acquisition – 1.5 – –
At end of year 1.5 1.5 – –
Provision for dilapidation costs represents the estimated cost of dilapidation work on leased properties prior to the properties being vacated at the end
of their lease term. The average length of the remaining lease term on these properties is 13 years.
Premier Farnell plc Notes to the Accounts
Annual Report and Accounts 2003 continued
63 19) Called Up Share Capital
Company Company
2003 2002
Nominal value Nominal value
£m £m
Authorised
Attributable to equity interests
500,000,000 ordinary shares of 5p each (2002: 429,000,000) 25.0 21.5
Attributable to non-equity interests
32,000,000 cumulative convertible redeemable preference shares of £1 each (2002: 32,000,000) 32.0 32.0
57.0 53.5
Allotted, called up and fully paid
Ordinary shares of 5p each (equity interests)
At 4th February 2002 (272,244,295 shares) 13.6 13.6
Preference share conversion (89,838,310 shares) 4.5 –
Allotted under share option schemes (355,625 shares) – –
At 2nd February 2003 (362,438,230 shares) 18.1 13.6
Cumulative convertible redeemable preference shares of £1 each (non-equity interests)
At 4th February 2002 (27,946,255 shares) 27.9 27.9
Preference share conversion (19,530,070 shares) (19.5) –
Preference share purchase and cancellation (643,964 shares) (0.6) –
At 2nd February 2003 (7,772,221 shares) 7.8 27.9
Capital restructuring
On 13th May 2002 shareholders approved a special conversion right which enabled preference shareholders, for a limited period, to convert their
preference shares into ordinary shares at an enhanced rate of conversion of 4.6 ordinary shares for each preference share. This compares to the
normal conversion rate of approximately 2.1 ordinary shares for each preference share. The right to exercise this special conversion expired on
24th June 2002 for US holders and on 26th June 2002 for UK holders. Holders of preference shares were entitled to receive a one-time payment in
lieu of the preference dividend in respect of those preference shares converted of 19.8 pence for each sterling preference share converted and $0.30
for each US preference share converted. Costs in respect of this restructuring amounted to £0.9 million.
As a result of the special conversion right, 19,530,070 preference shares were converted into 89,838,310 ordinary shares.
In addition, on 3rd and 4th July 2002 the Company purchased and cancelled a total of 643,964 of its own preference shares at a cost of £8.3 million.
Allotments during the year
On various dates during the year allotments were made under the Company’s Executive Share Option Schemes totalling 355,625 ordinary shares
(nominal value: £17,781) for a cash consideration of £655,425.
The rights and restrictions attaching to the US$1.35 cumulative convertible redeemable preference shares of £1 each (the “US preference
shares”) and, following a changeover, 89.2p cumulative convertible redeemable preference shares of £1 each (the “sterling preference
shares” and, together with the US preference shares, the “preference shares”) are as follows:
1) Currency
Holders of preference shares are entitled to receive a preferential dividend, a distribution on a winding up and a payment on redemption. Holders of
US preference shares receive such payments in US dollars. Holders of sterling preference shares receive such payments in sterling.
2) Changeover
A holder of US preference shares may serve notice on the Company requiring that some or all of his US preference shares be changed to sterling
preference shares.
3) Income
a) Each holder has a right to receive a ﬁxed cumulative preferential dividend at the rate of US$1.35 per annum for every £1 of nominal value for the US
preference shares and at the rate of 89.2p per annum for every £1 of nominal value for the sterling preference shares. Dividends on the US and sterling
preference shares are payable half-yearly in arrears in equal amounts, on 26th January and 26th July.
b) The ﬁxed cumulative preferential dividends payable in respect of the US preference shares and sterling preference shares are paid in priority to any
dividend payable to the holders of ordinary shares and in priority to or pari passu with the holders of any other class of preference shares in the capital
of the Company.
c) If a holder of US preference shares has elected to changeover his US preference shares to sterling preference shares then the ﬁxed cumulative
preferential dividend and any arrears payable after the changeover date will be paid at the sterling rate set out above.
4) Conversion
a) Each holder of US preference shares and sterling preference shares is entitled to convert all or any of his fully paid preference shares into fully paid
ordinary shares at the rate of 10.3432p in nominal amount of ordinary share capital for every £1 in nominal amount of preference share capital so
converted (the “conversion rate”).
Premier Farnell plc Notes to the Accounts
Annual Report and Accounts 2003 continued
64 Note 19 continued
b) The preference shares may be converted on any date at the option of the holder on and from the date of issue up to and including 22nd April 2016.
c) If at any time 75 per cent or more of all the preference shares have been converted into ordinary shares (but assuming, for this purpose only, that any
preference shares which have been converted into ordinary shares pursuant to the special conversion right referred to above had never been issued or
converted), the Company may give written notice to the remaining holders of US preference shares and sterling preference shares to convert the
remaining US preference shares and sterling preference shares into ordinary shares.
d) The conversion rate may be subject to adjustment if, inter alia, the Company makes an issue of ordinary shares by way of capitalisation of proﬁts or
reserves, a rights issue or another offer to ordinary shareholders or if there is a change of control in the Company following a take-over offer or if a
capital distribution is made.
5) Redemption
The Company shall (subject to any statutory restrictions) on 29th April 2016 redeem all the US preference shares in issue at US$25 for every £1 of
nominal value and all the sterling preference shares in issue at £16.518 for every £1 of nominal value.
6) Voting
Each preference share entitles the holder to receive notice of but not to attend or vote at general meetings of the Company save in limited
circumstances. Subject to being entitled to vote on any resolution, each holder of preference shares has one vote on a show of hands and on a poll
every such holder has one vote for every ordinary share to which he would be entitled on conversion of his preference shares.
7) Winding Up
Subject to the rights attached to any shares issued on any special terms and conditions, on a return of capital on a winding-up of the Company the
assets available for distribution will be applied, ﬁrst, in paying to each holder of a preference share any arrears and accruals of the preferential dividend;
second, in repaying US$25 for every £1 of nominal value for the US preference shares and £16.518 for every £1 of nominal value for the sterling
preference shares; third, in repaying the capital paid up on each ordinary share; and fourth, in distributing the remainder rateably among the members
of the Company according to the amounts paid up on their respective holdings of shares in the Company, each preference share being treated for this
purpose as if converted at the conversion rate applicable into fully paid ordinary shares immediately prior to the commencement of the winding-up.
20) Share Options
During the year options were exercised on 333,125 5p ordinary shares at 192p and on 22,500 5p ordinary shares at 193p, under the terms of the
1984 Senior Executive Share Option Scheme (as subsequently amended).
At 2nd February 2003, the aggregate number of shares covered by options is 7,527,593 (2002: 6,122,841) and the total consideration of £19.0 million
(2002: £18.9 million) is made up as follows:
Number Total
of shares Option consideration
Date of grant outstanding price £m
May 1993 51,799 356p 0.2
May 1995 110,452 551p 0.6
November 1995 10,519 631p 0.1
November 1996 212,398 682p 1.4
November 1996 220,000 688p 1.5
May 1997 65,000 682p 0.4
July 1998 300,000 305p 0.9
March 1999 1,754,875 192p 3.4
July 1999 25,000 245p 0.1
December 1999 45,000 368p 0.2
April 2000 654,350 425p 2.8
June 2000 30,000 468p 0.1
September 2000 65,000 513p 0.3
December 2000 50,000 377p 0.2
July 2001 40,000 249p 0.1
September 2001 1,231,250 193p 2.4
January 2002 29,000 320p 0.1
April 2002 50,000 337p 0.2
October 2002 2,473,250 153p 3.8
December 2002 59,700 199p 0.1
January 2003 40,000 175p 0.1
January 2003 10,000 199p –
7,527,593 19.0
Both approved and unapproved executive share options are exercisable between three and ten years from the date of grant.
Premier Farnell plc Notes to the Accounts
Annual Report and Accounts 2003 continued
65 21) Reserves
Share Capital Proﬁt and
premium redemption Merger loss
account reserve reserve account
£m £m £m £m
Group
At 4th February 2002 4.4 – – 65.6
Retained loss for the year – – – (1.8)
Premium on issue of ordinary shares 0.7–––
Purchase of own preference shares – 0.6 – (8.3)
Preference share conversion 15.0–––
Preference share conversion costs (0.9) – – –
Goodwill reinstated on disposal of businesses – – – 2.6
Currency translation adjustment – – – (0.3)
At 2nd February 2003 19.2 0.6 – 57.8
Company
At 4th February 2002 4.4 – 0.6 738.4
Retained loss for the year – – – (42.2)
Premium on issue of ordinary shares 0.7–––
Purchase of own preference shares – 0.6 – (8.3)
Preference share conversion 15.0–––
Preference share conversion costs (0.9) – – –
Currency translation on investments – – – (0.1)
Other currency translation adjustments – – – 0.1
At 2nd February 2003 19.2 0.6 0.6 687.9
Cumulative goodwill arising on acquisition of subsidiary undertakings which are still part of the Group and which was charged directly against reserves
of the Group amounted to £1,594.0 million at 2nd February 2003 (2002: £1,596.6 million).
22) Reconciliation of Movements in Shareholders’ Funds
Group Group Company Company
2003 2002 2003 2002
(52 weeks) (53 weeks) (52 weeks) (53 weeks)
£m £m £m £m
Proﬁt after taxation 41.6 38.6 1.2 5.6
Dividends – preference (10.8) (26.1) (10.8) (26.1)
– ordinary (32.6) (24.5) (32.6) (24.5)
(1.8) (12.0) (42.2) (45.0)
New share capital subscribed 0.7 0.2 0.7 0.2
Purchase of own preference shares (8.3) – (8.3) –
Preference share conversion costs (0.9) – (0.9) –
Goodwill reinstated on disposal of businesses 2.6 25.6 – –
Currency translation on investments – – (0.1) (15.9)
Other currency translation adjustments (0.3) (1.3) 0.1 15.9
Net change in shareholders’ funds (8.0) 12.5 (50.7) (44.8)
Shareholders’ funds at the beginning of the year 111.5 99.0 784.9 829.7
Shareholders’ funds at the end of the year 103.5 111.5 734.2 784.9
Shareholders’ funds comprise:
Equity interests (23.2) (375.2) 607.5 298.2
Non-equity interests 126.7 486.7 126.7 486.7
103.5 111.5 734.2 784.9
Non-equity interests reﬂect the redemption cost of the cumulative convertible preference shares.
Premier Farnell plc Notes to the Accounts
Annual Report and Accounts 2003 continued
66 23) Disposals
Details of businesses disposed of during the year are given in note 2.
2003 2002
£m £m
Tangible ﬁxed assets 1.7 4.2
Stocks 2.1 7.3
Debtors/creditors 1.8 1.1
Goodwill previously eliminated against reserves 2.6 25.6
8.2 38.2
Net consideration (see below) (3.3) (27.2)
Loss on disposal (note 2) 4.9 11.0
Cash consideration 4.3 34.2
Disposal costs (1.0) (7.0)
Net consideration 3.3 27.2
24) Notes to the Consolidated Statement of Cash Flows
1) Reconciliation of operating proﬁt to net cash inﬂow from operating activities
2003 2002
£m £m
Operating proﬁt 80.3 86.9
Depreciation charge (net of gain on disposals) 15.8 14.1
Amortisation of goodwill 2.6 1.5
Net pension credit (6.8) (6.7)
(Increase)/decrease in stocks (9.0) 9.3
Decrease in debtors 0.8 29.7
Increase/(decrease) in creditors 8.3 (27.7)
Net cash inﬂow from operating activities 92.0 107.1
2) Analysis of changes in net debt
Debt due Debt due
Cash at bank Bank within after Net
and in hand overdraft one year one year cash/(debt)
£m £m £m £m £m
At 4th February 2002 28.1 (3.0) (20.0) (241.5) (236.4)
Increase in cash 2.0 0.3 – – 2.3
Decrease/(increase) in debt – – 19.9 (26.0) (6.1)
Other changes – – (98.7) 98.7 –
Exchange movement (0.5) – 4.2 27.3 31.0
At 2nd February 2003 29.6 (2.7) (94.6) (141.5) (209.2)
25) Contingent Liabilities
The Company has guaranteed the loans of certain subsidiary undertakings which, at 2nd February 2003, amounted to £189.0 million
(2002: £219.8 million).
26) Operating Leases
Land and buildings Other assets
2003 2002 2003 2002
£m £m £m £m
The Group has annual commitments under operating leases 
which expire:
Within one year 0.7 0.8 0.9 0.5
Between two and ﬁve years 3.2 3.5 2.7 3.4
After ﬁve years 1.8 1.6 – –
5.7 5.9 3.6 3.9
Premier Farnell plc Notes to the Accounts
Annual Report and Accounts 2003 continued
67 27) Pension Commitments and Other Post-Retirement Obligations
1) Pensions
The Group operates pension plans throughout the world covering the majority of its employees. These plans are devised in accordance with local
conditions and practices in the countries concerned and include deﬁned contribution and deﬁned beneﬁt schemes. The assets of the plans are
generally held in separately administered trusts. The contributions to the plans are assessed in accordance with independent actuarial advice principally
using the projected unit method of valuation.
The Group’s two principal plans operate in the UK and the US. Further disclosures of these plans are set out below:
UK Plan US Plan
6th April 31st October
Last valuation date 1999 2002
£m £m
Market value of investments at last valuation date 55.7 112.6
Regular pension cost – 2.2
Interest on prepaid asset – (6.9)
Amortisation of variation 0.1 (2.2)
Total pension cost/(credit) 0.1 (6.9)
Level of funding, being the actuarial value of assets expressed as a percentage
of the accrued service liabilities 104% 279%
The principal assumptions used in the actuarial valuation of the UK Plan were an average projected investment return of 8.5% per annum, salary
inﬂation of 6.0% per annum and pension increases of 3.5% per annum. For the US Plan, the principal actuarial assumptions were an average projected
investment return of 8.5% per annum and salary inﬂation of 5.0% per annum.
Variations from regular cost are spread over the remaining service lives of current employees in the plans.
The ﬁnal salary section of the UK Plan was closed to new entrants in 1998 as a result of which, under the projected unit method, the current service
cost of the scheme will increase as the members of the scheme approach retirement. Members at that date now receive beneﬁts funded through a
combination of the US Plan and the UK Plan, including contributions to the money purchase section within the UK Plan. Employees joining the UK Plan
since 1 January 1999 are entitled to money purchase beneﬁts only.
An asset of £82.2 million (2002: £87.0 million) is included in debtors, representing the excess of the actuarial value of the assets over the accrued
service liabilities of the US Plan.
The April 2002 actuarial valuation of the UK Plan is in the process of being ﬁnalised. This is expected to show a funding level of 94% as a result of the
fall in equity market values. As a consequence, the total pension cost for the UK Plan, under SSAP 24, for the year ending 1st February 2004, will be
£0.8 million.
Disclosures in accordance with Financial Reporting Standard (“FRS”) 17, Retirement Beneﬁts
The following information is provided for disclosure purposes only in accordance with FRS17. Pension costs have been recognised in these accounts in
line with Statement of Standard Accounting Practice No. 24, Accounting for Pension Costs, as described above.
The ﬁnancial assumptions at 2nd February 2003 used to calculate liabilities under FRS17 were as follows:
UK Plan UK Plan US Plan US Plan
2003 2002 2003 2002
% pa % pa % pa % pa
Inﬂation 2.30 2.50 2.30 2.50
Rate of increase in salaries 3.80 4.00 3.80 4.00
Rate of increase in pensions 2.30 2.50 2.30 2.50
Discount rate 5.50 5.75 6.50 7.00
The market value of assets and the expected rate of return at 2nd February 2003 were:
UK Plan UK Plan US Plan US Plan UK Plan UK Plan US Plan US Plan
Long-term Value Long-term Value Long-term Value Long-term Value
expected rate expected rate expected rate expected rate
of return of return of return of return
2003 2003 2003 2003 2002 2002 2002 2002
% pa £m % pa £m % pa £m % pa £m
Equities 8.9 25.0 8.9 107.1 7.9 31.5 7.9 156.6
Bonds 4.5 18.2 – – 5.0 21.2 – –
Cash 4.0 0.1 – – – – 4.5 1.8
Average return/Total 7.0 43.3 8.9 107.1 6.8 52.7 7.9 158.4
Premier Farnell plc Notes to the Accounts
Annual Report and Accounts 2003 continued
68 Note 27 continued
Disclosures in accordance with Financial Reporting Standard (“FRS”) 17, Retirement Beneﬁts (continued)
The funding position at 2nd February 2003 in accordance with FRS17 was as follows:
UK Plan US Plan Total UK Plan US Plan Total
2003 2003 2003 2002 2002 2002
£m £m £m £m £m £m
Total market value of assets 43.3 107.1 150.4 52.7 158.4 211.1
Present value of plan liabilities (58.0) (57.7) (115.7) (61.2) (69.1) (130.3)
(Deﬁcit)/surplus in the plan (14.7) 49.4 34.7 (8.5) 89.3 80.8
Related deferred tax asset/(liability) 4.4 (18.7) (14.3) 2.6 (33.8) (31.2)
Net pension (liability)/asset (10.3) 30.7 20.4 (5.9) 55.5 49.6
Analysis of amounts charged to the proﬁt and loss account in respect of deﬁned beneﬁt schemes for the year ended 2nd February 2003:
(i) Amounts charged to operating proﬁt
UK Plan US Plan Total
£m £m £m
Current service cost 0.3 2.7 3.0
Past service cost – 0.7 0.7
Total operating charge 0.3 3.4 3.7
(ii) Amounts credited to exceptional items
Gain on curtailments – 0.3 0.3
(iii) Amounts credited/(charged) to other ﬁnance income
Expected return on pension scheme assets 3.5 11.4 14.9
Interest cost on pension scheme liabilities (3.5) (4.4) (7.9)
Net return – 7.0 7.0
Movements in (deﬁcit)/surplus during the year:
UK Plan US Plan Total
£m £m £m
(Deﬁcit)/surplus at 4th February 2002 (8.5) 89.3 80.8
Current service cost (0.3) (2.7) (3.0)
Past service cost – (0.7) (0.7)
Gain on curtailments – 0.3 0.3
Other ﬁnance income – 7.0 7.0
Total loss recognised in the statement of total recognised gains and losses (5.9) (43.8) (49.7)
(Deﬁcit)/surplus at 2nd February 2003 (14.7) 49.4 34.7
Analysis of amount recognised in the statement of total recognised gains and losses:
UK Plan US Plan Total
£m £m £m
Actual return less expected return on pension scheme assets (10.6) (37.6) (48.2)
Experience gains and losses arising on scheme liabilities 5.2 7.1 12.3
Changes in the assumptions underlying the present value of the scheme (0.5) (2.6) (3.1)
Actuarial loss recognised in the statement of total recognised gains and losses (5.9) (33.1) (39.0)
Currency translation adjustment – (10.7) (10.7)
Total loss recognised in the statement of total recognised gains and losses (5.9) (43.8) (49.7)
History of experience gains and losses:
UK Plan US Plan Total
2003 2003 2003
Difference between the actual and expected return on scheme assets:
Amount (£m) (10.6) (37.6) (48.2)
Percentage of scheme assets 24.5% 35.1% 32.0%
Experience gain on scheme liabilities
Amount (£m) 5.2 7.1 12.3
Percentage of the present value of scheme liabilities 9.0% 12.3% 10.6%
Actuarial loss recognised in statement of total recognised gains and losses
Amount (£m) (5.9) (33.1) (39.0)
Percentage of the present value of scheme liabilities 10.2% 57.4% 33.7%
Premier Farnell plc Notes to the Accounts
Annual Report and Accounts 2003 continued
69 Premier Farnell plc Notes to the Accounts
Annual Report and Accounts 2003 continued
70
Note 27 continued
Disclosures in accordance with Financial Reporting Standard (“FRS”) 17, Retirement Beneﬁts (continued)
Reported net assets and proﬁt and loss reserve can be reconciled to amounts in accordance with FRS17 as follows:
Net Proﬁt and Net Proﬁt and
assets loss reserve assets loss reserve
2003 2003 2002 2002
£m £m £m £m
As reported 103.5 57.8 111.5 65.6
Pension asset in accordance with SSAP 24 (82.2) (82.2) (87.0) (87.0)
Associated deferred tax liability 30.7 30.7 33.0 33.0
As reported excluding pension asset and associated deferred tax liability 52.0 6.3 57.5 11.6
Net pension asset in accordance with FRS17 20.4 20.4 49.6 49.6
Amounts in accordance with FRS17 72.4 26.7 107.1 61.2
2) Post-retirement medical beneﬁts
In the US, the Group provides unfunded post-retirement medical beneﬁts to certain US employees. The method of accounting for these obligations is
similar to that used to account for pension obligations. The principal assumptions used in the most recent actuarial valuation undertaken at
2nd February 2003 were a discount rate of 8.0% per annum and healthcare costs increasing by 9.0% per annum in the short term, reducing to an
increase of approximately 5.0% per annum in the longer term. At 2nd February 2003, the provision for post-retirement medical beneﬁts based on this
valuation was £5.2 million (2002: £5.0 million).
Disclosures in accordance with Financial Reporting Standard (“FRS”) 17, Retirement Beneﬁts
The following information is provided for disclosure purposes only in accordance with FRS 17.
The ﬁnancial assumptions at 2nd February 2003 used to calculate liabilities for post-retirement medical beneﬁts under FRS 17, were as follows:
Discount rate 8.0%
Medical inﬂation 9.0% decreasing by 0.5% each year to 5.0% over eight years
Analysis of amounts charged to the proﬁt and loss account in respect of post-retirement medical beneﬁts for the year ended 2nd February 2003:
2003
£m
Amounts charged to operating proﬁt – current service cost 0.2
Amounts charged to other ﬁnance income – interest cost on liabilities 0.4
2003
Movements in deﬁcit during the year: £m
Obligation at 4th February 2002 (5.3)
Contributions paid 0.4
Current service cost (0.2)
Finance cost (0.4)
Total loss recognised in the statement of total recognised gains and losses (0.3)
Obligation at 2nd February 2003 (5.8)
2003
Analysis of amount recognised in the statement of total recognsied gains and losses: £m
Experience loss on liabilities (0.1)
Loss on change of assumptions (1.0)
Actuarial loss recognised in the statement of total recognised gains and losses (1.1)
Currency translation adjustment 0.8
Total loss recognised in the statement of total recognised gains and losses (0.3)
History of experience gains and losses: 2003
Experience loss on liabilities (0.1)
Percentage of liabilities 1.7%
Actuarial loss recognised in the statement of total recognised gains and losses (1.1)
Percentage of liabilities 19.0%
Had the provision for post-retirement medical beneﬁts been calculated in accordance with FRS 17, reported net assets and the proﬁt and loss reserve,
as at 2nd February 2003, would have been reduced by £0.4 million.
28) Related Party Transactions
The Company has taken advantage of the exemption under FRS8, Related Party Transactions, from disclosing transactions between the Company and
other group undertakings as all such transactions have been eliminated fully on consolidation in these ﬁnancial statements. Premier Farnell plc Notes to the Accounts
Annual Report and Accounts 2003 continued
71
29) Summary of Differences Between UK and US Generally Accepted Accounting Principles (GAAP)
The Group accounts are prepared in accordance with UK GAAP which differs in certain signiﬁcant respects from US GAAP . A description of the
relevant accounting principles which differ materially is given below.
Goodwill and Intangible Assets
Under UK GAAP , prior to the introduction of FRS10 “Goodwill and Intangible Assets” in 1998 which requires goodwill and intangible assets to be
capitalised and amortised over their estimated useful economic lives, goodwill arising on acquisitions was permitted to be written off against retained
earnings. Since the introduction of FRS10, goodwill arising on acquisitions is capitalised and amortised over its estimated useful economic life which, in
the case of Buck & Hickman, is 20 years. Goodwill arising on acquisitions is reviewed for impairment at the end of the ﬁrst full year after an acquisition
and in other years if events or changes in circumstances indicate that the carrying value may not be recoverable.
Under US GAAP , prior to the introduction of FAS 142, “Goodwill and Other Intangible Assets”, goodwill and other identiﬁable intangible assets were
capitalised and amortised over their estimated useful lives. Accordingly, on the acquisition of Premier in 1996, £596 million of the excess purchase
consideration over net asset value was recorded as a customer list intangible asset with the remaining £1,193 million recorded as goodwill. The
customer list was being amortised over 20 years, and goodwill amortised over 40 years.
On the acquisition of Buck and Hickman in July 2001, £21.3 million of the excess purchase consideration over net asset value was recorded as a
deﬁnite lived customer list intangible asset, £8.2 million recognised as an indeﬁnite lived intangible asset, with the remaining £23.1 million recognised
as goodwill.
The Company adopted FAS 142 in full on 4 February 2002. FAS 142 requires that goodwill and indeﬁnite lived intangible assets are no longer
amortised, but instead assessed annually for impairment. Deﬁnite lived intangible assets continue to be amortised over their estimated useful lives.
FAS 142 requires intangible assets to be reassessed as either deﬁnite lived or indeﬁnite lived intangible assets on the date of adoption of the standard.
Accordingly, the Company continued to recognise the Premier customer list as a deﬁnite lived intangible asset with no change in the estimated useful
life. Similarly, the customer list intangible asset and the trademark intangible asset recognised on the acquisition of Buck and Hickman continued to be
recognised as deﬁnite lived and indeﬁnite lived intangible assets, respectively, with no change in the estimated useful life of the customer list.
The impact of adopting FAS 142 has been to cease goodwill amortisation of approximately £31 million per annum, resulting in a goodwill balance
subject to impairment testing of £1,112.9 million as of 4 February 2002.
The Company performed its transitional goodwill impairment test as required by the standard as of 4 February 2002, being the adoption date, and on
31 July 2002, being the date the Company has elected for each subsequent annual impairment test.
The result of the transitional impairment test was the recognition of goodwill impairment of £728.0 million, which in accordance with the transitional
provisions of the standard, has been recorded as a cumulative effect change in accounting principle.
The indeﬁnite lived trademark intangible asset was tested for impairment in accordance with the standard although no impairment was indicated.
The differing treatment of goodwill under US GAAP may also give rise to a different proﬁt or loss being recorded in the income statement on the
subsequent disposal of a business.
Deferred Taxation
Under FRS 19, “Deferred Tax”, accounting for deferred tax under UK GAAP is now largely consistent with US GAAP . The principal difference
recognised in the reconciliation below relates to deferred tax liabilities provided against intangible assets recorded under US GAAP on acquisition which
are not separately identiﬁable under UK GAAP and for which no deferred tax liability is recorded.
Interest Rate Hedging Instruments
Under UK GAAP amounts payable or receivable under an interest rate hedging swap, which incorporates an embedded written option, are accounted
for over the life of the swap on an accruals basis; whereas, under US GAAP , the written option element is accounted for separately from the host
contract on the balance sheet at a mark to market valuation, with changes in this valuation taken to the proﬁt and loss account as they arise.
Pension Costs
The key differences between UK GAAP (SSAP24) and US GAAP in relation to deﬁned beneﬁt pension plans are:
– Under UK GAAP plan assets are valued using a discounted income valuation. US GAAP requires plan assets to be measured at market-related
value.
– Under UK GAAP the effect of variations in cost can be accumulated at successive valuations and amortised on an aggregate basis. Under US GAAP
the amortisation of the transitional asset and the costs of past service beneﬁt improvements are separately tracked, with aggregated gains and
losses amortised only if outside a 10% corridor.
Under US GAAP , an additional liability is required to be recorded when the accumulated beneﬁt obligation exceeds the fair value of the plan assets. An
intangible asset is recognised when the additional liability is recorded and is adjusted as the additional liability changes. However, the recorded intangible
asset is limited to the amount of unrecognised prior service cost (including any unrecognised net obligation from transition); any excess of the additional
liability over this amount is recorded within the statement of other comprehensive income. At 2nd February 2003, the cumulative amount of additional
liability, recorded within the statement of other comprehensive income, as there was no unrecognised prior service cost was £15.4 million.
Capitalisation of interest
Under UK GAAP , the Group does not capitalise interest; whereas, under US GAAP , the estimated amount of interest incurred on capital projects which
are prepared for use over time is included in ﬁxed assets and depreciated over the lives of the related assets.
Stock based compensation
Under UK GAAP , a compensation cost must be calculated in respect of share options and long term incentive plans based on the difference between
the share price at the date of the grant and the option/award price which is recognised over the vesting period; whereas, under US GAAP , the
compensation cost is based on the fair value of the option/award at the date of grant and is also recognised over the vesting period. Note 29 continued
Under UK GAAP , own shares are carried on the balance sheet and classiﬁed as a ﬁxed asset; whereas, under US GAAP , own shares are offset against
shareholders’ funds.
Under UK GAAP , a provision is made for the cost of acquiring further shares on the market where there is an obligation under a long term incentive
plan; whereas, under US GAAP , no such provision is recognised.
Convertible Redeemable Preference Shares and Preference Dividends
Under UK GAAP , cumulative convertible redeemable preference shares are included as shareholders’ funds; whereas, under US GAAP , cumulative
convertible redeemable preference shares do not form part of shareholders’ funds when the terms of redemption of such shares are outside the control
of the Company; the dividend thereon is recorded as a charge against net income.
Under UK GAAP , the special conversion right, which enabled preference shareholders to convert their preference shares into ordinary shares at an
enhanced rate of conversion, does not affect the income statement or shareholders’ funds, with the difference in the nominal value between the
preference shares converted and ordinary shares issued being credited to the share premium account. Under US GAAP , FAS 84, “Induced
Conversions of Convertible Debt”, requires an expense to be recorded against net income, measured as being the difference between the fair value of
ordinary shares issued pursuant to the special conversion right and the fair value of ordinary shares issued pursuant to the original conversion terms.
Under UK GAAP , costs relating to the preference share conversion are charged against share premium; whereas, under US GAAP , such costs are
charged in arriving at net income.
Under UK GAAP , the cost of repurchasing preference shares is treated as a movement in the proﬁt and loss reserve. On cancellation of the shares a
non-distributable reserve is created equivalent to the nominal value of the shares cancelled. Under US GAAP , as the cumulative convertible redeemable
preference shares are considered to closely resemble debt, the transaction is considered to be an early extinguishment of debt and the difference
between the cost of repurchasing the shares and the book value of the debt is recorded as a gain.
Foreign Exchange Hedging Transactions
Under UK GAAP , gains or losses arising on foreign exchange forward contracts taken out in respect of anticipated trading receipts from overseas
subsidiaries may be deferred and recognised at the time of the trading receipt; whereas, under US GAAP , such gains or losses may only be deferred
when designated and documented as a qualifying hedging relationship in accordance with FAS133, “Accounting for Derivative Instruments and
Hedging Activities”. The Company does not designate these derivative ﬁnancial instruments as qualifying hedging relationships, therefore, these
instruments are recorded at their fair values with gains and losses recorded currently in earnings. The effect on net income of this difference is, however,
not considered signiﬁcant.
Ordinary Dividends
Under UK GAAP , provision is made for dividends in the year in respect of which they are proposed by the Directors; whereas, under US GAAP ,
provision for dividends is not made until they are formally declared by the Directors.
Effect on net income of differences between UK and US GAAP
2003 2002 2003 2002
£m £m $m $m
Proﬁt after tax under UK GAAP 41.6 38.6 63.6 55.2
US GAAP adjustments:
Amortisation of goodwill and deﬁnite lived intangible assets (27.9) (62.0) (42.7) (88.6)
Gain or loss on disposals 0.4 9.5 0.6 13.6
Deferred taxation 10.3 11.2 15.8 16.0
Interest rate hedging instruments – 2.4 – 3.4
Pension costs (1.3) (0.2) (2.0) (0.3)
Capitalisation of interest 1.6 – 2.4 –
Stock based compensation (1.0) (0.2) (1.5) (0.3)
Preference dividends (10.8) (26.1) (16.5) (37.3)
Preference share induced conversion costs (149.5) – (228.7) –
Preference share extinguishment gain 2.3 – 3.5 –
Total US GAAP adjustments (175.9) (65.4) (269.1) (93.5)
Loss after tax under US GAAP prior to cumulative effect of adoption of FAS 142 (134.3) (26.8) (205.5) (38.3)
Cumulative effect of adoption of FAS 142 (728.0) – (1,113.8) –
Net loss under US GAAP (862.3) (26.8) (1,319.3) (38.3)
Basic earnings per ordinary share under UK GAAP 9.3p 4.6p $0.142 $0.066
Basic loss per ordinary share ADR under US GAAP*:
Prior to cumulative effect of adoption of FAS 142 and gain on the 
extinguishment of preference shares (82.4)p (19.7)p $(1.261) $(0.282)
Cumulative effect of adoption of FAS 142 (439.1)p – $(6.718) –
Preference share extinguishment gain 1.4p – $0.021 –
Net loss per ordinary share ADR under US GAAP (520.1)p (19.7)p $(7.958) $(0.282)
*Two Premier Farnell ordinary shares are represented by each ordinary share ADR.
The translation of sterling into US dollars has been presented for convenience purposes only using the average exchange rate for the year of 1.53
(2002: 1.43).
Premier Farnell plc Notes to the Accounts
Annual Report and Accounts 2003 continued
72 Premier Farnell plc Notes to the Accounts
Annual Report and Accounts 2003 continued
73
Note 29 continued
Effect on shareholders’ funds of differences between UK and US GAAP
2003 2002 2003 2002
£m £m $m $m
Shareholders’ funds under UK GAAP 103.5 111.5 169.7 157.2
US GAAP adjustments:
Goodwill and intangible assets 676.3 1,543.5 1,109.2 2,176.3
Tangible ﬁxed assets 1.6 – 2.6 –
Deferred taxation (130.9) (166.5) (214.7) (234.8)
Ordinary dividends 18.1 13.6 29.7 19.2
Pensions (17.2) (8.3) (28.2) (11.7)
Interests in own shares (0.2) (0.5) (0.3) (0.7)
Stock based compensation 1.0 1.3 1.6 1.8
Convertible redeemable preference shares (126.7) (486.7) (207.8) (686.2)
Total US GAAP adjustments 422.0 896.4 692.1 1,263.9
Shareholders’ funds under US GAAP 525.5 1,007.9 861.8 1,421.1
Total assets under UK GAAP 543.0 565.8 890.5 797.7
Total assets under US GAAP 1,203.5 2,100.5 1,973.7 2,961.7
The cumulative effects on signiﬁcant balance sheet captions of differences between UK and US GAAP are as follows:
UK GAAP US GAAP US GAAP UK GAAP US GAAP US GAAP
adjustments adjustments
2003 £m £m £m $m $m $m
Fixed asset investments 0.2 (0.2) – 0.3 (0.3) –
Goodwill and intangible assets 48.5 676.3 724.8 79.5 1,109.2 1,188.7
Tangible ﬁxed assets 112.9 1.6 114.5 185.2 2.6 187.8
Net current assets 126.7 1.9 128.6 207.8 3.1 210.9
Creditors – due after more than one year (141.5) (126.7) (268.2) (232.1) (207.8) (439.9)
Provisions for liabilities and charges (43.3) (130.9) (174.2) (71.0) (214.7) (285.7)
2002
Fixed asset investments 0.5 (0.5) – 0.7 (0.7) –
Goodwill and intangible assets 51.1 1,543.5 1,594.6 72.0 2,176.3 2,248.3
Tangible ﬁxed assets 114.1 – 114.1 160.9 – 160.9
Net current assets 231.5 6.6 238.1 326.4 9.3 335.7
Creditors – due after more than one year (241.5) (486.7) (728.2) (340.5) (686.2) (1,026.7)
Provisions for liabilities and charges (44.2) (166.5) (210.7) (62.3) (234.8) (297.1)
The translation of sterling into US dollars has been presented for convenience purposes only using the year-end exchange rate of 1.64 (2002: 1.41). Premier Farnell plc Directors’ Responsibilities
Annual Report and Accounts 2003 Auditors’ Report
74
The following statement, which should be read in conjunction with the
Auditors’ report, is made with a view to distinguishing for shareholders the
respective responsibilities of the Directors and of the Auditors in relation to
the accounts.
The Directors are required by the Companies Act 1985 to prepare
accounts for each ﬁnancial year which give a true and fair view of the state
of affairs of the Company and the Group as at the end of the ﬁnancial year
and of the proﬁt and loss for the ﬁnancial year. The Directors consider that
in preparing the accounts on pages 48 to 73 the Company has used
appropriate accounting policies, consistently applied and supported by
reasonable and prudent judgements and estimates and that all applicable
accounting standards have been followed.
The Directors have responsibility for ensuring that the Company keeps
accounting records which disclose with reasonable accuracy the ﬁnancial
position of the Company and which enable them to ensure that the
accounts comply with the Companies Act 1985.
The Directors have general responsibility for taking such steps as are
reasonably open to them to safeguard the assets of the Group and to
prevent and detect fraud and other irregularities.
The 2003 Annual Report and Accounts will be published on the
Company’s website (in addition to the normal paper version). The
maintenance and integrity of the Company’s website is the responsibility of
the Directors and the work carried out by the auditors does not involve
consideration of these matters.
Legislation in the UK governing the preparation and dissemination of
ﬁnancial statements may differ from legislation in other jurisdictions.
Directors’ Responsibilities
Independent Auditors’ Report to the Members of
Premier Farnell plc
We have audited the ﬁnancial statements which comprise the proﬁt and
loss account, the statement of total recognised gains and losses, the
balance sheets, the cash ﬂow statement, related notes and the accounting
policies set out in the statement of accounting policies. We have also
audited the disclosures required by Part 3 of Schedule 7A to the
Companies Act 1985 contained in the Remuneration Report (“the
auditable part”).
Respective Responsibilities of Directors and Auditors
The Directors’ responsibilities for preparing the Annual Report and the
ﬁnancial statements in accordance with applicable United Kingdom law
and accounting standards are set out in the statement of Directors’
Responsibilities. The Directors are also responsible for preparing the
Remuneration Report.
Our responsibility is to audit the ﬁnancial statements and the auditable part
of the Remuneration Report in accordance with the relevant legal and
regulatory requirements and United Kingdom Auditing Standards issued
by the Auditing Practices Board. This report, including the opinion, has
been prepared for and only for the Company’s members as a body in
accordance with Section 235 of the Companies Act 1985 and for no
other purpose. We do not, in giving this opinion, accept or assume
responsibility for any other purpose or to any other person to whom this
report is shown or into whose hands it may come save where expressly
agreed by our prior consent in writing.
We report to you our opinion as to whether the ﬁnancial statements give a
true and fair view and whether the ﬁnancial statements and the auditable
part of the Remuneration Report have been properly prepared in
accordance with the United Kingdom Companies Act 1985. We also
report to you if, in our opinion, the Directors’ report is not consistent with
the ﬁnancial statements, if the Company has not kept proper accounting
records, if we have not received all the information and explanations we
require for our audit, or if information speciﬁed by law regarding Directors’
remuneration and transactions is not disclosed.
We read the other information contained in the Annual Report and
consider the implications for our report if we become aware of any
apparent mis-statements or material inconsistencies with the ﬁnancial
statements. The other information comprises only the Chairman’s
Statement, the Group Chief Executive’s Review, the Finance Director’s
Review, the Directors’ Report, the unaudited part of the Directors’
Remuneration Report and the Corporate Governance Statement.
We review whether the Corporate Governance Statement reﬂects the
Company’s compliance with the seven provisions of the Combined Code
speciﬁed for our review by the Listing Rules of the Financial Services
Authority, and we report if it does not. We are not required to consider
whether the Board’s statements on internal control cover all risks and
controls, or to form an opinion on the effectiveness of the Company’s or
Group’s corporate governance procedures or its risk and control
procedures.
Basis of Audit Opinion
We conducted our audit in accordance with Auditing Standards issued by
the Auditing Practices Board. An audit includes examination, on a test
basis, of evidence relevant to the amounts and disclosures in the ﬁnancial
statements and the auditable part of the Remuneration Report. It also
includes an assessment of the signiﬁcant estimates and judgements made
by the Directors in the preparation of the ﬁnancial statements, and of
whether the accounting policies are appropriate to the Company’s
circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information
and explanations which we considered necessary in order to provide us
with sufﬁcient evidence to give reasonable assurance that the ﬁnancial
statements and the auditable part of the Directors’ Remuneration Report
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the ﬁnancial statements.
Opinion
In our opinion:
– The ﬁnancial statements give a true and fair view of the state of affairs
of the Company and the Group at 2nd February 2003 and of the proﬁt
and cash ﬂows of the Group for the year then ended.
– The ﬁnancial statements have been properly prepared in accordance
with the Companies Act 1985.
– Those parts of the Remuneration Report required by Part 3 of
Schedule 7A to the Companies Act 1985 have been properly prepared
in accordance with the Companies Act 1985.
PricewaterhouseCoopers LLP
Chartered Accountants and Registered Auditors
Leeds
19th March 2003
Auditors’ Report Premier Farnell plc Shareholder Information
Annual Report and Accounts 2003
75
2003/2004 Financial Calendar
Quarter One results 28th May 2003
Annual General Meeting 11th June 2003
Quarter Two and interim results w/c 8th September 2003
Quarter Three results w/c 1st December 2003
Final Ordinary Dividend Key Dates Interim Ordinary Dividend Key Dates
Ex-dividend Record Payment Ex-dividend Record Payment
Ordinary Shares 28th May 2003 30th May 2003 25th June 2003 24th Sept 2003 26th Sept 2003 24th Oct 2003
Ordinary ADSs 28th May 2003 30th May 2003 25th June 2003 24th Sept 2003 26th Sept 2003 24th Oct 2003
Half-yearly Preference Dividend Key Dates
Ex-dividend Record Payment Ex-dividend Record Payment
Preference Shares 1st July 2003 4th July 2003 28th July 2003 7th Jan 2004 9th Jan 2004 26th Jan 2004
Preference ADSs 2nd July 2003 4th July 2003 28th July 2003 7th Jan 2004 9th Jan 2004 26th Jan 2004
Shareholder Information
Annual General Meeting
The 2003 Annual General Meeting will be held at the Mayfair Conference
Centre, 17 Connaught Place, Marble Arch, London W2 2EL, on 11th June
at 11.30 am.
Registrar
Enquiries concerning shareholdings or dividends should be addressed in
the ﬁrst instance to the Company’s Registrar, Northern Registrars Limited,
Northern House, Woodsome Park, Fenay Bridge, Huddersﬁeld HD8 0LA,
United Kingdom or telephone +44 (0) 1484 600900.
E-mail: client.services@northernregistrars.co.uk.
Investor Communications
Premier Farnell is committed to establishing a high-quality dialogue with its
ﬁnancial communities. The Group has an in-house investor relations
function and seeks to ensure that its strategy, businesses, and markets
are well understood and fairly valued. The Group understands that
information ﬂow is important to this process and communicates by means
of results presentations, meetings, site visits, conference calls, printed and
electronic material (e.g. corporate web-site, www.premierfarnell.com) and
quarterly reporting.
Shareholder Enquiries
If you have any enquiries as a shareholder, please call Nicholas Ross,
Group Director, Communications on +44 (0) 870 129 8608 or
e-mail: rossn@premierfarnell.com.
For other enquiries please e-mail:information@premierfarnell.com.
US shareholders can also contact our US ofﬁce on +1 (216) 525 4263.
Additional Information for US Investors
The Company’s American Depository Shares (ADSs), which are
represented by American Depository Receipts (ADRs), are listed on the
New York Stock Exchange. Each ordinary ADS represents two ordinary
shares and each preference ADS represents one preference share and
these trade under the symbols PFP and PFPPR respectively. The ADR
programme is administered on behalf of the Company by The Bank of
New York and enquiries relating to the ADSs and dividend payments
should be addressed to The Bank of New York, American Depositary
Receipts, PO Box 11258, Church St Station, New York, NY 10286-1258,
USA or telephone +1 (888) 269 2377.
E-mail:shareowner-svcs@bankofny.com.
ADR holders receive the reports issued to shareholders either at the
record address, if they hold the ADRs directly, or from their bank or
brokerage ﬁrm if the ADRs are held in ‘street name’.
The Company is subject to the regulations of the Securities and Exchange
Commission as they apply to foreign companies and will ﬁle its annual
report on Form 20-F and other information as required on or before
1st August 2003. When ﬁled, a copy of the Form 20-F (together with
selected ﬁnancial data in US dollars and format) may be obtained from
Mr Joseph R Daprile, Vice President and General Counsel, North America
Corporate, at Premier Farnell Corp., 7061 E. Pleasant Valley Road,
Independence, Ohio 44131, USA.
E-mail: information@premierfarnell.com. Premier Farnell plc Advisers
Annual Report and Accounts 2003
76
Advisers
Auditors
PricewaterhouseCoopers 
Benson House
33 Wellington Street
Leeds LS1 4JP
Bankers
HSBC
47 Market Street
Bradford BD1 1LW
Registrar & Share
Transfer Ofﬁce
Northern Registrars Limited 
Northern House
Woodsome Park
Fenay Bridge
Huddersﬁeld HD8 0LA
Stockbrokers
Cazenove & Co. Ltd
12 Tokenhouse Yard
London EC2R 7AN
ABN AMRO
Hoare Govett Limited
250 Bishopsgate
London EC2M 4AA
ADR Depository Bank
The Bank of New York
Investor Relations Dept.
PO Box 11258
Church Street Station
New York NY10286-1258
USA
Cautionary Statement for the Purposes of the ‘Safe
Harbor’ Provision of the United States Private Securities
Litigation Reform Act of 1995. 
The U.S. Private Securities Litigation Reform Act of 1995
provides a ‘safe harbor’ for forward-looking statements.
This Annual Report contains certain forward-looking statements
relating to the business of the Group and certain of its plans and
objectives, including, but not limited to, savings to be gained
from certain programs targeted at the Group’s spend on goods
and services for running operations, the introduction of new IT
and e-commerce platforms, the expected beneﬁts and future
actions to be taken by the Group in respect of certain sales and
marketing initiatives, economies of scale, operating efﬁciencies,
future capital expenditures, including how such expenditures are
to be funded, future ordinary expenditures and future actions to
be taken by the Group in connection with such capital and
ordinary expenditures. 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. Actual expenditures made and actions taken as well as
expected results may differ materially from the Group’s
expectations contained in the forward-looking statements as a
result of various factors, many of which are beyond the control
of the Group. These factors include, but are not limited to, the
implementation of cost saving initiatives to offset current market
conditions, integration of new personnel and new information
systems, continued use and acceptance of eCommerce
programs and systems and the impact on other distribution
systems, the ability to expand into new markets and territories,
the implementation and customer acceptance of new sales and
marketing initiatives, changes in demand for electronic, electrical,
electro-magnetic and industrial products, rapid changes in
distribution of our products and customer expectations, product
availability, the ability to introduce and customers’ acceptance of
new services, products and product lines, the impact of
competitive pricing, ﬂuctuations in foreign currencies, changes in
interest rates and the impact of changes in worldwide and
national economies.
Registered in England and Wales
No.876412. Registered ofﬁce:Farnell House,
Forge Lane, Leeds, LS12 2NE.
This document is produced
from 50% recycled
de-inked ﬁbre and 50%
totally chlorine free (TCF)
pulp, which is sourced from
sustainable forests.
Designed by Bostock and Pollitt
Printed by Polestar Direct Premier Farnell plc Five Year Record
Annual Report and Accounts 2003
2003 2002 2001 2000 1999
£m £m £m £m £m
Turnover 759.0 806.4 876.2 752.1 705.0
Operating proﬁt before amortisation of goodwill 82.9 88.4 115.0 103.7 122.2
Amortisation of goodwill (2.6) (1.5) – – –
Total operating proﬁt 80.3 86.9 115.0 103.7 122.2
Proﬁt before taxation, amortisation of goodwill and
exceptional items 67.2 72.5 102.1 91.8 110.4
Amortisation of goodwill (2.6) (1.5) – – –
Exceptional items (4.8) (11.0) – – (10.0)
Proﬁt before taxation 59.8 60.0 102.1 91.8 100.4
Proﬁt after taxation 41.6 38.6 71.3 66.2 66.6
Preference dividends (10.8) (26.1) (25.3) (23.7) (23.2)
Proﬁt attributable to ordinary shareholders 30.8 12.5 46.0 42.5 43.4
Ordinary dividends (32.6) (24.5) (24.5) (24.5) (24.5)
Retained (loss)/proﬁt (1.8) (12.0) 21.5 18.0 18.9
Shareholders’ funds – equity (23.2) (375.2) (375.4) (357.5) (367.7)
– non-equity 126.7 486.7 474.4 431.3 426.1
Equity minority interests – – 0.3 0.3 0.3
Total capital employed 103.5 111.5 99.3 74.1 58.7
Dividend per share (pence) 9.0 9.0 9.0 9.0 9.0
Basic earnings per share (pence) 9.3 4.6 16.9 15.6 16.0
Exceptional items (pence) 1.9 4.6 – – 2.5
Adjusted earnings per share (pence) 11.2 9.2 16.9 15.6 18.5
Five Year Record
01 Our mission
02 Group at a glance
04 Chairman’s statement
06 Chief Executive’s statement
Operating review
10 Marketing and 
Distribution Division
22 Industrial Products Division
26 Board of Directors and Ofﬁcers
28 Group Leadership T eam
30 Finance Director’s review
34 Social responsibility report
38 Directors’ report
40 Remuneration report
46 Corporate governance
48 Consolidated proﬁt 
and loss account
49 Consolidated balance sheet
50 Company balance sheet
51 Consolidated statement of 
cash ﬂow
52 Statement of accounting
policies
53 Notes to the accounts
74 Directors’ responsibilities
74 Auditors’ report
75 Shareholder information
76 Advisers
Five year record Premier Farnell plc Annual Report and Accounts 2003
Premier Farnell plc
Annual Report and 
Accounts 2003
Our customers’ needs 
drive our business
ready
Group Headquarters
25/28 Old Burlington Street
London
W1S 3AN
UK
T +44 (0) 20 7851 4100
F +44 (0) 20 7851 4110
150 Armley Road
Leeds
LS12 2QQ
UK
T +44 (0) 870 129 8608
F +44 (0) 870 129 8611
www.premierfarnell.com