premier farnell plc
annual report and accounts 2004
“premier farnell underst ands wha t we need
to make our business successful”
premier farnell plc annual report and accounts 2004
wwwpremierfarnellcom
group headquarters
2528 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 contents
01 calendar highlights
02 group a t a glance
04 financial highlights
05 chairman’s st a tement
06 a winning stra tegy
07 chief executive’s review
12 opera ting review
20 social responsibility report 
26 board of directors 
28 finance director’s report
32 directors’ report
34 remunera tion report
40 corpora te governance
42 consolida ted profit
and loss account
42 st a tement of tot al recognised
gains and losses
43 consolida ted balance sheet
44 comp any balance sheet
45 consolida ted st a tement of
cash flows
46 st a tement of accounting
policies
47 notes to the accounts
69 directors’ responsibilities
69 auditors’ report 
70 shareholder informa tion
71 advisers
72 five year record
cover story
newark inone’s direct ship service  provides european customers
with rapid direct delivery on a range of over 70000 us products
it enabled ukbased trifix electronic services to source a specific
part for a time critical repair – saving its customer from potential
production downtime penal ties running into many thousands
of pounds year at a glance premier farnell plc 01
annual report and accounts 2004
year a t a glance
calendar highlights 20032004
feb
the inone brand is launched to enable
us to communicate our full range of
products and services more effectively
four businesses are rebranded with the
inone suffix
ma y
newark inone launches additions
to its product range expanding its
semiconductor offering by 50
the new farnell inone catalogue is
published with a total offer of 150000
products incorporating the full
buckhickman inone range
aug
steve canham is appointed managing
director of the marketing and distribution
division europe and asia pacific 
cpc launches its new 2800 page
catalogue with the addition of 13500
new products it is split into seven main
product areas for easy reference
nov
paul tallentire is appointed president of
newark inone 
a tornado hits akron brass’ manufacturing
site at wooster in ohio significant damage
is caused but as a result of wellrehearsed
drills there are no injuries to personnel
mar
customer relationship management
software is implemented across newark
inone’s 46 sales branches and two
call centres
jun
the group renews its global supply
agreement with philips adding newark
inone and buckhickman inone to the
contract along with farnell inone further
evidence of our wide geographical and
service capability for multinational
customers
sep
premier farnell is named electronics
industry european distributor 2003 a
newly created award for the electronics
industry developed to promote best
practice in customer care sales growth
innovation and employee motivation
dec
to facilitate faster and more efficient
deliveries a distribution centre and sales
office is opened in the free trade zone
in shanghai 
a communication excellence award is
won for the internal communication of the
new branding to employees 
the national electronic distributors
association awards newark inone seven
out of nine awards for direct marketing
and advertising
apr
buckhickman inone launches a specialist
320page health and safety catalogue
introducing 1600 new health safety and
hygiene products to bring the total product
range to 12000 items
jul
the newark inone direct ship service is
launched giving customers in europe and
asia pacific easy access to an additional
70000 products delivered direct from
the us
oct
investment at the newark inone north
american distribution centre is completed
the premier farnell core values
programme is launched interactive small
group sessions are held with employees
throughout the group to explore and
understand the values
jan
akron brass wins a contract valued
at 600000 to supply a storm remote
control vapor mitigation system to
exxon mobil corporation
feb jun aug 02 premier farnell plc group at a glance
annual report and accounts 2004
premier farnell
group a t a glance
marketing and distribution division
five closely related businesses providing
marketing and distribution services
primarily within industrial and electronic
sectors customers typically need a broad
product range fast delivery and specialist
technical support these are delivered
through a combination of extensive product
and market knowledge and investment 
in software systems and warehouse
automation
industrial products division
a group of businesses that supply
highperformance products to
specialist industrial markets in europe
and north america
a leader in the marketing and distribution of electronic
components test equipment maintenance and repair
products in europe and the asia pacific region the
business also provides procurement services and
technical support tailored to individual customer needs
wwwfarnellinonecom
a leading north american marketer and distributor
of electronic components through call centres via
the web and through a network of sales offices
across the us and in canada mexico and brazil 
wwwnewarkinonecom
a leading uk business in the marketing and
distribution of tools consumables and health and
safety equipment typically needed in industrial
working environments a specialist in supply chain
management and vendor managed inventory 
wwwbuckhickmaninonecom
a north american distributor of quality electronic
equipment and related products to engineers who
install and repair consumer electronics and 
similar equipment
wwwmcminonecom
a leading distributor of electrical and electronic
equipment components and accessories to smaller
companies across the uk a specialist in the
promotion of new products and special offers through
direct mail and via the web
wwwcpccouk
a worldleader in the design and manufacture of 
firefighting systems based in ohio usa
customers include fire departments firetruck
manufacturers and industry worldwide
wwwakronbrasscom
a paneuropean distributor of highperformance
ownbrand consumables including tools adhesives
and chemicals for the automotive servicing and
crashrepair markets
wwwkenteuropecom
a distributor of highperformance electrical 
cable and connector assemblies for use in hostile 
or heavyduty industrial environments customers
include the metal automotive and construction
industries in north america
wwwtpcwirecom
a distributor of electrical and industrial automation
products and engineered solutions to manufacturers
in the united states
wwwcadillacelectriccom group at a glance premier farnell plc 03
annual report and accounts 2004
customer contacts
2000000

suppliers
3000

products in stock
400000
product database
4000000

employees
5000
countries with offices
21
countries selling into
100

mul tiple channels
– customer contact centres
– web sites
– eprocurement
– field sales
– corporate account sales
management
technical support
– 70000 datasheets
value added services
– productwatch
– productfind
– vendor managed inventory
marketing and distribution
division
sales
£6682m
32
†
1 americas 43
2 uk 39
3 continental europe  asia pacific 18
operating profit
£676m
before rebranding costs and amortisation
of goodwill
employees
4050
2
3
1
industrial products division
sales
£964m
56
†
1 americas 59
2 europe  asia pacific 41
operating profit
£137m
employees
950
†
year on year sales per day growth for
continuing businesses at constant exchange
rates
2
1
divisional group 04 premier farnell plc financial highlights
annual report and accounts 2004
financial highlights
2
3
1
2
3
1
group operating profit
£74m
123m
group net operating assets
£287m
523m
1 americas 49
2 uk 41
3 europe  asia pacific 10
2
3
1
group sales
£765m
1269m
35
†
1 americas 45
2 uk 35
3 europe  asia pacific 20
1 americas 37
2 uk 46
3 europe  asia pacific 17
gross margin
402
411
2003
basic earnings per share
89p
93p
2003
†
year on year sales per day growth for continuing
businesses at constant exchange rates
 before rebranding costs and amortisation 
of goodwill
 before rebranding costs amortisation of 
goodwill and disposal of businesses
operating margin
97
109
2003
adjusted earnings per share
101p
112p
2003
interest cover 
52x
53x
2003
dividend per share
90p
90p
2003 chairman’s statement premier farnell plc 05
annual report and accounts 2004
chairman’s st a tement
real progress in a difficul t year
sir malcolm bates
chairman
overview
this year can be characterised as one of
significant achievement in difficult trading
environments whilst our markets remained
weak or patchy for most of the year the group
achieved a 35 per cent increase in sales per
day yearonyear this reflects the group’s
progress in winning market share in europe
and amid signs of a recovery in the market a
stronger performance from our north american
operations in the final quarter of the year
during the year the group also concluded a
four year investment programme activities this
year have included the implementation of major
information systems in the uk and us the
opening of a new distribution centre in china
the full automation of the new distribution
centre in europe and a substantial increase in
product ranges this programme has
transformed the group’s potential our
businesses are now equipped with a far greater
ability to understand the needs of their
customers and the flexibility to offer products
and services that meet those needs in
addition the brands of some of the group’s
major businesses were brought together under
a new brand suffix inone reflecting the
increasing coordination of our activities
financial results
group sales for the year were £7646 million
2003 £7590 million this comprised sales of
£6682 million in the marketing and distribution
division and sales of £964 million in the
industrial products division
operating profit for the year was £688 million
2003 £803 million producing an operating
margin of 90 per cent 2003 106 per cent
adjusted operating profit for the year was
£738 million 2003 £829 million before
rebranding costs of £24 million and goodwill
amortisation of £26 million producing an
adjusted operating margin of 97 per cent
2003 109 per cent operating profit was
affected by the increased depreciation following
the rollout of the customer relationship
management software and investment in the
liège distribution centre
profit before tax in the year was £546 million
2003 £598 million profit before tax goodwill
amortisation and gainloss on business
disposals was £571 million 2003 £672 million
earnings per share for the year were 89 pence
2003 93 pence adjusted earnings per share
for the year before rebranding costs
amortisation of goodwill and the gainloss on
business disposals were 101 pence
2003 112 pence
the board is recommending a final dividend of
50 pence 2003 50 pence making a total for
the year of 90 pence 2003 90 pence the
dividend is covered 10 times by profit
attributable to ordinary shareholders and
11 times by profit attributable to ordinary
shareholders before goodwill amortisation and
profit on disposal of businesses the final
dividend is payable on 23rd june 2004 to
shareholders on the register on 28th may 2004
balance sheet
the group’s financial position is sound net
debt at 1st february 2004 was £2019 million
2003 £2092 million and interest was covered
52 times by operating profit before oneoff
rebranding costs and goodwill amortisation in
june 2003 the group raised 225 million of
new financing in the us private placement
market the funds raised were used to repay
other borrowings
business progress
during the year the group has focussed on
growing business with larger corporate
accounts developing its ecommerce capability
and extending its product portfolio
we achieved strong growth in corporate
accounts by strengthening existing relationships
and winning significant new business our
capabilities in vendormanaged inventory and
eprocurement create a powerful proposition
that has enabled us to add customers
including bombardier the uk atomic energy
authority and tarmac in addition sales to the
us federal government newark inone’s
largest customer increased by over 14 per cent
during the year
ecommerce sales per day were up 52 per cent
year on year within the marketing and
distribution division reaching £71 million during
the period this business was transacted
through the 282 live eprocurement partnerships
that we have in place with larger customers
and with many other customers via our
web sites
in order to support higher levels of customer
service we extended product ranges across
the marketing and distribution division during
the year this was most evident in the
americas where we added a total of 56000
products to newark inone’s portfolio bringing
the total to some 160000
staff
the commitment of staff across the group has
been impressive and on behalf of the board i
would like to thank all our employees for their
effort during a demanding year this effort has
also been recognised externally by a number of
prestigious awards from suppliers and industry
bodies alike discussed in the operating review
we were pleased to welcome laurence bain
group chief operating officer to the board on
1 july 2003 sir robert horton deputy
chairman is retiring from the board after
completing nine years of distinguished service
and we are grateful to him for his sterling
contribution and wise counsel throughout his
time as a director
outlook
the investment programme of the past few
years has provided a platform from which to
drive growth it has also created capacity in
systems and distribution centres to
accommodate sales increases the group
has already demonstrated the ability to assist
large and small customers to improve their
productivity and is well positioned to take
advantage of growth opportunities in its key
markets as they develop during the current
year our focus is now firmly on disciplined and
efficient programmes to ensure that those
opportunities are seized
we enter a new year confident that should the
market recovery be sustained the group’s
operational gearing should enable us to deliver
value for customers and shareholders alike 06 premier farnell plc a winning strategy
annual report and accounts 2004
a winning stra tegy
broadening our offer
whilst there are few individual components of our offer that
are unique where they are combined our breadth of product 
choice of channel high levels of customer service and increasing
range of specific services provide real differential advantage
our newark inone direct ship service is making a real difference to
customers such as trifix electronic services
full story on page 08
supporting our customers
we can now segment our customers quickl y and accuratel y in
order to offer more targeted support and relevant telesales field
and direct mail campaigns this ability enables us to build and
strengthen our relationship with our customers
our investment in customer relationship management systems was
critical when hurricane isabel hit the us
full story on page 10 chief executive’s review premier farnell plc 07
annual report and accounts 2004
chief executive’s review
well positioned for growth
john hirst
group chief executive
market dynamics
although less volatile than the semiconductor
market our trading environment is determined in
part by the cyclical nature of the global electronic
components market regionally the timing of the
cycle creates different impacts whilst asia has
been growing for over 18 months fuelled by the
rapid growth in china and there have been the
first signs of improvement in north america since
the middle of last year there are still no notable
signs of growth in europe
this pattern has undoubtedly been influenced
by the continued migration of production to low
cost economies – from western europe and
north america to mexico eastern europe and
in particular china
the shift towards greater volumes of business
being conducted on the web and through
eprocurement is gaining momentum our
customers are continually driving to reduce
the costs of procuring consumables and
looking for productivity improvements and
waste elimination including supplier base
rationalisation increasingly they are focussing
on their key skills and out sourcing nonstrategic
skills relying on companies like ours to provide
efficient sourcing
in europe and several us states legislation is
pending which restricts the use of heavy metals
like lead and cadmium in electrical and
electronic equipment further laws are designed
to govern the disposal of waste electronic and
electrical goods we estimate this will affect
between 25 per cent and 30 per cent of the
products we sell as manufacturers determine
their individual responses customers are
looking for information and guidance we are
establishing a leadership position by using
our knowledge and expertise to help
customers and suppliers prepare for this
change through web sites and an active
communications programme
our proposition
for some years we have defined our market
proposition as one of providing economic
benefit and peace of mind to our customers
and suppliers our customers come to us for
three main reasons – a broad product range
available on demand and quick and effective
delivery from this our customers can be more
efficient and have greater reassurance than if
they had to search less reliable sources for
product the range of additional services we
have developed to strengthen this basic
proposition enables us to build much stronger
and more permanent customer relationships
these services include vendor managed
inventory systems which reduce our customers’
need to hold stock and tailored eprocurement
and web site solutions which help save time
and reduce administration costs
over recent years we have built upon our
relationship with suppliers adding value by
providing marketing services with two million
customer contacts on our database our
suppliers understand and appreciate the
unparalleled reach that we now have in the
market place
progress against our strategy
our strategy is to drive for sales and profits
growth by increasing spend from existing
customers recruiting new customers
developing new markets and acquisitions
a key element in winning business with existing
and new customers is adding products to our
range to satisfy more needs for more customers
we have made significant progress this year in
expanding our product range particularly to
strengthen our offer to design engineers and we
will continue to push these product expansions
from our north american inventories we are
now able to ship direct to customers in europe
and asia pacific in three days this has added
70000 products to our offer in these markets
rebranding four of our businesses under the
inone label has enabled us to communicate
more effectively the full range of products and
services we offer across our businesses to both
our customers and suppliers
as the shift to ecommerce continues
reaching 11 of total sales of the marketing
and distribution division this year the level of
business we transact with our customers
through eprocurement channels continues to
grow delivering cost efficiencies we have also
seen progress with our global and major
customers where our ability to provide a
customised eprocurement solution has
delivered significant sales growth rates
our suite of customer relationship management
systems is now fully implemented in newark
inone in the us and farnell inone in the uk
and we are seeing some real benefits in our
service to customers our own productivity and
the intelligence we have readily available to
enhance our customer offer
our global product database and publication
management systems are delivering
genuine improvements in our productivity
significantly reducing the time and resources
required to prepare product catalogues and
promotional materials
we are well positioned to respond to our
customers’ drive to reduce the overall costs of
procuring indirect materials taking our inventory
management and procurement skills into the
heart of our customers’ businesses
we have made good progress identifying and
penetrating new markets we have expanded
our operations in china with the opening of a
sales office and distribution centre in shanghai
and sales in mexico are building satisfactorily as
our new office and distribution centre becomes
established each time we identify a new
customer group or segment and focus our skills
upon it we make particularly good progress
looking ahead
as momentum builds in our markets we are
well positioned to benefit our new systems are
fully operational with the right people in place
to exploit the opportunities they present by
gaining market share through the downturn we
have demonstrated our successful strategy of
focussing on specific groups of customers –
understanding their needs and deploying our
resources to respond to them
there are still uncertainties around the duration
and scale of the market upturn in north
america so we will continue to manage our
costs carefully then as we grow a significant
proportion of sales growth from our efforts and
the improved market falls to the bottom line
this year has seen solid results in a tough
market and good progress against our
objectives we have the capacity in both
infrastructure and people to continue to build
on the market share gains we have seen in
europe and to take advantage of the market
upturn we are beginning to see in north
america we have continued to upgrade our
management team and have some outstanding
people working in our business
notwithstanding the considerable organic
growth potential we will continue to review good
quality acquisition opportunities as they arise 08 premier farnell plc chief executive’s review broadening our offer
annual report and accounts 2004 continued
“with support like this we can continue
to provide first class service and impress
our growing number of customers”
mark a ferguson
director
trifix electronic services l td
chief executive’s review
continued
broadening our offer
business issue
specialising in industrial electronics trifix
electronics services ltd based in the north of
england provides hitech repairs to items such
as sophisticated pressing machinery test and
measurement and robotics equipment 
trifix started business in 2003 and is rapidly
building a reputation for the speed and
professionalism of its service – crucial factors
for its customer base
late one monday afternoon trifix had a call
from an automotive component manufacturing
company that had an urgent repair need for
part of its manufacturing equipment the speed
of repair to this equipment was of the essence
as potential production downtime penalties
running at thousands of pounds per minute
could be levied on the automotive component
manufacturer
typically this type of expensive capital
equipment comes from outside the uk and
replacement component lead times from the
manufacturers can be 1214 weeks
trifix needed to identify and source the repair
components rapidly
the solution
as part of the inone family of businesses
farnell inone has access to millions of products
from around the world 
more specifically its newark inone direct ship
service gives customers easy access to an
additional 70000 products from newark inone
in the us
the sales team from farnell inone was able to
locate the specific components required which
were not available anywhere in the uk from
newark inone trifix placed the order at
630 pm on monday and received delivery by
930 am on wednesday by mid afternoon trifix
had completed the repair and had the
equipment back on site with its customer
the benefits
– easy access to a huge range of products not
available in the uk
– technical data available from farnell inone to
enable the correct products to be ordered
quickly and easily
– rapid delivery direct from the us
– ability to service its own customers meeting
their critical needs for urgent solutions  where we add value
400000 products in stock
access to over 4 million more
same day despatch and
fast delivery
i have easy access to a huge
breadth and range of
components and products
leading brands and new
technology all from one
supplier available on the web
on cd and in catalogues
benefit
this enables me to focus my
time on my design work i save
time and money sourcing all
the products i need in
one place
design engineer
productwatch
i am notified if a component
i want to specify is becoming
obsolete or out of stock and
a replacement is suggested
to me
benefit
i save time money and effort
which would otherwise be
wasted using a component
which is becoming obsolete
and finding a replacement
design engineer
productfind
i have assistance in locating
and can get a quotation on
notincatalogue products
quickly and from one source
benefit
i can deal with one supplier
for all my product requirements
and save time searching for
unusual products
design engineer
technical advice
i can get good technical advice
over the phone and easily
obtain relevant technical data
and information on the web
benefit
the free and readily
available advice means i
can make a more informed
product selection
design engineer
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pr
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   where we add value
400000 products in stock
access to over 4 million more
same day despatch and
fast delivery
i have easy access to a huge
breadth and range of
components and products
leading brands and new
technology all from one
supplier available on the web
on cd and in catalogues
benefit
this enables me to focus my
time on my design work i save
time and money sourcing all
the products i need in
one place
design engineer
productwatch
i am notified if a component
i want to specify is becoming
obsolete or out of stock and
a replacement is suggested
to me
benefit
i save time money and effort
which would otherwise be
wasted using a component
which is becoming obsolete
and finding a replacement
design engineer
productfind
i have assistance in locating
and can get a quotation on
notincatalogue products
quickly and from one source
benefit
i can deal with one supplier
for all my product requirements
and save time searching for
unusual products
design engineer
technical advice
i can get good technical advice
over the phone and easily
obtain relevant technical data
and information on the web
benefit
the free and readily
available advice means i
can make a more informed
product selection
design engineer
customised electronic
catalogue
we can have an electronic
catalogue of just those
products required in our
business and our orders are
processed electronically
benefit 
we have better control and
visibility of purchases and
can reduce the administration
costs in placing and processing
orders
purchasing professional
quote kit and supply
we can get all the components
in a bill of materials priced
bagged into the quantity needed
for each unit of production and
supplied by one supplier
benefit
we can reduce the number of
suppliers we deal with and
save time searching for products
and obtaining price quotations
we save time in production
having all the parts we need for
an item together and to hand
purchasing professional
lineside inventory and
daily replenishment
products required for fast
moving lines and critical
spares are located next to
production areas
benefit
we save time spent walking
to and waiting at stores and
the cost of extra products
and spares being hoarded in
the production area
maintenance engineer
stockroom management
we use the premier farnell
stockroom management
system to manage the
engineering stores and stocks
when a product is used it is
automatically replaced within
a specified time
benefit
we save cost and production
downtime automatic
replenishment enables us to
reduce the stocks of products
held in stores whilst making
sure that products don’t go
out of stock
maintenance engineer


       broadening  our offer chief executive’s review premier farnell plc 09
continued annual report and accounts 2004 10 premier farnell plc chief executive’s review supporting our customers
annual report and accounts 2004 continued
chief executive’s review
continued
supporting our customers
when hurricane isabel hit north carolina
and virginia last year it left  36 homes
destroyed 1800 people in temporary
shel ter and 45 million without power 
the despera te situa tion genera ted a need
for a whole range of emergency
replacement and rep air items – urgentl y 
business issue
when hurricane isabel hit north carolina and
virginia it left a trail of devastation – and an
urgent requirement for emergency repair and
replacement items
newark inone needed to make contact with
specific customers to make them aware of the
products available on demand and the special
services arranged to help them deal with the
impact of the disaster
the solution
using its customer relationship management
systems newark inone had a fully operational
solution in place within 48 hours
– targeting over 17000 specific contacts
– creating tailored emails and call scripts to
facilitate communication with each of these
contacts
– making customers aware of the specific
products available to meet the needs of this
situation and special emergency delivery
services 
– tracking the followup actions required to
ensure customer needs were met
the benefits
– without the investment in systems a huge
undertaking such as this could have taken
as much as 14 days to organise – too long
given the seriousness of the situation
– newark inone was able to provide rapid and
proactive solutions to the urgent and specific
needs of particular customers
“i am convinced our customer relationship
management systems played a critical
role in supporting our customers it
enabled us to identify a specific group
of customers who were experiencing a
difficult situation and respond to
their needs”
john dougherty
sales manager
newark inone 1 on thursday 17th september 2003 hurricane isabel
hit north carolina and virginia
5 …involving 42 staff communicating
with 17000 customers 
10 service hours were extended throughout
the emergency period
11
3 
8 
2 leaving 1800 people in temporary shelter
and 45 million without power it created a
desperate situation
6 a special “next flight out” service was
promoted for emergency needs 
7 customers were made aware of the
specific products available to meet their
urgent requirements… 1 on thursday 17th september 2003 hurricane isabel
hit north carolina and virginia
5 …involving 42 staff communicating
with 17000 customers 
10 service hours were extended throughout
the emergency period
11 newark inone was able to act
quickly and decisively to meet its
customers’ needs
3 urgent contact with specific customers
was required
9 …from uninterruptible power supplies
to high voltage transformers
8 …from newark inone’s offer
of 160000 products from over
400 manufacturers…
4 within 48 hours an action plan was being
rolled out…
2 leaving 1800 people in temporary shelter
and 45 million without power it created a
desperate situation
6 a special “next flight out” service was
promoted for emergency needs 
7 customers were made aware of the
specific products available to meet their
urgent requirements…
17000 people
cont acted thanks
to our new systems supporting our customers chief executive’s review premier farnell plc 11
continued annual report and accounts 2004 12 premier farnell plc operating review marketing and distribution division
annual report and accounts 2004
opera ting review
marketing and distribution division
americas
sales £2861m
growth 09
operating profit £270m
before rebranding costs
europe and asia pacific
sales £3821m
growth 68
operating profit £406m
before rebranding costs and amortisation of
goodwill
research and
development
small scale 
production
design 
engineer
purchasing 
professional
product quality and
time to market
easy and reliable
supply
finance or 
procurement director
finance or 
procurement director
finance or 
procurement director
plant and facility
maintenance product
service and repair
maintenance or 
service engineer
minimise production
downtime
– large breadth and range 
of products in stock
– swift delivery
– easily viewed and accessed 
on web and catalogue
– leading brands and new technology
– t echnical advice
– unusual product search
– obsolescence notification
– sourcing
– unusual product search
– quote supply and kit to a bill 
of materials
– pricing options
– easy to find and buy 
– stockroom management
– stockroom management
– unusual product search
– low minimum order quantity
– late order capability – same 
day dispatch
– local customer support
– ease and speed of finding product
our customers
their needs
our response
our customers and their needs marketing and distribution division operating review premier farnell plc 13
annual report and accounts 2004
opera ting review
marketing and distribution division
what we do
representing 87 per cent of the group’s sales
the marketing and distribution division consists
of five businesses – all specialising in the
marketing and distribution of a wide range of
electronic components and maintenance repair
and operations mro products between
them they serve most of the countries of the
world with specialist service propositions
tailored to customers’ needs
our high service small volume distribution
proposition is underpinned by a broad range of
400000 stocked products – branded and own
branded including the latest new products
available for same day despatch and rapid
delivery our customers now also have easy
access to millions of additional products held
on our database see case study 1
this customer base is large and active with
two million customer contacts on our
database varying in size and scope from
small managerowned enterprises to large
multinationals our customers’ businesses
represent nearly all industries and our contacts
correspond to a wide range of different job
roles our typical customer contacts are
engineers and buyers in electronics design
smallscale production and maintenance our
task is to understand their requirements and
ensure that our offer delivers benefits to them
a maintenance engineer for example relies on
the availability of specific products and swift
and reliable delivery whereas a design engineer
needs accurate technical support and rapid
access to the latest technology advances
through new products
large corporate customers derive significant
benefit from our services which enable them to
reduce the total cost of procuring their indirect
materials these include the components
products and spares required for maintenance
repair and operations activities procurement
and finance specialists want visibility and
control so that they can reduce the administration
costs of purchasing these materials
we continue to segment the market and tailor
our proposition to meet the needs of each type
of customer strategically this ability to
communicate with and service a large number
of customers represents a source of significant
value to our suppliers
our role in the market
as a distributor we must create efficiencies and
add value in the chain between our customers
and suppliers
to our customers we offer economic benefit
and peace of mind
– reduced stockholding costs through easy
access to a huge range of products in the
quantities required
– reduced transaction costs through
eprocurement and vendor reduction
– secure reliable and rapid supply of products
which are easy to identify select and order
– technical information and support
– wide choice of sales channels to match their
needs
– supply chain management solutions
to our suppliers we represent the most
effective means of reaching a valuable and
diverse customer base
– effective targeted marketing to customers
grouped according to their requirements
– market intelligence and feedback
– product launches
– multichannel marketing
– reliable and swift global distribution
– technical support to customers
our trading environment
global influences
despite depressed markets in recent years
we have continued to invest in strengthening
our business offering in order to drive increased
market share
a number of market drivers and dynamics are
also directing our focus
the large scale manufacture of electronic
products is migrating to low cost economies
such as china mexico and eastern europe
we have established sound relationships with
many of the companies who are making this
shift in their production and are maximising the
opportunities it presents to supply their
maintenance repair and operations
requirements however research and design
of new products an important part of our
primary market is largely continuing in
the west
a major new phenomenom is the role of china
which accounts for around a third of the
consumption of semiconductors in production
we are building our infrastructure in this market
augmenting our sales representation in beijing
with the opening of a sales office and
distribution centre in shanghai
supply chain influences
our customers are constantly seeking to
improve their productivity and reduce costs
large and small manufacturing companies
are increasingly focussing on their core
processes to maximise profitability and looking
for ways of streamlining or outsourcing
noncore activities this trend is particularly
evident in the procurement of indirect materials
the administrative cost of acquisition can be
disproportionate to the individual cost of these
types of products for example hand tools and
consumables in part because of the large
number of suppliers typically involved
case study 1
business issue
the work of keele university’s central technical
services is very wide ranging from using a
portable appliance tester to test electrical items
to design and build projects using the skills and
facilities of the mechanical workshop to making
cds for physiotherapy course handbooks
within this environment andrew mansbridge
electronicsit supervisor of keele university’s
central technical services has a need to
source a wide variety of products
inevitably there are times when the product
required is outside farnell inone’s stocked
range for example while preparing a quotation
for a research grant submission a specific chip
was required to make an amplifier used in a
piezo electronic device
the solution
andrew called upon farnell inone’s
productfind service a database of over
four million products and we were able to
identify and source the specialist product
required located at apex microtechnology
in the us
“trawling the web searching through
catalogues and even managing to track
down and speak to the uk agents of a
us manufacturer had produced no
results” explained andrew
“for an operation like ourselves with
diverse product needs productfind can
save hours of searching and frustration
it’s good to know that we can get rapid
quotes on prices and availability on
hardtofind products”
andrew mansbridge
electronicsit supervisor
keele university 14 premier farnell plc operating review marketing and distribution division
annual report and accounts 2004 continued
opera ting review
marketing and distribution division
continued
the drive to eliminate administration costs and
reduce the number of suppliers sourcing a
wider range of products from one distributor is
a trend to which we can fully respond with our
broad range of electronic components and
industrial products see case study 2
the consolidation of electronic component
manufacturers creates an opportunity for us
successful suppliers want to work with a
limited number of capable distributors who
have global reach and are adding value in the
supply chain through sophisticated marketing
the larger multinational distributors have
competitive advantage over regional and local
distributors who are unable to meet the
increasing expectations of suppliers our
breadth of product choice of sales channel
high levels of customer service and increasing
range of specific services provide real differential
advantage in meeting these requirements
legislation
european directives restricting the use of
hazardous substances rohs and imposing
obligations in respect of waste electronic and
electrical equipment weee are due to be
implemented in the uk during 2004 the rohs
directive bans the use of substances such as
lead mercury and cadmium in electronic and
electrical products and will have a major impact
on our industry equivalent legislation is also
pending in a number of us states and in
china we are working with our customers and
suppliers to provide information and assistance
in this complex area
our progress this year
communicating our global offer
the rebranding of four of our businesses to
become farnell inone newark inone
buckhickman inone and mcm an inone
company has enabled us to communicate
the power and resources of our global
operations – increasingly important to
customers suppliers and employees
inone customers now have access to over
3000 suppliers 400000 stocked products
and an unparalleled range of specialist services
worldwide while suppliers benefit from
increasing access to global coverage
the launch of the newark inone direct ship
service is a typical example of the way we are
benefiting from close collaboration between the
inone businesses our inone customers in
europe and asia pacific now benefit from easy
access to an additional 70000 products –
delivered direct from the us on a low cost
threeday delivery service
making the most of our customer
relationships
the primary focus of our investment for growth
programme announced in january 1999 has
been to move from dealing with all our
customers in the same way to treating them as
individually as we can the way in which we
market to and serve our customers is
enhanced by our increasing ability to capture
and use information about them understanding
their buying patterns and their requirements
the prime source of this market intelligence is
the millions of transactions and other contacts
with our customers and suppliers our
knowledge and investment in technology
enables us to take our product and customer
data interpret it and identify new ways in which
to improve and differentiate our offer from that
of our competitors
the customer relationship management tools
which have been implemented in newark
inone in the us and farnell inone in the uk
are powerful and sophisticated
when a customer calls to place an order with
either one of these businesses the name of the
customer automatically appears on the
operative’s screen together with details of their
trading history – when they last ordered what
they ordered and their recent transactions with
us we can immediately recognise the
customer their type of business and what they
have been buying from us this rich seam of
knowledge empowers our customer care staff
enabling them to provide unparalleled support
offer appropriate promotional products and
direct customers to relevant new services
the full implementation of our customer
relationship management systems in newark
inone and farnell inone in the uk this year has
enabled us to segment our customers quickly
and accurately to provide focussed web pages
telesales and direct mail campaigns for
example newark inone has recently launched
a new direct mail publication mailed to over
100000 design engineer customers and
created a specialist design engineers’ web
portal with dropdown menus for conversion
tools industry news manufacturer selector
guides standards and other useful information
by gaining a much greater understanding of
our customers we are able to target our
products and services better and earn a larger
share of customers’ spending
as we continue to develop our customer
relationship management capabilities we will
increasingly be able to offer our full range of
valueadded services to the small and medium
sized customers who represent the largest
number of our contacts see case study 3
case study 2
business issue
australian mining electronics manufacturer
bramco electronics produces a broad range of
products – from simple items to complex
microprocessorcontrolled communications and
conveyor management systems
in order to concentrate on developing
innovative products bramco needed to
outsource its stock control and production
coordination
the solution
by examining bramco’s bills of materials and
required production quantities farnell inone
australia were able to offer scheduled orders
and mixed quantity pricing to deliver the best
value to the customer we also undertook to
carry one month’s stock with the ability to draw
on that stock at 24 hours’ notice
complete kits of parts required to produce a
particular product are delivered together in a
box so the savings on picking parts and
ordering are immediately obvious if bramco is
required to fulfil an urgent order a kit can be
called up from farnell inone overnight giving
them greater manufacturing flexibility
manufacturing efficiency has improved and
paperwork simplified
“we’ve found that as we get busier our
turnaround times are actually getting
shorter because farnell inone are one
step ahead of us they are totally
focussed on our needs”
mark leishman
general manager
bramco electronics marketing and distribution division operating review premier farnell plc 15
continued annual report and accounts 2004
case study 3
business issue
us federal government agencies have a
requirement to source thousands of different
electronic and related products they need to
be able to manage and control their costs
of procurement by minimising the number of
vendors they deal with – relying on these
suppliers for quality products available on
demand and delivered rapidly throughout
the us
without going to several different sources each
time to check prices government purchasers
need to be confident that they are buying
across a wide range at competitive prices
the solution
newark inone has created a special business
unit team gov to serve the specific needs
of this segment – operating under the general
services administration gsa schedule
– offering a ‘one stop’ shop for 160000
products from over 400 manufacturers
– establishing a specially trained government
team wellversed in the specific requirements
of government purchasers
– creating a unique wwwteamgovcom web
site and phone number
the success of team gov is illustrated by
doubledigit growth in sales this year
the benefits
– a huge reduction in process costs by
reducing the number of orders placed with
different suppliers
– spending less time locating products – 
a onestop source for a huge range of
products at competitive prices
– dealing with a supplier that really
understands their needs
“the federal government segment is
different from any other with its own
specific requirements – so much so that
you need to be able to ‘speak
government’ it is satisfying to be able to
concentrate on meeting these special
needs with service our federal
government customers really appreciate”
phil bearden
team gov contact center manager
newark inone
increasing focus on the web
our sales via ecommerce have reached 15
of our total sales in the americas and 12 of
our total sales in europe and asia pacific the
shift to the internet enables us to introduce new
products more rapidly and facilitates the provision
of technical data and informationbased
services to all our customers this is attracting
new customers as well as allowing existing
customers to move to a lower cost channel
the majority of our customers are small
businesses typically their staff are very active
users of the internet owing to their technical
backgrounds and need to access the latest
technical and product information
we continue to invest in new web technology
to provide constantly improving sites which
offer advanced search facilities and rapid
access to technical data
our main area of focus in the coming year will
be to drive continuing sales growth through
technical enhancements and the addition of
facilities and services
exploiting our eprocurement capabilities
eprocurement provides vital links to customers’
inhouse transactional systems enabling the
automation of most of the commercial
mechanics from the ordering process to
invoicing and payment the potential customer
benefits can be significant including
– reducing the cost of administering and
processing orders
– shortening the purchasing process
– reducing errors in ordering
– eliminating rogue purchasing
– ensuring only approved or contracted
suppliers are used
– minimising the risk of buying inferior products
offcontract
– increasing transparency of purchasing data
we are equipped to link to any purchasing
system responding to whatever the customer
wants quickly and at low cost
for our larger customers the ability to
customise our electronic catalogues to their
specific requirements is a major benefit we
can tailor the product range and pricing to the
customer’s exact specifications catalogues
can sit behind the customer’s firewall to give
them greater control and we can build in
capabilities to enable data and products to be
acquired from other web sites known as
“punch out”
farnell inone has recently won a contract to
supply the uk atomic energy authority ukaea
with electrical and electronic equipment at six
sites we developed a tailored online catalogue
of approximately 100000 products which
helps to ensure that their employees buy these
categories of products only from farnell inone
ukaea benefits from better control over
spending improved compliance with supplier
agreements and greater productivity as staff
are able to spend more time on their core
job responsibilities
a similar approach with transco the uk gas
distribution company links our customised
catalogue with transco’s sap enterprise
resource planning system allowing the capture
of spending information for reporting across
the organisation
we now have 282 live eprocurement partnerships
in place see case study 4
adding value with tailored services
this year we rolled out our productwatch
service throughout europe and asia pacific
productwatch allows us to alert a design
engineer when a component is due to become
obsolete and advise them of a replacement
it is becoming an invaluable tool for our design
engineer customers and helps them avoid
changes in product designs if components are
withdrawn over 100000 such customer
communications have been made since the
launch of the service
we are expanding our inventory management
skills into our customers’ premises in the past
year we have been able to provide these
services principally to our larger customers
with our customer relationship management
systems in newark inone in the us and
farnell inone in the uk and growing capability
we will increasingly be able to offer this level of
service to the smaller customers who represent
the majority of our business
we now supply businesscritical maintenance
repair and operations products at the point of
use to eight separate rollsroyce plc sites
throughout the uk via our vendor managed
inventory stocking solution this uses electronic
inventory control software to reorder the stock
required automatically with nextday
replenishment of stocking locations
there are considerable benefits to our
customers of consolidating all their consumable
requirements within a single contract including
improved service levels reduced total cost of
acquisition and reduced transaction levels
building our capabilities
this year has seen continuing investment in
building the fabric of our business by
broadening our product range and expanding
our presence in new geographies
newark inone added a total of 56000 new
products to its range this year greatly
improving the competitiveness of our offer to
design engineers in particular 16 premier farnell plc operating review marketing and distribution division
annual report and accounts 2004 continued
opera ting review
marketing and distribution division
continued
in the uk farnell inone launched its 2003
catalogue in may with 40000 new products
the sevenbook catalogue and cd includes
the full range of 150000 stocked products
from farnell inone and buckhickman inone
the broadest offer in our market in the uk
we will continue to add new products to our
ranges to strengthen our competitive
proposition and will be seeking opportunities
to make more of our existing product range
available to increased numbers of our
customer base
we have expanded our presence in china in a
controlled and effective way with the opening of
a distribution centre and sales office in one of
the free trade zones in shanghai
the decision to operate within a free trade
zone has been driven by the significant benefit
of reduced import procedures which will enable
faster and more efficient delivery of product to
our customers this is a crucial milestone in our
expansion into china strengthening our market
position and increasing our global reach
our business in china is branded
farnellnewark inone to capitalise on the
reputation of both newark inone and
farnell inone with multinational customers
in china see case study 5
driving increased efficiency
during the year new publishing systems were
implemented at farnell inone newark inone
and cpc together with the creation of
comprehensive product databases designed to
support the group’s ecommerce activities
these new systems are reducing production
times and eliminating design duplication during
the production of catalogues and direct mail
flyers each business now has increased
flexibility to respond to more dynamic markets
and produce targeted promotions
at newark inone’s gaffney distribution centre
an additional 32000 square feet of usable
mezzanine space was added to accommodate
new products this completes a fouryear
programme of rationalisation and investment in
our distribution centre facilities in the americas
the benefits of investment in radio data
terminals are being realised at cpc’s preston
distribution centre the new system creates
order picking lists in the most efficient sequence
to reduce walking time in the large warehouse
at the liège distribution centre the conveyor
and radio frequency picking system went live
in october 2003 after an extended period of
testing this location now services all the larger
mainland european markets
our infrastructure will be further strengthened
as buckhickman inone completes its migration
onto the same transactional system as farnell
inone facilitating the offer of our full range of
products and services to our customer base
increasing process efficiencies and improving
productivity see case study 6
strengthening our supplier relationships
almost everything we do to enhance our
customer proposition – from improving our
range to achieving more focussed customer
relationships – makes us a more attractive
partner for our suppliers
our newark inone direct ship service opens
up the european market for the first time for
many suppliers enhanced web site capabilities
enable suppliers to launch their products
rapidly and globally via our businesses
the value of our proposition to suppliers and
the benefits of developing longterm
relationships with them have been evident
this year
epcos uk named farnell inone its distributor
of the year 2003 after twelve months in which
our sales of epcos products recorded growth
of 27 tyco electronics made farnell inone
its distributor of the year – uk and ireland for
the second time as a result of the successful
working relationship the two companies have
shared for over 15 years see case study 7
investing in our people
we are a service business and as such we
deliver the customer experience through many
thousands of daily contacts between customers
and our employees
an important milestone in growing the talent of
our organisation has been the development of
a set of core values which are the guidelines
and points of reference for the behaviour which
will deliver the customer experience and drive
business performance
we have embarked on a process of embedding
our core values – developed from research
carried out with customers suppliers and
employees – into the fabric of our organisation
we have started to engage our employees at all
levels of the organisation in exploring and
understanding these values communicating our
strategy and direction and how these values can
apply to enhance our customers’ experience
case study 4
buckhickman inone has delivered an
advanced eprocurement solution to johnson
matthey the global manufacturer of catalysts
speciality chemicals and precious metal
products which has reduced the cost of
administering the purchase of often low value
items from an estimated £25 per order to
£5 per order
johnson matthey has been provided with
two online buckhickman inone catalogues –
one with the 2500 most popular products
and a second with the wider product list –
that include technical information and
product photographs
online computer order points on the factory
floor are used for purchasing
“not only have we reduced the resources
involved in buying items which often have
a low cost we also have access to far
more information than before this
information helps stock control and by
eliminating the paper trail enables buyers
for each business unit to focus more time
on core business activities where they
add maximum value”
howard jarman
senior buyer
johnson matthey
case study 5
“agilent gets very strong support from
farnellnewark inone shanghai and with
the establishment of a warehouse in the
free trade zone which is just a few
steps from us delivery is even easier and
faster opening up the possibility of
implementing a vmi solution”
lynn xu
supply manager
agilent technologies
shanghai marketing and distribution division operating review premier farnell plc 17
continued annual report and accounts 2004
looking ahead
over the next year we will continue to strengthen
our core business and build our capabilities we
will drive hard to improve our productivity
particularly by exploiting the opportunities
provided by our customer relationship
management systems and ecommerce to satisfy
our customers’ requirements and deliver a
customer experience demonstrably better than
they can get elsewhere
we will continue to seek appropriate
acquisitions that have the potential to add to
our capability in selected geographies product
areas or specific market segments and meet
our stringent criteria
our primary objective remains the continued
transformation of our business into a world
leading marketing and distribution business
we have made good progress and will achieve
our goal through the sharing and adoption of
best practice the quality of our people and the
use of the best information technology to focus
on the needs of individual customers and
suppliers by exploiting our skills and strengths
to outperform the competition and build loyalty
and commitment from our suppliers customers
and employees we aim to deliver superior
growth and profitability
case study 6
cpc has helped its order pickers become
more efficient by equipping them with radio
data terminals rdts
as orders are received at cpc’s preston
distribution centre new software now creates
picking lists in the most efficient sequence
each product selected is scanned by the order
picker using the rdt which confirms accuracy
before it is put into the despatch container
without this investment and the addition of a
new conveyor belt cpc would have found it
difficult to handle the large number of additions
it has made to its range order throughput
capacity has increased to provide a better
service to cpc’s customers
“it makes the job of order picking better
organised before we found we were
retracing our steps and going back to the
same location several times when
handpicking multiple orders
“now the rdt system sends us round the
warehouse to pick items in the most
efficient order so we don’t waste
any time”
beth fidler
warehouse picker
cpc
case study 7
“we have worked with farnell inone for
over a decade and always received
enthusiastic support when launching new
product lines into the market farnell
inone’s active marketing campaigns
ensure that products are readily accepted
by customers while its product and
supply chain team work constantly to
enhance our relationship and sales the
results have been clearly demonstrated
through fantastic sales growth this year”
keith rogers
distribution manager
epcos uk 18 premier farnell plc operating review industrial products division
annual report and accounts 2004 continued
opera ting review
industrial products division
sales £964m
growth 56
operating profit £137m
akron brass
a worldleader in the design and manufacture of firefighting 
systems based in ohio usa customers include fire departments 
firetruck manufacturers and industry worldwide
tpc wire  cable
a distributor of highperformance electrical cable and 
connector assemblies for use in hostile or heavy duty 
industrial environments customers include the metal 
automotive and construction industries in north america
kent
a paneuropean distributor of highperformance ownbrand 
consumables including tools adhesives and chemicals for 
the automotive servicing and crashrepair markets industrial products division operating review premier farnell plc 19
continued annual report and accounts 2004
opera ting review
industrial products division
with continued reduction in spending in the
us automotive and steel industries market
conditions have been difficult throughout
the year
tpc has focussed on developing new
customers in the offshore drilling and mining
food and tyre manufacturing industries and
through sharing expertise and experience with
newark inone in government sales
operations have been expanded with the
addition of a warehouse and sales presence in
mexico new product sales accounted for
20 per cent of total revenue in the year
with over 200 pages a catalogue launched in
august 2003 contains the entire tpc product
line and a new technical data section well
organised with comprehensive information
resources it highlights tpc’s many product
choices and value added services
the focus for the coming year continues to be on
new markets tpc has been awarded a general
services administration gsa contract under
the federal supply schedule to provide all
federal state and local government facilities
with access to the entire tpc product range
systems are currently being put in place which
will enable the business to market effectively to all
government facilities and contractors
“if i need to install electrical cable in a
dangerous maintenance area that i don’t
want to go back into again then i always
use tpc wire  cable i know that it will
permanently solve the problem”
ike graham
letourneau co inc
letourneau inc is a leading provider of large
mobile equipment for forestry marine and
mining markets worldwide and also supplies
drilling products for the oil and gas industry
kent
operating through an extensive network of field
sales personnel kent is a paneuropean
distributor of highperformance ownbrand
repair and maintenance products for the
transport industry kent’s position in the
supply of highperformance ownbrand
consumables tools adhesives and chemicals
to the automotive servicing and crashrepair
markets is well established newer target
markets within the transport industry include
marine and specialist industrial markets
market conditions have continued to be
depressed in kent’s principal markets but new
customer opportunities are being identified and
tightening health and safety legislation creates
an opportunity for kent’s range of more
environmentally friendly products
kent’s strategic focus is on developing the
strength of its organisation through the
recruitment and training of its people in order to
maximise the opportunity it faces in niche
market segments and the building of its
technical proposition
this year has seen the implementation of new
performance management and assessment
processes which have assisted in the
recruitment of new salespeople improved staff
retention rates and increased sales productivity
the introduction of a new range of windscreen
tools and a strategic partnership with market
leader equalizer has enabled kent to enjoy
significant growth in the windscreen segment
new distribution deals have been completed in
the automotive sector and progress has been
made into new target market segments with
the first sales from a major marine customer
in croatia
the focus for this year will continue to be on
improving the training and development of the
kent sales force sustaining kent’s
automotive sector positioning through new
product introductions and key accounts and
the trialling of the product and service offering
for the marine market in a number of other
european countries
akron brass
the us market leader in the manufacture and
sale of high performance firefighting equipment
for firetruck manufacturers public fire services
and industrial facilities akron brass sells via its
own field sales force and distributors to
customers all over the world
despite the downturn in north american
firetruck production akron grew its business by
8 per cent compared to last year with particularly
strong industrial and international sales
akron’s strategic focus is to increase market
penetration and develop new products
progress has been made during the year with
the introduction of new products for example
the inhouse designed mercury quick attack
monitor is light and stable and delivers a higher
flow of water than competitive products it is
quick to set up and can be left unmanned at
the fire scene to free up valuable personnel
exceeding initial targets the product has sold
well both in north america and internationally
akron has increased its exports into asia and
in particular malaysia where it has secured
business with three new firetruck
manufacturers progress in the industrial market
has been marked by the sale of a vapour
mitigation system to exxon mobil corporation
for their joliet illinois facility this is one of
akron’s range of remote control systems
designed to deliver a quicker hardhitting
response to industrial fires and vapour releases
shortly after the yearend akron expanded
its product range through the acquisition of
the business of gfe manufacturing an
illinoisbased supplier of lighting systems and
water flow test equipment for the firefighting
industry with annual sales of approximately
40 million
akron will continue to focus on penetrating
existing markets with new products and
expanding the newly acquired product offerings
tpc wire  cable
based in the usa a broad line supplier of high
performance electrical and electronic cord
cable and accessories for the industrial market
tpc wire  cable has an established
reputation for product innovation quality and
superior customer service this has been built
on a strong foundation of application and
technical expertise proven product
performance and unique valueadded services
the benefits tpc delivers to its customers are
measured in the reduction of production
downtime and lower overall maintenance costs
a field based sales force and technical support
team work together with customers in
purchasing maintenance engineering material
control and management to help reduce costs
through long term improved performance 20 premier farnell plc social responsibility report
annual report and accounts 2004
social responsibility report
overview
heal th and safety
premier farnell’s accident rate more than 50 per cent lower than
the industry average
environment
iso 14001 accreditation achieved for a major distribution centre
for the second year running
community
employees encouraged to give time to good causes social responsibility report premier farnell plc 21
annual report and accounts 2004
social responsibility report
this is the third year for which we have prepared a social responsibility
report and every year we continue to find that its preparation and issue
helps raise awareness of relevant issues within the group in preparing
this report we have wherever practical followed the guidelines
suggested by the uk government through the department for
transport local government and the regions dtlr
health and safety
our health and safety commitment remains the simple one of minimising
accidents and injuries in the workplace our occupational injury rate in
2003 was 070 injuries100000 hours worked although slightly above
our target of 060 for the year this rate is more than 50 per cent lower
than the average for our industry see figure 1 our occupational injury
rate also remains very low when compared to rates for other industries
see figure 2
our injury rate has risen slightly from a low of 063100000 hours
worked in 2001 this increase is largely attributable to increased
awareness and therefore reporting of safety issues at buckhickman
inone following its acquisition in 2001
while we will continue to strive for improvement in the absolute rate
our immediate aim will be to continue to keep our injury rate at less than
50 per cent of our industry average
business segment safety risks and actions routinely taken to
prevent and minimise injuries
the group’s principal business activity is the distribution of electronic
components and other maintenance repair and operations products
distribution activities with potential for injury include manual handling
movement of goods lifting of products and opening of boxes
the acquisition of buck  hickman limited in 2001 brought with it a
number of vehicles used for the transport of the group’s products and
this transport fleet has the usual associated risks principally from road
traffic accidents
we provide targeted safety training to affected employees in an effort to
prevent and reduce injuries in areas such as safe lifting first aidcpr
infection control emergency evacuation spill cleanup fire extinguisher
forklift operation confined space entry electrical isolation and the use of
personal protective equipment
our major distribution and manufacturing facilities are required to
conduct regular health and safety audits and to address quickly any
safety concerns that are identified our goal is to address safety
concerns before accidents occur each facility now has an active health
and safety committee these committees meet regularly and review
accident “near misses” in order to assess what lessons can be learned
in order to ensure compliance with the large number of safety
regulations in the us we require facilities located there to prepare and
follow annual safety compliance calendars listing the safety compliance
and employee training actions that the facility must take during the year
a large proportion of the group’s employees are officebased and
training is provided in the correct use of display screens and workstations
premier farnell has
been a member of
the ftse4 good index
since jul y 2001
fig 1 occupational injury and illness rate per 100000 hours worked
notes
1 shown are the rates at which accidents which involve more than basic first aid
treatment and occupational illnesses occurred per 100000 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 the 2002 reported premier farnell injury rate was 068 we subsequently determined
two additional injuries warranted reporting and have amended our 2002 rate
3 for the past two years we have reported our occupational injury rate100000 hours
worked this year we have extended the report to cover occupational injuries and
illnesses100000 hours
070
063
065
072
114
1998
000 050 100 150 200 250
1999
2000
2001
2002
208
180
174
159
167
070
2003
industry average
premier farnell
176 22 premier farnell plc social responsibility report
annual report and accounts 2004 continued
social responsibility report
continued
performance against 2003 safety targets
target result
– occupational injury rate of – rate of 07100000 hours
06100000 hours worked worked
– implement “behaviourbased – no further programmes
safety” programme in one other implemented – target retained
major facility for 2004
– active safety committees in all – all major facilities now have 
major facilities active committees
– safety committees to track – committees are tracking these
“nearmiss” incidents incidents and using the learning
gained
– members of group safety staff – programme implemented and
to make regular visits to major continuing
facilities
additional actions planned in 2004 to prevent and minimise
injuries
we will take three additional actions in 2004 to emphasise safety
encourage prosafety attitudes and reduce injuries
1 we will adopt mcm an inone company’s innovative
“behaviourbased safety” programme in another major facility in the us
2 we will establish a safety committee for the americas region with
representation from all divisions in the region committee members will
participate in quarterly conference calls and share information on
yeartodate safety performance results and best practice at their
divisions a group safety representative will chair the calls the first such
conference call took place on 26th january 2004 and included
discussion of the lessons that were learned from the incident described
later in this report in which a tornado hit the new akron brass
manufacturing plant
3 we intend to achieve osha 18001 accreditation at one of our major
facilities in the uk osha 18001 is a recognised standard for health and
safety management systems and a good complement for a major facility
that already has iso 14001 accreditation
the environment
we are committed to reducing the impact of our activities on the
environment
for the past two years we have collected and refined our data on
the amount of energy used employee business travel waste disposed
waste recycled water consumed and greenhouse gas emitted by
group operations
the data is presented in this report in two ways total quantity of
usagegeneration and unit rates based on sales turnover
ie quantity per £1000 of sales
in order to ensure that we have representative and reliable environmental
data our group environmental managers reviewed the 2002 and 2003
data that was compiled by group business units prior to preparation of
this year’s report in some instances we have restated the 2002 data
displayed in last year’s report
we consider the 2002 and 2003 figures displayed in this year’s report to
be accurate and comparable
fig 2 comparing premier farnell plc’s occupational injury and
illness rate with rates for other industries
legal services 040
insurance agentsbrokers 045
premier farnell 070
banking 075
electrical goods – wholesale trade 145
chemical industry 165
electronic equipment 225
paper 280
aircraft 285
all manufacturing 360
trucking 425
steel 430
rubberplastics 440
food production 465
motor vehicles 740
ironsteel foundries 790
shown is the company’s occupational injury and illness rate for 2003 it is compared to
occupational illness and injury rates for other industry segments as compiled and
published by the us department of labor bureau of labor statistics for 2002 being
the latest statistics available social responsibility report premier farnell plc 23
continued annual report and accounts 2004
premier farnell
became a member of
the dow jones
sust ainability index
in oct 2003
business segment environmental concerns and actions routinely
taken to manage these concerns
environmental concerns associated with the group’s business include
the proper handling storage shipping and disposal of the chemical
products we distribute
returned damaged and discontinued chemical products eg electrical
cleaners solders batteries must be properly handled and disposed of
supplier packaging must also be properly disposed of chemical
products must be packaged and shipped in compliance with hazardous
materials transportation laws
akron brass’ manufacturing facilities generate industrial process waste
that must be properly handled and disposed of these facilities include a
brass foundry that requires special air handling equipment and air
emission permits
we provide environmental training to affected employees to ensure that
they comply with relevant laws and act in an environmentally responsible
manner this includes hazardous waste spill prevention and hazardous
materials transportation training
facilities located in the us prepare an annual environmental compliance
calendar listing the compliance and employee training actions that must
be taken
performance against 2003 environmental targets
target result
– collect 2003 environmental data – 2003 data included in this report
as for 2002 along with 2002 data
– achieve iso 14001 accreditation – completed – farnell inone is 
at our leeds distribution centre now accredited for all sites in
leeds
– increase recycling at our major – achieved – leeds increased
distribution centres in leeds and recycling by over 25 per cent 
gaffney begin recycling all and gaffney by 4 per cent all 
cardboard waste from supplier cardboard waste from supplier 
packaging at uk distribution packaging at uk distribution 
centres centres now being recycled
– continue strong industrial process – continued to recycle over 600
waste recycling at akron brass metric tons of scrap metal
energy used total amount unit rate
2003 2002 2003 2002
total used 000 amount used£1000
electricity kwh 36333 38058 47 49
natural gas cubic metres 1688 2601 22 34
propane kilograms 5 5 0006 0006
fuel oil litres 25 3 0033 0004
petrol for company cars
trucks litres 1020 1066 1 1
diesel fuel litres 1602 1750 2 2
employee business travel total amount unit rate
2003 2002 2003 2002
kilometres 000 kilometres£1000
business use of cars
trucks 8151 8908 11 12
business use of rented
carstrucks 6043 6412 8 8
train use 329 351 04 05
short intracontinent
airline flights 5175 13841 7 18
long intercontinent
airline flights 8942 12725 12 16
total 28640 42237 38 55
waste disposed total amount unit rate
2003 2002 2003 2002
kilograms 000 kilograms£1000
hazardous waste 281 212 037 028
industrial process waste 7 3 0009 0003
solid waste 2193 2594 297 34
total 2481 2809 33 36
the increase in use of fuel oil is attributable to the opening of the liège distribution
centre which was not included in the 2002 figures 24 premier farnell plc social responsibility report
annual report and accounts 2004 continued
social responsibility report
continued
additional actions planned in 2004 to manage
environmental concerns
we will take four additional actions in 2004 to manage environmental
concerns and reduce environmental impacts
1 as part of the process for improving our environmental performance
we have introduced the concept of “green” offices and facilities a
questionnaire covering the main environmental impacts of our business
enables individual sites be they offices distribution centres or sales
branches to selfassess their performance points are earned for
environmental practices that conserve energy minimise waste disposal
encourage recycling and minimise water use sites achieving a target
score will be awarded a certificate to confirm their “green” status
our aim is for three sites in the group to achieve “green” status in 2004
and then for the programme to be rolled out more widely across the
group in 2005 we believe that allowing each site to take responsibility
for its own environmental performance will capitalise on the enthusiasm
of individuals within premier farnell for sound environmental practices
2 two significant pieces of new european environmental legislation will
affect the group’s business in the near future these are the european
directives dealing with the restriction of the use of certain hazardous
substances rohs and waste electronic and electrical equipment
weee the directives require implementation into the national law of
the eu member states and the principal provisions will take effect from
july 2006 and august 2005 respectively
the rohs directive effectively prohibits the use of certain undesirable
substances including lead cadmium and mercury in electronic and
electrical products from july 2006 the weee directive imposes
obligations relating to the collection recycling and disposal of waste
electronic and electrical equipment the primary purpose of both
directives is protection of human health and the environment
similar legislation has been proposed in some us states canadian
provinces and in china
a large number of the items distributed by the group will be affected as
will the products manufactured or assembled by the group’s customers
the group has formed a management team and tasked it to work
closely with customers and suppliers to ensure compliance with the new
legislation but also to provide information and assistance in working
through the significant changes that will be required within the
electronics industry regular updates are circulated and a dedicated
website has been created that can be accessed via
wwwfarnellinonecom
3 we plan to achieve iso 14001 certification at another major
distribution centre
4 we will establish computer based safety and environmental training
programmes and add them to an existing company training web site for
use by all divisions courses to be provided in 2004 include occupational
injury and illness recordkeeping office ergonomics warehouse
ergonomics infection control for first aid volunteers emergency
response action plans iso 14001 awareness hazardous waste
handling and hazardous materials transportation
waste recycled total amount unit rate
2003 2002 2003 2002
kilograms 000 kilograms£1000
hazardous waste 8 3 0010 0004
industrial process waste 1207 1295 16 17
solid waste 1153 821 15 11
total 2368 2119 31 27
water used
total amount unit rate
2003 2002 2003 2002
litres 000 litres£1000
water used 47445 56491 62 73
greenhouse gas emissions total amount metric tons
used 000 co2 emitted
type of energy used 2003 2002 2003 2002
electricity for facilities
kwh 36333 38058 22236 23291
natural gas for facilities
cubic metres 1688 2739 3638 5902
propane for lift trucks
kilograms 5 5 11 11
fuel oil for facilities litres 25 3 86 11
petrol for company cars
trucks litres 1020 1066 1913 1999
diesel fuel litres 1602 1750 4276 4671
petrol for rented cars
trucks litres 1352 1459 2535 2736
total 34695 38621
conversion factor used  0612 kg co
2
kwh equals usa 199899 average per
us dept of energy
reference httpwwweiadoegovcneafelectricitypageco2reportco2emisspdf
see footnote to energy used table on previous page
assumed 105 kilometreslitre of petrol consumed social responsibility report premier farnell plc 25
continued annual report and accounts 2004
contribution to the community
the group contributes to the wider community in a number of ways
cash donations are made each year to a number of charities and this
year these amounted to £24000 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 longterm sponsor of the “great
yorkshire bike ride” which has now raised £10 million for a variety of
charities as well as the group’s sponsorship a number of employees
take part every year this year the event raised £98000 for a variety of
charities
the group regularly donates the proceeds of sales of obsolete and
damaged stock to charities and also donates equipment to various
charitable and educational organisations to assist in research
programmes the value of these donations made during the year was
£130000
in the us all of the group’s businesses participate in united way a
communitybased umbrella organisation supporting various human
services organisations group employees have taken leadership roles in
united way’s fundraising activities also in the us employees at the
newark inone distribution centre in gaffney have taken part in efforts to
provide food and clothing to local families and individuals in need
cpc has a policy of matching charitable donations raised by its
employees who have engaged in a multitude of fund raising events over
the year including for scope the national asthmatic society lennox
children’s cancer fund as well as a number of local causes
farnell inone involved its suppliers in raising nearly £10000 for the fund
for epilepsy
akron brass managers are involved in a junior achievement programme
by teaching business practice to local high school students
significant awards and achievements in 2003
we are delighted to report that the us national safety council presented
its “green cross for safety excellence achievement awards” to four
premier farnell companies these awards recognised exemplary safety
records at newark inone mcm tpc wire  cable and cadillac electric
sites
we are particularly pleased to have achieved our target of iso 14001
accreditation for the farnell inone distribution centre in leeds having
obtained iso 14001 accreditation for newark inone’s gaffney
distribution centre last year we now have accreditation for sites
representing approximately 56 per cent of group turnover
we are also pleased to report that we were presented with the
pricewaterhousecoopers social responsibility reporting award for
yorkshire for last year’s social responsibility report
we remain a member of the ftse4 good index of corporate and social
responsibility and the dow jones sustainability index 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
more important than any award or inclusion in an index are the practical
benefits of the safety and environmental actions we have taken a good
example of this occurred in november 2003 when a tornado hit the new
akron brass building part of the roof was torn off and air conditioning
units thrown some distance from the plant akron’s regular fire and
tornado drills demonstrated their value as everyone present quickly
moved to the area of the plant designated as a tornado shelter as
soon as warning of the tornado was received no employees suffered
any injury
audit of this report
as part of the process of ensuring that we have robust data as a
reference point our internal audit department is currently assessing the
processes used to collect and collate the information contained in this
report any proposals for improvement will be taken into account for
future years
premier f arnell is a
long term
p articip ant in the bie
index of corpora te
environment al
engagement 26 premier farnell plc board of directors and officers
annual report and accounts 2004
premier farnell
board of directors and officers
01
02
04 05
06 07 08
09 10
03 board of directors and officers premier farnell plc 27
annual report and accounts 2004
01
sir malcolm bates
hondlitt msc fcis fraes ccmi
aged 69
appointed chairman 1997 chairman hhg
plc includes pearl assurance plc national
provident life limited and npi limited
02
john r hirst ba fca act ccmi
aged 51
appointed group chief executive 1998
appointed nonexecutive director of
hammerson plc february 2004 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
03
andrew c fisher ba fca
aged 46
appointed group finance director 1994
previously a partner at price waterhouse
04
sir robert horton bsc sm lld dsc
aged 64
appointed nonexecutive director 1995
chairman sporting exchange ltd and
nonexecutive director emerson electric co
us formerly chairman of railtrack plc
chubb plc and chairman and ceo bp 
05
cary j nolan ba bsee
aged 61
appointed nonexecutive director 1999 formerly
president ceo picker international inc
president cooper surgical and president xerox
medical systems division nonexecutive
director of t oshiba medical and t omotherapy inc
06
d john s roques ca
aged 65
appointed nonexecutive director 1999
chairman portman building society
nonexecutive director bba group plc and
hhg plc formerly senior partner deloitte 
touche
07
michael lester ma oxon
solicitor aged 64
appointed nonexecutive director 1998
director bae systems plc formerly a
director and vicechairman the general
electric company plc
08
steven webb llb
solicitor aged 41
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
09
william b korb
aged 64
appointed nonexecutive director january
2003 formerly president and ceo of gilbarco
incorporated nonexecutive director of
cambrex corporation and chairman of moses
cone health system
10
laurence bain ca
aged 50
appointed group chief operating officer
july 2002 and joined the board as an
executive director in july 2003 previously
vice president and director of operations for
motorola in europe middle east and africa
nonexecutive
audit committee
john roques chairman
michael lester
cary nolan
william korb
nominations committee
sir malcolm bates chairman
sir robert horton
michael lester
remuneration committee
michael lester chairman
william korb
cary nolan
john roques
organisation  management development
sir robert horton chairman
sir malcolm bates
john hirst
william korb 28 premier farnell plc finance director’s review
annual report and accounts 2004
finance director’s review
group sales and operating profit
group sales for the financial year were £7646 million
2003 £7590 million sales were reduced by £151 million on
translation of overseas sales into sterling reflecting the weakness of
the us dollar partly offset by the strength of the euro profit before
taxation in the year was £546 million 2003 £598 million profit before
taxation goodwill amortisation and exceptional items of £571 million
2003 £672 million benefited by £02 million on translation of overseas
profits into sterling
group sales for the year based on year on year sales per day for
continuing businesses and at constant exchange rates increased by
35 per cent with fourth quarter sales increasing by 48 per cent
following the severe decline in worldwide demand for electronic
components the group has achieved positive sales growth in each of
the last six quarters in markets which have remained difficult
group year on year sales growth rates 
based on sales per day for continuing businesses at constant
exchange rates
the marketing and distribution division contributed 87 per cent of the
group’s sales whilst general industrial demand and activity in the
electronics industry remained subdued for most of the year significant
progress was made in growing ecommerce sales winning large
corporate account business and developing sales to specific customer
segments such as the us federal government in addition signs of
recovery were seen in the north american market in the second half of
the year in the americas sales per day were 09 per cent below the
prior year although sales per day in the fourth quarter increased 33 per
cent over the prior year in europe and asia pacific year on year sales
per day increased by 68 per cent showing consistent growth
throughout the year
the industrial products division achieved year on year sales per day
growth for continuing businesses of 56 per cent sales at akron brass
which manufactures highperformance firefighting equipment increased
83 per cent assisted by strong sales development in territories outside
its primary north american market sales at tpc wire  cable a
distributor of high specification cable to the north american automotive
and steel industries increased by 18 per cent and sales at kent which
distributes high performance consumable products to the automotive
repair industry increased by 37 per cent
despite the difficult trading environment the group’s gross margin has
been stable throughout the year although the full year gross margin of
402 per cent is 09 per cent down on the previous year due to the mix
of business and a more aggressive promotional stance in north america
150
100
50
00
50
100
q1 q2
20023 20034
q3 q4 q1 q2 q3 q4
andrew fisher
group finance director finance director’s review premier farnell plc 29
continued annual report and accounts 2004
gross margin 
on 27th february 2003 the group announced the rebranding of four
of its businesses within the marketing and distribution division to
demonstrate to customers and suppliers the close alignment and global
collaboration between them the new trading names are newark inone
farnell inone buckhickman inone and mcm an inone company the
operating profit of the marketing and distribution division reflects the
oneoff cost of the rebranding of £24 million
restructuring costs of £08 million relating primarily to headcount
reductions resulting from sales branch consolidations in north america
were incurred during the year the group also realised profits of
£11 million on the disposal of surplus properties
the group’s operating margin before goodwill amortisation and
rebranding costs was 97 per cent this compares with 109 per cent in
the previous year and reflects a stepup in the cost base of some
£8 million relating mainly to the commencement of depreciation following
deployment of customer relationship management systems in north
america march 2003 and the uk november 2002 and establishing a
second european full service warehouse near liège
operating margin 
based on operating profit before goodwill amortisation and
rebranding costs
acquisitions and disposals
on 31st july 2003 the group sold maintenance inc a distributor of
asphalt resurfacing products and part of the industrial products division
for net cash proceeds of £07 million the business traded at breakeven
during the first six months of the financial year the exceptional gain of
£01 million was after charging goodwill previously written off against
reserves of £04 million
subsequent to the year end the group acquired the business and
assets of gfe manufacturing a company based in illinois us involved
in the manufacture of lighting rigs for the firefighting industry for a
consideration of 45 million this acquisition extends the product range
00
50
100
150
200
q1 q2
20023 20034
q3 q4 q1 q2 q3 q4
350
370
390
410
430
450
q1 q2
20023 20034
q3 q4 q1 q2 q3 q4
available to akron brass customers in north america gfe had sales of
approximately 40 million in 2003
purchase and cancellation of preference shares
on 19th march 2003 the company purchased and cancelled 197000
of its own preference shares at a cash cost of £23 million the total
number of preference shares in issue on 1st february 2004 was
76 million 2003 78 million
interest and fixed charges
the net interest charge of £143 million 2003 £157 million was
covered 52 times by operating profit before oneoff rebranding costs
and goodwill amortisation
fixed charge interest plus preference dividends cover was 31 times
interest payments relate predominantly to fixed rate us dollar
borrowings the effective interest rate on the group’s fixed rate
borrowings was 66 per cent this compares to 71 per cent in the prior
year and reflects the refinancing of the group’s long term debt during the
year as explained below
taxation
the group’s effective tax charge represented 273 per cent
2003 284 per cent of the profit before tax goodwill amortisation and
gainloss on disposal of businesses the underlying tax rate excluding
the impact of tax credits arising from the favourable settlement of earlier
years’ liabilities was 293 per cent 2003 299 per cent this rate
compares favourably with the corporate tax rates of 30 in the uk and
35 in the us the territories in which the group earns most of its
profits 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 50 pence which
together with the interim dividend amounts to a total dividend per share
of 90 pence unchanged from the previous year at a total cost for the
financial year of £326 million the dividend is covered 11 times
2003 11 times by attributable profits adjusted for goodwill amortisation
and business disposals maintaining the dividend at last year’s level
reflects the board’s confidence in the group’s outlook and its strong
underlying cash flow characteristics
earnings per share
basic earnings per share were 89 pence 2003 93 pence adjusted
earnings per share before rebranding costs amortisation of goodwill
and gainloss on disposal of businesses were 101 pence
2003 112 pence
the weighted average number of ordinary shares in issue during the
year was 3623 million 2003 3316 million the increase reflecting the
special conversion approved by shareholders on 13th may 2002 of
195 million preference shares into 898 million ordinary shares
cash flow and net debt
free cash flow available to ordinary shareholders is summarised below
2004 2003
£m £m
cash flow from operating activities 700 920
capital expenditure 204 249
sale of fixed assets 26 17
interest and preference dividends 206 266
tax 145 127
free cash flow 171 295
cash flow from operating activities represented a conversion rate of
98 per cent 2003 111 per cent of operating profit before goodwill 30 premier farnell plc finance director’s review
annual report and accounts 2004 continued
finance director’s review
continued
amortisation and reflects continued tight control of working capital
across the group inventories increased by £99 million in the year to
support expansion of the product ranges throughout the marketing and
distribution division and the stocking of the liège warehouse
receivable days have been maintained or improved across all major
businesses with the group average reducing from 52 to 50 days during
the year
capital expenditure of £204 million included £135 million on computer
systems £59 million was spent on completing the deployment of the
new frontoffice systems based around siebel customer relationship
management software and a further spend of £76 million was incurred
in enhancing existing systems the integrated frontoffice systems
which were successfully deployed at farnell inone’s uk business in
november 2002 were rolled out across newark inone’s branch and call
centre infrastructure in march 2003 the primary contract for the delivery
of the front office suite of systems has now been completed at a total
cost of some £40 million incurred over the last four years capital
investment in the liège warehouse amounted to £28 million in the year
total capital expenditure in the coming year is estimated to be between
£15 million and £20 million
the change in net debt is summarised below
£m
opening net debt 2092
free cash flow 171
ordinary dividends 326
disposal of businesses 05
purchase of own preference shares 23
issue of ordinary shares 09
net cash outflow 164
exchange movement 237
closing net debt 2019
the group’s net debt comprises the following
£m
cash at bank and in hand 317
bank loans and overdrafts 228
us 380 million senior notes due 2006 2010 and 2013 2089
other loans 19
net debt 2019
in june 2003 the group raised 225 million of new financing in the
private placement market comprising 66 million senior notes payable
2010 at an effective interest rate of 53 per cent and 159 million senior
notes payable 2013 at an effective interest rate of 59 per cent the
funds were used to repay other borrowings principally the 155 million
70 senior notes due june 2003
the resulting profile of the group’s loan finance and committed bank
facilities is illustrated in the chart below this shows sound mediumterm
funding and headroom of over £100 million
debt profile £m
a bilateral bank facilities to 2006
b 155m 72 senior notes repayable 2006
c 66m 53 senior notes repayable 2010
d 159m 59 senior notes repayable 2013
gross debt at 1st february 2004
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
shortterm 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
and an annual report detailing the group’s debt cash and hedging
activity is reviewed 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 similarly whilst a
significant proportion of the group’s borrowings are denominated in
us dollars the group does not specifically hedge all of its longterm
investments in overseas assets
0
100
200
229
300
331
2004 2006 2008 2010 2012
a
b
c
d finance director’s review premier farnell plc 31
continued annual report and accounts 2004
pension accounting
the group accounts for pensions in accordance with ssap 24 the
group’s net assets include a pension asset of £796 million
2003 £822 million which is included in debtors due after more than
one year the consolidated profit and loss account includes a net
pension credit of £29 million 2003 £44 million in relation to all of the
group’s pension schemes
the group operates defined benefit schemes in the uk which was
closed to new entrants in 1998 and north america as a result of the
april 2002 triennial valuation of the uk scheme contributions have
recommenced at a rate of £07 million per annum a contribution holiday
will continue for the foreseeable future in relation to the overfunded
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
2004 profit before tax would have been reduced by £22 million
2003 £32 million representing the net of £78 million which would be
charged to operating profit and £56 million which would be credited to
interest the credit to interest reflects the income attributable to the
substantial surplus which exists in the us scheme consolidated net
assets would have been reduced by £236 million and the value of the
net surplus of the uk and us defined benefit schemes would have been
£441 million 2003 £347 million based on the market value of scheme
assets at 1st february 2004 comprising a surplus in the us scheme of
£578 million and a deficit in the uk scheme of £137 million
international financial reporting standards ifrs
in june 2002 the european union approved the application of ifrs for
all listed groups for periods commencing on or after 1st january 2005
as a result the group will apply ifrs in its financial statements for the
year ending 31st january 2006 the primary effects of ifrs on the
group are expected to be the following
– the reclassification of the company’s preference shares from
shareholders’ funds to debt
– the introduction of pension accounting rules which broadly follow
frs 17
– the requirement to reflect a charge in the profit and loss account
relating to sharebased incentives and
– the cessation of amortisation of goodwill which will become subject to
an annual test for impairment
the group has established a project timetable to ensure the
requirements under ifrs will be met
andrew fisher
group finance director directors’ report
32 premier farnell plc directors’ report
annual report and accounts 2004
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 12 to 19
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 attributable to ordinary shareholders was
£324 million 2003 £308 million the directors recommend that a final
dividend of 50 pence 2003 50 pence per ordinary share be paid on
23rd june 2004 to those shareholders on the register of members at the
close of business on 28th may 2004 an interim dividend of 40 pence
per ordinary share was paid on 24th october 2003 making a total for
the year of 90 pence 2003 90 pence per ordinary share
acquisitions and disposals
on 31st july 2003 the group sold maintenance inc a distributor of
asphalt resurfacing products and part of the industrial products division
for a consideration of £09 million after the year end the group
purchased the business and certain assets of gfe manufacturing inc a
supplier of lighting systems and water flow test equipment for the
firefighting industry for a consideration of 45 million
further details of acquisitions and disposals are given in the finance
director’s review on page 29 and in notes 3 24 and 30 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 20 on page 58
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
2003 but expire at the close of the forthcoming meeting
directors
the names and biographical details of the directors who held office
throughout the year appear on page 27
in accordance with the company’s articles of association sir robert
horton and mr andrew fisher will retire at the forthcoming annual
general meeting of the company and mr fisher will offer himself for
reelection sir robert horton will retire from the board at the close of
the meeting mr laurence bain who was appointed during the year will
retire and offer himself for election mr fisher and mr bain are executive
directors and have service contracts with the company further details of
which are provided in the remuneration report on page 36
additional information relating to directors’ remuneration service
contracts and interests in the company’s shares is given in the
remuneration report on pages 34 to 39 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 1st february 2004 the amount the group owed its
suppliers represented 36 working days’ purchases 2003 33 working
days the company is a holding company and does not have any
trade creditors
research and development
the group’s research and development activities are restricted to the
development of new or enhanced products for akron brass and are not
significant in the context of the group as a whole
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 £24000 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
employment
the group places great emphasis on optimising the contribution made
by employees at all levels around the world a groupwide performance
review and annual management audit process are in their fifth year of
operation two leadership development programmes are in place for
the top 150 managers and a series of programmes for new or
inexperienced managers and supervisors has been introduced product
training using on line learning technology has been implemented the
same technology has been employed to develop a groupwide
induction programme and a module covering the group’s code of
ethics in addition there has been continued 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 cooperation with elected representatives from its
european operating companies the group’s european works council
the premier farnell european forum is in its fourth year of operation
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 age
race religion or sexual orientation
employees’ participation in the group’s performance is encouraged
through the reintroduction of a uk savingsrelated share option
scheme directors’ report premier farnell plc 33
continued annual report and accounts 2004
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 14th april 2004 the company had been notified of the following
interests amounting to 3 per cent or more of the company’s issued
ordinary share capital

prudential plc 1005
axa sa 666
scottish widows 476
zurich financial services 393
royal and sun alliance insurance group plc 369
hbos plc 312
legal and general plc 304
independent auditor
resolutions to reappoint pricewaterhousecoopers llp as auditor 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 2004 annual general meeting at
the mayfair conference centre marble arch london on 15th june
2004 at 1030 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
18th march 2004 remunera tion report
34 premier farnell plc remuneration report
annual report and accounts 2004
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 company’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 shortterm and longterm 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 as updated in july 2003
it is the company’s policy that executive directors be permitted to hold
one nonexecutive directorship with another company the fees payable
in respect of this directorship are retained by the executive director
this report sets out the company’s policy on directors’ remuneration for
2004 and so far as practicable for subsequent years the inclusion in
the report of remuneration policy in respect of years after 2004 is
required by the legislation under which this report is prepared the
remuneration committee is able to state its remuneration policy for
2004 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 2004 will be described in future remuneration reports all
statements in this report in relation to remuneration policy for years after
2004 should be read in the light of this paragraph
as part of the process of keeping the company’s remuneration policy
under review shareholders will be asked to approve a new savings
related saye share option scheme at the company’s annual general
meeting the current saye scheme expires in june 2004 and the new
scheme is proposed as a replacement all uk employees will be entitled
to participate in the scheme subject to a minimum qualifying period of
employment options granted under the scheme over the company’s
ordinary shares may be at a discount of up to 20 per cent to the
prevailing market price
employees participating in the scheme will be required to commit to
regular monthly savings for three or five years and will be entitled to
exercise options over the number of shares which can be purchased
using these savings and any bonus paid at the end of the savings
period further information on the rules of the scheme is provided with
the notice of annual general meeting
in future participation in the scheme may be extended to group
employees in other countries and the resolution to be put to
shareholders seeks authority for the directors to make necessary
adjustments to the uk rules to allow for this
the remuneration committee and its role
the remuneration committee consists of mr michael lester chairman
mr william korb mr cary nolan and mr john roques all members of
the committee are independent nonexecutive directors
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 since the end of the year the committee has
appointed kpmg people services a division of kpmg llp  to advise
the committee remuneration report premier farnell plc 35
continued annual report and accounts 2004
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 noncash benefits for executive directors is included in
the table of remuneration on page 37 and for mr hirst and mr fisher
consists of a fully expensed car and life and health insurance mr bain
does not have a company car but instead receives a cash allowance
which is included in the salary figure disclosed in the table mr bain
does receive life and health insurance the values of which are included
in benefits in kind the value of these benefits is not pensionable for
any executive director but is assessable to income tax
– shortterm incentives
the company operates an annual performancerelated 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 of base salary for mr andrew fisher and
mr laurence bain to reach this maximum requires that the company
exceeds its budgeted profit as well as achievement of clearly defined
individual objectives
– longterm incentives
the company operates a longterm incentive plan and the share
option schemes described below
longterm incentives
under the longterm 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 award which can be made in any year to a participant is
equal to 100 per cent of base salary
the main performance condition compares the growth of the
company’s total shareholder return or “tsr” share price growth and
reinvested dividends over a three year period to that of the companies
in the ftse mid250 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
straightline 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 retesting 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 tsr 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 mid250 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 mid250 index carried out on their behalf by new bridge
street consultants the requirement that the committee must be
satisfied that the underlying performance of the company during the
performance period justifies the exercise of an award is intended to give
the committee a discretion as to whether or not 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 predetermine 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 an executive share option scheme
under which both inland revenue approved and unapproved options
may be granted and an saye option scheme benefits under these
plans are not pensionable the rules of the executive scheme were
approved by shareholders at the company’s annual general meeting in
2003 as noted above it is proposed to replace the existing saye
option scheme with a new saye scheme for which shareholder approval
is being sought at the forthcoming annual general meeting of
the company
annual grants are made under the executive share option scheme with a
maximum grant equal to 100 per cent of the individual’s annual salary
exercise of options granted under the scheme is subject to a
performance condition this condition is that the growth in the
company’s adjusted 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
are exercisable exercise of all options granted requires 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
applies for performance between 12 per cent and 20 per cent if the
performance target is not met by the fourth year the relevant
options lapse remunera tion report 
continued
36 premier farnell plc remuneration report
annual report and accounts 2004 continued
eps 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 longterm incentive plan
options granted under earlier schemes operated by the company
remain outstanding executive options granted under such schemes
after 13th march 2001 may not be exercised unless the growth in the
company’s 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 results
announcements
in common with all eligible employees of the group executive directors
are entitled to participate in the company’s saye option scheme and will
be entitled to participate in the replacement saye scheme referred to
above if it is approved by shareholders these options are not subject to
the satisfaction of a performance condition as this scheme is not
restricted to executive directors and senior executives executive
directors did not have any outstanding interests under the existing
scheme during the year to 1st february 2004
the company’s executive shareholding policy requires executive
directors and other senior executives to retain a number of the shares
acquired as a result of the exercise of executive share options or awards
under the longterm incentive plan until a shareholding with a value equal
to the executive’s annual base salary is reached this level of
shareholding is then to be maintained
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
£99000 company contributions payable into the money purchase
arrangement on their behalf amount to 194 per cent of the earnings cap
for mr hirst and 150 per cent of the earnings cap for mr fisher with
each making an employee contribution equal to 30 per cent of the
earnings cap
the company makes further contributions on behalf of mr hirst and
mr fisher to funded unapproved retirement benefit schemes furbs
determined by reference to the excess of their salaries over the earnings
cap the cost to the company of these further contributions was
£208542 2003 £244161 for mr hirst and £83842 2003 £72697
for mr fisher
mr bain is entitled to money purchase benefits from a combination of
the uk scheme and an unapproved scheme furbs total
contributions are 50 per cent of basic salary from mr bain all paid to
the uk scheme and 27 per cent of basic salary from the company of
which 40 per cent of basic salary is paid into the uk scheme and
23 per cent of basic salary into the furbs the total cost to the
company for the period since mr bain was appointed a director
was £38400
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
twothirds of the total remuneration of executive directors ignoring
pension contributions would be performance related
service contracts
in accordance with the company’s policy mr hirst mr fisher and
mr bain have service agreements which are terminable by the company
on twelve months’ notice mr hirst’s and mr bain’s service agreements
dated 13th november 1998 and 23rd april 2004 respectively allow the
company to make a payment of salary in lieu of the whole or part of
their notice periods and mr fisher’s agreement 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 agreement were included as part of the
reduction in his notice period from 24 months during 2001
nonexecutive directors
the fees for the nonexecutive directors are determined by the board
as a whole fees for the chairman are determined by the remuneration
committee business expenses are also reimbursed in addition to the
base fee an additional £5000 per annum is paid to the chairmen of the
audit and remuneration committees
the nonexecutive directors do not have contracts of service but are
appointed pursuant to letters of appointment such appointments are
initially for a threeyear term it is normal that the appointment is renewed
for a second threeyear period thereafter the company’s policy is for
reappointments to be on an annual basis nonexecutive 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
nonexecutive directors are
sir malcolm bates 11th june 2003 annual
sir robert horton 11th june 2003 annual – retiring at the 2004 agm
w korb 21st january 2003 threeyear
m lester 4th august 2001 threeyear
c nolan 5th july 2002 threeyear
d j s roques 1st july 2002 threeyear
any director appointed by the board during the year holds office only
until the next annual general meeting and may then stand for election
thereafter each director must retire from office at every third annual
general meeting since he last retired at which meeting he will be eligible
for reelection remuneration report premier farnell plc 37
continued annual report and accounts 2004
directors’ remuneration
salary annual benefits total emoluments pension contributions
or fees bonus in kind 2004 2003 2004 2003
£000 £000 £000 £000 £000 £000 £000
executive
j r hirst 384 90 27 501 606 228 262
a c fisher 254 83 20 357 369 99 87
l bain from date of appointment 1st july 2003 149 36 1 186 – 38 –
nonexecutive
sir malcolm bates chairman 110 – – 110 100 – –
sir robert horton 40 – – 40 35 – –
w korb 28 – – 28 1 – –
m lester 33 – – 33 28 – –
c j nolan 28 – – 28 26 – –
d j s roques 33 – – 33 28 – –
1059 209 48 1316 1193 365 349
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 relevant executive directors mr bain does not receive any final salary
benefits and therefore does not appear in this table
final salary additional final salary transfer value of final transfer value of final ba
pension accrued as at pension earned during salary benefits as at salary benefits as at
1st february 2004 the year including inflation 2nd february 2003 1st february 2004
excluding inflation a b
£ pa £ pa £ £ £
j r hirst 7242 1212 1043 42328 74171 31843
a c fisher 19843 1441 926 96861 149670 52809
 no contribution is made by directors to the final salary pension arrangements
for each of the directors the main terms applying to their final salary pensions are
– 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
mr hirst is aged 51 and mr fisher is aged 46
the accrued final salary pension shown at 1st february 2004 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 both including and excluding an
allowance for inflation during the year
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 as the transfer values are linked to investment market conditions
the improvement in equity markets over the year will have been a significant factor in the increase in transfer values which is shown 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 remunera tion report 
continued
38 premier farnell plc remuneration report
annual report and accounts 2004 continued
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 after the
end of the financial year mr bain acquired a beneficial interest in 5000 ordinary shares
1st february 2nd february
2004 2003
sir malcolm bates – beneficial 35000 35000
a c fisher – beneficial 80000 80000
j r hirst – beneficial 66050 66050
laurence bain – beneficial – –
sir robert horton – beneficial 13000 13000
w korb – beneficial 10000 10000
m lester – beneficial 30000 30000
c j nolan – beneficial 7000 7000
d j s roques – beneficial 10000 10000
 as at date of appointment for l bain
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 234000 ordinary shares and 35000 adrs representing 70000 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 longterm 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 longterm incentive plan
share options
at at
2nd february 1st february exercise exercise
2003 granted exercised lapsed 2004 price pence period
j r hirst 300000 – – – 300000 305 july 2001 to july 2008
70000 – – – 70000 192 march 2002 to march 2009
125000 – – – 125000 153 october 2005 to october 2012
– 147448 – – 147448 2645 october 2006 to october 2013
a c fisher 30000 – – – 30000 682 may 2000 to may 2007
57000 – – – 57000 551 may 1998 to may 2005
73000 – – – 73000 192 march 2002 to march 2009
75000 – – – 75000 153 october 2005 to october 2012
– 97353 – – 97353 2645 october 2006 to october 2013
l bain 75000 – – – 75000 153 october 2005 to october 2012
– 92173 – – 92173 2645 october 2006 to october 2013
 as at date of appointment for l bain
the options listed above are executive options which are subject to the performance conditions described under the heading longterm 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 1st february 2004 was 2655p 2nd february 2003 1745p and the range during the year was
1325p – 2820p remuneration report premier farnell plc 39
continued annual report and accounts 2004
longterm incentive plan
interests of directors in the plan are
at awarded market price vested lapsed at end of
2nd february at date of 1st february performance
2003 award pence 2004 period
j r hirst 95541 – 305 – 95541 – january 2004
94964 – 3475 – – 94964 january 2005
– 203804 2175 – – 203804 june 2006
a c fisher
63694 – 305 – 63694 – january 2004
61870 – 3475 – – 61870 january 2005
– 135870 2175 – – 135870 june 2006
l bain
148387 – 155 – – 148387 january 2005
125000 – 2175 – – 125000 june 2006
 as at date of appointment for l bain
the conditions for the vesting of an award made under the plan are described under the heading longterm 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 1st february 2004 is the last this is compared to the total shareholder return for a hypothetical holding in the ftse mid250
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 longterm 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 share options and longterm incentive plan is auditable all other information
provided in the remuneration report is not subject to audit
approved by the board on 18th march 2004
signed on behalf of the board by
michael lester
chairman of the remuneration committee
0
50
100
150
200
250
300
1st february
1999
1st february
2000
1st february
2001
1st february
2002
1st february
2003
1st february
2004
value £
premier farnell ftse mid250 index excl investment trusts corpora te governance
40 premier farnell plc corporate governance
annual report and accounts 2004
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 on corporate governance
are applied by the company the combined code has been revised
following the higgs review and the new version was published in july
2003 the new code the new code applies for reporting years
beginning on or after 1st november 2003 and therefore the year under
review remains subject to the code issued in june 1998 the board
has however taken account of the additional requirements of the new
code and implemented as many of these as practicable
the board confirms that the company complies with all of the provisions
set out in section 1 of the combined code issued in june 1998
directors
the board consists of a nonexecutive chairman five nonexecutive
directors all of whom are considered by the board to be independent
and three executive directors in accordance with the new code the
board has ceased to regard the chairman as independent and as a
consequence he has ceased to be a member of the audit and
remuneration committees sir robert horton is the company’s senior
independent nonexecutive director and deputy chairman
in reaching its conclusions on independence and as suggested by the
new code the board considered that sir malcolm bates and
mr roques are both also nonexecutive directors of hhg plc and that
mr lester and mr nolan have family members who are employed by
firms among those which provide legal advice to the company the
board considered mr roques’ background and experience and
determined that his holding of a cross nonexecutive directorship with
sir malcolm bates would not affect his independence in the cases of
mr lester and mr nolan the board considered the fact that they do
not determine which legal advisers are appointed by the company and
that their family members are not directly involved in providing advice to
the company in reaching its conclusion that their independence is
not affected
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 kept under review
and provided where necessary
the appointment letters for nonexecutive directors have been updated
since the end of the year to take account of the requirements of the
new code and now include the time commitment expected of and
confirmation from nonexecutive directors that they have sufficient time
available to meet this commitment nonexecutive directors are required
to inform the board of any changes to their other appointments
the board
the role of the board is to maximise the longterm 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 audit remuneration and organisation and management
development committees have respectively five three and two
scheduled meetings each year although additional meetings are held
where required the nominations committee meets as required
during the year all directors attended the five board meetings that were
held all of the members of the respective committees attended the five
audit committee and four remuneration committee meetings that were
held except for one meeting of the audit committee that mr nolan was
unable to attend
complete copies of the terms of reference of the audit remuneration
nominations and organisation and management development
committees are available on the company’s web site at
wwwpremierfarnellcom 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
the board has adopted a number of corporate governance policies
including a group code of ethics covering issues such as conflicts of
interest fraud whistleblowing and share dealing a copy of the code is
also available on the company’s web site
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 nonexecutive 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 the only appointment made to the board during the year
was that of mr bain this was an internal promotion following mr bain’s
appointment as group chief operating officer in july 2002
a formal induction process for new directors has recently been
approved by the board and this will be implemented for future
appointments in addition proposals for performance evaluation of the
board its committees and individual directors are being considered with
a view to implementation during the year ending january 2005
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 reelection 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 34 to 39
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 remuneration committee in line with the policy adopted by
the full board corporate governance premier farnell plc 41
continued annual report and accounts 2004
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
the board regards the discussion of the company’s strategy as primarily
part of the role of the chief executive and this forms part of his regular
meetings with institutional shareholders feedback from these meetings
is provided to the board both by the group director communications
and by the company’s financial public relations advisers the board also
regularly receives copies of analysts’ reports on the company
the chairman is available to shareholders at any time to discuss strategy
and governance matters while other nonexecutive directors do not
ordinarily attend meetings with major shareholders they would do so if
this was requested by shareholders
all ordinary shareholders have the opportunity to ask questions at the
company’s annual general meeting at which the group chief executive
makes a business presentation summarising the progress of the
group during the year all directors 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 audit committee’s terms of reference have recently been updated
to reflect the requirements of the new code and many of the
recommendations contained in the smith report published in january
2003 in addition and following a recommendation from the smith
report the committee has also adopted and implemented a
groupwide policy restricting the appointment of former employees of
the external auditor
the committee keeps the scope and cost effectiveness of both the
internal and external audit functions under review this now includes an
annual review of the effectiveness of the external auditor including its
quality control procedures
the independence and objectivity of the external auditor is also
considered on a regular basis with particular regard to the level of
nonaudit fees the split between audit and nonaudit fees for the year
to 1st february 2004 and information on the nature of the nonaudit fees
incurred appear in note 5 to the financial statements the nonaudit
fees were paid in respect of assurance work including taxation and are
considered by the committee not to affect the independence or
objectivity of the auditors the external auditor’s appointment is subject
to biannual review by the committee and the lead audit partner is
rotated at least every five years the committee also maintains a formal
policy on the provision of nonaudit services by the auditor which is
reviewed each year this policy prohibits the provision of certain services
and requires that others are subject to prior approval by the committee
or its chairman this policy allows specific tax compliance services
within defined monetary limits to be preapproved by the committee at
the beginning of the year all other permitted nonaudit services are
considered on a case by case basis
at each of its meetings the committee is provided with information on
all nonaudit services provided by the auditor and the estimated cost of
such services the committee monitors such costs in the context of the
audit fee for the year in order to ensure that the value of nonaudit
services does not increase to a level where it has the potential to affect
the auditor’s objectivity and independence
the committee also receives an annual confirmation of independence
from the auditor
throughout the year the group has been in full compliance with the
applicable provisions on internal control contained in the combined
code issued in june 1998
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 at least
annually 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 us sarbanesoxley
act 2002 as they apply to foreign private issuers this legislation
requires amongst other things annual certifications to be included
within or attached to the company’s annual report on form 20f  which
is filed with the us securities and exchange commission as part of the
process for ensuring that such certifications can be made an 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 69 42 premier farnell plc consolidated profit and loss account
annual report and accounts 2004 statement of total recognised gains and losses
consolidated profit and loss account
financial year ended 1st february 2004
2004 2003 2004 2003
notes £m £m m m
turnover 1 7646 7590 12692 11613
cost of sales 4576 4470 7596 6839
gross profit 3070 3120 5096 4774
net operating expenses 1
– before rebranding costs and amortisation of goodwill 2332 2291 3871 3505
– rebranding costs 2 24 – 40 –
– amortisation of goodwill 26 26 43 40
total net operating expenses 2382 2317 3954 3545
operating profit 1
– before rebranding costs and amortisation of goodwill 738 829 1225 1269
– rebranding costs 2 24 – 40 –
– amortisation of goodwill 26 26 43 40
total operating profit 688 803 1142 1229
profitloss on disposal of businesses 3 01 48 02 74
net interest payable 4 143 157 237 240
profit before taxation 5 546 598 907 915
taxation 7 156 182 259 279
profit after taxation 390 416 648 636
preference dividends nonequity 9 66 108 110 165
profit attributable to ordinary shareholders 324 308 538 471
ordinary dividends equity 9 326 326 541 499
retained loss for the year 22 02 18 03 28
earnings per share 10
basic and diluted 89p 93p 0148 0142
earnings per share before rebranding costs amortisation of
goodwill and disposals 10
basic and diluted 101p 112p 0168 0171
the translation of sterling into us dollars has been presented for convenience purposes only using the average exchange rate for the year of 166
2003 153
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
statement of total recognised gains and losses
financial year ended 1st february 2004
2004 2003
£m £m
profit after taxation 390 416
currency translation adjustments net of associated tax charge 98 03
total recognised gains for the year 488 413 consolidated balance sheet premier farnell plc 43
annual report and accounts 2004
consolidated balance sheet
at 1st february 2004
2004 2003 2004 2003
notes £m £m m m
fixed assets
intangible assets 11 459 485 835 795
tangible assets 12 1072 1129 1951 1852
investments 13 – 02 – 03
1531 1616 2786 2650
current assets
stocks 14 1510 1478 2748 2424
debtors – due within one year 15 1285 1218 2339 1998
– due after more than one year 15 796 822 1449 1348
cash at bank and in hand 317 296 577 485
3908 3814 7113 6255
creditors – due within one year 17 1590 2547 2894 4177
net current assets 2318 1267 4219 2078
total assets less current liabilities 3849 2883 7005 4728
creditors – due after more than one year 18 2307 1415 4199 2321
provisions for liabilities and charges 19 421 433 766 710
1121 1035 2040 1697
capital and reserves
called up share capital 20 257 259 468 424
share premium account 22 201 192 366 315
capital redemption reserve 22 08 06 15 10
profit and loss account 22 655 578 1191 948
shareholders’ funds 23 1121 1035 2040 1697
shareholders’ funds comprise
equity interests 97 232 177 381
nonequity interests 1218 1267 2217 2078
1121 1035 2040 1697
the translation of sterling into us dollars has been presented for convenience purposes only using the yearend exchange rate of 182 2003 164
approved by the board on 18th march 2004
sir malcolm bates
chairman 44 premier farnell plc company balance sheet
annual report and accounts 2004
company balance sheet
at 1st february 2004
2004 2003
notes £m £m
fixed assets
investments 13 4900 6239
current assets
debtors – due within one year 15 63 08
– due after more than one year 15 4205 3228
4268 3236
creditors – due within one year 17 274 294
net current assets 3994 2942
total assets less current liabilities 8894 9181
creditors – due after more than one year 18 1962 1839
6932 7342
capital and reserves
called up share capital 20 257 259
share premium account 22 201 192
capital redemption reserve 22 08 06
merger reserve 22 06 06
profit and loss account 22 6460 6879
shareholders’ funds 23 6932 7342
shareholders’ funds comprise
equity interests 5714 6075
nonequity interests 1218 1267
6932 7342
approved by the board on 18th march 2004
sir malcolm bates
chairman consolidated statement of cash flows premier farnell plc 45
annual report and accounts 2004
consolidated statement of cash flows
financial year ended 1st february 2004
2004 2003 2004 2003
notes £m £m m m
net cash inflow from operating activities 25 700 920 1162 1408
returns on investments and servicing of finance
interest received 04 06 07 09
interest paid 144 164 239 251
dividends paid on preference shares nonequity 66 108 110 165
net cash outflow from returns on investments and 
servicing of finance 206 266 342 407
taxation paid 145 127 241 194
capital expenditure and financial investment
purchase of tangible fixed assets 204 249 339 381
sale of tangible fixed assets 26 17 43 26
net cash outflow from capital expenditure and 
financial investment 178 232 296 355
disposals
disposal of subsidiary undertakings 24 05 33 08 50
net cash inflow from disposals 05 33 08 50
equity dividends paid 326 281 541 430
net cash outflowinflow before use of liquid resources
and financing 150 47 250 72
financing
issue of ordinary share capital 20 09 07 15 11
purchase of own preference shares 20 23 83 38 127
preference share conversion costs 20 – 09 – 14
new bank loans 2066 291 3430 445
repayment of bank loans 1887 230 3132 352
net cash inflowoutflow from financing 165 24 275 37
increase in net cash 15 23 25 35
the translation of sterling into us dollars has been presented for convenience purposes only using the average exchange rate for the year of 166
2003 153
reconciliation of net debt
opening net debt 2092 2364
increase in net cash 15 23
increase in debt 179 61
exchange movement 237 310
closing net debt 25 2019 2092 46 premier farnell plc statement of accounting policies
annual report and accounts 2004
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 which
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
1st february 2004 results of subsidiary undertakings acquired or
disposed of are consolidated from or up to the date on which control
passes intergroup transactions are eliminated on consolidation
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
expense classification
cost of sales comprises the cost of goods delivered to customers
including the cost of freight packaging and inventory adjustments
distribution costs represent all operating company expenses including
sales marketing product and purchasing warehousing information
technology and ecommerce
administrative expenses comprise the cost of central head office and the
group board
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
buckhickman inone 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
exchange gains and losses arising on foreign currency borrowings and
related financial instruments used to finance the group’s foreign currency
investments are taken to reserves and reported in the statement of total
recognised gains and losses
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 postretirement 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 28
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
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
statement of accounting policies notes to the accounts
1 segmental information
1 turnover operating profit and net operating assets
a business segments
net operating assets
turnover operating profit excluding goodwill
2004 2003 2004 2003 2004 2003
£m £m £m £m £m £m
marketing and distribution division
americas
– before rebranding costs 2861 3116 270 330 1114 1239
– rebranding costs note 2 – – 12 – – –
2861 3116 258 330 1114 1239
europe and asia pacific
– before rebranding costs and amortisation
of goodwill 3821 3486 406 422 1516 1396
– rebranding costs note 2 – – 12 – – –
– amortisation of goodwill – – 26 26 – –
3821 3486 368 396 1516 1396
total marketing and distribution division 6682 6602 626 726 2630 2635
industrial products division 964 988 137 152 243 258
head office costs – – 75 75 – –
7646 7590 688 803 2873 2893
b geographical segments by origin
net operating assets
turnover operating profit excluding goodwill
2004 2003 2004 2003 2004 2003
£m £m £m £m £m £m
americas 3432 3753 388 458 1052 1164
uk 2706 2516 317 364 1314 1321
rest of world 1508 1321 84 82 507 408
head office costs – – 75 75 – –
amortisation of goodwill uk – – 26 26 – –
7646 7590 688 803 2873 2893
amortisation of capitalised goodwill is in respect of the acquisition of buckhickman inone in july 2001
the geographical analysis of turnover by destination is not significantly different from that shown above turnover between segments is not significant
2 reconciliation of net operating assets with net assets is as follows
2004 2003
£m £m
net operating assets excluding goodwill 2873 2893
net debt 2019 2092
goodwill uk 459 485
pension fund prepayment 796 822
tax dividends and other 988 1073
net assets 1121 1035
capitalised goodwill is in respect of the acquisition of buckhickman inone in july 2001
3 net operating expenses
2004 2003
£m £m
distribution costs 2271 2205
administrative expenses 101 101
research and development expenditure 10 11
2382 2317
distribution costs in 2004 include rebranding costs of £24 million 2003 £nil note 2
administrative expenses in 2004 include amortisation of goodwill of £26 million 2003 £26 million
research and development expenditure is charged to the profit and loss account as incurred
notes to the accounts premier farnell plc 47
annual report and accounts 2004 48 premier farnell plc notes to the accounts
annual report and accounts 2004 continued
2 rebranding
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 them the new trading names are newark inone farnell inone
buckhickman inone and mcm an inone company
the operating profit of the marketing and distribution division for the year ended 1st february 2004 reflects the oneoff cost of the rebranding of
£24 million
3 profitloss on disposal of businesses
2004 2003
£m £m
profitloss on net assets sold net of costs 05 23
goodwill previously eliminated against reserves 04 26
profitloss on disposal of businesses in the year note 24 01 49
deferred consideration received from prior year disposals – 01
profitloss on disposal of businesses 01 48
tax credit arising on disposal of businesses – 09
on 31st july 2003 the group sold maintenance inc a distributor of asphalt resurfacing products and part of the industrial products division in
north america for a cash consideration of £09 million in the period up to disposal this business contributed £07 million 2003 £16 million of
sales and incurred an operating profit of £01 million 2003 £02 million the cash flows from this business in the period up to disposal were not
significant
the business sold in the year ended 2nd february 2003 part of the industrial products division contributed £54 million of sales and incurred an
operating loss of £01 million during that year in the period prior to disposal
4 net interest payable
2004 2003
£m £m
interest receivable on shortterm deposits 04 06
interest payable on bank overdrafts and loans repayable within 5 years 97 162
interest payable on loans repayable after 5 years 50 01
143 157
5 profit before taxation
profit before taxation is stated after chargingcrediting
2004 2003
£m £m
amortisation of goodwill 26 26
depreciation 204 163
profit on sale of fixed assets 11 05
restructuring costs 08 06
operating lease rentals
plant and machinery 39 36
other 59 61
fees paid to the group’s auditors
statutory audit 06 05
further assurance services 01 01
tax compliance services 01 01
tax advisory services 01 01
other nonaudit services – 01
the audit fees and fees for further assurance services paid to the group’s auditors shown above include £01 million 2003 £01 million in respect
of the company notes to the accounts premier farnell plc 49
continued annual report and accounts 2004
note 5 continued
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 sarbanesoxley act 2002
tax services are in respect of tax compliance and tax advice in a number of territories
other nonaudit services provided in 2003 comprised advice on the implementation of share option and long term incentive schemes
6 employees and directors
2004 2003
£m £m
staff costs during the year were as follows
wages and salaries 1171 1195
social security costs 201 186
other pension costs note 28 29 44
1343 1337
the average monthly number of persons employed was as follows
2004 2003
number number
marketing and distribution division
americas 1618 1654
europe and asia pacific 2448 2306
4066 3960
industrial products division 952 991
head office 43 43
5061 4994
directors’ remuneration
a detailed analysis of directors’ remuneration including salaries performancerelated bonuses and longterm incentives is provided under the
headings directors’ remuneration and share options in the remuneration report on pages 34 to 39 the total remuneration of the directors
comprises
2004 2003
£m £m
aggregate emoluments 13 12
company contributions to money purchase pension schemes 04 04
17 16
number of directors to whom retirement benefits are accruing under
– a defined benefit scheme and a money purchase scheme 2 2
– a money purchase scheme 1 –
details of the highest paid director are given on page 37 under the heading directors’ remuneration 50 premier farnell plc notes to the accounts
annual report and accounts 2004 continued
7 taxation
2004 2003
£m £m
uk corporation tax at 30 2003 30
current tax for the year 71 135
current tax in respect of prior years 08 07
overseas corporate tax
current tax for the year 67 26
current tax in respect of prior years 02 01
deferred taxation
current year 29 31
prior year 01 04
156 182
no tax chargecredit arose from the disposal of businesses in 2004 2003 credit of £09 million
the rate of the current tax charge on profits before goodwill amortisation and profitloss on disposal of businesses is lower than the standard rate of
corporation tax in the uk the differences are explained below
2004 2003
 
standard rate of uk tax 300 300
overseas tax rates 28 06
timing differences 49 40
other current year items 38 13
prior year items 17 09
effective rate of tax 224 244
8 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 loss for the
financial year dealt with in the accounts of the company is £04 million 2003 profit of £12 million
9 dividends
2004 2003
£m £m
preference nonequity
paid july 2003 july 2002 33 75
paid january 2004 january 2003 33 33
66 108
ordinary equity
interim paid of 40p 2003 40p per share 145 145
final proposed of 50p 2003 50p per share 181 181
326 326
details of dividends on preference shares are given in note 20 notes to the accounts premier farnell plc 51
continued annual report and accounts 2004
10 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 13 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 ie 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
2004 2004 2003 2003
£m pence £m pence
profit attributable to ordinary shareholders 324 89 308 93
rebranding costs 24 07 ––
profitloss on disposal of businesses 01 – 48 14
tax attributable to rebrandingdisposal of businesses 07 02 09 03
amortisation of goodwill 26 07 26 08
profit attributable to ordinary shareholders before rebranding costs
amortisation of goodwill and disposals 366 101 373 112
number number
weighted average number of shares 362329619 331570659
dilutive effect of share options 1025010 850520
diluted weighted average number of shares 363354629 332421179
the year on year increase in the weighted average number of ordinary shares outstanding results from the special conversion approved by
shareholders on 13th may 2002 of 195 million preference shares into 898 million ordinary shares
adjusted earnings per share ie before rebranding costs amortisation of goodwill and profitloss on disposal of businesses have been provided in
order to facilitate year on year comparison
11 intangible fixed assets
goodwill
£m
group
cost
at 3rd february 2003 and 1st february 2004 526
amortisation
at 3rd february 2003 41
charge for the year 26
at 1st february 2004 67
net book amount
at 1st february 2004 459
at 2nd february 2003 485 52 premier farnell plc notes to the accounts
annual report and accounts 2004 continued
12 tangible fixed assets
freehold land plant and
and buildings equipment total
£m £m £m
group
cost
at 3rd february 2003 729 1360 2089
additions 12 189 201
disposals 56 150 206
businesses sold 02 02 04
currency translation adjustment 37 48 85
at 1st february 2004 646 1349 1995
depreciation
at 3rd february 2003 225 735 960
charge for the year 18 186 204
disposals 48 143 191
businesses sold 01 02 03
currency translation adjustment 18 29 47
at 1st february 2004 176 747 923
net book amount
at 1st february 2004 470 602 1072
at 2nd february 2003 504 625 1129
plant and equipment includes computer hardware and software with a cost of £936 million 2003 £870 million and accumulated depreciation of
£489 million 2003 £432 million
capital commitments authorised and contracted at 1st february 2004 amounted to £11 million 2003 £32 million
13 fixed asset investments
group group company company
2004 2003 2004 2003
£m £m £m £m
shares in subsidiary undertakings – – 4900 6237
interests in own shares – 02 – 02
– 02 4900 6239
1 shares in subsidiary undertakings
£m
company
at 3rd february 2003 6237
additions 7606
disposals 8951
currency revaluation adjustment 08
at 1st february 2004 4900
additions and disposals in the year relate to the internal reorganisation of the group’s legal structure notes to the accounts premier farnell plc 53
continued annual report and accounts 2004
note 13 continued
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 inone gmbh formerly 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
farnellnewark inone distribuidora de componentes electronicos ltda formerly farnell do brazil 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
farnell newark inone shanghai co ltd china
combined precision components plc uk
buck  hickman limited uk
newark corporation usa
newark electronics corporation usa
mcm electronics inc usa
premier farnell llc usa
premier farnell canada limited canada
nv premier industrial belgium srl 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 54 premier farnell plc notes to the accounts
annual report and accounts 2004 continued
note 13 continued
2 interests in own shares
£m
group and company
cost
at 3rd february 2003 and 1st february 2004 11
amortisation
at 3rd february 2003 09
charge for the year 02
at 1st february 2004 11
net book amount
at 1st february 2004 –
at 2nd february 2003 02
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 1st february 2004 and 2nd february
2003 the trust held 234000 ordinary shares and 35000 adrs representing 70000 ordinary shares with a total nominal value of £15200 the
market value of these shares at 1st february 2004 was £806000 2nd february 2003 £533000
14 stocks
group group company company
2004 2003 2004 2003
£m £m £m £m
raw materials 14 18 – –
work in progress 43 38 – –
finished goods and goods for resale 1453 1422 – –
1510 1478 – –
15 debtors
group group company company
2004 2003 2004 2003
£m £m £m £m
amounts falling due within one year
trade debtors 1029 1045 – –
deferred tax asset note 19 – – 01 03
other debtors 126 59 59 03
prepayments and accrued income 130 114 03 02
1285 1218 63 08
amounts falling due after more than one year
amounts owed by subsidiary undertakings – – 4205 3228
pension fund prepayment note 28 796 822 – –
796 822 4205 3228
16 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 30 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 related 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 longterm investments in overseas assets currency translation gains amounting to
£98 million in the year ended 1st february 2004 and currency translation losses amounting to £03 million in the year ended 2nd february 2003
have been creditedcharged to reserves in relation to the translation of net assets in foreign currencies notes to the accounts premier farnell plc 55
continued annual report and accounts 2004
note 16 continued
at 1st february 2004 the gross notional amount of foreign exchange forward contracts to sell foreign currencies all of which had maturities of less
than one year totalled £642 million 2003 £140 million and can be analysed as follows
commitments to sell foreign currency
sterling equivalent unrecogniseddeferred
gains and losses
2004 2003 2004 2003
£m £m £m £m
euros 109 116 01 01
australian dollars 06 24 – –
us dollars 527 – – –
642 140 01 01
the commitment to sell us dollars is linked to the group’s us dollar denominated borrowings referred to below which provide a hedge against the
group’s us dollar investments the unrealised exchange gain on this us dollar commitment has been reflected in the statement of total recognised
gains and losses
in addition at 1st february 2004 the group had entered into foreign exchange forward contracts to buy £09 million 2003 £nil of us dollars on
which there was an unrecognised loss of £01 million
the unrecogniseddeferred gains and losses in respect of foreign exchange forward contracts are estimated by reference to the amounts not yet
recognised 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 management anticipates that the
ongoing us dollar interest and dividend obligations together with 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 1st february 2004 the group had the equivalent of £45 million 2003 £36 million of predominantly euro denominated net financial assets in
nonfunctional currencies in relation to which future movements in foreign currencies could have a limited impact on consolidated profit
2 interest rate risk
the group finances its operations through a combination of retained cash flow equity and nonequity shares and short and medium term
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
2004 2003
fixed floating total fixed floating total
£m £m £m £m £m £m
due within one year 01 28 29 946 27 973
due between one and two years 01 – 01 02 – 02
due between two and five years 855 200 1055 948 440 1388
due over five years 1249 02 1251 15 10 25
2106 230 2336 1911 477 2388
the group’s borrowings are denominated in us dollars with the exception of the floating rate debt due within five years of £228 million which is
denominated in sterling
the group has multicurrency bilateral bank facilities of £1225 million which are committed until 2006 the facilities carry a libor based floating
rate of interest at the year end £200 million was drawn on these facilities 2003 £440 million
in june 2003 the group raised 2250 million of new financing in the private placement market this comprises 660 million senior notes payable
2010 and 1590 million senior notes payable 2013 at fixed interest rates of 53 and 59 respectively the funds raised were used to repay
other borrowings principally the 1550 million 70 senior notes due on 17th june 2003 the total us dollar denominated private placement debt
outstanding at the year end is 3800 million 2003 3100 million
the weighted average interest rate attributable to fixed rate borrowings was 66 2003 71 and the weighted average duration of fixed rate
borrowings was 60 years 2003 29 years
the group’s other financial liabilities comprise provision for dilapidation costs of £15 million 2003 £15 million
nonequity shares
a proportion of the group’s share capital is attributable to nonequity interests in the form of cumulative convertible redeemable preference shares
the rights and restrictions attaching to the preference shares are described in note 20 56 premier farnell plc notes to the accounts
annual report and accounts 2004 continued
note 16 continued
financial assets
cash at bank and in hand of £317 million 2003 £296 million relates principally to overnight deposits and current account balances held in
trading operations worldwide and comprises £34 million 2003 £25 million in sterling £145 million 2003 £169 million in euros £74 million
2003 £42 million in us dollars and £64 million 2003 £60 million in other currencies all significant balances earn interest based on local
market rates appropriate for the currency concerned
3 fair value of financial assets and liabilities
an analysis of the fair values and book values of the group’s financial assets and liabilities is provided below
book value fair value book value fair value
2004 2004 2003 2003
£m £m £m £m
assets
cash at bank and in hand 317 317 296 296
liabilities and derivatives
creditors – due within one year 29 29 973 986
– due after more than one year 2307 2342 1415 1500
commitments to sellbuy foreign currency –– – 01
provision for dilapidation costs 15 15 15 15
2351 2386 2403 2502
nonequity interests 1218 1106 1267 895
the fair value of borrowings is based on estimates of the current fixed interest rates available for debt of the same remaining maturity the fair value
of nonequity interests is based on the quoted market price as at the financial year end
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 nonperformance by the counterparties the group would not realise a material loss in the event of nonperformance by
counterparties at 1st february 2004 neither the group nor the counterparties were required to collateralise their respective obligations under these
financial instruments
17 creditors – due within one year
group group company company
2004 2003 2004 2003
£m £m £m £m
bank overdrafts unsecured 28 27 45 62
unsecured loans note 18 01 946 – –
trade creditors 538 493 – –
corporate taxes 448 434 17 15
payroll and other taxes including social security 61 59 02 02
other creditors 124 138 07 12
accruals and deferred income 209 269 22 22
proposed ordinary dividend 181 181 181 181
1590 2547 274 294
18 creditors – due after more than one year
group group company company
2004 2003 2004 2003
£m £m £m £m
unsecured loans 2307 1415 1403 410
amounts owed to subsidiary undertakings – – 559 1429
2307 1415 1962 1839
unsecured loans comprise
bank loans 200 440 166 410
70 us dollar guaranteed senior notes payable 2003 – 945 – –
72 us dollar guaranteed senior notes payable 2006 852 945 – –
53 us dollar guaranteed senior notes payable 2010 363 – 363 –
59 us dollar guaranteed senior notes payable 2013 874 – 874 –
other loans 19 31 – –
2308 2361 1403 410
less amount due within one year 01 946 – –
2307 1415 1403 410 notes to the accounts premier farnell plc 57
continued annual report and accounts 2004
note 18 continued
group group company company
2004 2003 2004 2003
£m £m £m £m
bank overdrafts and unsecured loans are repayable as follows
within one year 29 973 45 62
between one and two years 01 02 – –
between two and five years 1055 1388 166 410
after five years 1251 25 1237 –
2336 2388 1448 472
details of the group’s borrowing facilities are given in note 16
19 provisions for liabilities and charges
group group company company
2004 2003 2004 2003
£m £m £m £m
deferred taxation 359 366 – –
overseas postretirement obligations 47 52 – –
dilapidation costs 15 15 – –
421 433 – –
1 deferred taxation
at beginning of year 366 377 03 02
chargecredit in the year note 7 28 27 02 01
currency translation adjustment 35 38 – –
provisionasset at end of year 359 366 01 03
deferred tax provisionsassets comprise
accelerated capital allowances 129 135 – –
shortterm timing differences 66 76 01 03
pension prepayment 296 307 – –
359 366 01 03
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 postretirement obligations note 28
at beginning of year 52 50 – –
increase in year – 10 – –
currency translation adjustment 05 08 – –
at end of year 47 52 – –
3 dilapidation costs
at beginning and end of year 15 15 – –
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 12 years 58 premier farnell plc notes to the accounts
annual report and accounts 2004 continued
20 called up share capital
company company
2004 2003
nominal value nominal value
£m £m
authorised
attributable to equity interests
500000000 ordinary shares of 5p each 2003 500000000 250 250
attributable to nonequity interests
32000000 cumulative convertible redeemable preference shares of £1 each 2003 32000000 320 320
570 570
allotted called up and fully paid
ordinary shares of 5p each equity interests
at 3rd february 2003 362438230 shares 181 136
preference share conversion – 45
allotted under share option schemes 510000 shares – –
at 1st february 2004 362948230 shares 181 181
cumulative convertible redeemable preference shares of £1 each nonequity interests
at 3rd february 2003 7772221 shares 78 279
preference share conversion – 195
preference share purchase and cancellation 197000 shares 02 06
at 1st february 2004 7575221 shares 76 78
capital restructuring
on 19th march 2003 the company purchased and cancelled 197000 of its own preference shares at a cost of £23 million
the capital restructuring in 2003 comprised the special conversion approved by shareholders on 13th may 2002 of 19530070 preference shares
into 89838310 ordinary shares in addition in 2003 the company purchased and cancelled a total of 643964 of its own preference shares at a
cost of £83 million
allotments during the year
on various dates during the year allotments were made under the company’s executive share option schemes totalling 510000 ordinary shares
nominal value £25500 for a cash consideration of £930000
the rights and restrictions attaching to the us135 cumulative convertible redeemable preference shares of £1 each
the “us preference shares” and the 892p 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 us135 per annum for every £1 of nominal value for the
us preference shares and at the rate of 892p per annum for every £1 of nominal value for the sterling preference shares dividends on the us and
sterling preference shares are payable halfyearly 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 103432p in nominal amount of ordinary share capital for every £1 in nominal amount of preference share capital so
converted the “conversion rate”
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 notes to the accounts premier farnell plc 59
continued annual report and accounts 2004
note 20 continued
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 takeover 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 us25 for every £1 of
nominal value and all the sterling preference shares in issue at £16518 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 windingup 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 us25 for every £1 of nominal value for the us preference shares and £16518 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 windingup
21 share options
during the year options were exercised on 393000 5p ordinary shares at 192p 84000 5p ordinary shares at 153p and on 33000 5p ordinary
shares at 193p under the terms of the 1984 senior executive share option scheme as subsequently amended
at 1st february 2004 the aggregate number of shares covered by options is 8418045 2003 7527593 and the total consideration of
£211 million 2003 £190 million is made up as follows
number total
of shares option consideration
date of grant outstanding price £m
may 1995 78894 551p 04
november 1995 10519 631p 01
november 1996 161500 682p 11
november 1996 157500 688p 11
may 1997 50000 682p 03
july 1998 300000 305p 09
march 1999 1242500 192p 24
july 1999 25000 245p 01
december 1999 45000 368p 02
april 2000 528550 425p 22
june 2000 26000 468p 01
september 2000 65000 513p 03
december 2000 50000 377p 02
july 2001 40000 249p 01
september 2001 1083750 193p 21
january 2002 9000 320p –
april 2002 50000 337p 02
october 2002 2186000 153p 33
december 2002 59700 199p 01
january 2003 40000 175p 01
january 2003 10000 199p –
september 2003 60000 246p 01
october 2003 2107335 265p 56
january 2004 31797 262p 01
8418045 211
both approved and unapproved executive share options are exercisable between three and ten years from the date of grant 60 premier farnell plc notes to the accounts
annual report and accounts 2004 continued
note 21 continued
in addition under the company’s longterm incentive plan certain individuals have been granted rights which may result in the issue of the following
ordinary shares and adrs each adr representing two ordinary shares
end of
number of number of performance
date of grant ordinary shares adrs period
march 2002 459607 41070 january 2005
june 2003 1385216 199057 june 2006
1844823 240127
22 reserves
share capital profit and
premium redemption merger loss
account reserve reserve account
£m £m £m £m
group
at 3rd february 2003 192 06 – 578
retained loss for the year – – – 02
premium on issue of ordinary shares under share option schemes note 20 09 – – –
purchase of own preference shares note 20 – 02 – 23
goodwill reinstated on disposal of business note 24 – – – 04
currency translation adjustment net of associated tax charge – – – 98
at 1st february 2004 201 08 – 655
company
at 3rd february 2003 192 06 06 6879
retained loss for the year – – – 396
premium on issue of ordinary shares under share option schemes note 20 09 – – –
purchase of own preference shares note 20 – 02 – 23
currency translation on investments – – – 08
other currency translation adjustments – – – 08
at 1st february 2004 201 08 06 6460
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 £15936 million at 1st february 2004 2003 £15940 million
23 reconciliation of movements in shareholders’ funds
group group company company
2004 2003 2004 2003
£m £m £m £m
profitloss after taxation 390 416 04 12
dividends – preference 66 108 66 108
– ordinary 326 326 326 326
02 18 396 422
new share capital subscribed note 20 09 07 09 07
purchase of own preference shares note 20 23 83 23 83
preference share conversion costs – 09 – 09
goodwill reinstated on disposal of business note 24 04 26 – –
currency translation on investments – – 08 01
other currency translation adjustments 98 03 08 01
net change in shareholders’ funds 86 80 410 507
shareholders’ funds at the beginning of the year 1035 1115 7342 7849
shareholders’ funds at the end of the year 1121 1035 6932 7342
shareholders’ funds comprise
equity interests 97 232 5714 6075
nonequity interests 1218 1267 1218 1267
1121 1035 6932 7342
nonequity interests reflect the redemption cost of the cumulative convertible preference shares notes to the accounts premier farnell plc 61
continued annual report and accounts 2004
24 disposals
details of businesses disposed of during the year are given in note 3
2004 2003
£m £m
tangible fixed assets 01 17
stocks 01 21
debtorscreditors – 18
goodwill previously eliminated against reserves 04 26
06 82
profitloss on disposal note 3 01 49
net consideration see below 07 33
cash consideration 09 43
disposal costs 02 10
net consideration 07 33
cash flow in respect of prior year disposals 02 –
net cash flow from disposals 05 33
25 notes to the consolidated statement of cash flows
1 reconciliation of operating profit to net cash inflow from operating activities
2004 2003
£m £m
operating profit 688 803
depreciation charge net of profit on disposals 193 158
amortisation of goodwill 26 26
pension credit 60 68
increase in stocks 99 90
increasedecrease in debtors 53 08
increase in creditors 05 83
net cash inflow from operating activities 700 920
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 cashdebt
£m £m £m £m £m
at 3rd february 2003 296 27 946 1415 2092
increasedecrease in net cash 16 01 – – 15
decreaseincrease in debt – – 924 1103 179
other changes – – 01 01 –
exchange movement 05 – 22 210 237
at 1st february 2004 317 28 01 2307 2019
26 contingent liabilities
the company has guaranteed the loans of certain subsidiary undertakings which at 1st february 2004 amounted to £887 million
2003 £1890 million
27 operating leases
land and buildings other assets
2004 2003 2004 2003
£m £m £m £m
the group has annual commitments under noncancellable operating leases 
which expire
within one year 08 07 08 09
between one and five years 22 32 29 27
after five years 20 18 01 –
50 57 38 36 62 premier farnell plc notes to the accounts
annual report and accounts 2004 continued
28 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 net credit for the year relating to all of the group’s pension plans amounted to £29 million 2003 £44 million
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 2002 2003
£m £m
market value of investments at last valuation date 531 1232
regular pension cost 03 18
interest on prepaid asset – 68
amortisation of variation 04 10
total pension costcredit 07 60
level of funding being the actuarial value of assets expressed as a percentage
of the accrued service liabilities 94 263
the principal assumptions used in the actuarial valuation of the uk plan were a weighted average projected investment return of 64 per annum
salary inflation of 43 per annum and pension increases of 28 per annum for the us plan the principal actuarial assumptions were a weighted
average projected investment return of 85 per annum and salary inflation of 50 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 1st january 1999 are entitled to money purchase benefits only
an asset of £796 million 2003 £822 million is included in debtors representing the excess of the actuarial value of the assets over the accrued
service liabilities of the us plan
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 1st february 2004 used to calculate liabilities under frs17 were as follows
uk plan uk plan uk plan us plan us plan us plan
2004 2003 2002 2004 2003 2002
 pa  pa  pa  pa  pa  pa
inflation 260 230 250 260 230 250
rate of increase in salaries 410 380 400 410 380 400
rate of increase in pensions 260 230 250 260 230 250
discount rate 550 550 575 610 650 700
the market value of assets the expected rate of return and the funding position at 1st february 2004 in accordance with frs17 were
uk plan uk plan uk plan uk plan uk plan uk plan
longterm value longterm value longterm value
expected rate expected rate expected rate
of return of return of return
2004 2004 2003 2003 2002 2002
 pa £m  pa £m  pa £m
equities 80 299 89 250 79 315
bonds 49 191 45 182 50 212
cash 40 03 40 01 – –
average returntotal market value 68 493 70 433 68 527
present value of plan liabilities 630 580 612
deficit in the plan 137 147 85
related deferred tax asset 41 44 26
net pension liability 96 103 59 notes to the accounts premier farnell plc 63
continued annual report and accounts 2004
note 28 continued
1 pensions continued
disclosures in accordance with financial reporting standard “frs” 17 retirement benefits continued
us plan us plan us plan us plan us plan us plan
longterm value longterm value longterm value
expected rate expected rate expected rate
of return of return of return
2004 2004 2003 2003 2002 2002
 pa £m  pa £m  pa £m
equities 80 1151 89 1071 79 1566
cash –– – – 45 18
average returntotal market value 80 1151 89 1071 79 1584
present value of plan liabilities 573 577 691
surplus in the plan 578 494 893
related deferred tax liability 218 187 338
net pension asset 360 307 555
analysis of amounts charged to the profit and loss account in respect of defined benefit schemes for the year ended 1st february 2004
i amounts charged to operating profit
uk plan uk plan us plan us plan
2004 2003 2004 2003
£m £m £m £m
current service cost 03 03 22 27
past service cost – – – 07
total operating charge 03 03 22 34
ii amounts credited to exceptional items
gain on curtailments – – – 03
iii amounts creditedcharged to other finance income
expected return on pension scheme assets 30 35 93 114
interest cost on pension scheme liabilities 31 35 36 44
net chargereturn 01 – 57 70
movements in deficitsurplus during the year
uk plan uk plan us plan us plan
2004 2003 2004 2003
£m £m £m £m
deficitsurplus at beginning of year 147 85 494 893
contributions paid by employer 03 – – –
current service cost 03 03 22 27
past service cost – – – 07
gain on curtailments – – – 03
other finance costincome 01 – 57 70
total gainloss recognised in the statement of total recognised gains and losses 11 59 49 438
deficitsurplus at end of year 137 147 578 494
analysis of amount recognised in the statement of total recognised gains and losses
uk plan uk plan us plan us plan
2004 2003 2004 2003
£m £m £m £m
actual return less expected return on pension scheme assets 52 106 142 376
experience lossesgains arising on scheme liabilities 04 52 31 71
changes in the assumptions underlying the present value of the scheme 37 05 63 26
actuarial gainloss recognised in the statement of total recognised gains and losses 11 59 110 331
currency translation adjustment – – 61 107
total gainloss recognised in the statement of total recognised gains and losses 11 59 49 438 64 premier farnell plc notes to the accounts
annual report and accounts 2004 continued
note 28 continued
1 pensions continued
disclosures in accordance with financial reporting standard “frs” 17 retirement benefits continued
history of experience gains and losses
uk plan uk plan us plan us plan
2004 2003 2004 2003
£m £m £m £m
difference between the actual and expected return on scheme assets
amount £m 52 106 142 376
percentage of scheme assets 105 245 123 351
experience lossgain on scheme liabilities
amount £m 04 52 31 71
percentage of the present value of scheme liabilities 06 90 54 123
actuarial gainloss recognised in statement of total recognised gains and losses
amount £m 11 59 110 331
percentage of the present value of scheme liabilities 17 102 192 574
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
2004 2004 2003 2003
£m £m £m £m
as reported 1121 655 1035 578
pension asset in accordance with ssap 24 796 796 822 822
associated deferred tax liability 296 296 307 307
as reported excluding pension asset and associated deferred tax liability 621 155 520 63
net pension asset in accordance with frs17 264 264 204 204
amounts in accordance with frs17 885 419 724 267
the uk defined benefit pension plan includes certain employees of premier farnell plc however the contributions by premier farnell plc are
accounted for as a defined contribution scheme as the company is unable to identify its share of the underlying assets and liabilities in the plan
2 postretirement medical benefits
in the us the group provides unfunded postretirement 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
1st february 2004 were a discount rate of 70 per annum and healthcare costs increasing by 90 per annum in the short term reducing to an
increase of approximately 50 per annum in the longer term at 1st february 2004 the provision for postretirement medical benefits based on this
valuation was £47 million 2003 £52 million during the year the company agreed a change to the postretirement medical benefit arrangements
with unions and employees this change has been reflected within the reserve at the yearend
disclosures in accordance with financial reporting standard “frs” 17 retirement benefits
the following information is provided for disclosure purposes only in accordance with frs17
the financial assumptions at 1st february 2004 used to calculate liabilities for postretirement medical benefits under frs17 were as follows
discount rate 70 2003 80
medical inflation 90 decreasing by 05 each year to 50 over eight years 2003 90 decreasing by 05 each year to 50
over eight years
analysis of amounts charged to the profit and loss account in respect of postretirement medical benefits for the year ended 1st february 2004
2004 2003
£m £m
amounts charged to operating profit – current service cost 02 02
amounts charged to other finance income – interest cost on liabilities – 04
2004 2003
movements in deficit during the year £m £m
obligation at beginning of year 58 53
contributions paid 04 04
current service cost 02 02
finance cost 05 04
total gainloss recognised in the statement of total recognised gains and losses 12 03
obligation at end of year 49 58 notes to the accounts premier farnell plc 65
continued annual report and accounts 2004
note 28 continued
2 postretirement medical benefits continued
disclosures in accordance with financial reporting standard “frs” 17 retirement benefits continued
2004 2003
analysis of amount recognised in the statement of total recognised gains and losses £m £m
experience gainloss on liabilities 13 01
loss on change of assumptions 07 10
actuarial gainloss recognised in the statement of total recognised gains and losses 06 11
currency translation adjustment 06 08
total gainloss recognised in the statement of total recognised gains and losses 12 03
history of experience gains and losses 2004 2003
experience gainloss on liabilities £m 13 01
percentage of liabilities 265 17
actuarial gainloss recognised in the statement of total recognised gains and losses £m 06 11
percentage of liabilities 122 190
had the provision for postretirement medical benefits been calculated in accordance with frs17 reported net assets and the profit and loss
reserve as at 1st february 2004 would have been reduced by £01 million 2003 £04 million
29 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
30 post balance sheet events
on 6th february 2004 the group acquired the business and assets of gfe manufacturing a company based in illinois us involved in the
manufacture of lighting rigs for the firefighting industry for a consideration of 45 million the acquisition will enable akron brass part of the
industrial products division to extend the product range available to customers in north america gfe manufacturing reported sales in 2003 of
approximately 40 million
31 summary of differences between uk and us generall y 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 buckhickman inone 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 fas142 “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 £1193 million recorded as goodwill the
customer list was being amortised over 20 years and goodwill amortised over 40 years
on the acquisition of buckhickman inone in july 2001 £213 million of the excess purchase consideration over net asset value was recorded as a
definite lived customer list intangible asset £82 million recognised as an indefinite lived intangible asset with the remaining £231 million recognised
as goodwill
the company adopted fas142 in full on 4th february 2002 fas142 requires that goodwill and indefinite lived intangible assets are no longer
amortised but instead assessed annually for impairment by applying a fair value based test definite lived intangible assets continue to be amortised
over their estimated useful lives fas142 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 continues 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 buckhickman inone continues 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 company performed its transitional goodwill impairment test as required by fas142 as of 4th february 2002 being the adoption date the
result of the transitional impairment test was the recognition of goodwill impairment of £7280 million which in accordance with the transitional
provisions of the standard was recorded as a cumulative effect change in accounting principle
the company has elected to carry out the annual impairment test required by the standard on 31st july each year the impairment test on 31st
july 2003 resulted in the recognition of a further goodwill impairment of £393 million 31st july 2002 £nil
the indefinite lived trademark intangible asset has also been tested for impairment in accordance with the standard although no impairment was
indicated 66 premier farnell plc notes to the accounts
annual report and accounts 2004 continued
note 31 continued
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 frs19 “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 have been written off against retained earnings under uk gaap and for which no deferred tax liability is therefore recorded
hedging of the group’s us dollar investments
uk group companies hold borrowings and forward contracts denominated in us dollars that provide a hedge against the group’s us dollar
investments under uk gaap  exchange gains or losses on these us dollar liabilities are taken to reserves and reported in the statement of total
recognised gains and losses whereas under us gaap fas 133 such exchange gains and losses are recorded in the profit and loss account
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 marketrelated
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 1st february 2004 the cumulative
amount of additional liability recorded within the statement of other comprehensive income as there was no unrecognised prior service cost was
£129 million
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 optionaward price and is recognised over the vesting period whereas under us gaap 
the compensation cost is based on the fair value of the optionaward at the date of grant and is also recognised over the vesting period
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
revenue recognition
under uk gaap  revenue is recognised when a seller has “performed” under the contractual terms of an arrangement in this context performance
occurs when all contractual obligations to a customer have been fulfilled through the supply of goods or services consequently under uk gaap 
revenue is recognised at the point of shipment when the contractual terms of the arrangement have been satisfied
under us gaap  staff accounting bulletin no 104 “sab 104” requires that revenue is not recognised until physical delivery to the customer this
is because it is newark inone’s general practice to provide the customer with replacement products at no cost in the event of delivery failure
notwithstanding that newark inone’s standard terms of trade state that title passes and risk of loss or damage transfers to the customer at the
point of shipment
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
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  fas84 “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 notes to the accounts premier farnell plc 67
continued annual report and accounts 2004
note 31 continued
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
nondistributable 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
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
2004 2003 2004 2003
£m £m m m
profit after tax under uk gaap 390 416 648 636
us gaap adjustments
amortisation of goodwill 26 26 43 40
amortisation of definite lived intangible assets 282 305 468 467
gain or loss on disposals 01 04 02 06
goodwill impairment in accordance with fas142 393 – 653 –
deferred taxation 109 103 181 158
hedging of the group’s us dollar investments 105 – 174 –
pension costs 27 13 45 20
stock based compensation 15 10 25 15
revenue recognition 07 – 12 –
capitalisation of interest 03 16 05 24
preference dividends 66 108 110 165
preference share induced conversion costs – 1495 – 2287
preference share extinguishment gain 10 23 17 35
total us gaap adjustments 542 1759 901 2691
loss after tax under us gaap prior to cumulative effect of adoption of fas142 152 1343 253 2055
cumulative effect of adoption of fas142 – 7280 – 11138
net loss under us gaap 152 8623 253 13193
basic earnings per ordinary share under uk gaap 89p 93p 0148 0142
basic loss per ordinary share adr under us gaap
prior to cumulative effect of adoption of fas142 84p 810p 0139 1240
cumulative effect of adoption of fas142 – 4391p – 6718
net loss per ordinary share adr under us gaap 84p 5201p 0139 7958
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 166
2003 153 68 premier farnell plc notes to the accounts
annual report and accounts 2004 continued
note 31 continued
effect on shareholders’ funds of differences between uk and us gaap
2004 2003 2004 2003
£m £m m m
shareholders’ funds under uk gaap 1121 1035 2040 1697
us gaap adjustments
goodwill and intangible assets 5536 6763 10075 11092
tangible fixed assets 13 16 24 26
deferred taxation 1092 1309 1987 2147
ordinary dividends 181 181 329 297
pensions 168 172 306 282
interests in own shares – 02 – 03
stock based compensation 08 10 15 16
revenue recognition 07 – 13 –
convertible redeemable preference shares 1218 1267 2217 2078
total us gaap adjustments 3253 4220 5920 6921
shareholders’ funds under us gaap 4374 5255 7960 8618
total assets under uk gaap 5439 5430 9899 8905
total assets under us gaap 10803 12035 19661 19737
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
2004 £m £m £m m m m
goodwill and intangible assets 459 5536 5995 835 10075 10910
tangible fixed assets 1072 13 1085 1951 24 1975
net current assets 2318 14 2332 4219 25 4244
creditors – due after more than one year 2307 1218 3525 4199 2217 6416
provisions for liabilities and charges 421 1092 1513 766 1987 2753
2003
fixed asset investments 02 02 – 03 03 –
goodwill and intangible assets 485 6763 7248 795 11092 11887
tangible fixed assets 1129 16 1145 1852 26 1878
net current assets 1267 19 1286 2078 31 2109
creditors – due after more than one year 1415 1267 2682 2321 2078 4399
provisions for liabilities and charges 433 1309 1742 710 2147 2857
the translation of sterling into us dollars has been presented for convenience purposes only using the yearend exchange rate of 182 2003 164 directors’ responsibilities
directors’ responsibilities premier farnell plc 69
auditors’ report annual report and accounts 2004
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 or loss of the group for the financial year
the directors consider that in preparing the accounts on pages 42 to 68
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 the group 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 company and
the group and to prevent and detect fraud and other irregularities
the 2004 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
independent auditors’ report to the members of
premier farnell plc
we have audited the financial statements which comprise the
consolidated profit and loss account the statement of total recognised
gains and losses the balance sheets the consolidated statement of
cash flows 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 misstatements or material inconsistencies with the financial
statements the other information comprises only the chairman’s
statement the chief executive’s review the operating review the
finance director’s review the directors’ report the unaudited part of
the remuneration report the corporate governance statement and the
social responsibility report
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 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 1st february 2004 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
18th march 2004
auditors’ report 70 premier farnell plc shareholder information
annual report and accounts 2004
shareholder information
20042005 financial calendar
quarter one results 27th may 2004
annual general meeting 15th june 2004
quarter two and interim results wc 6th september 2004
quarter three results wc 6th december 2004
financial year end 30th january 2005
final ordinary dividend key dates interim ordinary dividend key dates
exdividend record payment exdividend record payment
ordinary shares 26th may 2004 28th may 2004 23rd june 2004 22nd sept 2004 24th sept 2004 22nd oct 2004
ordinary adss 26th may 2004 28th may 2004 23rd june 2004 22nd sept 2004 24th sept 2004 22nd oct 2004
halfyearly preference dividend key dates
exdividend record payment exdividend record payment
preference shares 30th june 2004 2nd july 2004 26th july 2004 29th dec 2004 31st dec 2004 26th jan 2005
preference adss 30th june 2004 2nd july 2004 26th july 2004 29th dec 2004 31st dec 2004 26th jan 2005
annual general meeting
the 2004 annual general meeting will be held at the mayfair conference
centre 17 connaught place marble arch london w2 2el on
15th june at 1030 am
registrar
enquiries concerning shareholdings or dividends should be addressed in
the first instance to the company’s registrar capita registrars limited
northern house woodsome park fenay bridge huddersfield
hd8 0la united kingdom or telephone 44 0 870 1623131
email shareholderservicescapitaregistrarscom
investor communications
premier farnell is committed to establishing a highquality dialogue with its
financial communities the group has an inhouse 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 eg corporate web site wwwpremierfarnellcom and
quarterly reporting
shareholder enquiries
if you have any enquiries as a shareholder please call james garthwaite
group director communications on 44 0 870 129 8608 or
email jgarthwaitepremierfarnellcom
for other enquiries please emailinformationpremierfarnellcom
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 street station new york
ny 102861258 usa or telephone 1 888 269 2377
emailshareownersbankofnycom
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 20f and other information as required on or
before 1st august 2004 when filed a copy of the form 20f 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
email informationpremierfarnellcom
new york stock exchange corporate governance rules
updated governance rules were approved by the securities and
exchange commission on 4th november 2003 as a foreign private
issuer the company is entitled to follow uk governance practices but
must disclose any significant ways in which these differ from the nyse
standards
the only significant differences in respect of the company are
i there is no nominatingcorporate governance committee
nominations to the board are dealt with by the nominations
committee corporate governance is a matter for the whole board
with specific items relating to financial control and remuneration being
reviewed first by the audit and remuneration committees
respectively
ii there are no regularly scheduled meetings of the nonexecutive
directors without management present although it is planned that
this practice be introduced
iii the corporate governance guidelines adopted by the company
cover most but not all of the matters which the nyse standards
suggest the relevant guidelines adopted by the company are
contained principally in its code of ethics which appears on the
company’s web site advisers premier farnell plc 71
annual report and accounts 2004
advisers
cautionary statement for the purposes of the ‘safe harbor’
provision of the united states private securities litigation
reform act of 1995 
the us private securities litigation reform act of 1995 provides a
‘safe harbor’ for forwardlooking statements this annual report
contains certain forwardlooking 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 ecommerce 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 forwardlooking 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 forwardlooking 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
electromagnetic 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 we undertake no obligation to
publicly update or revise any forwardlooking statements whether as a
result of new information future events or otherwise after the date of
this annual report to conform them to actual results
auditors
pricewaterhousecoopers llp
benson house
33 wellington street
leeds ls1 4jp
bankers
hsbc
47 market street
bradford bd1 1lw
registrar  share
transfer office
capita registrars limited 
northern house
woodsome park
fenay bridge
huddersfield hd8 0la
stockbrokers
cazenove  co ltd
20 moorgate
london ec2r 6da
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 ny102861258
usa
registered in england and wales
no876412 registered office
farnell house forge lane
leeds ls12 2ne
this document is
produced from 50
recycled deinked fibre
and 50 totally chlorine
free tcf pulp which is
sourced from
sustainable forests 72 premier farnell plc five year record
annual report and accounts 2004
five year record
2004 2003 2002 2001 2000
£m £m £m £m £m
turnover 7646 7590 8064 8762 7521
operating profit before rebranding costs and
amortisation of goodwill 738 829 884 1150 1037
amortisation of goodwill 26 26 15 – –
rebranding costs 24 ––––
total operating profit 688 803 869 1150 1037
profit before taxation amortisation of goodwill and
exceptional items 571 672 725 1021 918
amortisation of goodwill 26 26 15 – –
exceptional items 01 48 110 – –
profit before taxation 546 598 600 1021 918
profit after taxation 390 416 386 713 662
preference dividends nonequity 66 108 261 253 237
profit attributable to ordinary shareholders 324 308 125 460 425
ordinary dividends 326 326 245 245 245
retained lossprofit 02 18 120 215 180
shareholders’ funds – equity 97 232 3752 3754 3575
– nonequity 1218 1267 4867 4744 4313
equity minority interests – – – 03 03
total capital employed 1121 1035 1115 993 741
dividend per share pence 90 90 90 90 90
basic earnings per share pence 89 93 46 169 156
exceptional items pence 12 19 46 – –
adjusted earnings per share pence 101 112 92 169 156 designed by bostock and pollitt
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annual report and accounts 2004
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premier farnell plc annual report and accounts 2004
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Summary:
 chairman’s statement premier farnell plc 05
annual report and accounts 2004
chairman’s st a tement
real progress in a difficul t year
sir malcolm bates
chairman
overview
this year can be characterised as one of
significant achievement in difficult trading
environments whilst our markets remained
weak or patchy for most of the year the group
achieved a 35 per cent increase in sales per
day yearonyear this reflects the group’s
progress in winning market share in europe
and amid signs of a recovery in the market a
stronger performance from our north american
operations in the final quarter of the year
during the year the group also concluded a
four year investment programme activities this
year have included the implementation of major
information systems in the uk and us the
opening of a new distribution centre in china
the full automation of the new distribution
centre in europe and a substantial increase in
product ranges this programme has
transformed the group’s potential our
businesses are now equipped with a far greater
ability to understand the needs of their
customers and the flexibility to offer products
and services that meet those needs in
addition the brands of some of the group’s
major businesses were brought together under
a new brand suffix inone reflecting the
increasing coordination of our activities
financial results
group sales for the year were £7646 million
2003 £7590 million this comprised sales of
£6682 million in the marketing and distribution
division and sales of £964 million in the
industrial products division
operating profit for the year was £688 million
2003 £803 million producing an operating
margin of 90 per cent 2003 106 per cent
adjusted operating profit for the year was
£738 million 2003 £829 million before
rebranding costs of £24 million and goodwill
amortisation of £26 million producing an
adjusted operating margin of 97 per cent
2003 109 per cent operating profit was
affected by the increased depreciation following
the rollout of the customer relationship
management software and investment in the
liège distribution centre
profit before tax in the year was £546 million
2003 £598 million profit before tax goodwill
amortisation and gainloss on business
disposals was £571 million 2003 £672 million
earnings per share for the year were 89 pence
2003 93 pence adjusted earnings per share
for the year before rebranding costs
amortisation of goodwill and the gainloss on
business disposals were 101 pence
2003 112 pence
the board is recommending a final dividend of
50 pence 2003 50 pence making a total for
the year of 90 pence 2003 90 pence the
dividend is covered 10 times by profit
attributable to ordinary shareholders and
11 times by profit attributable to ordinary
shareholders before goodwill amortisation and
profit on disposal of businesses the final
dividend is payable on 23rd june 2004 to
shareholders on the register on 28th may 2004
balance sheet
the group’s financial position is sound net
debt at 1st february 2004 was £2019 million
2003 £2092 million and interest was covered
52 times by operating profit before oneoff
rebranding costs and goodwill amortisation in
june 2003 the group raised 225 million of
new financing in the us private placement
market the funds raised were used to repay
other borrowings
business progress
during the year the group has focussed on
growing business with larger corporate
accounts developing its ecommerce capability
and extending its product portfolio
we achieved strong growth in corporate
accounts by strengthening existing relationships
and winning significant new business our
capabilities in vendormanaged inventory and
eprocurement create a powerful proposition
that has enabled us to add customers
including bombardier the uk atomic energy
authority and tarmac in addition sales to the
us federal government newark inone’s
largest customer increased by over 14 per cent
during the year
ecommerce sales per day were up 52 per cent
year on year within the marketing and
distribution division reaching £71 million during
the period this business was transacted
through the 282 live eprocurement partnerships
that we have in place with larger customers
and with many other customers via our
web sites
in order to support higher levels of customer
service we extended product ranges across
the marketing and distribution division during
the year this was most evident in the
americas where we added a total of 56000
products to newark inone’s portfolio bringing
the total to some 160000
staff
the commitment of staff across the group has
been impressive and on behalf of the board i
would like to thank all our employees for their
effort during a demanding year this effort has
also been recognised externally by a number of
prestigious awards from suppliers and industry
bodies alike discussed in the operating review
we were pleased to welcome laurence bain
group chief operating officer to the board on
1 july 2003 sir robert horton deputy
chairman is retiring from the board after
completing nine years of distinguished service
and we are grateful to him for his sterling
contribution and wise counsel throughout his
time as a director
outlook
the investment programme of the past few
years has provided a platform from which to
drive growth it has also created capacity in
systems and distribution centres to
accommodate sales increases the group
has already demonstrated the ability to assist
large and small customers to improve their
productivity and is well positioned to take
advantage of growth opportunities in its key
markets as they develop during the current
year our focus is now firmly on disciplined and
efficient programmes to ensure that those
opportunities are seized
we enter a new year confident that should the
market recovery be sustained the group’s
operational gearing should enable us to deliver
value for customers and shareholders alike