premier farnell plc annual report and accounts 2003
premier farnell plc
annual report and 
accounts 2003
our customers’ needs 
drive our business
ready
group headquarters
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
wwwpremierfarnellcom premier farnell plc five year record
annual report and accounts 2003
2003 2002 2001 2000 1999
£m £m £m £m £m
turnover 7590 8064 8762 7521 7050
operating proﬁt before amortisation of goodwill 829 884 1150 1037 1222
amortisation of goodwill 26 15 – – –
total operating proﬁt 803 869 1150 1037 1222
proﬁt before taxation amortisation of goodwill and
exceptional items 672 725 1021 918 1104
amortisation of goodwill 26 15 – – –
exceptional items 48 110 – – 100
proﬁt before taxation 598 600 1021 918 1004
proﬁt after taxation 416 386 713 662 666
preference dividends 108 261 253 237 232
proﬁt attributable to ordinary shareholders 308 125 460 425 434
ordinary dividends 326 245 245 245 245
retained lossproﬁt 18 120 215 180 189
shareholders’ funds – equity 232 3752 3754 3575 3677
– nonequity 1267 4867 4744 4313 4261
equity minority interests – – 03 03 03
total capital employed 1035 1115 993 741 587
dividend per share pence 90 90 90 90 90
basic earnings per share pence 93 46 169 156 160
exceptional items pence 19 46 – – 25
adjusted earnings per share pence 112 92 169 156 185
five year record
01 our mission
02 group at a glance
04 chairman’s statement
06 chief executive’s statement
operating review
10 marketing and 
distribution division
22 industrial products division
26 board of directors and ofﬁcers
28 group leadership t eam
30 finance director’s review
34 social responsibility report
38 directors’ report
40 remuneration report
46 corporate governance
48 consolidated proﬁt 
and loss account
49 consolidated balance sheet
50 company balance sheet
51 consolidated statement of 
cash ﬂow
52 statement of accounting
policies
53 notes to the accounts
74 directors’ responsibilities
74 auditors’ report
75 shareholder information
76 advisers
five year record delivering
our mission describes what we
aim to achieve
a group of focused businesses
using industry leading talent
technology and unsurpassed
service to provide our business
customers with electronic mro
and specialist products and
services – on a global scale
we understand our markets and
our customers’needs completely
and offer unparalleled flexibility
with combinations of channels
products and services that are
demonstrably better than they
can get elsewhere we deliver
economic benefit and peace of
mind to our customers suppliers
employees and shareholders
premier farnell plc our mission
annual report and accounts 2003
1 premier farnell plc group at a glance
annual report and accounts 2003
2
premier farnell plc
group at a glance
global
group sales
£759m
1161m
group statistics 2003
group operating profit
£83m
127m
group net operating assets
£289m
474m
gross margin
411
413 
2002
interest cover 
53x
56x
2002 
operating margin
109
110
2002 
basic earnings per share 
93p
46p
2002
adjusted earnings
per share
112p
92p
2002
operating cashflow
£920m
£1071m
2002
dividend per share 
90p
90p
2002 
1 americas 50
2 uk 33
3 europe  asia pacific 17
1 americas 51
2 uk 40
3 europe  asia pacific 9
1 americas 40
2 uk 46
3 europe  asia pacific 14
 before amortisation of goodwill
 before amortisation of goodwill
and disposal of businesses premier farnell plc group at a glance
annual report and accounts 2003
3
marketing and distribution
division
businesses and the primary
markets they serve
newark inone
us  canada  mexico  brazil 
mcm an inone company
us 
farnell inone
uk  europe  asia pacific
cpc
uk 
buckhickman inone
uk 
description
the division specialises in the
marketing and distribution of
electronic components
maintenance repair and operations
products and specialist services
divisional sales and sales growth
£660m
10
†
employees
3950
industrial products division
businesses and the primary
markets they serve
akron brass
us  canada
tpc wire and cable
us  canada  mexico
kent
europe
description
the division supplies high
performance fire fighting equipment
for public fire services and industrial
facilities highendurance cable and
connector assemblies for use in
aggressive environments and
highperformance consumable
products to the automotive crash
repair industry
divisional sales and sales growth
£99m
28
employees
950
key characteristics
wide customer base 
1million
wide supplier base 
 3000
wide product base in stock 
 400000
access to
 6 million
products
global coverage
offices in 21 countries
high barriers to entry
leading brand names
over 400000 products in stock 
strategic relationships with suppliers
marketleading ecommerce
capability
technical support
added value services
vendor managed inventory
same day despatch
1 americas 47
2 uk 38
3 europe  asia pacific 15
1 americas 64
2 uk 2
3 europe  asia pacific 34
reach
 based on sales per day for continuing businesses
at constant exchange rates
†
including buckhickman inone acquired july 2001 premier farnell plc chairman’s statement
annual report and accounts 2003
4
chairman’s statement
overview
market share gains and some 
large customer contract wins 
attest to a year of achievement 
in difficult economic circumstances
markets for the most part remained
slow particularly in north america
but despite this we have continued
to improve our ability to service 
our customers gross margins 
have been maintained and costs
tightly controlled so that net margins
have remained robust while working
capital has continued to be closely
managed
we have gained major financial
benefits through the capital
restructuring announced in april
2002 including increased earnings
per share and dividend cover
improved cash flow of £9 million 
for this and future years reduced
financial gearing and a more
balanced capital structure
we have developed comprehensive
skills to capitalise on the accelerating
demand by major companies to
improve the effectiveness of their
indirect materials procurement and
inventory management these skills
have opened access to large
customers and we are achieving
significant success which would
previously have been beyond our
reach there remains significant
potential to gain market share and the
group is in a strong position for further
progress when markets improve 
financial results
group sales for the year were 
£7590 million 2002 £8064 million
reflecting the tough market
conditions although on a sales per
day basis the group’ s businesses
returned to year on year growth in
the second half of the year and were
up 28 per cent in the fourth quarter
profit before tax and goodwill
amortisation and loss on disposal 
of businesses was £672 million
2002 £725 million with adjusted
earnings per share of 112 pence
2002 92 pence 
statutory profit before tax was
£598 million 2002 £600 million
and basic earnings per share were
93 pence 2002 46 pence
the board is recommending a final
dividend of 5 pence 2002 5 pence
making a total for the year of 9 pence
2002 9 pence the dividend is
covered 11 times the final dividend
is payable on 25th june 2003 to
shareholders on the register on
30th may 2003
strategic progress
the group has continued to 
execute its strategy of forging 
closer relationships with customers
by understanding and satisfying 
their needs the group has
strengthened its competitive position
in all its major territories by improving
performance and introducing new
products and added value services
work has been focused on winning
additional sales in the absence of any
help from the market this has been
achieved through concentrating on
improving operational effectiveness
and increasing share by targeting
specific market segments closer
customer relationships are being built
using the newly installed customer
relationship management software
added value services are helping
customers increase their own
productivity and reduce the overall
cost of indirect material procurement
evidence of the success of this
strategy is demonstrated by the
agreements signed with vauxhall
lockheed martin and the us
government in 2002 and
rollsroyce in march of this year premier farnell plc chairman’s statement
annual report and accounts 2003
5
business portfolio
early in the year the group sold
da lubricants the specialist oil
blending business based in
indianapolis this resulted in a loss
before tax on the disposal of
£49 million including £26 million of
goodwill previously eliminated against
reserves
buck  hickman the leading uk
distributor of tools and industrial
products acquired in july 2001 
has been successfully integrated 
into the group the buck  hickman
product range and its expertise in
vendor managed inventory services
both contributed to the group being
awarded important supply contracts
by vauxhall and rollsroyce 
balance sheet
in april 2002 the company
announced a special right 
for a limited period for preference
shareholders to convert their
cumulative redeemable preference
shares into ordinary shares 
at an enhanced conversion rate 
this resulted in 70 per cent of the
company’ s preference shares 
being converted and 898 million
new ordinary shares arising from
the conversion were issued 
the conversion has resulted in
increased earnings per share and
reduced financial gearing it has also
improved cash flow by more than 
£9 million this year enhanced
dividend cover and provided a more
balanced capital structure 
the company’ s borrowings include
155 million 70 per cent senior
notes repayable in june 2003 
in anticipation of this repayment 
the company has secured additional
funding to be drawn in june 2003
of 225 million comprising
159 million senior notes payable
2013 at an effective interest rate 
of 59 per cent and 66 million
senior notes payable 2010 at an
effective interest rate of 53 per cent
the additional funds will be used to
repay other loans this refinancing 
at investment grade interest rates
demonstrates the financial
soundness of the group 
staff
on behalf of the board i particularly
wish to thank all our employees 
for their hard work and commitment
during what has been another
challenging year it is their
determination and effort that has
resulted in the quality of the group’ s
businesses being further enhanced
and it is the reliability and
resourcefulness of our employees
which encourages our customers 
to buy repeatedly from the group
we have pleasure in welcoming
william korb to the board as a 
nonexecutive director mr korb 
a us citizen was president and 
ceo of gilbarco incorporated 
the leading manufacturer of retail
petrol pumps from 1988 to 1999
he is a nonexecutive director of
cambrex corporation which is 
listed on the nyse
outlook
the group’ s principal businesses
have secured market share gains
against a background of harsh
economic and industry conditions
this progress has been supported
by important initiatives in many areas
including customer eprocurement
arrangements vendor managed
inventory installations increased
product ranges improved service
levels and geographic expansion
the group has further enhanced its
proposition to customers during the
year enabling them to increase
productivity notwithstanding the
global political and economic outlook
and the lack of confidence in major
industrial markets the board remains
confident that it is pursuing the
appropriate strategy
sir malcolm bates
chairman
progress
the group’s principal
businesses have secured
market share gains against 
a background of harsh
economic and industry
conditions premier farnell plc chief executive’s statement
annual report and accounts 2003
6
market overview 
in the last two years we have
experienced an unprecedented
decline in the electronics market 
and we have also seen an overall
economic slowdown in the 
majority of the markets in which we
operate in the first quarter of each of
the last two years some forecasters
have anticipated a recovery in the
second half of the year particularly in
north america although there was
no certainty about the pace and
precise timing we said then that we
were not going to count on help from
the market but that we would work
on the assumption that there would
be no improvement and be ready to
react as we saw the market move 
up or down as soon as we saw 
the early signs of a downturn in
2001 we acted quickly and removed
a significant amount of cost from 
the business during the last twelve
months we have not repeated this
scale of cost reduction but have
maintained a very tight control overall
and taken opportunities to cut out
waste and duplication we believed
that we should turn our focus to
delivering better and additional
services to our customers 
apart from asia where there was
some uplift particularly in the middle
and second half of 2002 our markets
have now been at best flat for
around eighteen months proving
that we were right to maintain our
cautious view
maintaining our strategic focus
we have maintained determined
progress on our key initiatives putting
in the software and the systems that
we need to service our customers
better building services and
improving the quality of our people
despite the poor market conditions
we have maintained our investment
in these areas 
we have continued to focus on
improving the way we do business
our ongoing investment in
information technology is based 
on competitive advantage in our 
kind of business increasingly moving
from the traditional and still
important control of the physical 
flow of goods to the management
and understanding of the information
associated with that flow
we constantly strive to improve 
our customer service levels 
we have added eprocurement
capabilities and developed new
services productfind gives our
customers access to six million
products beyond those which we
have in stock and productwatch™
alerts our design engineer customers
when components are due to go
obsolete so that they do not use them
in new products we have focused
on breaking down our customer
base into appropriate segments to
enable us to satisfy their particular
needs more effectively
chief executive’s statement premier farnell plc chief executive’s statement
annual report and accounts 2003
7
we have continued to strengthen 
our management team laurence
bain was appointed group chief
operating officer in july 2002 and 
a new global accounts director
senior personnel in marketing and
strategic development in north
america and a new group director
of strategic marketing and planning
were also appointed during the year
t wo of these are internal
appointments which is of particular
significance following a period where
most of our senior appointments
were made from outside we are
now beginning to bring through
talent from within the organisation
investing for growth
our business strategy is designed 
to deliver profitable growth 
sales growth can come from new
customers new markets and higher
spend from existing customers 
this explains the focus of our
activities in the following areas
– expansion of our product range
– international development
– deeper understanding of our
customers and markets through
segmentation
– greater penetration of existing
multinational and large accounts
– ongoing improvement of
customer service
expansion of our product range
continues to be one of our areas 
of development over the last year
we have added 46000 products 
to the marketing and distribution
division and there will be more this
year particularly in north america 
in march 2003 we doubled our
american range of passive
components by adding 11000 
new products that is a significant
step forward in improving our
product coverage and enables 
us to win more of our existing
customers’ spending and to 
attract new customers 
we have continued to build our
international presence to satisfy 
our customers’ needs and we 
have opened offices in italy belgium
austria and mexico over the last
twelve months 
we have clear examples of
significant progress in the market
segments that we have particularly
chosen to focus on our health 
and safety business in the uk 
grew around 29 per cent overall 
last year and in the final quarter 
was higher still the result of merging
the capabilities of our three uk
businesses in this area the differing
needs of design and maintenance
engineers are better understood 
and our attention to these two
groups of customers reflects their
importance to us
our focus on large customers
produced encouraging results sales
to the us government through an
agreement with the general services
administration gsa awarded in may
2002 are up 12 per cent despite
federal budget approval delay sales
to designated major corporate
accounts are up 3 per cent in north
america and we have secured
agreements with 37 new large
customers across the marketing and
distribution division each one of
these deals requires different
combinations of products and
services and has been secured as a
direct result of our flexibility in
deploying the very wide range of
services we can provide
ecommerce continues to offer a
major growth opportunity at newark
inone sales through all our
electronic channels including the
internet and eprocurement are up
8 per cent at farnell inone by
82 per cent sales through the
eprocurement channel alone are up
52 per cent in north america some
customers transact between 30 per
cent and 50 per cent of their
business with us in their first year of
utilising eprocurement
control
competitive advantage in our
kind of business is increasingly
moving from the traditional 
and still important control of the
physical flow of goods to the
management and understanding
of the information associated
with that flow premier farnell plc chief executive’s statement
annual report and accounts 2003 continued
8
there were 43 new eprocurement
partnerships established in north
america during the year which takes
our total to 118 and a further 42 are
under negotiation the demand from
new companies wishing to take
advantage of the available
economies and efficiencies that
eprocurement offers appears not to
diminish sixtyseven new
eprocurement partnerships in europe
this year takes our total to 108 and a
further 36 are under negotiation or
development 
it is important to remember the 
basic elements of our business
customers come to us first and
foremost because we have a very
wide product range which they know 
will be in stock and delivered reliably
and swiftly beyond that we offer
significant benefits from our flexibility
in recognising and responding 
to customers’ particular needs 
our vendor managed inventory
solutions and our eprocurement
capability where we have established
a reputation for being the best in our
class in a market where customers
are continually striving to reduce the
number of suppliers manage costs
and increase productivity we are well
placed to take a share of that
business through our ability to deliver
efficiencies to their procurement
processes 
we have a focused approach and
dedicated team of people who are
well educated and well equipped to
manage this kind of business the
number of stock rooms now under
our management or influence in
north america is 246 compared to
98 at this time last year in europe
the number is 157 and our sales
through the stockrooms we manage
rose by 27 per cent over last year
managing customers’ stockrooms
creates a close relationship with
these customers one it is difficult for
our competitors to match
where appropriate opportunities
arise we are also growing by
acquisition as one potential route 
to expanding our product or
geographic coverage buckhickman
inone acquired in july 2001 
has been a significant success 
for us in a market that has declined
buckhickman inone sales in the
fourth quarter were up 16 per cent
this excellent performance comes
not only from the closer collaboration
of our businesses in the uk 
but also from our extensive range 
of services significant amongst
these are our vendor managed
inventory expertise and our ability 
to help our customers gain
productivity benefits from managing
their inventories t wo major business
wins which reflect this capability are
the contracts we have been awarded
by vauxhall announced in november
2002 and rollsroyce in march
2003 this is business that we would
not have been in a position to tender
for eighteen months ago
the main businesses in the industrial
products division akron brass 
tpc wire  cable and kent have
continued to make sound progress
in difficult market conditions by
adding products and services that
have driven sales greater
productivity and improved margins
have been realised at akron brass
following the investment in new plant
sales productivity has improved at
kent after restructuring 
focus premier farnell plc chief executive’s statement
annual report and accounts 2003 continued
9
communicating our capabilities
and working together to deliver
in february we announced our
intention to rebrand a number of 
the businesses in the marketing 
and distribution division over the
last few years we have made major
investments which have substantially
improved the quality of our
information management we have
increased our understanding of our
customers and market segments
and we have added a wide range 
of services our businesses are now
working together more effectively 
to give customers the service they
expect it is appropriate therefore 
to signal to the market the range and
depth of the services our businesses
provide and how they work together
in providing these services globally
rebranding with a new visual identity
and the addition of the suffix inone
gives us the opportunity to
communicate our progress at the
same time as retaining the historical
value which resides in our existing
business names we have rebranded
those businesses which operate 
with the same kind of customers
buckhickman inone farnell inone
and newark inone rebranding 
is a signal of our past achievements
our current capabilities and our 
future aspirations
continuing to strengthen 
our business
we prefer to work on what we see
as the realities of the market place
rather than what various forecasters
might say when our markets
improve we are ready to take full
advantage of their recovery in the
meantime we are working on the
basis that markets will continue as
they are and we will continue to push
hard to gain market share we have
gained significant strength this year
tight control of costs has made our
margins more robust in withstanding
the market cycle 
we have increased our market share
progressively over the last couple of
years by concentrating on the things
that enhance our customer’ s
experience we have continued to
improve the performance of our
business and we have demonstrated
the benefits of acquiring
buckhickman inone we believe 
we are in a very strong position for
continued market share growth and
to take advantage of the market
upturn when it comes
john hirst
group chief executive
flexible marketing and
distribution  as we rigorously pursue our strategy of
achieving growth through our focus on
understanding and satisfying our customers’
needs we are investing our time and
resources in developing our product range
and new tailored services which are aligned
with our customers’ requirements premier farnell plc operating review
annual report and accounts 2003
12
description of businesses
our businesses within the marketing
and distribution division specialise in
the marketing and distribution of
electronic components maintenance
repair and operations mro products
and specialist services
we focus on the small volume high
service requirements for these types
of products of customers working in
research and design small volume
manufacturing and maintenance
repair and operations activities
our area of operation is characterised
by a very wide range of products
some 400000 in stock and a large
number of customers across almost
every industry and sector of
economic activity 
customers typically range in size
from small privately owned specialist
businesses to large multinational
corporations the need they have in
common is for a comprehensive and
wide range of products in stock and
available for same day despatch
backed by services which meet
their specific requirements
as we rigorously pursue our strategy
of achieving growth through our focus
on understanding and satisfying our
customers’ needs we are investing
our time and resources in developing
our product range and new tailored
services which are aligned with our
customers’ requirements
we are able to do this as a result of
the progress we have made on our
key strategic initiatives we have
reached the final stages of
implementation of the software and
systems that provide the capability to
exploit the vast quantities of
information generated by the sheer
numbers of transactions which are a
feature of our kind of business we
have continued to improve the quality
of our people giving us the capability
to turn that information into
knowledge we are using our growing
capabilities to build closer relationships
with our existing customers to win
new business from new customers
and to enter new markets
a number of the businesses in the
marketing and distribution division
are being rebranded this year  these
are buckhickman inone farnell
inone and newark inone over the
last few years we have made major
investments which have substantially
improved the quality of our
information management we have
increased our understanding of our
customers and market segments
and we have added a wide range of
services our businesses are now
working together more effectively
to give customers the service they
expect the new branding
communicates to our customers
the range and depth of the services
our businesses provide and how they
work together in providing these
services globally  the new visual
identity and the addition of the suffix
inone gives us the opportunity to
communicate our progress at the
same time as retaining the historical
value which resides in our existing
business names
building our capabilities
our three year programme of
investment in front office systems
which enable us to gather and use
customer data more effectively is
now substantially complete in our
major markets these systems
which include customer relationship
management software data
warehousing and data mining tools
were integrated with our transactional
systems in the uk in november
2002 and in the us in march 2003
during the final stages of development
and testing during 2001 they were
used on a stand alone basis this
assisted learning and the gathering
of historical customer data in advance
of becoming fully operational
the customer relationship
management software provides us
with visibility of all customer contacts
and transactions regardless of the
wherever and whenever we
achieve a better understanding
of the needs of particular
groups of customers we reap
the reward of increased sales
marketing and
distribution division
newark inone
us
canada
mexico
brazil
46 sales branches
2 business contact centres
3 distribution centres
farnell inone
uk
europe
asia pacific
offices in 17 countries
business contact centre in uk
6 distribution centres
buckhickman inone
uk 
31 sales branches 
1 distribution centre
mcm an inone company
us
1 business contact centre
1 distribution centre
cpc
uk
1 business contact centre
1 distribution centre
we focus on the small volume 
high service requirements of
customers working in research 
and design small volume
manufacturing and maintenance
repair and operations activities
with twelve distribution centres
worldwide and offices in 
21 countries we are well placed 
to service customers around 
the world vauxhall’s ellesmere port manufacturing plant
produces over 3000 cars a week if a production
line stops because of machine failure the delay
could cost thousands of pounds as new parts
are sourced
in october 2002 the vauxhall management team
awarded us sole responsibility for managing the
supply of all nonproduction maintenance
consumables the components that service the
plant’s needs and keep the lines running our
solution is a comprehensive vendormanaged
inventory vmi system under which stateof
theart inventory control software constantly
monitors use and depletion of on site stocks
this information is fed back to us for
replenishment many of the regularly used items
are placed directly beside the production lines
for immediate use while others can be ordered
rapidly from the place of use 
the system gives vauxhall fast access to a
range of nearly 240000 products
the software also enables vauxhall management
to track performance in each production area
the vmi solution which offers vauxhall huge
potential in terms of time cost and efficiency
savings has enabled them to reduce their
roster of maintenance repair and operations
suppliers from several hundred to just one –
premier farnell
efficiency service
in may 2002 newark inone secured a fiveyear
agreement from the general services
administration gsa under which newark inone
is eligible to provide us government agencies
with more than 90000 stock lines including
cable tools test equipment and datacom
products from over 350 leading manufacturers
the gsa is the us government’s inhouse
purchasing department responsible for
negotiating contracts with suppliers of all goods
bought by government departments under the
agreement newark inone’s existing catalogue
has been added to gsa advantage the
department’s own ecommerce platform from
which engineers scientists and other procuring
officers can search for and select products for
use in their facilities 
the process of enhancing customer service 
is already underway t o assist customers with
selection ordering and billing newark inone
has set up a dedicated team in independence
ohio with a telephone hotline and information
point on its own website the mcm catalogue 
is now being integrated under the schedule
significantly extending the product range
newark inone’s main us government sector
customers are the department of defense and
the department of energy and the value of sales
is expected to grow substantially over the life 
of the agreement  premier farnell plc operating review
annual report and accounts 2003 continued
15
sales channel customers choose to
use this enables us to identify
purchasing habits and buying potential
and to develop services and solutions
which meet the requirements of
specific segments of customers
with the acquisition of buckhickman
inone we significantly added to our
expertise in managing our customers’
inventory on their behalf we have
made marked progress in extending
our capabilities in this area and have
developed a wide range of solutions
as part of our ongoing investment in
ecommerce we are migrating to a
‘one platform’ approach for all of our
websites this means that our
ebusiness team will only have one
platform to support and develop
enabling us to achieve much faster
rollouts of new sites functionality
and products
the requirement for flexibility is at the
heart of our eprocurement strategy 
our technology enables us to connect
with any procurement system which
a customer may use we have the
capability to develop an electronic
catalogue tailored to the specific
requirements of the customer  this
delivers many benefits to the customer 
including more effective purchasing
procedures better control of
purchasing processes and improved
management reporting
in addition to the ongoing
development of our capabilities as
we develop our understanding of our
customers’ needs we continue to
develop our product range the
acquisition of buckhickman inone in
july 2001 added 48000 industrial
products combined with the offer
from cpc and farnell inone we now
have one of the widest ranges of
products from one source in the
uk this was a key contributory factor
in the contracts we have won with
vauxhall and rollsroyce
over the last year we have added
46000 products to the division
in march of this year  we added
11000 new products to newark
inone’ s range of passive components
thereby doubling our range and
significantly strengthening our offer to
design engineers
developing closer relationships
with our customers
wherever and whenever we achieve
a better understanding of the needs
of particular groups of customers
we reap the reward of increased sales
grouping customers according to their
type of occupation and by the industry
sector they work in enables us to
focus our efforts and to develop greater
knowledge of product requirements
and purchasing behaviour 
for example our focus on customers
who specify and purchase health
and safety products in the uk which
has included the publication of a
specialist catalogue and mailers has
resulted in sales of these products
increasing by around 29 per cent
compared to last year 
our agreement with the national
universities working party on
electronic components nuwpec
has been extended for a further two
years until 2004 as a direct result of
our investment in improving the
service we offer to our education
customers including upgrading the
functionality of the dedicated website
we have developed for them
in the us we have secured a five
year agreement with the general
services administration gsa under
which we are eligible to provide the
us government with 90000 products
this agreement represents a major
opportunity to develop our
understanding of the specific
requirements and ways of working
of government purchasing agents
we have established a dedicated
sales team within newark inone’ s
business contact centre in
independence ohio to handle calls
from us government agencies 
us government sales in the year
t elesales is one of many 
channels through which we reach
out to our customers
local websites with local language
catalogues and mailers open
up sales channels cost effectively
flexibility is at the heart of
our eprocurement strategy
enabling us to connect with
any procurement system a
customer may use
americas
sales £312m
growth –97
operating profit £33m
based on sales per day for
continuing businesses at constant 
exchange rates
europe asia pacific
sales £348m
growth 133
†
operating profit £42m
†including buckhickman inone
acquired in july 2001 premier farnell plc operating review
annual report and accounts 2003 continued
16
advanced by 12 per cent over the
previous year  we are confident that
the schedule will add sales over its
fiveyear term
t ailoring our offer to meet our
customers’ needs
our substantial investment in
information technology signals our
belief in the growth opportunity that
ecommerce offers to our type of
business it enables us to speed up
the introduction of new products to
our range to make technical
information readily available to track
buying behaviour and tailor our offer
more precisely  sales through the
ecommerce channels accounted for
8 per cent of divisional turnover in
2002 with year on year sales up
28 per cent
our ecommerce strategy has two
main areas of focus – transaction
websites and eprocurement
we have fully transactional websites
for each of the major countries in
which we operate and together
with customer specific sites the
total number of sites is 30 each one
is customised for the local market
or customer  with business and
countryspecific data and reflects
the feedback we have received
from customers
customers worldwide are now
downloading more than 70000
technical datasheets and over 3000
semiconductor application directories
each week from our websites in a
matter of seconds whereas
previously they would have had to
request them by telephone and wait
for them to be posted or faxed
our online services enable us to
speed up the process of introducing
new products to our range and to the
market for example the test
equipment manufacturer t ektronix
used our websites for the global
launch of their new oscilloscopes in
april 2002 potential buyers also
received emails and mailers
promoting the new products
and increased sales resulted from
this multichannel sales and
marketing programme
the ongoing development of our
eprocurement capabilities is driven
by our commitment to be flexible
enough to integrate with our
customers’ systems regardless of
what technology they are using
many large corporations have
made significant investment in
inhouse eprocurement systems and
need suppliers like ourselves who
are capable of integrating with
their systems
we have the capability to design
each installation to the customer’ s
particular specification in many
cases this takes the form of a
customised electronic catalogue
accessible online by designated
employeepurchasers we compile
the catalogue in conjunction with
the customer  choosing specific
products for particular needs
for customers the advantages of
eprocurement are reduced total cost
of procurement and increased
control by reducing supplier
numbers the cost of administration
overhead is significantly lowered and
purchasing process automation
contributes to further cost
containment by restricting buyers
to specific products and suppliers
customers can curtail unauthorised
spending the electronic catalogue
can be updated rapidly to reflect
changing requirements
developing customised eprocurement
solutions enables us to build the
closest possible understanding of the
customers’ product requirements and
purchasing patterns integrating our
systems with those of our customers
builds our relationship ensuring that
we can consistently satisfy their
evolving needs
sales through eprocurement in
north america have increased by
our online services enable us 
to speed up the process of
introducing new products to our
range and to the market
a key characteristic of our
business is our wide range
of products some 400000
in stock
achieving growth
we export products to over
100 countries to realise sales
potential where we do not
have our own operations lockheed martin a leading us aerospace and
defence contractor has 25 separate
manufacturing and assembly facilities spread
across the eastern usa the company’s
commodity procurement requirements are
consolidated within the northern material
acquisition center nmac a new distribution
centre located in new jersey 
in order further to streamline segments of its
650 million procurement programme and
rationalise its supplier base lockheed martin
has appointed 11 strategic suppliers to work
with them on site at nmac newark inone was
the first to be selected and is now operating as
one of the company’s dedicated suppliers of
electronic components for research and
development and maintenance repair and
operations usage 
having signed a global supplier agreement with
the company in 2001 newark inone had
already established a good relationship with
lockheed martin the new arrangement at
nmac is a further demonstration of how we
can develop customised eprocurement
solutions that fit the requirements of world
class customers in this case lockheed martin
employees anywhere in the world can access
newark inone’s online catalogue having
chosen a product they can place an order
through exostar the global aerospace online
trading exchange the order passes to the
newark inone representative on site at nmac
who organises fulfilment and generates the
associated back office data 
connected rollsroyce is one of the world’s leading
manufacturers of gas turbine engines for use
in aircraft ships and power generation
facilities with annual sales of nearly £6 billion
it serves a customer base of more than 500
airlines 4000 other aircraft operators and 2000
marine customers including 50 navies
in march 2003 we were awarded a threeyear
contract subject to annual review by
rollsroyce to supply a broad range of
industrial consumables such as hand tools
safety products abrasives and electronic
components to eight of its uk sites the
contract anticipated to generate annual sales
of around £10 million is our largest to date
for business critical maintenance repair and
operations items we supply rollsroyce with
product at pointofuse via our vendor
managed inventory stocking solution this
uses electronic inventory control software to
automatically reorder the stock required with
next day replenishment of stocking locations
this is backed up by a tailored online
catalogue through exostar the aerospace and
defence trading exchange for ondemand
ordering of standard consumable products
technology our productwatch™ service
suggests appropriate alternatives
or replacements for obsolete and
end of line products
increasingly customers are
recognising our growing 
expertise in managing inventory 
on their behalf
premier farnell plc operating review
annual report and accounts 2003 continued
19
52 per cent this year  the adoption of
eprocurement continues apace with
our larger customers the uptake
varies with some customers
transacting between 30 per cent and
50 per cent of their business with us in
their first year of utilising eprocurement
for their electronic and mro
product requirements
the demand from new companies
wishing to take advantage of the
available economies and efficiencies
that eprocurement offers has not
diminished newark inone
established 43 new eprocurement
partnerships this year  taking the total
to 118 and a further 42 are under
negotiation sixtyseven new
eprocurement partnerships were
finalised in europe during the year
bringing the total to 108 and a
further 36 are under negotiation
or development
adding value with our services
in our market the critical factors in
purchasing decisions for our
customers are availability of product
and speed of delivery  however 
the market for the supply of indirect
materials is one in which the cost
of acquisition of the product can
be greater than the cost of the
product itself our customers are
continually looking to control and
reduce the cost of acquisition of
products and increase productivity
and often seek to reduce the number
of suppliers they have to achieve
this we are continually improving
our capability to assist our customers
to deliver efficiencies in their
procurement processes
we offer a wide choice of channels
through which our customers can
transact with us including customer
contact centres web sites
eprocurement field sales and our
network of sales offices and branches
customers can choose the channels
which are the most appropriate for
their needs increasingly customers
are recognising our growing expertise
in managing inventory on their behalf
this can range from the provision
of specialist software and systems
to having a member of our staff
permanently based on the customer’ s
site to manage their stockroom
every solution is different as each
one is tailored to meet the customer’ s
specific requirements
boston scientific for example a
worldwide developer  manufacturer
and marketer of medical devices with
14000 employees decided that a
common supplier for its mro
requirements would increase the
efficiency of its four sites in ireland
it would allow the company to
leverage spend in these commodities
reduce the complexity of procuring
items and allow the company to focus
on other valueadding activities the
company set out to find the best
solution to fit its business needs and
selected farnell inone to take
complete charge of the management
of its key mro commodities boston
scientific requested an onsitesupplier
based permanently at its facilities
helping it to set up organise and
manage individual plant stock rooms
as well as offering customised
services such as a personalised
website and specialist sourcing
capabilities farnell inone’ s flexibility
and willingness to adapt its services
to meet boston scientific’ s product
needs meant it was well placed to
win the tender  replacing more than
250 suppliers in the process
we also add value by identifying
common problems faced by
customers and developing services
to address them productwatch™
was developed on the strength of
research carried out with design
engineers and since its wellreceived
launch early in 2002 has proven
itself an invaluable tool to thousands
of customers providing advanced
warning of obsolete endofline and
endofstock items the proactive
system saves design engineers the
headache of designingin a
component only to discover later
that it is no longer available premier farnell plc operating review
annual report and accounts 2003 continued
20
the service suggests appropriate
alternatives or replacements saving
customers the significant amounts
of time money and effort that finding
substitutes requires
our productfind service which is
being rolled out internationally helps
customers cut the time spent sourcing
products the service is specifically
designed to help customers source
products which are hard to find
quickly and easily  the service is
supported by our database of over
six million products sourced from
more than 3000 suppliers
winning new business
as large corporations have achieved
increased efficiencies greater
productivity and better control of
costs in their procurement of
production line materials they are
increasingly turning their attention to
delivering the same improvements
to the procurement of indirect
materials with our broad product
portfolio stateoftheart systems
expertise in managing inventory and
logistics experience we are well
placed to offer a solution tailored
to their particular needs
the strategy of targeting large
corporations has produced a number
of major successes in the past
twelve months
in august 2002 newark inone was
selected by lockheed martin to act
as an on site procurement specialist
at its northern material acquisition
centre in new jersey which
consolidates research and
development and maintenance repair
and operations product purchasing
for twelve locations lockheed martin
employees can now access newark
inone’ s catalogue online and can buy
centrally from anywhere in the world
with orders passing through the
exostar online trading exchange to
the dedicated newark inone onsite
representative this custommade
solution was designed after close
consultation with lockheed martin
procurement personnel which
enabled us to determine exactly what
level of service they required
in may 2002 farnell inone won a
valuable preferred supplier contract
with deutsche bahn the german
state railway company and has
continued to develop sales with the
french department of defence and
manufacturers audi siemens philips
and daimler chrysler 
in october  we secured a fiveyear
contract with vauxhall the uk arm
of general motors under this
agreement we supply maintenance
repair and operations materials and
consumables to the company’ s
ellesmere port automotive
manufacturing facility  the contract
expected to be worth some
£40 million in sales over its lifetime
was won against stiff competition
three factors helped us to secure the
contract our unique service capability 
our range of 240000 products
available from farnell inone
buckhickman inone and cpc and
our proposal for a vendormanaged
inventory system we have replaced
several hundred suppliers and helped
to cut vauxhall’ s costs by streamlining
its procurement process
in november we received a
prestigious supplier excellence
award from the major us electronics
group honeywell this award
recognised our wideranging
technical support during the
introduction of their eprocurement
system the overall quality and
responsiveness of our staff and
the efficiency of our product
delivery system
in our market the critical factors
in purchasing decisions are
availability of product and speed
of delivery
expansion of our product
range continues to be an area
of ongoing development premier farnell plc operating review
annual report and accounts 2003 continued
21
in march 2003 we were awarded a
threeyear contract subject to annual
review by rollsroyce to supply a
range of industrial consumables such
as hand tools and health and safety
equipment to eight of their uk
manufacturing sites the contract
anticipated to generate annual sales
of around £10 million is the largest we
have ever won on an annualised basis
overall sales to large customers
increased during the year  compared
to last year  newark inone’ s 36
designated major corporate accounts
contributed 13 per cent of newark
inone’ s sales and sales per day on
these accounts improved by 3 per
cent over last year 
in the uk sales to designated major
corporate accounts increased
16 per cent compared to last year
new contracts were signed with
19 customers in the uk during the
year  and all are now in the process
of development
developing into new markets
with twelve distribution centres
worldwide and offices in 21 countries
we are well placed to service
customers around the world the
international expansion of our
operations is driven by demand from
existing or potential customers in a
region or country  where on the basis
of thorough market analysis we can
direct our operations at known
customer demand this year has
seen us expand the international
reach of our business in a controlled
and effective way 
in europe we have recently opened
sales offices in italy and belgium in
each case we initially tested the
demand for our products and
services through sales and marketing
activity undertaken by country
nationals from an existing company
base in the case of italy  for example
this involved italian nationals based in
our leeds business contact centre
local websites along with local
language catalogues and mailers
open up the sales channels cost
effectively  once sales have reached
the level that we consider justifies the
investment we then open a sales
office in the territory concerned
we established a representative office
in china in 2001 and also have sales
representation in eastern europe
increasingly multinational customers
are looking to us to supply the
maintenance repair and operations
products and services required to
support their manufacturing facilities in
all the countries in which they operate
in mexico we have opened a sales
office published a local catalogue
launched a dedicated website and
taken on warehouse space to supply
our fastestmoving products the
freetrade area of mexico has a large
number of us and european owned
manufacturing companies with many
of which we have strong relationships
from this base we will be able to 
reach beyond them to the whole of
the mexican market
in the established markets of
continental europe the small order 
high service distribution sector in
which we operate is characterised by
regional and local distributors who
do not have our breadth of product
range or service offer  the opportunity
to grow our sales in these markets
is significant our new warehouse in
liege belgium became operational
in september 2002 and will improve
service levels and the cost
effectiveness of our logistics to
western europe in january 2003
we acquired the customer list of the
electronic component distributor
merkelbach based in essen germany
in order to strengthen our sales
presence in northern germany 
our on site support helps
customers organise and arrange
their stock rooms
the opportunity to grow
our sales in continental europe
is significant industrial
products  ohiobased akron brass the market leader in
the us manufactures and sells nozzles and
other specialist equipment for firefighting
in line with group strategy the company has
been looking to expand into new markets as a
potential source of new business malaysia is
one example of note the country has a
developing infrastructure with good growth in
the industrial sector and akron brass looked for
a suitable local distributor they soon found that
the best candidate was already representing
some of their main competitors
determined to reach an exclusive deal with the
distributor the akron team launched a
campaign to prove to the distributor and the
enduser market that the akron brass range
represents excellent value for money 
the time money equipment and personnel that
were committed to this project were fully
justified when the distributor succeeded in
getting akron brass products specified on more
than 200 fire trucks being built for the malaysian
fire service over the past eighteen months
akron brass has increased its sales to malaysia
and sales are forecast to grow again this year premier farnell plc operating review
annual report and accounts 2003 continued
24
the majority of the sales are
generated by three businesses 
akron brass
akron brass is the us market leader
in the manufacture of high
performance firefighting equipment
for firetruck manufacturers public fire
services and industrial facilities
its principal markets remained slow
but stable during the year however
the completion of a 7 million
expansion and upgrade of the
company’ s wooster ohio facility 
in 2001 has significantly enhanced
manufacturing capacity and
efficiency enabling the company 
to generate a higher gross margin 
for its products 
sales per day were 40 per cent
above last year with sales to the us
municipal and original equipment
markets improving although the
industrial segment has been weaker 
the business has strengthened its
efforts to penetrate the industrial
market adding sales personnel and
an engineering support group in
particular akron is targeting the oil
gas and petrochemical industries
where upstream and downstream
installations such as refineries and
distribution terminals require high
level firefighting capability
tpc wire  cable
tpc wire  cable based in the 
us is a specialist distributor of high
endurance cable and connector
assemblies for use in aggressive
environments these cables are
widely used for example to control
robot arms during manufacturing
processes
the company’ s major markets are
the steel and automotive industries
both of which have continued to
suffer from downturns now lasting
several years t o reduce tpc’ s
dependence on these markets the
management team has concentrated
on broadening the customer base
expanding geographic reach and
developing new product sales 
despite the market difficulties sales
per day increased by 3 per cent over
last year
the company has identified new
sectors in which its products can be
utilised in particular it has focused
on the mining food and tyre
manufacturing industries in many
cases this has required the
company to respecify its products in
order to achieve industryspecific
ratings once the respecified
products were in place the company
successfully used its field and inside
sales resources to secure orders
from these markets
the company’ s efforts to boost overall
sales through the development and
marketing of new products were also
successful with new product sales
accounting for 16 per cent of total
revenue over the year
in mexico tpc took on a new
warehouse just outside mexico 
city and appointed an incountry
sales manager
kent
kent is an ownbrand distributor of
high performance consumable
products sold into the automotive
repair and industrial maintenance
sectors it has offices in nine
european countries and a network of
subdistributors throughout the world
in the face of difficult market
conditions sales per day were
1 per cent below last year 
the company’ s development 
during the year has concentrated 
on improving the product range
developing closer relationships 
with customers focusing on key
accounts and expanding the range
of channels to market
the company’ s product portfolio 
has been extended substantially 
and now includes some 4000 items
this not only provides customers
with a broader choice but also
expands the potential customer base
an important step forward this year
has been the decision to move the
sales force from commissiononly 
to a salarybased scheme enabling
the business to retain quality people
and remunerate them appropriately
despite some disruption in france
sales productivity levels have 
generally increased 
the renewed focus on key accounts
has been successful with sales to
these customers rising by 18 per
cent over the year of particular note
ferrari has decided to specify kent
screenfix 212 windscreen adhesive
for the 360 challenge models 
and volume producers seat 
hyundai and vw have all approved
kent quickseal for use in their
manufacturing operations
in slowmoving markets
the industrial products division
has concentrated on
reengineering aspects of its
manufacturing and marketing
functions to improve its 
overall sales proposition
industrial products division 
akron brass
us
canada
tpc wire  cable
us
canada
mexico
kent
europe
sales £99m
growth 28
operating profit £15m
kent’s product portfolio has been
extended substantially and
includes some 4000 items this
provides customers with a broader
choice and also expands the
potential customer base
based on sales per day for 
continuing businesses at constant 
exchange rates tpc wire  cable has saved a major
automotive manufacturer significant sums 
in running costs by finding an effective 
solution to a component problem
the manufacturer’s plant was experiencing
repeated interruptions caused by failure of 
the power assemblies they were using they
turned to tpc for a more robust product 
tpc’s field sales representative worked 
closely with plant personnel to identify 
the problem a new bracket was designed 
to fit onto the assemblies and prevent the 
problem from reoccurring 
benefits premier farnell plc board of directors and officers
annual report and accounts 2003
26
board of directors 
and officers premier farnell plc board of directors and officers
annual report and accounts 2003
27
1 sir malcolm bates hondlitt
msc fcis fraes ccmi
aged 68
appointed chairman 1997
chairman london transport amp
uk plc includes amp pearl
assurance amp npi and amp
london life nonexecutive director
amp ltd australia
2 john r hirst ba fca 
act  ccmi
aged 50
appointed group chief executive
1998 formerly 19 years with
imperial chemical industries plc
where he held a number of senior
posts including divisional chief
executive of ici performance
chemicals chief executive of
ici autocolor and group treasurer
3 andrew c fisher ba fca
aged 45
appointed group finance 
director 1994 previously a partner 
at price waterhouse
4 sir robert horton bsc 
sm lld dsc
aged 63
appointed nonexecutive director
1995 chairman chubb plc and
nonexecutive director emerson
electric co us formerly chairman
of railtrack plc and chairman and
ceo bp 
5 cary j nolan ba bsee
aged 60
appointed nonexecutive director
1999 formerly president ceo
picker international inc president
cooper surgical and president xerox
medical systems division non
executive director of t oshiba medical
and t omotherapy inc
6 d john s roques ca
aged 64
appointed nonexecutive director
1999 chairman portman building
society nonexecutive director bba
group plc and chubb plc formerly
senior partner deloitte  t ouche 
7 michael lester ma oxon
solicitor aged 63
appointed nonexecutive director
1998 director bae systems plc
formerly a director and
vicechairman the general electric
company plc
8 steven webb llb
solicitor aged 40
appointed company secretary and
general counsel december 2000
previously company secretary and
general counsel of kelda group plc
and company secretary of kalon
group plc
9 william b korb
aged 63
appointed nonexecutive director
january 2003 formerly president
and ceo of gilbarco incorporated
nonexecutive director of cambrex
corporation 
nonexecutive
audit committee
john roques chairman
sir malcolm bates
michael lester
cary nolan
nominations committee
sir malcolm bates chairman
john hirst
sir robert horton
remuneration committee
michael lester chairman
sir malcolm bates
william korb
cary nolan
john roques
organisation  management
development
sir robert horton chairman
sir malcolm bates
john hirst
william korb premier farnell plc group leadership t eam
annual report and accounts 2003
28
group leadership
t eam
1 graham johnson
global business systems
director
previously a management consultant
specialising in major it related
change initiatives also worked for
british t elecom and
pricewaterhousecoopers
2 brian j lewis
group director human resources
previously corporate vice president
human resources at borealis as
vp human resources coca cola
southeast and west asia own
consultancy in asia
3 nicholas p g ross
group director communications
formerly ceo industrial products
division europe prior to that
director of business development
4 steven webb
company secretary and 
general counsel
see page 27
5 john r hirst
group chief executive
see page 27
6 peter costello
chief executive officer
ipd north america
previously ceo product
manufacturing division premier farnell plc group leadership t eam
annual report and accounts 2003
29
7 andrew c fisher
group finance director
see page 27
8 michael w ruprich
chief executive officer
mdd americas
formerly ceo newark electronics
previously president and chief
executive jlk direct distribution inc
9 laurence bain
group chief operating officer
previously vice president and
director of operations for motorola 
in europe middle east and africa
10 matt t oogood
group director strategic
marketing and planning
formerly strategic marketing
director mdd europe and
asia pacific
11 chris haworth
chief operating officer mdd
europe and asia pacific
formerly ceo appliance spares
division joined cpc in 1975 where
he was managing director when it
was acquired by the group in 1995 group sales and operating profit
group sales for the financial year 52 weeks were £7590 million
2002 £8064 million 53 weeks there was a negative impact resulting
from the translation of overseas sales of £222 million due principally to the
weakness of the us dollar against sterling similarly profit before tax goodwill
amortisation and exceptional items of £672 million 2002 £725 million was
reduced by £09 million
group sales for the year based on year on year sales per day for continuing
businesses and at constant exchange rates increased by 12 per cent
including the benefit of the buckhickman inone acquisition made in
july 2001 excluding buckhickman inone year on year sales decreased by
51 per cent although the rate of decline narrowed during the year
significantly the group moved back into positive year on year growth in the
second half and sales grew by 28 per cent in the fourth quarter
premier farnell plc finance director’s review
annual report and accounts 2003
30
finance director’s
review
americas spd and year on 
year growth rates
europe  asia pacific spd 
and year on year growth rates
excluding buckhickman inone
20
18
16
14
12
10
0
10
20
30
m 
q1 q2 q3 q4
12
10
08
06
10
0
1 0
£m 
q1 q2 q3 q4
buckhickman inone spd and
year on year growth rates
05
04
03
02
20
10
0
10
£m 
q1 q2 q3 q4
note all sales growth rates are based on sales per day for continuing
businesses at constant exchange rates premier farnell plc finance director’s review
annual report and accounts 2003
31
the marketing and distribution division represented 87 per cent of the
group’ s sales general industrial demand and activity in the electronics
industry remained weak throughout the year in the division’ s primary north
american and european markets in the americas sales per day were
97 per cent below the prior year although sales per day have remained
relatively stable since may 2002 in europe and asia pacific year on year
sales per day increased by 133 per cent including the benefit of the
buckhickman inone acquisition excluding buckhickman inone year on
year sales per day declined by 15 per cent with the second half of the year
showing an improving sales trend and year on year growth of 26 per cent
after a decline of 54 per cent in the first half in its first full year of ownership
buckhickman inone has performed strongly and achieved an increase in
year on year sales of 46 per cent during the year the sales trend improved
and year on year growth in the second half was 105 per cent
sales for the industrial products division increased 28 per cent year on
year sales at akron brass which manufactures highperformance
firefighting equipment increased 40 per cent and sales at tpc wire and
cable a distributor of high specification cable to the north american
automotive and steel industries also increased by 31 per cent sales at the
other main business kent europe which distributes high performance
consumable products to the automotive repair industry saw sales decline
slightly by 09 per cent
the expense classification in the consolidated profit and loss account has
been restated to reflect the way in which management measure the
performance of the group despite the difficult trading environment the
gross margin for the year of 411 per cent has been stable and in line with
the previous year reflecting firm management control and high customer
service levels
restructuring costs of £06 million relating to the closure of a warehouse
in north america were incurred during the year and the group also realised
profits of £05 million on the disposal of surplus properties
the group’ s operating margin of 109 per cent before goodwill amortisation
compares with 110 per cent in the previous year the group realigned its
cost base rapidly during the period of sharp deterioration of market
conditions experienced in 2001 and has continued to exercise tight cost
control during the current year this together with sustained strong gross
margins has resulted in the operating margin being maintained throughout
the year at a similar level to last year
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 these businesses the new trading names will be newark inone
farnell inone buckhickman inone and mcm an inone company the one
off cost of the rebranding of £24 million will be charged in the first quarter
of the coming financial year
disposals
on 28th june 2002 the group sold da lubricants the speciality lubricants
business of the industrial products division for net cash proceeds of
£33 million the business traded at breakeven during the first five months of
the financial year the exceptional charge of £49 million included goodwill
previously written off against reserves of £26 million
deferred consideration of £01 million was received in the year which related
to prior year disposals
operating margin 
150
125
100
75
50
q1 q2
20012 20023
q3 q4 q1 q2 q3 q4
gross margin 
450
400
350
q1
comprises continuing businesses throughout the above periods
q2
20012 20023
q3 q4 q1 q2 q3 q4 premier farnell plc finance director’s review
annual report and accounts 2003 continued
32
capital reorganisation
on 13th may 2002 shareholders approved a special conversion right which
enabled preference shareholders for a limited period to convert their
preference shares into ordinary shares at an enhanced rate of conversion
as a result 195 million 70 per cent preference shares were converted into
898 million ordinary shares the total number of ordinary shares in issue at
the year end was 3624 million 2002 2722 million
in addition in july 2002 the company purchased and cancelled a total of
644000 of its own preference shares at a cost of £83 million the total
number of preference shares in issue at the year end was 78 million
2002 279 million and the ongoing annual preference dividend will be
approximately £7 million
the restructuring has resulted in increased earnings per share and reduced
financial gearing it also improved cash flow by more than £9 million in
the year enhanced fixed charge cover and provided a more balanced
capital structure
subsequent to the year end the company purchased and cancelled a
further 197000 of its own preference shares at a cash cost of £23 million
interest and fixed charges
the net interest charge of £157 million 2002 £159 million was covered
53 times by the profit before interest goodwill amortisation and loss on
disposal of businesses interest payments relate predominantly to fixed rate
us dollar borrowings the effective interest rate on the group’ s borrowings
was 71 per cent fixed charge interest plus preference dividends cover
was 27 times
t axation
the group’ s effective tax charge represented 284 per cent
2002 295 per cent of the profit before tax goodwill amortisation and loss
on disposal of businesses the underlying tax rate excluding the impact of
tax credits arising from the favourable settlement of earlier years’ liabilities
was 299 per cent 2002 305 per cent a tax credit of £09 million arose
on business disposals in the year 2002 nil
the uk and us corporation tax rates of 30 per cent and 35 per cent
respectively are significant influences on the group’ s effective rate in the
absence of significant changes to uk or us tax rates or regulations the
effective rate during the coming financial year should be no greater than
31 per cent
dividends
the board is recommending a final dividend of 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 2002 10 times by
attributable profits adjusted for goodwill amortisation and loss on disposal of
businesses maintaining the dividend at last year’ s level reflects the board’ s
confidence in the group’ s outlook and its strong cash flow characteristics
earnings per share
basic earnings per share were 93 pence 2002 46 pence adjusted
earnings per share before amortisation of goodwill and loss on disposal of
businesses were 112 pence 2002 92 pence this improvement reflects
the capital restructuring described above and the consequent reduction in
the preference dividend in the year to £108 million 2002 £261 million
the weighted average number of ordinary shares in issue during the year
was 3316 million 2002 2719 million
cash flow and net debt
free cash flow available to ordinary shareholders is summarised below
2003 2002
£m £m
cash flow from operating activities 920 1071
capital expenditure 249 248
sale of fixed assets 17 13
interest and preference dividends 266 417
tax 127 274
free cash flow 295 145
cash flow from operating activities represented 111 per cent
2002 121 per cent of operating profit before goodwill amortisation
and reflects tight control of working capital across the group inventories
increased by £90 million in the year reflecting the stocking of the new
belgium warehouse and product range expansion receivable days have
been maintained or improved across all major businesses with the overall
average reducing from 55 to 52 days during the year releasing cash of
£6 million
capital expenditure of £249 million included £185 million on computer
systems £108 million was spent on frontoffice customerfacing systems
based around siebel customer relationship management systems and a
further spend of £77 million was incurred in enhancing existing systems
including expenditure at newark inone and farnell inone to facilitate the
integration of the frontoffice systems with their backoffice systems the
frontoffice systems were successfully deployed at farnell inone’ s uk
business in november 2002 and since the year end have been successfully
deployed across newark inone’ s branch and call centre infrastructure
expenditure on frontoffice systems in the coming year will be approximately
£6 million and total capital expenditure is expected to be approximately
£20 million the depreciation charge in the coming year will increase by
approximately £7 million mainly as a result of the deployment of front office
systems
payments to tax authorities benefited by £9 million as a result of tax repaid
from prior years
the change in net debt is summarised below
£m
opening net debt 2364
free cash flow 295
ordinary dividends 281
disposal of businesses 33
capital reorganisation 92
issue of ordinary shares 07
net cash outflow 38
exchange movement 310
closing net debt 2092
the group’ s net debt comprises the following
£m
cash at bank and in hand 296
bank loans and overdrafts 467
us 310million senior notes due 2003 and 2006 1890
other loans 31
net debt 2092 premier farnell plc finance director’s review
annual report and accounts 2003 continued
33
the company has 155 million 70 per cent senior notes repayable in june
2003 in anticipation of this repayment the company has secured additional
funding to be drawn in june 2003 of 225 million comprising 159 million
senior notes payable 2013 at an effective interest rate of 59 per cent and
66 million senior notes payable 2010 at an effective interest rate of
53 per cent
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 in excess of £100 million
treasury operations
the group is exposed to a number of different market risks including
movement in interest rates and foreign currency exchange rates the group
has established policies and procedures within the treasury function to
monitor and manage the exposures arising from volatility in these markets
with derivative instruments being entered into when considered appropriate
by management
the group treasury function is responsible for sourcing and structuring
borrowing requirements managing interest rate and foreign exchange
exposure and managing any surplus funds which are invested mainly in
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
group policy prohibits speculative arrangements in that transactions in
financial instruments are matched to an underlying business requirement
such as forecast debt and interest repayments and expected foreign
currency revenues the group uses derivatives only to manage its foreign
currency and interest rate risks arising from underlying business activities
the group treasury function is subject to periodic independent reviews by
the internal audit department controls over interest rate and foreign
exchange exposures and transaction authenticity are in place and dealings
are restricted to those banks with the relevant combination of geographic
presence and suitable credit rating the group continually monitors the credit
ratings of its counterparties and credit exposure for each counterparty
the group hedges transactions primarily related to the purchase and sale
of inventories denominated in foreign currencies through foreign exchange
forward contracts these contracts reduce currency risk from exchange rate
movements with respect to these transactions and cash flows gains and
losses are deferred and accounted for as part of the underlying transactions
the group does not hedge profit translation exposure unless there is a
corresponding cash flow since such hedges provide only a temporary deferral
of the effect of movements in exchange rates
accounting standards and policies
the group’ s accounting policies fully reflect the requirements of the
accounting standards board
pension accounting
the group accounts for pensions in accordance with ssap 24 the group’ s
net assets include a pension asset of £822 million 2002 £870 million
which is included in debtors due after more than one year the consolidated
profit and loss account includes a net pension credit of £44 million
2002 £53 million in relation to all of the group’ s pension schemes it is
estimated that this credit will be reduced by approximately £15 million in the
coming financial year primarily as result of the decline in the market value of
assets in the group’ s uk and us defined benefit schemes
the recent triannual valuation of the uk scheme is expected to require the
group to recommence contributions at a rate of approximately £800000 per
annum the group will continue to enjoy a contribution holiday for the
foreseeable future in relation to the us scheme
the results do not reflect the full adoption of frs 17 retirement benefits
because this is not required until the group’ s financial year ending
31st january 2006 if the standard had been fully adopted in 2003 profit
before tax would have been reduced by £32 million comprising a charge to
operating profit of £102 million and a credit to interest of £70 million and
consolidated net assets would have been reduced by £311 million under
frs 17 the value of the net surplus of the uk and us defined benefit
schemes would have been £347 million comprising a surplus in the
us scheme of £494 million and a deficit in the uk scheme of £147 million
andrew fisher
group finance director
2012
debt profile £m
357
300
236
200
100
0
2004 2006 2008 2010
a bilateral bank facilities to 2006
b 155m 72 senior notes repayable 2006
c 66m 53 senior notes repayable 2010
d 159m 59 senior notes repayable 2013
gross debt at 2nd february 2003
a
b
c
d premier farnell plc social responsibility report
annual report and accounts 2003
34
social responsibility report
safety
this is the second year for which
we have prepared a social
responsibility report and we have
found that the preparation and
issue of this report has already
helped to raise awareness of
relevant issues within the group
in preparing this report we have
wherever practical followed the
guidelines suggested by the
uk government
health and safety
our health and safety commitment
remains the simple one of
minimising accidents and injuries in
the workplace it is therefore with
great sadness that we have to
report the death during the year of
a driver with our buckhickman
inone business who was involved
in a fatal road traffic accident the
coroner’s enquiry into the accident
recorded a verdict of accidental
death and no blame was
apportioned to the company or any
of its operations
our occupational injury rate see
figure 1 decreased from 114
injuries100000 hours worked in
1998 to only 063 in 2001 and
rose slightly to 068 in 2002 we
understand the reasons for this
increase and have taken steps to
address them
last year we set a target of
reducing this rate to 060 by the
end of 2003 despite the small rise
in 2002 we still believe that this
goal is achievable
our occupational injury rate remains
very low when compared to rates
for other industries see figure 2
business segment risks
the group’s business is
predominantly distribution
distribution activities with potential
for injury include manual handling
movement of goods lifting of
products and opening of boxes
the group also has a small number
of manufacturing facilities each of
which has certain activities where a
potential for injury exists
actions taken to prevent
and minimise injuries
we provide targeted safety training
to relevant employees in an effort to
prevent and reduce injuries we
provide training in ergonomics safe
lifting first aidcprinfection control
hazard communication emergency
evacuation spill cleanup fire
extinguisher use forklift operation
confined space entry electrical
isolation and the use of personal
protective equipment
in the uk all of our logistics
management team have undergone
training in health and safety
responsibilities and this will be
extended to cover risk assessment
and accident investigation
our major distribution and
manufacturing facilities are required
to conduct regular health and
safety audits they are required to
address quickly any safety concerns
that are identified our goal is to
address safety concerns before
accidents occur
in order to ensure compliance
with the large number of safety
regulations in the us we require
facilities located there to prepare
annually and follow safety
compliance calendars the
calendars list the safety compliance
and employee training actions that
the facility must take during the
year these calendars not only
ensure compliance but also
provide a safety focus throughout
the year
a large portion of premier farnell
employees are officebased for
that reason we take proactive
actions to reduce office related
injuries training in the correct use
fig 1 occupational injury rate
per 100000 hours worked
shown are the rates at which accidents which involve more than basic first aid treatment
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
204
114
industry average
premier farnell
1998
171
072
1999
166
065
2000
159
063
2001
167
068
2002
000 050 100 150 200 250 premier farnell plc social responsibility report
annual report and accounts 2003
35
of display screens and workstations
is provided
additional actions to be taken in
2003 to reduce injuries
we plan to take a number of
actions in 2003 that will emphasise
safety and encourage prosafety
attitudes these actions are
described below
as mentioned in last year’s report
our mcm distribution centre in the
us has been developing a
“behaviourbased safety”
programme their programme has
now been finalised and
implemented the development
and implementation of the
programme has resulted in many
positive results at the time of this
report the mcm distribution centre
had completed 17 consecutive
months without a recordable
workplace injury we attribute this
accomplishment to the fact that
their behaviourbased safety
approach encourages sound safety
behaviour in a proactive manner
we are proud of mcm’s
accomplishment and our target in
2003 is to implement a similar
“behaviourbased safety”
programme in at least one other of
the group’s major facilities
we are requiring all major facilities
to track and regularly report
nearmiss incidents and to have
active safety committees in 2003
one role of these committees will
be to review nearmiss incidents
and take any corrective actions that
may be warranted consistent with
our goal of preventing injuries
before they occur the committees
will also review recordable injuries
safety audit findings and safety
compliance and training activities
members of our safety staff will
make regular visits to major facilities
in 2003 to review safety practices
attend safety committee meetings
and assist in conducting safety
audits in the uk and europe
regular risk surveys of the facilities
will be conducted that will establish
baselines for improvement this
is part of an ongoing safety
programme that was started about
18 months ago
the environment
our commitment in this area is to
identify and collect data on the
group’s environmental impacts and
to reduce them
as stated in last year’s report we
have begun collecting data on the
amount of energy used employee
business travel waste disposed
waste recycled water consumed
and greenhouse gas emissions
we will compile this data annually
the 2002 results are presented in
this report the data is presented in
two ways we present total quantity
of usagegeneration as well as unit
rates based on sales turnover ie
quantity per £1000 of sales
we consider the 2002 data to be
important baseline data we intend
to compare data for future years
with this baseline data
we feel that it is too early for us to
set specific reduction targets until
we have a greater understanding of
the activities underlying this data
however we will continue our efforts
to reduce environmental impacts
wherever possible including the
actions described later in this report
achievements
we are delighted to report that our
distribution centre in gaffney south
carolina has been audited and
granted iso 14001 certification
during the registration audit the
fig 2 comparing premier
farnell’s occupational injury
rate with rates for other
industries
legal services 035
insurance agentsbrokers 035
banking 060
premier farnell 068
electrical goods – wholesale 135
chemical industry 170
electronic equipment 210
aircraft 255
paper 275
all manufacturing 350
steel 400
rubberplastics 400
trucking 415
food 450
motor vehicles 650
ironsteel foundries 745
groups injury rate in 2002
shown is the company’s occupational
injury rate for 2002 compared to industry
segment rates compiled and published by
the us department of labor bureau of
labor statistics for 2001 being the latest
statistics available premier farnell plc social responsibility report
annual report and accounts 2003 continued
36
aware
independent auditors complimented
the gaffney facility for having the
highest level of iso 14001 related
employee awareness and training
of any company they had audited
an activity we are particularly proud
of is the high level of recycling we
carry out across the group we
recycle over 40 of the waste we
produce this reflects the significant
steps taken at our major distribution
centres in leeds and gaffney in
recycling supplier packaging it also
reflects the significant steps taken
by our akron brass manufacturing
operation in wooster ohio in
recycling industrial process waste
we are also pleased by the pollution
prevention efforts taken by our
leeds and gaffney distribution
centres both have made significant
progress in using recycled material
andor airfilled bags instead of
polystyrene chips as protective
packaging for the products we ship
to customers both distribution
centres also utilise cardboard
shipping boxes made from
recycled material
we remain a member of the ftse4
good index of corporate and
social responsibility the criteria for
which includes environmental
issues as well as stakeholder
relations and human rights we are
also among a small number of
companies that have participated in
the business in the environment
survey of corporate environmental
engagement for every year since
its inception
business segment risks
as previously stated the group’s
business is predominantly
distribution environmental
concerns associated with this
segment include the proper
handling storage shipping and
disposal of the chemical products
we distribute
chemical products must be
packaged and shipped in
compliance with hazardous
materials transportation laws
returned damaged and
discontinued chemical products
eg electrical cleaners solders
batteries must be properly handled
and disposed of
premier farnell has several
manufacturing facilities these
facilities generate industrial process
waste that must be properly
handled and disposed of in
addition akron brass operates a
brass foundry that requires special
air handling equipment and air
emission permits
actions routinely taken to
manage environmental
concerns
we provide targeted environmental
training to relevant employees in an
effort to ensure they comply with
relevant laws and act in an
environmentally responsible manner
we provide training in hazardous
waste disposal spill prevention
and hazardous materials
transportation
in order to ensure compliance with
the large number of environmental
regulations in the us we require
facilities located there to prepare
annually and follow environmental
compliance calendars the
calendars list the environmental
compliance and employee training
actions that the facility must take
during the year these calendars
not only aid compliance but also
provide an environmental focus
throughout the year
energy consumed
unit rate
type of energy used amount used in 2002 per £1000 of sales
electricity 34683988 kwh 45 kwh
natural gas 2088856 cubic metres 27 cubic metres
propane 4585 kilograms 006 kilograms
fuel oil 3106 litres 004 litres
petrol for company
carstrucks 836282 litres 1 litre
diesel fuel for company
carstrucks 1269574 litres 2 litres
employee business travel
unit rate
amount in 2002 kilometres per £1000
type of travel kilometres of sales
business use of cars
trucks 9196846 12 
business use of rented
carstrucks 8936540 12 
train use 350546 02 
short intracontinent
airline flights 13833288 18 
long intercontinent
airline flights 12700692 16 
total 44888269 58 
waste disposed
unit rate
amount in 2002 kilograms per £1000
type of waste kilograms of sales
hazardous waste 551618 07 
industrial process waste 855883 1 
solid waste 2756342 4 
total 4163843 57  premier farnell plc social responsibility report
annual report and accounts 2003 continued
37
additional actions to be
taken in 2003 to manage
environmental concerns
we plan to take several actions
in 2003
as previously mentioned our
distribution centre in gaffney was
audited and the site was granted
iso 14001 certification our 2003
goal is to achieve iso 14001
certification at our major distribution
centre in leeds
we will continue our efforts to
increase recycling at our major
distribution centres in leeds and
gaffney as part of this we are
aiming for complete recycling of all
cardboard waste from supplier
packaging at all of our uk
distribution centres by the end of
january 2004 we will also continue
our industrial process waste
recycling efforts at the akron brass
manufacturing facilities
contribution to the community
the group contributes to the wider
community in a number of ways
a total of £51000 was donated to
a number of charities during the
year equally important are the
contributions in kind which are
made by the group employees are
encouraged to participate in
charitable fundraising events and to
give time both in and outside
working hours to good causes
the following are just a few of
many examples
in the uk farnell inone has been a
longterm sponsor of the “great
yorkshire bike ride” which has now
raised £1 million for a variety of
charities as well as the group’s
sponsorship a number of group
employees take part every year
raising their own contribution the
group has also provided twoyear
sponsorship of a vso volunteer
who is teaching english to chinese
students in the shaanxi province
of china
the group regularly donates certain
items of stock to charities and also
donates equipment to various
charitable and educational
organisations to assist in research
programmes
in the us all of the group’s
businesses participate in united
way a communitybased umbrella
organisation supporting various
human services organisations
group employees have taken
leadership roles in united way’s
fundraising activities also in the
us a number of group companies
have taken part in efforts to provide
food and clothing to local families
and individuals in need
akron brass has donated vital fire
fighting equipment to the mercy
ships organisation which travels to
developing nations to assist with
construction projects as well as
providing medical and dental care
in singapore farnell inone is
involved with the community chest
organisation which coordinates
community efforts to raise money
for vulnerable members of society
and provides matching
contributions to those made
by employees
across the group our close links
with the education sector are
strengthened by various
sponsorships and educational
awards
farnell inone reviewed the use of
polystyrene as protective loosefill
packaging for the products it
delivers to customers 
the reasons for the review were
– cost
– nonbiodegradable
– customer preference
as a result farnell inone moved
to the use of air bags which utilise
recyclable plastic for small and
medium parcels this reduced the
use of polystyrene by 80 per cent
and generated annual cost savings
of approximately £200000
waste recycled
unit rate
amount in 2002 kilograms per £1000
type of waste kilograms of sales
hazardous waste 2700 0004 
industrial process waste 1294825 168 
solid waste 1747141 227 
total 3044666 395 
water used
unit rate
amount in 2002 litres per £1000
litres of sales
water used 61846040 81 
greenhouse gas emissions
type of energy used amount used in 2002 metric tons co 2 emitted
electricity for facilities 34683988 kwh 21397
natural gas for facilities 2088856 cubic metres 4555
propane for lift trucks 4585 kilograms 11
fuel oil for facilities 3106 litres 11
petrol for company cars
trucks 836282 litres 1568
diesel fuel for company
carstrucks 1269574 litres 3390 
petrol for rented cars
trucks 1728792 litres 3241
total 34173
 assumed 105 kilometres per litre of petrol consumed
conversion factor used  0612 kg co 2kwh
equals usa 199899 average per us dept of energy premier farnell plc directors’ report
annual report and accounts 2003
38
principal activities and business review
a detailed review of the group’s activities the development of its business
and an indication of likely future developments are dealt with on pages 10
to 25
the principal activity of the group remains unchanged and is the
distribution of electronic electrical and industrial products to the design
maintenance and repair sectors
proﬁt and dividends
the proﬁt for the ﬁnancial year 52 weeks attributable to ordinary
shareholders was £308 million 2002 £125 million 53 weeks the
directors recommend that a ﬁnal dividend of 50 pence 2002 50 pence
per ordinary share be paid on 25th june 2003 to those shareholders on
the register of members at the close of business on 30th may 2003 an
interim dividend of 40 pence per ordinary share was paid on 25th october
2002 making a total for the year of 90 pence 2002 90 pence per
ordinary share 
acquisitions and disposals
on 28th june 2002 the group sold da lubricants the speciality lubricants
business of the industrial products division in north america for a
consideration of £43 million
further details of this disposal are given in the finance director’s review on
pages 30 to 33 and in notes 2 and 23 to the financial statements
share capital
details of changes in the issued share capital of the company during the
year are set out in note 19 on page 64 these include the results of the
special conversion right announced in april 2002 pursuant to this special
conversion right preference shareholders were given the right for a limited
period to convert their cumulative redeemable preference shares in the
company into ordinary shares at an enhanced conversion rate a total of
19530070 preference shares were converted under this right leading to
the issue of 89838310 new ordinary shares following the expiry of the
special conversion right the company acquired 643964 preference
shares in the market for cancellation at a total cost of £83 million on
19th march 2003 the company acquired a further 197000 preference
shares in the market for cancellation at a cost of £23 million
at the forthcoming annual general meeting the company will be seeking
authority to purchase its ordinary and preference shares authorities were
previously granted at the annual general meeting in 2002 but expire at
the close of the forthcoming meeting
fixed assets
the directors are of the opinion that any difference between the book
value and the market value of the land and buildings of the company and
its subsidiary undertakings is not signiﬁcant
directors
the names and biographical details of the directors who held ofﬁce
throughout the year appear on page 27 in addition messrs morton l
mandel and patrick f sullivan were directors of the company until
12th june 2002
in accordance with the company’s articles of association sir malcolm
bates mr john roques and mr cary nolan will retire at the forthcoming
annual general meeting of the company and offer themselves for
reelection mr william korb who was appointed during the year will retire
and offer himself for election all of the directors standing for election or
reelection are nonexecutive directors and do not have service contracts
with the company
additional information relating to directors’ remuneration service contracts
and interests in the company’s shares is given in the remuneration
report on pages 40 to 45 the details of directors’ interests in the
company’s shares form part of this report
supplier payment policy
the group’s operating companies are responsible for agreeing terms and
conditions under which business transactions with their suppliers are
conducted payments to suppliers are made in accordance with those
terms provided that suppliers also comply with all relevant terms and
conditions at 2nd february 2003 the amount the group owed its
suppliers represented 33 working days’ purchases at 3rd february
2002 21 the company is a holding company and does not have any
trade creditors
charitable and political donations
in the us the group has an ongoing policy of donating certain items of
stock to charitable organisations in addition during the year the group
made charitable donations in cash of £51000 further details of the
group’s charitable activities appear in the social responsibility report
the group continues its policy of not making contributions to political
parties although resolutions will be proposed at the company’s annual
general meeting to deal with the consequences of the political parties
elections and referendums act 2000 these resolutions are explained in
the notes accompanying the notice of the meeting
employment
the group places great emphasis on optimising the contribution made by
employees at all levels around the world a groupwide performance
review and annual management audit process are in their fourth year of
operation two leadership development programmes have been
implemented for the top 150 managers and a series of programmes for
new or inexperienced managers and supervisors have been introduced
product training using interactive elearning technology has been
implemented a change management workshop has been introduced
across the group in addition there has been signiﬁcant investment in
general skill development with particular reference to computer skills
marketing and customer service
a formal job grading system exists across the group to assist
remuneration practices as well as career development and organisational
planning processes
employees are informed of the performance of the group and a
structured communication programme allows factors affecting their
employment to be discussed
working in close cooperation with elected representatives from its
european operating companies the group has established a european
directors’ report works council the premier farnell european forum the forum provides
an arena for the exchange of relevant and appropriate information and
constructive dialogue between management and employees on european
issues
the group gives full and fair consideration to applications for employment
from disabled persons with regard to their particular aptitudes and
abilities efforts are made to continue the employment of those who
become disabled during their employment training career development
and promotion are as far as practicable identical for all employees
according to their skills and abilities the group consistently seeks to
recruit develop and employ throughout the organisation suitably qualiﬁed
capable and experienced people irrespective of race religion or sex
environment
the group recognises the importance of responsible environmental
management and its obligation to protect the environment the group
therefore gives high priority to all environmental matters further information
appears in the social responsibility report
substantial shareholdings
at 10th april 2003 the company had been notiﬁed of the following
interests amounting to 3 per cent or more of the company’s issued
ordinary share capital

axa sa 732
prudential plc 612
scottish widows 477
the capital group companies inc 410
standard life group 399
hbos plc 395
royal and sun alliance insurance group plc 369
legal and general plc 306
independent auditors
following the conversion of pricewaterhousecoopers into a limited liability
partnership from 1 january 2003 pricewaterhousecoopers resigned as
auditors of the company on 18th march 2003 and pricewaterhousecoopers
llp was appointed as auditor to ﬁll the casual vacancy which arose
a resolution to reappoint pricewaterhousecoopers llp as auditors and to
authorise the directors to determine their remuneration will be proposed at
the forthcoming annual general meeting of the company
annual general meeting
the notice convening the company’s 2003 annual general meeting at
the mayfair conference centre marble arch london on 11th june 2003
at 1130 am is set out in a separate document issued to shareholders
by order of the board
steven webb
secretary
farnell house
forge lane
leeds ls12 2ne
19th march 2003
premier farnell plc directors’ report
annual report and accounts 2003
39 remuneration report
this report provides information on directors’ remuneration a resolution
will be put to shareholders at the company’s annual general meeting
inviting them to approve this report
remuneration policy
the group’s overall policy aims are to
– attract develop motivate and keep talented people at all levels
throughout the group
– pay competitive salaries and beneﬁts to all of its people
– encourage the holding of shares in the company as an effective way of
aligning the interests of employees with those of shareholders and
– focus remuneration arrangements to help each business in the group
meet its speciﬁc targets
the board’s policy for executive remuneration is to
– pay a basic salary which is competitive with other companies of similar
size and complexity
– give executives the opportunity to increase their basic earnings by
meeting and outperforming key short term and long term measures
thereby linking executive rewards to the group’s performance and
shareholder interests
– encourage executives to hold shares in the company and
– reward executives fairly and responsibly for their contribution to the
group’s performance without paying more than is necessary to achieve
this objective
in framing this policy the board has given full consideration to the
provisions of the combined code
this report sets out the group’s policy on directors’ remuneration for
2003 and so far as practicable for subsequent years the inclusion in the
report of remuneration policy in respect of years after 2003 is required by
the legislation under which this report is prepared the remuneration
committee is able to state its remuneration policy for 2003 with
reasonable certainty but is less certain that this policy will continue without
amendment in subsequent years this is because the committee
considers that a successful remuneration policy needs to be sufﬁciently
ﬂexible to take account of future changes in the group’s business
environment and remuneration practice any changes in policy for years
after 2003 will be described in future remuneration reports all
statements in this report in relation to remuneration policy for years after
2003 should be read in the light of this paragraph
as part of the process of keeping the group’s remuneration policy under
review two proposals will be put to shareholders at the company’s
annual general meeting
the ﬁrst proposal is for the adoption of a new executive share option
scheme which if approved will replace the existing executive option
schemes in line with current best practice the proposed new option
scheme provides for annual grants to participants including executive
directors the maximum value of an annual grant to any individual will be
equal to 100 per cent of the individual’s annual salary exercise of options
granted under the scheme will be subject to a performance condition
this condition will be that the growth in the company’s earnings per share
eps over the three consecutive ﬁnancial years starting with the year of
grant exceeds the growth in the uk retail price index rpi over the same
period by at least 9 per cent at this level of performance half of the
options granted would be exercisable exercise of all options granted will
require that the company’s eps growth exceeds rpi over the period by at
least 15 per cent with a sliding scale for performance between 9 per cent
and 15 per cent if the performance condition is not met over this three
year period options may also be exercised if the company’s eps growth
exceeds rpi by a minimum of 12 per cent over the four ﬁnancial years
starting with the year of grant the same sliding scale for exercise will
apply for performance between 12 per cent and 20 per cent if the
performance target is not met by the fourth year the relevant options will
lapse
earnings per share was chosen as the appropriate measure of performance
as it provides an absolute benchmark of the company’s performance and
is therefore a suitable balance with the relative performance measurement
used in the company’s longterm incentive plan
the second proposal is for certain amendments to the company’s
longterm incentive plan ltip the main performance measure under the
ltip relates to the company’s total shareholder return or “tsr” share
price growth and reinvested dividends over a three year period the base
share price used for tsr calculation purposes is currently the average
price over the 12 month period immediately prior to the beginning of the
ﬁnancial year in which an award is made under the plan this base share
price is compared to the share price three years later calculated as the
average over the 12 month period immediately prior to the end of the
three year performance period
it is proposed that both of these averaging periods are reduced to three
months and that the averaging takes place in the period immediately prior
to the date of an award the remuneration committee feels that this will
create a much closer link to the company’s performance at the time
awards are made while mitigating the impact of share price volatility it is
also proposed that the same averaging period is used for calculating the
maximum value of awards made to participants
shareholders are also asked to allow amendment to the ltip rules to
allow grants of awards within the 42 day period following approval at the
annual general meeting referred to above further information on both
proposals is contained in the notice of annual general meeting sent to
shareholders with this annual report
previously participants in the long term incentive plan did not receive
grants of executive options during the year the committee revised this
approach and granted executive share options to participants in the
longterm incentive plan including executive directors the committee
concluded that making only longterm incentive plan awards to the
company’s most senior executives and only executive option grants to the
premier farnell plc remuneration report
annual report and accounts 2003
40
remuneration report next tier of management was potentially divisive because of the possibility
of one group receiving different beneﬁts to the other group in respect of
the same performance by the company the committee now intends that
longterm incentive awards will also be made more widely within the
group in order that executive directors and senior executives receive a
balance of share options and longterm incentive awards
the remuneration committee and its role
the remuneration committee consists of mr michael lester chairman
sir malcolm bates mr william korb mr cary nolan and mr john roques
all members of the committee are nonexecutive directors and
considered to be independent mr morton mandel was a member of the
committee until his retirement from the board on 12th june 2002
the chief executive attends meetings of the committee to discuss the
performance of other executives and to make proposals where necessary
but is not present when his own position is discussed
the committee makes recommendations to the board on the group’s
framework of executive remuneration and its cost the committee
determines the speciﬁc remuneration packages for executive directors
and the other senior executives who form the group leadership team
during the year the committee received advice from the chief executive in
respect of the remuneration arrangements for other senior executives and
from mr brian lewis group hr director in respect of remuneration
arrangements generally
the current remuneration package
the current elements of remuneration for executive directors and senior
executives are as follows
– salary and beneﬁts
the committee reviews salaries each year taking account of group and
personal performance the committee also takes account of the levels
of pay awarded elsewhere in the group
the value of noncash beneﬁts for executive directors is included in the
table of remuneration on page 43 and consists of a fully expensed car
and life and health insurance the value of these beneﬁts is not
pensionable but is assessable to tax
– 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 60 per cent for the year ended 2nd february
2003 of base salary for mr andrew fisher to reach this maximum
requires signiﬁcant value creation by the group as well as achievement
of clearly deﬁned individual objectives
– longterm incentives
the company operates a longterm incentive plan and the share option
schemes described below
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 value of awards which can be made in any year to a participant
is equal to 100 per cent of basic salary
the main performance condition compares the growth of the company’s
tsr over a three year period to that of the companies in the ftse mid
250 index excluding investment trusts the company’s ranking amongst
the comparator companies determines the percentage of shares which a
participant can acquire no shares may be acquired where the company’s
ranking is below median and to acquire the full number of shares
awarded the company must rank in the top quartile of the comparator
group between these two points vesting is on a 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 re
testing of performance
in addition shares can only be acquired under any award if the
committee is satisﬁed that the underlying performance of the company
during the performance period justiﬁes the exercise of an award
the performance condition was chosen as the committee believes that
tsr is an appropriate method of comparing the performance of the
company to that of its peers the ftse 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
underlying performance of the company during the performance period
justiﬁes the exercise of an award is intended to give the committee a
discretion to refuse to allow a particular exercise notwithstanding the
achievement of at least a median tsr ranking the committee’s view is
that such circumstances are likely to be exceptional and therefore they
are difﬁcult to determine before they have arisen in addition the
committee does not wish to limit its discretion in any way by attempting
to 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 two executive share option schemes
and has a savings related saye share option scheme beneﬁts under
these plans are not pensionable as noted above it is proposed to
replace the executive share option schemes with a new share option
premier farnell plc remuneration report
annual report and accounts 2003
41 scheme for which shareholder approval is being sought at the forthcoming
annual general meeting of the company
following the 1996 finance act grants of inland revenue approved
options are limited to a maximum value of £30000 per participant and are
made under the approved executive option scheme options in excess of
£30000 are granted under the unapproved executive scheme grants
under both schemes are normally phased and the aggregate total option
value for any individual is limited to four times remuneration
executive options granted after 13th march 2001 may not be exercised
unless the growth in the company’s earnings per share eps over a
period of three consecutive ﬁnancial years exceeds the growth in the uk
retail price index rpi over the same period by at least 9 per cent for
options granted after 20th june 1996 but before 14th march 2001
exercise is subject to the growth in eps over three consecutive years
exceeding the growth in rpi over the same period by at least 6 per cent
for options granted before 20th june 1996 eps growth over three
consecutive years must match the growth in rpi over the same period
before options can be exercised eps was chosen as the appropriate
measure of performance at the time the executive share option schemes
were ﬁrst introduced and is the most common measure used in traditional
option schemes the company’s eps performance is reported quarterly in
the company’s ﬁnancial statements
as noted should the adoption of the new executive share option scheme
be approved at the company’s annual general meeting the new scheme
will replace both the existing approved and unapproved executive share
option schemes
in common with all eligible employees of the group executive directors
are entitled to participate in the company’s saye option scheme these
options are not subject to the satisfaction of a performance condition as
this is an all employee scheme details of their interests in particular issues
under the scheme during the year to 2nd february 2003 are set out in the
table on page 44
pension arrangements
the ﬁnal salary section of the premier farnell uk pension scheme the
uk scheme was closed to new entrants during 1998 employees who
were entitled to ﬁnal salary beneﬁts as members of the uk scheme at
31st december 1998 now receive beneﬁts through a combination of ﬁnal
salary beneﬁts funded by the uk scheme and the premier farnell corp
master pension plan the us plan in addition contributions are made to
the money purchase section within the uk scheme employees joining
the uk scheme since 1st january 1999 are entitled to money purchase
beneﬁts only and the uk scheme is no longer “contracted out”
mr john hirst and mr andrew fisher are each entitled to a combination
of ﬁnal salary and money purchase beneﬁts under the arrangements set
out above up to the limit of the inland revenue earnings cap currently
£97200 company contributions payable into the money purchase
arrangement on their behalf amount to 185 per cent of the earnings cap
for mr hirst and 143 per cent of the earnings cap for mr fisher with each
making an employee contribution equal to 3 per cent of the earnings cap
the company makes further contributions on behalf of mr hirst and
mr fisher to unapproved schemes determined by reference to the excess
of their salaries over the earnings cap the cost to the company of these
further contributions was £244161 2002 £142840 for mr hirst and
£72697 2002 £60888 for mr fisher
relative importance of remuneration elements
the committee’s view is that the performance related elements of the
remuneration package for executive directors should be a signiﬁcant
element of the total this serves to align the interests of such directors
with shareholders assuming full payment of all elements more than
twothirds of the total remuneration of executive directors ignoring
pension contributions would be performance related
service contracts
in accordance with the company’s policy both mr hirst and mr fisher
have service contracts which are terminable by the company and by the
executive on twelve months’ notice mr hirst’s service contract dated
13th november 1998 allows the company to make a payment of salary
in lieu of the whole or part of his notice period and mr fisher’s contract
dated 24th november 1994 contains provisions entitling him to a
payment equal to 12 months’ salary and beneﬁts in the event of early
termination the company’s policy is generally not to include a provision
providing for payment of a ﬁxed sum on termination and to endeavour to
minimise any payment on early termination by insisting on mitigation of
any loss the provisions in mr fisher’s contract were agreed as part of the
reduction in his notice period from 24 months during 2001
nonexecutive directors
the fees for the nonexecutive directors are determined by the board as
a whole 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 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 12th june 2002 annual
sir robert horton 12th june 2002 annual
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
all directors’ appointments are subject to approval of the shareholders in
general meeting sought on a threeyearly basis
premier farnell plc remuneration report
annual report and accounts 2003 continued
42 directors’ remuneration other
emoluments
salary annual including total emoluments pension contributions
or fees bonus beneﬁts 2003 2002 2003 2002
£000 £000 £000 £000 £000 £000 £000
executive
j r hirst 356 225 25 606 349 262 160
a c fisher 235 116 18 369 228 87 74
nonexecutive
sir malcolm bates chairman 100 – – 100 100 – –
sir robert horton 35 – – 35 26 – –
w korb appointed 21st january 2003 1 – – 1–––
m lester 28 – – 28 26 – –
m l mandel retired 12th june 2002 10 – – 10 26 – –
c j nolan 26 – – 26 26 – –
d j s roques 28 – – 28 26 – –
p f sullivan retired 12th june 2002 10 – – 10 26 – –
829 341 43 1213 833 349 234
no expense allowances chargeable to uk income tax were paid
there were no amounts paid or receivable in respect of compensation for loss of ofﬁce or in connection with the termination of any director
the following table sets out the ﬁnal salary pension beneﬁts accruing to the executive directors
final salary additional ﬁnal salary transfer value of ﬁnal transfer value of ﬁnal ba 
pension accrued as at pension earned during salary beneﬁts as at salary beneﬁts as at director’s
2nd february 2003 the year including inﬂation 3rd february 2002 2nd february 2003 contributions
excluding inﬂation a b
£ pa £ pa £ £ £
j r hirst 6030 1172 1089 50319 42328 7991
a c fisher 18382 1400 1111 135523 96861 38662
for each of the directors the main terms applying to their ﬁnal salary pensions are
– mr hirst is aged 50 and mr fisher is aged 45
– payable from normal retirement age of 60
– the directors do not make any contribution to the ﬁnal salary pension arrangements
– spouse’s pension of 50 per cent of the director’s pension payable on death 
– pensions in payment increase in line with inﬂation to a maximum of 5 per cent each year
the accrued ﬁnal salary pension shown at 2nd february 2003 is the combined ﬁgure for the uk scheme and us plan deﬁned beneﬁt accruals
and is the amount that the director would be entitled to from normal retirement age if he left service at the end of the year
the increase in ﬁnal salary pension during the year is the increase over the ﬁgure disclosed in last year’s accounts
premier farnell plc remuneration report
annual report and accounts 2003 continued
43 all transfer values have been calculated on the basis of actuarial advice the transfer values of the accrued entitlement represent the value of assets
that the pension scheme would need to transfer to another pension provider on transferring the scheme’s liability in respect of the director’s ﬁnal salary
pension beneﬁts they do not represent sums payable to individual directors and therefore they cannot be added meaningfully to annual remuneration
the table above shows transfer values at the beginning and the end of the year the decrease in transfer value is related to the substantial decline in
equity markets members’ contributions paid during the year were paid into the money purchase arrangement within the uk scheme and as such are
not included in the transfer value
directors’ interests
the interests of the directors in the ordinary share capital of the company at the beginning and end of the ﬁnancial year are set out below there have
been no changes in the interests set out between the end of the ﬁnancial year and 10th april 2003
2nd february 3rd february
2003 2002
sir malcolm bates – beneﬁcial 35000 35000
a c fisher – beneﬁcial 80000 47500
j r hirst – beneﬁcial 66050 36050
sir robert horton – beneﬁcial 13000 13000
w korb – beneﬁcial 10000 –
m lester – beneﬁcial 30000 10000
c j nolan – beneﬁcial 7000 7000
d j s roques – beneﬁcial 10000 10000
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
3rd february 2nd february exercise exercise
2002 granted exercised lapsed 2003 price period
j r hirst 300000 – – – 300000 305p 2nd july 2001 to 2nd july 2008
70000 – – – 70000 192p 31st march 2002 to 31st march 2009
– 125000 – – 125000 153p 21st october 2005 to 21st october 2012
a c fisher 30000 – – – 30000 682p 16th may 2000 to 16th may 2007
57856 – – – 57856 551p 19th may 1998 to 19th may 2005
3248 – – 3248 – 531p 1st february 2002 to 31st july 2002
73000 – – – 73000 192p 31st march 2002 to 31st march 2009
– 75000 – – 75000 153p 21st october 2005 to 21st october 2012
 saye share options which were not subject to any performance conditions the other options listed above are executive options which are subject
to the performance conditions described under the heading 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 2nd february 2003 was 1745p 3rd february 2002 273p and the range during the year was 129p–356p
premier farnell plc remuneration report
annual report and accounts 2003 continued
44 longterm incentive plan
interests of directors in the plan are
at awarded market price vested lapsed at end of
3rd february at date of 2nd february performance
2002 award 2003 period
j r hirst 62047 – 4855 – 62047 – january 2003
95541 – 305 – – 95541 january 2004
– 94964 3475 – – 94964 january 2005
a c fisher 41365 – 4855 – 41365 – january 2003
63694 – 305 – – 63694 january 2004
– 61870 3475 – – 61870 january 2005
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 2nd february 2003 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 directors’ interests 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 19th march 2003
signed on behalf of the board by
michael lester 
chairman of the remuneration committee
0
20
40
60
80
100
120
140
160
180
2nd february
1998
2nd february
1999
2nd february
2000
2nd february
2001
2nd february
2002
2nd february
2003
premier farnell ftse mid250 index excl investment trusts
value £
premier farnell plc remuneration report
annual report and accounts 2003 continued
45 the company is committed to high standards of corporate governance
throughout the group the board is accountable to the company’s
shareholders for good governance and this statement describes how the
principles identiﬁed in the combined code are applied by the company
the board conﬁrms that the company now complies with all of the
provisions set out in section 1 of the combined code
after the end of the accounting period the board nominated the company’s
deputy chairman as the senior independent nonexecutive director the
company’s remuneration committee composition has complied with the
combined code since mr mandel’s retirement from the board and the
committee in june 2002
directors
the board consists of a nonexecutive chairman ﬁve other
nonexecutive directors and two executive directors all of the non
executive directors are considered by the board to be independent
biographies of the board members appear on page 27 these indicate
the high level and broad range of experience that they possess
appropriate training for new and existing directors is constantly kept
under review and provided where necessary
the role of the board is to maximise the 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 principal terms of reference of the audit remuneration nominations
and organisation and management development committees are set out
on page 47 the membership of the committees appears on page 27
there is an agreed procedure for directors to take independent
professional advice at the company’s expense if necessary in the
performance of their duties this is in addition to the access which every
director has to the company secretary the company secretary is
charged by the board with ensuring that board procedures are followed
to enable the board to function effectively and assist directors to discharge
their responsibilities full and timely access is given to all relevant information
in the case of board meetings this consists of a comprehensive set of
papers including regular business progress reports and discussion
documents regarding speciﬁc matters in addition individual directors
meet with senior management and are encouraged to make periodic site
visits including overseas where appropriate senior managers are regularly
invited to board meetings and make business presentations
potential appointments of both executive and 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
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 40 to 45
each executive director abstains from any discussion or voting at
full board meetings on remuneration committee recommendations where
the recommendations have a direct bearing on his own remuneration
package the details of each executive director’s individual package are
ﬁxed by the committee in line with the policy adopted by the full board
communication with stakeholders
the company places a great deal of importance on communication with
its stakeholders
there is regular dialogue with individual institutional shareholders as well
as general presentations after the interim and preliminary results in 1999
the company introduced quarterly ﬁnancial reporting in order to improve
the level of information available to all shareholders all company
announcements are published on the company’s website together with
presentation material
all ordinary shareholders have the opportunity to ask questions at the
company’s annual general meeting and the group chief executive
makes a business presentation summarising the progress of the group
premier farnell plc corporate governance
annual report and accounts 2003
46
corporate governance during the year the chairmen of the audit remuneration and nominations
committees are available to take questions at the meeting
as discussed in the directors’ report employee communication is given
high priority this has included the establishment of a european works
council
going concern
after making enquiries the directors have a reasonable expectation that
the company and the group have adequate resources to continue in
operational existence for the foreseeable future for this reason they
continue to adopt the going concern basis in preparing the accounts
audit and internal control
the primary role of the audit committee is to keep under review the
group’s ﬁnancial and other systems and controls and its ﬁnancial reporting
procedures in fulﬁlling this role the committee receives and reviews work
carried out by the internal and external auditors and their ﬁndings the
company’s internal audit department works to an annual programme
developed in consultation with the committee as well as covering speciﬁc
matters arising during the year
the committee keeps the scope and cost effectiveness of both the
internal and external audit functions under review the independence and
objectivity of the external auditors is also considered on a regular basis
with particular regard to the level of nonaudit fees the split between
audit and nonaudit fees for the year to 2nd february 2003 and
information on the nature of the nonaudit fees incurred appear in note 4
to the financial statements the nonaudit fees were paid principally in
respect of assurance work including taxation and are considered by the
committee not to affect the independence or objectivity of the auditors
the committee has recently resolved that the external auditors’
appointment will be subject to biannual review the senior audit partner at
the group’s external auditors is rotated every ﬁve years during the year
the committee also adopted a formal policy on the provision of nonaudit
services by the auditors this policy prohibits the provision of certain
services and requires that others are subject to prior approval
throughout the year the group has been in full compliance with the
combined code provisions on internal control
the board has overall responsibility for the group’s system of internal
controls and risk management the audit committee reviews and
monitors the system’s effectiveness on behalf of the board while
responsibility for the system rests with the executive directors the system
includes an ongoing process for identifying evaluating and managing
signiﬁcant business risks however any system can provide only
reasonable and not absolute assurance of meeting internal control
objectives
the company is subject to the requirements of the sarbanesoxley act
2002 as they apply to foreign private issuers this us legislation requires
amongst other things annual certiﬁcations to be included within or
attached to the company’s annual report on form 20f  which is ﬁled
with the us securities and exchange commission as part of the process
for ensuring that such certiﬁcations can be made a new executive
management committee the disclosure and risk committee has been
formed the disclosure and risk committee has subsumed within its
terms of reference the functions previously carried out by the risk
committee as well as taking responsibility for reviewing disclosures made
by the company to regulators and the investment community as part of
this expanded role the disclosure and risk committee monitors and
reviews disclosure and risk management processes and reports to the
audit committee the audit committee considers these reports
alongside other reports from the internal audit department and the
external auditors to arrive at a balanced assessment of control
effectiveness across the group
the audit committee reports on its assessment to the board so that the
board can reach its own informed view on control effectiveness
the statement of the directors’ responsibility in relation to the accounts
appears on page 74
summary terms of reference of board committees
– audit
review the company’s ﬁnancial and other systems and controls and
the company’s ﬁnancial reporting
– remuneration
make recommendations to the board on the company’s framework of
executive remuneration determine remuneration packages for
executive directors and other senior executives
– nominations
make recommendations to the board on the appointment of directors
keep the composition of the board under review
– organisation and management development
review the group’s policies for ensuring that its management resource
at senior levels across the group and the organisation and development
of such resource are compatible with the longer term needs of the
group
premier farnell plc corporate governance
annual report and accounts 2003
47 2003 2002 2003 2002
52 weeks 53 weeks 52 weeks 53 weeks
restated restated
notes £m £m m m
turnover 1 7590 8064 11613 11532
cost of sales 4470 4732 6839 6767
gross proﬁt 3120 3332 4774 4765
net operating expenses 1
– before amortisation of goodwill 2291 2448 3505 3501
– amortisation of goodwill 26 15 40 21
total net operating expenses 2317 2463 3545 3522
operating proﬁt 1
– before amortisation of goodwill 829 884 1269 1264
– amortisation of goodwill 26 15 40 21
total operating proﬁt 803 869 1229 1243
loss on disposal of businesses 2 48 110 74 157
net interest payable 3 157 159 240 228
proﬁt before taxation 4 598 600 915 858
taxation 6 182 214 279 306
proﬁt after taxation 416 386 636 552
preference dividends nonequity 8 108 261 165 373
proﬁt attributable to ordinary shareholders 308 125 471 179
ordinary dividends equity 8 326 245 499 350
retained loss for the year 21 18 120 28 171
earnings per share 9
basic and diluted 93p 46p 0142 0066
earnings per share before amortisation of goodwill and disposals 9
basic and diluted 112p 92p 0171 0132
the translation of sterling into us dollars has been presented for convenience purposes only using the average exchange rate for the year of 153
2002 143
there is no material difference between the results as disclosed in the proﬁt and loss account and the results on an unmodiﬁed historical cost basis
all of the group’s turnover and operating proﬁt relates to continuing operations
the expense classiﬁcation in the consolidated proﬁt and loss account has been restated to reﬂect the way in which management measure the
performance of the group further details are given in the statement of accounting policies on page 52
statement of total recognised gains and losses
financial year ended 2nd february 2003
2003 2002
52 weeks 53 weeks
£m £m
proﬁt after taxation 416 386
currency translation adjustments 03 13
total recognised gains for the year 413 373
prior year adjustment on adoption of frs 19 – 162
total recognised gains since last annual report 413 535
premier farnell plc consolidated proﬁt and loss account
annual report and accounts 2003
48
consolidated proﬁt and loss account
financial year ended 2nd february 2003 2003 2002 2003 2002
notes £m £m m m
fixed assets
intangible assets 10 485 511 795 720
tangible assets 11 1129 1141 1852 1609
investments 12 02 05 03 07
1616 1657 2650 2336
current assets
stocks 13 1478 1529 2424 2156
debtors – due within one year 14 1218 1321 1998 1862
– due after more than one year 14 822 870 1348 1227
cash at bank and in hand 296 281 485 396
3814 4001 6255 5641
creditors – due within one year 16 2547 1686 4177 2377
net current assets 1267 2315 2078 3264
total assets less current liabilities 2883 3972 4728 5600
creditors – due after more than one year 17 1415 2415 2321 3405
provisions for liabilities and charges 18 433 442 710 623
1035 1115 1697 1572
capital and reserves
called up share capital 19 259 415 424 585
share premium account 21 192 44 315 62
capital redemption reserve 21 06 – 10 –
proﬁt and loss account 21 578 656 948 925
shareholders’ funds 22 1035 1115 1697 1572
shareholders’ funds comprise
equity interests 232 3752 381 5290
nonequity interests 1267 4867 2078 6862
1035 1115 1697 1572
the translation of sterling into us dollars has been presented for convenience purposes only using the yearend exchange rate of 164 2002 141
approved by the board on 19th march 2003
sir malcolm bates
chairman
premier farnell plc consolidated balance sheet
annual report and accounts 2003
49
consolidated balance sheet
at 2nd february 2003 2003 2002
notes £m £m
fixed assets
investments 12 6239 6243
current assets
debtors – due within one year 14 08 10
– due after more than one year 14 3228 3632
3236 3642
creditors – due within one year 16 294 524
net current assets 2942 3118
total assets less current liabilities 9181 9361
creditors – due after more than one year 17 1839 1512
7342 7849
capital and reserves
called up share capital 19 259 415
share premium account 21 192 44
capital redemption reserve 21 06 –
merger reserve 21 06 06
proﬁt and loss account 21 6879 7384
shareholders’ funds 22 7342 7849
shareholders’ funds comprise
equity interests 6075 2982
nonequity interests 1267 4867
7342 7849
approved by the board on 19th march 2003
sir malcolm bates
chairman
premier farnell plc company balance sheet
annual report and accounts 2003
50
company balance sheet
at 2nd february 2003 2003 2002 2003 2002
52 weeks 53 weeks 52 weeks 53 weeks
notes £m £m m m
net cash inﬂow from operating activities 24 920 1071 1408 1532
returns on investments and servicing of ﬁnance
interest received 06 13 09 19
interest paid 164 169 251 242
dividends paid on preference shares nonequity 108 261 165 373
net cash outﬂow from returns on investments and 
servicing of ﬁnance 266 417 407 596
taxation paid 127 274 194 392
capital expenditure and ﬁnancial investment
purchase of tangible ﬁxed assets 249 248 381 355
sale of tangible ﬁxed assets 17 13 26 19
purchase of own ordinary shares 12 – 06 – 09
net cash outﬂow from capital expenditure and 
ﬁnancial investment 232 241 355 345
acquisitions and disposals
purchase of subsidiary undertaking – 660 – 944
purchase of minority interest – 03 – 04
disposal of subsidiary undertakings 23 33 275 50 393
net cash inﬂowoutﬂow from acquisitions and disposals 33 388 50 555
equity dividends paid 281 245 430 350
cash inﬂowoutﬂow before use of liquid resources
and ﬁnancing 47 494 72 706
management of liquid resources
decrease in short term deposits with banks – 163 – 233
financing
issue of ordinary shares 19 07 02 11 03
purchase of own preference shares 19 83 – 127 –
preference share conversion costs 19 09 – 14 –
new bank loans 291 480 445 686
repayment of bank loans 230 110 352 157
net cash outﬂowinﬂow from ﬁnancing 24 372 37 532
increase in cash 23 41 35 59
the translation of sterling into us dollars has been presented for convenience purposes only using the average exchange rate for the year of 153
2002 143
reconciliation of net debt
opening net debt 2364 1792
increase in cash 23 41
decrease in short term deposits – 163
increase in debt 61 370
exchange movement 310 80
closing net debt 24 2092 2364
premier farnell plc consolidated statement of cash flows
annual report and accounts 2003
51
consolidated statement of cash flows
financial year ended 2nd february 2003 basis of accounting
the accounts have been prepared under the historical cost convention
and in accordance with applicable uk accounting standards a summary
of the more important group accounting policies which the directors
consider to be the most appropriate for the group and with the exception
of the expense classiﬁcation referred to below have been applied
consistently is set out below
basis of consolidation
the consolidated accounts incorporate the accounts of the company and
each of its subsidiary undertakings for the ﬁnancial year ended
2nd february 2003 52 weeks results of subsidiary undertakings
acquired or disposed of are consolidated from or up to the date on which
control passes the ﬁnancial results for the ﬁnancial year ended
3rd february 2002 comprised a 53 week period
expense classiﬁcation
the expense classiﬁcation in the consolidated proﬁt and loss account
has been restated to reﬂect the way in which management measure
and monitor the performance of the group with respect to gross proﬁt
and operating expenses expenses are now classiﬁed as follows
cost of sales comprises the cost of goods delivered to customers
including the net cost of freight packaging and inventory adjustments
distribution costs represent all operating company expenses including
sales marketing product and purchasing warehousing information
technology and ecommerce
administrative expenses comprise the cost of central head ofﬁce and
the group board
management consider that the above classiﬁcation of costs is the most
appropriate given the nature of the business
in prior years distribution costs comprised gross freight costs
administrative expenses were as deﬁned above and all other costs
were treated as cost of sales
the effect of this change on the prior year results is as follows
as previously reclassiﬁcation as restated
reported
£m £m £m
turnover 8064 – 8064
cost of sales 6766 2034 4732
total net operating expenses 429 2034 2463
total operating proﬁt 869 – 869
goodwill
goodwill comprising the amount by which the consideration for
acquisitions exceeds the fair value of the net assets acquired is capitalised
and amortised through the proﬁt and loss account on a straight line basis
over its estimated useful life as follows
buck  hickman 20 years
as permitted by frs10 goodwill and intangible assets goodwill arising
on acquisitions prior to 1998 remains written off against reserves such
goodwill would be charged in the proﬁt and loss account on
subsequent disposal of the related business
goodwill arising on acquisitions is reviewed for impairment in
accordance with frs10 and frs11 impairment of fixed assets and
goodwill at the end of the ﬁrst full year after an acquisition and in other
years if events or changes in circumstances indicate that the carrying
value may not be recoverable any impairment being charged to the
proﬁt and loss account
tangible fixed assets and depreciation
fixed assets are stated at cost interest is not capitalised
with the exception of motor vehicles which are depreciated on a
reducing balance basis at 25 per annum depreciation is calculated to
write off the cost of individual ﬁxed assets from the time they become
operational by equal annual instalments over their estimated useful lives
which are principally as follows
plant and equipment between 5 and 10 years
computer equipment between 3 and 5 years
freehold buildings 50 years
no depreciation is provided on freehold land
financial instruments
gains and losses on forward foreign exchange contracts entered into as
hedges of future purchases and sales denominated in foreign currency
are carried forward and taken to the proﬁt and loss account on maturity to
match the underlying transactions
amounts payable or receivable in respect of interest rate hedges are
recognised as adjustments to interest payable or receivable over the life of
the hedge
stocks
stocks are stated at the lower of cost and net realisable value provision is
made against slow moving and obsolete stock based on analysis of
historical data
deferred taxation
full provision is made on an undiscounted basis for deferred taxation
resulting from timing differences between proﬁts computed for taxation
purposes and proﬁts stated in the accounts to the extent that there is an
obligation to pay more tax in the future as a result of the reversal of those
timing differences
deferred tax assets are recognised to the extent they are expected to be
recoverable
pensions and similar obligations
the group operates deﬁned beneﬁt and deﬁned contribution schemes
pension schemes are accounted for in accordance with ssap 24
accordingly the expected cost of providing pension beneﬁts under
deﬁned beneﬁt schemes and other 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 27
foreign exchange
the results of overseas subsidiary undertakings are translated into sterling
at the average exchange rate ruling during the year foreign currency assets
and liabilities are translated into sterling at the rates of exchange ruling at
the balance sheet date gains or losses arising in the ordinary course of
business are dealt with in arriving at operating proﬁt those arising on the
translation of the assets and liabilities of overseas subsidiary undertakings
together with the exchange differences arising when the proﬁt and loss
accounts are translated at average rates and compared to the rate ruling at
the balance sheet date are dealt with as movements in reserves
turnover and revenue recognition
turnover comprises the value of sales to outside customers excluding
value added and sales taxes turnover is recognised when the risks and
rewards of ownership have passed to the customer
catalogue and advertising costs
catalogue costs are expensed over the life of the catalogue up to a
maximum period of one year advertising costs are expensed as incurred
leased assets
payments under operating leases are charged to the proﬁt and loss
account as they fall due
long term incentive plan
the consolidated proﬁt and loss account includes the costs relating to the
premier farnell performance share plan and the consolidated and
company balance sheets include the appropriate assets and liabilities of
the plan shares in the company held by the trust established to
administer the plan are shown as ﬁxed asset investments and are
amortised over the performance period of the plan to which they relate
where options over shares are awarded to executives the value of the
expected award is amortised on a straight line basis over the performance
period to which the award relates
investments in subsidiary undertakings
investments in subsidiary undertakings are included at cost provision is
made where in the opinion of the directors a permanent diminution in
value has occurred
premier farnell plc statement of accounting policies
annual report and accounts 2003
52
statement of accounting policies premier farnell plc notes to the accounts
annual report and accounts 2003
53
1 segmental information
1 turnover operating proﬁt and net operating assets
a business segments
turnover operating proﬁt net operating assets
2003 2002 2003 2002 2003 2002
52 weeks 53 weeks 52 weeks 53 weeks
£m £m £m £m £m £m
marketing and distribution division
americas 3116 3737 330 384 1239 1366
europe and asia paciﬁc 3486 3145 422 402 1396 1387
6602 6882 752 786 2635 2753
amortisation of goodwill – – 26 15 – –
6602 6882 726 771 2635 2753
industrial products division 988 1182 152 177 258 401
head ofﬁce costs – – 75 79 – –
7590 8064 803 869 2893 3154
b geographical segments by origin
turnover operating proﬁt net operating assets
2003 2002 2003 2002 2003 2002
52 weeks 53 weeks 52 weeks 53 weeks
£m £m £m £m £m £m
americas 3753 4569 458 529 1164 1683
uk 2516 2155 364 341 1321 1127
rest of world 1321 1340 82 93 408 344
head ofﬁce costs – – 75 79 – –
amortisation of goodwill uk – – 26 15 – –
7590 8064 803 869 2893 3154
amortisation of capitalised goodwill is in respect of the acquisition of buck  hickman in 2002 europe and asia paciﬁc segment
the geographical analysis of turnover by destination is not signiﬁcantly different from that shown above
2 reconciliation of net operating assets with net assets is as follows
2003 2002
£m £m
net operating assets 2893 3154
net debt 2092 2364
goodwill 485 511
pension fund prepayment 822 870
tax dividends and other 1073 1056
net assets 1035 1115
3 net operating expenses
2003 2002
restated
£m £m
distribution costs 2205 2360
administrative expenses 101 94
research and development expenditure 11 09
2317 2463
administrative expenses in 2003 include amortisation of goodwill of £26 million 2002 £15 million
research and development expenditure is charged to the proﬁt and loss account as incurred
notes to the accounts 2 loss on disposal of businesses
2003 2002
£m £m
lossgain on net assets sold net of costs 23 146
goodwill previously eliminated against reserves 26 256
loss on disposal of businesses in the year note 23 49 110
deferred consideration received from 2002 disposals 01 –
loss on disposal of businesses 48 110
on 28th june 2002 the company sold da lubricants the speciality lubricants business of the industrial products division in north america for a
consideration of £43 million
in the period up to disposal this business contributed £54 million 2002 £153 million of sales and incurred an operating loss of £01 million
2002 operating proﬁt £04 million the cash ﬂows from this business in the period up to disposal were not signiﬁcant
a tax credit of £09 million arose on the disposal 2002 nil
3 net interest payable
2003 2002
£m £m
interest receivable on shortterm deposits 06 13
interest payable on bank overdrafts and loans repayable within 5 years 162 170
interest payable on loans repayable after 5 years 01 02
157 159
4 proﬁt before taxation
proﬁt before taxation is stated after chargingcrediting
2003 2002
£m £m
amortisation of goodwill 26 15
depreciation 163 157
gain on sale of ﬁxed assets 05 15
restructuring costs 06 16
performance share plan – 12
operating lease rentals
plant and machinery 36 31
other 61 51
fees paid to the group’s auditors
statutory audit 05 04
further assurance services 01 –
tax services 02 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 2002 £01 million in respect of
the company
tax and other fees paid to the group’s auditors are in respect of assignments carried out on a worldwide basis it is the group’s policy to employ
pricewaterhousecoopers llp on assignments additional to their statutory duties where their expertise and experience of the group are important or
where they are awarded assignments on a competitive basis pricewaterhousecoopers llp are not engaged in assignments that are prohibited under
rules introduced pursuant to the us sarbanesoxley act 2002
tax services are in respect of tax compliance and tax advice in a number of territories
other nonaudit services provided included £01 million 2002 £nil in respect of advice on the implementation of share option and long term
incentive schemes
in the year ended 3rd february 2002 £01 million of fees were capitalised as part of the acquisition of buck  hickman no fees were capitalised in the
year ended 2nd february 2003
premier farnell plc notes to the accounts
annual report and accounts 2003 continued
54 5 employees and directors
2003 2002
£m £m
staff costs during the year were as follows
wages and salaries 1195 1273
social security costs 186 197
other pension costs 44 53
1337 1417
the average number of persons employed was as follows
2003 2002
number number
marketing and distribution division
americas 1654 1858
europe and asia paciﬁc 2306 2031
3960 3889
industrial products division 991 1243
head ofﬁce 43 42
4994 5174
directors’ remuneration
a detailed analysis of directors’ remuneration including salaries performancerelated bonuses and longterm incentives is provided under the
headings directors’ remuneration directors’ interests and share options in the remuneration report on pages 40 to 45 the total remuneration of the
directors comprises
2003 2002
£m £m
aggregate emoluments 12 08
company contributions to money purchase pension schemes 04 03
16 11
number of directors to whom retirement beneﬁts are accruing under a deﬁned beneﬁt scheme
and a money purchase scheme 2 2
details of the highest paid director are given on page 43 under the heading directors’ remuneration
6 taxation
2003 2002
£m £m
uk corporation tax at 30 2002 30
current tax for the year 135 113
current tax in respect of prior years 07 03
overseas corporate tax
current tax for the year 26 14
current tax in respect of prior years 01 12
deferred taxation
current year 31 94
prior year 04 08
182 214
the taxation charge for 2003 is net of a credit of £09 million arising from the disposal of businesses 2002 nil
the rate of the current tax charge on proﬁts before goodwill amortisation and loss on disposal of businesses is lower than the standard rate of
corporation tax in the uk the differences are explained below
2003 2002
 
standard rate of uk tax 300 300
impact of overseas losses and utilisation thereof – 01
overseas tax rates 06 15
timing differences 40 141
other current year items 13 02
prior year items 09 19
effective rate of tax 244 154
premier farnell plc notes to the accounts
annual report and accounts 2003 continued
55 7 premier farnell plc – proﬁt and loss account
premier farnell plc has not presented its own proﬁt and loss account as permitted by section 230 of the companies act 1985 the proﬁt for the
ﬁnancial year dealt with in the accounts of the company is £12 million 2002 £56 million
8 dividends
2003 2002
£m £m
preference nonequity
paid july 2002 july 2001 75 131
paid january 2003 january 2002 33 130
108 261
ordinary equity
interim paid of 40p 2002 40p per share 145 109
final proposed of 50p 2002 50p per share 181 136
326 245
9 earnings per share
basic earnings per share are based on the proﬁt attributable to ordinary shareholders for the year and the weighted average number of ordinary shares
in issue during the year excluding those shares held by the premier farnell executive trust note 12 for diluted earnings per share the weighted
average number of ordinary shares in issue is adjusted to assume issue of all dilutive potential ordinary shares 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
2003 2003 2002 2002
£m pence £m pence
proﬁt attributable to ordinary shareholders 308 93 125 46
loss on disposal of businesses 48 14 110 40
tax attributable to disposal of businesses 09 03 ––
amortisation of goodwill 26 08 15 06
proﬁt attributable to ordinary shareholders before disposals and amortisation of goodwill 373 112 250 92
number number
weighted average number of shares 331570659 271879752
dilutive effect of share options 850520 1007168
diluted weighted average number of shares 332421179 272886920
earnings per share
basic 93p 46p
diluted 93p 46p
earnings per share before amortisation of goodwill and disposals
basic 112p 92p
diluted 112p 92p
adjusted earnings per share ie before amortisation of goodwill and loss on disposal of businesses have been provided in order to facilitate year on
year comparison
premier farnell plc notes to the accounts
annual report and accounts 2003 continued
56 10 intangible fixed assets
goodwill
£m
group
cost
at 4th february 2002 and 2nd february 2003 526
amortisation
at 4th february 2002 15
charge for the year 26
at 2nd february 2003 41
net book amount
at 2nd february 2003 485
at 3rd february 2002 511
11 tangible fixed assets
freehold land plant and
and buildings equipment total
£m £m £m
group
cost
at 4th february 2002 810 1359 2169
additions 02 254 256
disposals – 92 92
businesses sold 24 55 79
currency translation adjustment 59 106 165
at 2nd february 2003 729 1360 2089
depreciation
at 4th february 2002 262 766 1028
charge for the year 11 152 163
disposals – 77 77
businesses sold 20 42 62
currency translation adjustment 28 64 92
at 2nd february 2003 225 735 960
net book amount
at 2nd february 2003 504 625 1129
at 3rd february 2002 548 593 1141
plant and equipment includes computer hardware and software with a cost of £870 million 2002 £788 million and accumulated depreciation of
£432 million 2002 £403 million
capital commitments authorised and contracted at 2nd february 2003 amounted to £32 million 2002 £106 million
premier farnell plc notes to the accounts
annual report and accounts 2003 continued
57 12 fixed asset investments
group group company company
2003 2002 2003 2002
£m £m £m £m
shares in subsidiary undertakings – – 6237 6238
interests in own shares 02 05 02 05
02 05 6239 6243
1 shares in subsidiary undertakings
£m
company
at 4th february 2002 6238
currency revaluation adjustment 01
at 2nd february 2003 6237
the principal trading subsidiary undertakings of premier farnell plc are as follows
country of
incorporation
and operation
farnell electronic components ltd uk
farnell electronic components pty ltd australia
farnell electronic components limited new zealand
farnell electronic components gmbh germany
farnell danmark as denmark
oy farnell finland ab finland
farnell components ab sweden
farnell ag switzerland
farnell components ireland limited eire
farnell france sas france
farnell netherlands bv netherlands
farnell do brasil ltda brazil
farnell components pte ltd singapore
farnell components m sdn bhd malaysia
farnell components hk ltd hong kong
farnell components sl spain
farnell italia srl italy
farnell belgium nv belgium
combined precision components plc uk
buck  hickman limited uk
newark corporation formerly da lubricant company inc usa
newark electronics corporation usa
mcm electronics inc usa
premier farnell llc usa
premier farnell canada limited formerly premier fastener limited canada
nv premier industrial belgium sa belgium
premier industrial deutschland gmbh germany
premier industrial holland bv holland
premier industrial france sarl france
premier industrial italia srl italy
premier industrial uk ltd uk
premierco españa sl spain
premier farnell electronics de mexico srl mexico
tpc wire  cable de mexico srl mexico
all of the above are wholly owned
companies incorporated in the uk are registered in england
all companies are involved in distribution activities premier farnell llc is also involved in manufacturing activities
a full list of subsidiary undertakings will be annexed to the company’s next annual return
premier farnell plc notes to the accounts
annual report and accounts 2003 continued
58 note 12 continued
2 interests in own shares
£m
group and company
cost
at 4th february 2002 and 2nd february 2003 11
amortisation
at 4th february 2002 06
charge for the year 03
at 2nd february 2003 09
net book amount
at 2nd february 2003 02
at 3rd february 2002 05
the premier farnell executive trust acquires ordinary shares and adrs each adr representing 2 ordinary shares in the open market in order to meet
anticipated obligations under the premier farnell performance share plan the cost of these shares is being amortised over the performance period of
the plan to which they relate the costs of administering the plan are charged to the proﬁt and loss account of the company the trustees have waived
the right to receive dividends in respect of the ordinary shares and adrs held by the trust at 2nd february 2003 and 4th february 2002 the trust held
234000 ordinary shares and 35000 adrs representing 70000 ordinary shares with a total nominal value of £15200 the market value of these
shares at 2nd february 2003 was £533000 3rd february 2002 £835000
13 stocks
group group company company
2003 2002 2003 2002
£m £m £m £m
raw materials 18 25 – –
work in progress 38 38 – –
finished goods and goods for resale 1422 1466 – –
1478 1529 – –
14 debtors
group group company company
2003 2002 2003 2002
£m £m £m £m
amounts falling due within one year
trade debtors 1045 1116 – –
deferred tax asset note 18 – – 03 02
other debtors 59 48 03 02
prepayments and accrued income 114 157 02 06
1218 1321 08 10
amounts falling due after more than one year
amounts owed by subsidiary undertakings – – 3228 3632
pension fund prepayment note 27 822 870 – –
822 870 3228 3632
premier farnell plc notes to the accounts
annual report and accounts 2003 continued
59 15 financial instruments and derivatives
an explanation of the group’s objectives policies and strategies in the use of derivatives and other ﬁnancial instruments is included in the finance
director’s review under the heading treasury operations on page 33 the following detailed disclosures with regard to the use of ﬁnancial instruments
and derivatives exclude short term trade debtors and creditors where permitted by frs13
1 foreign currency risk
the group hedges transactions primarily related to the purchase and sale of inventories denominated in foreign currencies through foreign exchange
forward contracts these contracts reduce currency risk from exchange rate movements with respect to these transactions and cash ﬂows gains and
losses are deferred and accounted for as part of the underlying transactions
the group does not hedge proﬁt translation exposure unless there is a corresponding cashﬂow since such hedges provide only a temporary deferral
of the effects of movements in exchange rates similarly whilst a signiﬁcant proportion of the group’s borrowings are denominated in us dollars the
group does not speciﬁcally hedge all of its longterm investments in overseas assets this has resulted in currency translation losses amounting to
£03 million and £13 million in the years ended 2nd february 2003 and 3rd february 2002 respectively being charged to reserves in relation to the
translation of overseas assets
at 2nd february 2003 the gross notional amount of foreign exchange forward contracts all of which had maturities of less than one year totalled
£140 million 2002 £29 million and can be analysed as follows
commitments to sell foreign currency
sterling equivalent unrecogniseddeferred
gains and losses
2003 2002 2003 2002
£m £m £m £m
euros 116 – 01 –
australian dollars 24 29 – –
other currencies – – – –
140 29 01 –
the increase in the gross notional amount of forward foreign exchange contracts compared to last year end reﬂects variations in the timing of entering
into contracts
the unrecogniseddeferred gains and losses in respect of foreign exchange forward contracts are estimated by reference to the amounts that the
group would receive or pay to terminate the contracts based on year end rates
during the ﬁnancial year the group has not used any other ﬁnancial instruments to hedge trading foreign exchange rate exposures
the group’s primary translation exposure relates to the relative values of the pound sterling and us dollar although the us business generates
signiﬁcant us dollar trading cash ﬂows the group’s borrowings are predominantly us dollar denominated following the conversion of a signiﬁcant
proportion of the group’s us dollar denominated preference shares into ordinary shares during the year the us dollar dividend obligations are
substantially reduced however management anticipates that the ongoing us dollar interest obligations and us dollar trade payments in the uk will
continue to preclude the need to enter into any signiﬁcant hedging of us dollar cash ﬂows
at 2nd february 2003 the group had the equivalent of £36 million 2002 £49 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
premier farnell plc notes to the accounts
annual report and accounts 2003 continued
60 note 15 continued
2 interest rate risk
the group ﬁnances its operations through a combination of retained cash ﬂow equity and nonequity shares and bank borrowings procedures are in
place to monitor and manage interest rate risk with derivatives being entered into when considered appropriate by management
financial liabilities
the maturity proﬁle of the group’s borrowings is as follows
2003 2002
fixed floating total fixed floating total
£m £m £m £m £m £m
due within one year 946 27 973 – 230 230
due between one and two years 02 – 02 1099 – 1099
due between two and ﬁve years 948 440 1388 1099 170 1269
due over ﬁve years 15 10 25 – 47 47
1911 477 2388 2198 447 2645
the group’s borrowings are denominated in us dollars with the exception of the ﬂoating rate debt due within ﬁve years of £467 million which is
denominated in sterling
the group has multi currency bilateral bank facilities of £125 million which are committed until 2006 the facilities carry a libor based ﬂoating rate of
interest at the year end £44 million was drawn on these facilities 2002 £37 million
the weighted average interest rate attributable to ﬁxed rate borrowings was 71 2002 71 and the weighted average duration of ﬁxed rate
borrowings was 29 years 2002 39 years
since the year end the group has raised 225 million £137 million of new funding in the private placement market principally in order to reﬁnance the
70 senior notes repayable in june 2003 these comprise 66 million of 7 year private placement notes and 159 million of 10 year private
placement notes at ﬁxed interest rates of 53 and 59 respectively
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 19 to the accounts
financial assets
cash at bank and in hand of £296 million 2002 £281 million relates principally to overnight deposits and current account balances in various
currencies held in trading operations worldwide all signiﬁcant balances earn interest based on local market rates appropriate for the currency
concerned
3 fair value of ﬁnancial instruments
an analysis of the fair values and book values of the group’s ﬁnancial instruments is provided below
book value fair value book value fair value
2003 2003 2002 2002
£m £m £m £m
assets
cash at bank and in hand 296 296 281 281
debtors due after more than one year pension fund prepayment 822 822 870 870
1118 1118 1151 1151
liabilities and derivatives
due within one year 973 986 230 230
due in more than one year 1415 1500 2415 2482
commitments to sell foreign currency – 01 ––
2388 2487 2645 2712
nonequity interests 1267 895 4867 3873
premier farnell plc notes to the accounts
annual report and accounts 2003 continued
61 note 15 continued
the fair value of borrowings is based on estimates of the current ﬁxed interest rates available for debt of the same remaining maturity
4 credit risk
the group monitors its positions with and the credit quality of the ﬁnancial institutions which are counterparties to its forward exchange contracts and
does not anticipate nonperformance by the counterparties the group would not realise a material loss in the event of nonperformance by
counterparties at 2nd february 2003 neither the group nor the counterparties were required to collateralise their respective obligations under these
ﬁnancial instruments
16 creditors – due within one year
group group company company
2003 2002 2003 2002
£m £m £m £m
bank overdrafts unsecured 27 30 62 85
unsecured loans note 17 946 200 – 200
trade creditors 493 338 – –
corporate taxes 434 402 15 63
payroll and other taxes including social security 59 62 02 –
other creditors 138 238 12 26
accruals and deferred income 269 280 22 14
proposed ordinary dividend 181 136 181 136
2547 1686 294 524
17 creditors – due after more than one year
group group company company
2003 2002 2003 2002
£m £m £m £m
unsecured loans 1415 2415 410 170
amounts owed to subsidiary undertakings – – 1429 1342
1415 2415 1839 1512
unsecured loans comprise
bank loans 440 370 410 370
70 us dollar guaranteed senior notes payable 2003 945 1099 – –
72 us dollar guaranteed senior notes payable 2006 945 1099 – –
other loans 31 47 – –
2361 2615 410 370
less amount due within one year 946 200 – 200
1415 2415 410 170
bank overdrafts and unsecured loans are repayable as follows
within one year 973 230 62 285
between one and two years 02 1099 – –
between two and ﬁve years 1388 1269 410 170
after ﬁve years 25 47 – –
2388 2645 472 455
details of the group’s borrowing facilities are given in note 15
premier farnell plc notes to the accounts
annual report and accounts 2003 continued
62 18 provisions for liabilities and charges
group group company company
2003 2002 2003 2002
£m £m £m £m
deferred taxation 366 377 – –
overseas postretirement obligations 52 50 – –
dilapidation costs 15 15 – –
433 442 – –
1 deferred taxation
at beginning of year 377 271 02 –
chargecredit in the year 27 102 01 02
currency translation adjustment 38 04 – –
provisionasset at end of year 366 377 03 02
deferred tax provisionsassets comprise
accelerated capital allowances 135 151 – –
shortterm timing differences 76 104 03 02
pension prepayment 307 330 – –
366 377 03 02
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 27
at beginning of year 50 48 – –
increase in year 10 – – –
currency translation adjustment 08 02 – –
at end of year 52 50 – –
3 dilapidation costs
at beginning of year 15 – – –
acquisition – 15 – –
at 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 13 years
premier farnell plc notes to the accounts
annual report and accounts 2003 continued
63 19 called up share capital
company company
2003 2002
nominal value nominal value
£m £m
authorised
attributable to equity interests
500000000 ordinary shares of 5p each 2002 429000000 250 215
attributable to nonequity interests
32000000 cumulative convertible redeemable preference shares of £1 each 2002 32000000 320 320
570 535
allotted called up and fully paid
ordinary shares of 5p each equity interests
at 4th february 2002 272244295 shares 136 136
preference share conversion 89838310 shares 45 –
allotted under share option schemes 355625 shares – –
at 2nd february 2003 362438230 shares 181 136
cumulative convertible redeemable preference shares of £1 each nonequity interests
at 4th february 2002 27946255 shares 279 279
preference share conversion 19530070 shares 195 –
preference share purchase and cancellation 643964 shares 06 –
at 2nd february 2003 7772221 shares 78 279
capital restructuring
on 13th may 2002 shareholders approved a special conversion right which enabled preference shareholders for a limited period to convert their
preference shares into ordinary shares at an enhanced rate of conversion of 46 ordinary shares for each preference share this compares to the
normal conversion rate of approximately 21 ordinary shares for each preference share the right to exercise this special conversion expired on
24th june 2002 for us holders and on 26th june 2002 for uk holders holders of preference shares were entitled to receive a onetime payment in
lieu of the preference dividend in respect of those preference shares converted of 198 pence for each sterling preference share converted and 030
for each us preference share converted costs in respect of this restructuring amounted to £09 million
as a result of the special conversion right 19530070 preference shares were converted into 89838310 ordinary shares
in addition on 3rd and 4th july 2002 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 355625 ordinary shares
nominal value £17781 for a cash consideration of £655425
the rights and restrictions attaching to the us135 cumulative convertible redeemable preference shares of £1 each the “us preference
shares” and following a changeover 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”
premier farnell plc notes to the accounts
annual report and accounts 2003 continued
64 note 19 continued
b the preference shares may be converted on any date at the option of the holder on and from the date of issue up to and including 22nd april 2016
c if at any time 75 per cent or more of all the preference shares have been converted into ordinary shares but assuming for this purpose only that any
preference shares which have been converted into ordinary shares pursuant to the special conversion right referred to above had never been issued or
converted the company may give written notice to the remaining holders of us preference shares and sterling preference shares to convert the
remaining us preference shares and sterling preference shares into ordinary shares
d the conversion rate may be subject to adjustment if inter alia the company makes an issue of ordinary shares by way of capitalisation of proﬁts or
reserves a rights issue or another offer to ordinary shareholders or if there is a change of control in the company following a 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
20 share options
during the year options were exercised on 333125 5p ordinary shares at 192p and on 22500 5p ordinary shares at 193p under the terms of the
1984 senior executive share option scheme as subsequently amended
at 2nd february 2003 the aggregate number of shares covered by options is 7527593 2002 6122841 and the total consideration of £190 million
2002 £189 million is made up as follows
number total
of shares option consideration
date of grant outstanding price £m
may 1993 51799 356p 02
may 1995 110452 551p 06
november 1995 10519 631p 01
november 1996 212398 682p 14
november 1996 220000 688p 15
may 1997 65000 682p 04
july 1998 300000 305p 09
march 1999 1754875 192p 34
july 1999 25000 245p 01
december 1999 45000 368p 02
april 2000 654350 425p 28
june 2000 30000 468p 01
september 2000 65000 513p 03
december 2000 50000 377p 02
july 2001 40000 249p 01
september 2001 1231250 193p 24
january 2002 29000 320p 01
april 2002 50000 337p 02
october 2002 2473250 153p 38
december 2002 59700 199p 01
january 2003 40000 175p 01
january 2003 10000 199p –
7527593 190
both approved and unapproved executive share options are exercisable between three and ten years from the date of grant
premier farnell plc notes to the accounts
annual report and accounts 2003 continued
65 21 reserves
share capital proﬁt and
premium redemption merger loss
account reserve reserve account
£m £m £m £m
group
at 4th february 2002 44 – – 656
retained loss for the year – – – 18
premium on issue of ordinary shares 07–––
purchase of own preference shares – 06 – 83
preference share conversion 150–––
preference share conversion costs 09 – – –
goodwill reinstated on disposal of businesses – – – 26
currency translation adjustment – – – 03
at 2nd february 2003 192 06 – 578
company
at 4th february 2002 44 – 06 7384
retained loss for the year – – – 422
premium on issue of ordinary shares 07–––
purchase of own preference shares – 06 – 83
preference share conversion 150–––
preference share conversion costs 09 – – –
currency translation on investments – – – 01
other currency translation adjustments – – – 01
at 2nd february 2003 192 06 06 6879
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 £15940 million at 2nd february 2003 2002 £15966 million
22 reconciliation of movements in shareholders’ funds
group group company company
2003 2002 2003 2002
52 weeks 53 weeks 52 weeks 53 weeks
£m £m £m £m
proﬁt after taxation 416 386 12 56
dividends – preference 108 261 108 261
– ordinary 326 245 326 245
18 120 422 450
new share capital subscribed 07 02 07 02
purchase of own preference shares 83 – 83 –
preference share conversion costs 09 – 09 –
goodwill reinstated on disposal of businesses 26 256 – –
currency translation on investments – – 01 159
other currency translation adjustments 03 13 01 159
net change in shareholders’ funds 80 125 507 448
shareholders’ funds at the beginning of the year 1115 990 7849 8297
shareholders’ funds at the end of the year 1035 1115 7342 7849
shareholders’ funds comprise
equity interests 232 3752 6075 2982
nonequity interests 1267 4867 1267 4867
1035 1115 7342 7849
nonequity interests reﬂect the redemption cost of the cumulative convertible preference shares
premier farnell plc notes to the accounts
annual report and accounts 2003 continued
66 23 disposals
details of businesses disposed of during the year are given in note 2
2003 2002
£m £m
tangible ﬁxed assets 17 42
stocks 21 73
debtorscreditors 18 11
goodwill previously eliminated against reserves 26 256
82 382
net consideration see below 33 272
loss on disposal note 2 49 110
cash consideration 43 342
disposal costs 10 70
net consideration 33 272
24 notes to the consolidated statement of cash flows
1 reconciliation of operating proﬁt to net cash inﬂow from operating activities
2003 2002
£m £m
operating proﬁt 803 869
depreciation charge net of gain on disposals 158 141
amortisation of goodwill 26 15
net pension credit 68 67
increasedecrease in stocks 90 93
decrease in debtors 08 297
increasedecrease in creditors 83 277
net cash inﬂow from operating activities 920 1071
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 4th february 2002 281 30 200 2415 2364
increase in cash 20 03 – – 23
decreaseincrease in debt – – 199 260 61
other changes – – 987 987 –
exchange movement 05 – 42 273 310
at 2nd february 2003 296 27 946 1415 2092
25 contingent liabilities
the company has guaranteed the loans of certain subsidiary undertakings which at 2nd february 2003 amounted to £1890 million
2002 £2198 million
26 operating leases
land and buildings other assets
2003 2002 2003 2002
£m £m £m £m
the group has annual commitments under operating leases 
which expire
within one year 07 08 09 05
between two and ﬁve years 32 35 27 34
after ﬁve years 18 16 – –
57 59 36 39
premier farnell plc notes to the accounts
annual report and accounts 2003 continued
67 27 pension commitments and other postretirement obligations
1 pensions
the group operates pension plans throughout the world covering the majority of its employees these plans are devised in accordance with local
conditions and practices in the countries concerned and include deﬁned contribution and deﬁned beneﬁt schemes the assets of the plans are
generally held in separately administered trusts the contributions to the plans are assessed in accordance with independent actuarial advice principally
using the projected unit method of valuation
the group’s two principal plans operate in the uk and the us further disclosures of these plans are set out below
uk plan us plan
6th april 31st october
last valuation date 1999 2002
£m £m
market value of investments at last valuation date 557 1126
regular pension cost – 22
interest on prepaid asset – 69
amortisation of variation 01 22
total pension costcredit 01 69
level of funding being the actuarial value of assets expressed as a percentage
of the accrued service liabilities 104 279
the principal assumptions used in the actuarial valuation of the uk plan were an average projected investment return of 85 per annum salary
inﬂation of 60 per annum and pension increases of 35 per annum for the us plan the principal actuarial assumptions were an 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 1 january 1999 are entitled to money purchase beneﬁts only
an asset of £822 million 2002 £870 million is included in debtors representing the excess of the actuarial value of the assets over the accrued
service liabilities of the us plan
the april 2002 actuarial valuation of the uk plan is in the process of being ﬁnalised this is expected to show a funding level of 94 as a result of the
fall in equity market values as a consequence the total pension cost for the uk plan under ssap 24 for the year ending 1st february 2004 will be
£08 million
disclosures in accordance with financial reporting standard “frs” 17 retirement beneﬁts
the following information is provided for disclosure purposes only in accordance with frs17 pension costs have been recognised in these accounts in
line with statement of standard accounting practice no 24 accounting for pension costs as described above
the ﬁnancial assumptions at 2nd february 2003 used to calculate liabilities under frs17 were as follows
uk plan uk plan us plan us plan
2003 2002 2003 2002
 pa  pa  pa  pa
inﬂation 230 250 230 250
rate of increase in salaries 380 400 380 400
rate of increase in pensions 230 250 230 250
discount rate 550 575 650 700
the market value of assets and the expected rate of return at 2nd february 2003 were
uk plan uk plan us plan us plan uk plan uk plan us plan us plan
longterm value longterm value longterm value longterm value
expected rate expected rate expected rate expected rate
of return of return of return of return
2003 2003 2003 2003 2002 2002 2002 2002
 pa £m  pa £m  pa £m  pa £m
equities 89 250 89 1071 79 315 79 1566
bonds 45 182 – – 50 212 – –
cash 40 01 – – – – 45 18
average returntotal 70 433 89 1071 68 527 79 1584
premier farnell plc notes to the accounts
annual report and accounts 2003 continued
68 note 27 continued
disclosures in accordance with financial reporting standard “frs” 17 retirement beneﬁts continued
the funding position at 2nd february 2003 in accordance with frs17 was as follows
uk plan us plan total uk plan us plan total
2003 2003 2003 2002 2002 2002
£m £m £m £m £m £m
total market value of assets 433 1071 1504 527 1584 2111
present value of plan liabilities 580 577 1157 612 691 1303
deﬁcitsurplus in the plan 147 494 347 85 893 808
related deferred tax assetliability 44 187 143 26 338 312
net pension liabilityasset 103 307 204 59 555 496
analysis of amounts charged to the proﬁt and loss account in respect of deﬁned beneﬁt schemes for the year ended 2nd february 2003
i amounts charged to operating proﬁt
uk plan us plan total
£m £m £m
current service cost 03 27 30
past service cost – 07 07
total operating charge 03 34 37
ii amounts credited to exceptional items
gain on curtailments – 03 03
iii amounts creditedcharged to other ﬁnance income
expected return on pension scheme assets 35 114 149
interest cost on pension scheme liabilities 35 44 79
net return – 70 70
movements in deﬁcitsurplus during the year
uk plan us plan total
£m £m £m
deﬁcitsurplus at 4th february 2002 85 893 808
current service cost 03 27 30
past service cost – 07 07
gain on curtailments – 03 03
other ﬁnance income – 70 70
total loss recognised in the statement of total recognised gains and losses 59 438 497
deﬁcitsurplus at 2nd february 2003 147 494 347
analysis of amount recognised in the statement of total recognised gains and losses
uk plan us plan total
£m £m £m
actual return less expected return on pension scheme assets 106 376 482
experience gains and losses arising on scheme liabilities 52 71 123
changes in the assumptions underlying the present value of the scheme 05 26 31
actuarial loss recognised in the statement of total recognised gains and losses 59 331 390
currency translation adjustment – 107 107
total loss recognised in the statement of total recognised gains and losses 59 438 497
history of experience gains and losses
uk plan us plan total
2003 2003 2003
difference between the actual and expected return on scheme assets
amount £m 106 376 482
percentage of scheme assets 245 351 320
experience gain on scheme liabilities
amount £m 52 71 123
percentage of the present value of scheme liabilities 90 123 106
actuarial loss recognised in statement of total recognised gains and losses
amount £m 59 331 390
percentage of the present value of scheme liabilities 102 574 337
premier farnell plc notes to the accounts
annual report and accounts 2003 continued
69 premier farnell plc notes to the accounts
annual report and accounts 2003 continued
70
note 27 continued
disclosures in accordance with financial reporting standard “frs” 17 retirement beneﬁts continued
reported net assets and proﬁt and loss reserve can be reconciled to amounts in accordance with frs17 as follows
net proﬁt and net proﬁt and
assets loss reserve assets loss reserve
2003 2003 2002 2002
£m £m £m £m
as reported 1035 578 1115 656
pension asset in accordance with ssap 24 822 822 870 870
associated deferred tax liability 307 307 330 330
as reported excluding pension asset and associated deferred tax liability 520 63 575 116
net pension asset in accordance with frs17 204 204 496 496
amounts in accordance with frs17 724 267 1071 612
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
2nd february 2003 were a discount rate of 80 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 2nd february 2003 the provision for postretirement medical beneﬁts based on this
valuation was £52 million 2002 £50 million
disclosures in accordance with financial reporting standard “frs” 17 retirement beneﬁts
the following information is provided for disclosure purposes only in accordance with frs 17
the ﬁnancial assumptions at 2nd february 2003 used to calculate liabilities for postretirement medical beneﬁts under frs 17 were as follows
discount rate 80
medical inﬂation 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 2nd february 2003
2003
£m
amounts charged to operating proﬁt – current service cost 02
amounts charged to other ﬁnance income – interest cost on liabilities 04
2003
movements in deﬁcit during the year £m
obligation at 4th february 2002 53
contributions paid 04
current service cost 02
finance cost 04
total loss recognised in the statement of total recognised gains and losses 03
obligation at 2nd february 2003 58
2003
analysis of amount recognised in the statement of total recognsied gains and losses £m
experience loss on liabilities 01
loss on change of assumptions 10
actuarial loss recognised in the statement of total recognised gains and losses 11
currency translation adjustment 08
total loss recognised in the statement of total recognised gains and losses 03
history of experience gains and losses 2003
experience loss on liabilities 01
percentage of liabilities 17
actuarial loss recognised in the statement of total recognised gains and losses 11
percentage of liabilities 190
had the provision for postretirement medical beneﬁts been calculated in accordance with frs 17 reported net assets and the proﬁt and loss reserve
as at 2nd february 2003 would have been reduced by £04 million
28 related party transactions
the company has taken advantage of the exemption under frs8 related party transactions from disclosing transactions between the company and
other group undertakings as all such transactions have been eliminated fully on consolidation in these ﬁnancial statements premier farnell plc notes to the accounts
annual report and accounts 2003 continued
71
29 summary of differences between uk and us generally accepted accounting principles gaap
the group accounts are prepared in accordance with uk gaap which differs in certain signiﬁcant respects from us gaap  a description of the
relevant accounting principles which differ materially is given below
goodwill and intangible assets
under uk gaap  prior to the introduction of frs10 “goodwill and intangible assets” in 1998 which requires goodwill and intangible assets to be
capitalised and amortised over their estimated useful economic lives goodwill arising on acquisitions was permitted to be written off against retained
earnings since the introduction of frs10 goodwill arising on acquisitions is capitalised and amortised over its estimated useful economic life which in
the case of buck  hickman is 20 years goodwill arising on acquisitions is reviewed for impairment at the end of the ﬁrst full year after an acquisition
and in other years if events or changes in circumstances indicate that the carrying value may not be recoverable
under us gaap  prior to the introduction of fas 142 “goodwill and other intangible assets” goodwill and other identiﬁable intangible assets were
capitalised and amortised over their estimated useful lives accordingly on the acquisition of premier in 1996 £596 million of the excess purchase
consideration over net asset value was recorded as a customer list intangible asset with the remaining £1193 million recorded as goodwill the
customer list was being amortised over 20 years and goodwill amortised over 40 years
on the acquisition of buck and hickman in july 2001 £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 fas 142 in full on 4 february 2002 fas 142 requires that goodwill and indeﬁnite lived intangible assets are no longer
amortised but instead assessed annually for impairment deﬁnite lived intangible assets continue to be amortised over their estimated useful lives
fas 142 requires intangible assets to be reassessed as either deﬁnite lived or indeﬁnite lived intangible assets on the date of adoption of the standard
accordingly the company continued to recognise the premier customer list as a deﬁnite lived intangible asset with no change in the estimated useful
life similarly the customer list intangible asset and the trademark intangible asset recognised on the acquisition of buck and hickman continued to be
recognised as deﬁnite lived and indeﬁnite lived intangible assets respectively with no change in the estimated useful life of the customer list
the impact of adopting fas 142 has been to cease goodwill amortisation of approximately £31 million per annum resulting in a goodwill balance
subject to impairment testing of £11129 million as of 4 february 2002
the company performed its transitional goodwill impairment test as required by the standard as of 4 february 2002 being the adoption date and on
31 july 2002 being the date the company has elected for each subsequent annual impairment test
the result of the transitional impairment test was the recognition of goodwill impairment of £7280 million which in accordance with the transitional
provisions of the standard has been recorded as a cumulative effect change in accounting principle
the indeﬁnite lived trademark intangible asset was tested for impairment in accordance with the standard although no impairment was indicated
the differing treatment of goodwill under us gaap may also give rise to a different proﬁt or loss being recorded in the income statement on the
subsequent disposal of a business
deferred taxation
under frs 19 “deferred tax” accounting for deferred tax under uk gaap is now largely consistent with us gaap  the principal difference
recognised in the reconciliation below relates to deferred tax liabilities provided against intangible assets recorded under us gaap on acquisition which
are not separately identiﬁable under uk gaap and for which no deferred tax liability is recorded
interest rate hedging instruments
under uk gaap amounts payable or receivable under an interest rate hedging swap which incorporates an embedded written option are accounted
for over the life of the swap on an accruals basis whereas under us gaap  the written option element is accounted for separately from the host
contract on the balance sheet at a mark to market valuation with changes in this valuation taken to the proﬁt and loss account as they arise
pension costs
the key differences between uk gaap ssap24 and us gaap in relation to deﬁned beneﬁt pension plans are
– under uk gaap plan assets are valued using a discounted income valuation us gaap requires plan assets to be measured at 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 2nd february 2003 the cumulative amount of additional
liability recorded within the statement of other comprehensive income as there was no unrecognised prior service cost was £154 million
capitalisation of interest
under uk gaap  the group does not capitalise interest whereas under us gaap  the estimated amount of interest incurred on capital projects which
are prepared for use over time is included in ﬁxed assets and depreciated over the lives of the related assets
stock based compensation
under uk gaap  a compensation cost must be calculated in respect of share options and long term incentive plans based on the difference between
the share price at the date of the grant and the optionaward price which 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 note 29 continued
under uk gaap  own shares are carried on the balance sheet and classiﬁed as a ﬁxed asset whereas under us gaap  own shares are offset against
shareholders’ funds
under uk gaap  a provision is made for the cost of acquiring further shares on the market where there is an obligation under a long term incentive
plan whereas under us gaap  no such provision is recognised
convertible redeemable preference shares and preference dividends
under uk gaap  cumulative convertible redeemable preference shares are included as shareholders’ funds whereas under us gaap  cumulative
convertible redeemable preference shares do not form part of shareholders’ funds when the terms of redemption of such shares are outside the control
of the company the dividend thereon is recorded as a charge against net income
under uk gaap  the special conversion right which enabled preference shareholders to convert their preference shares into ordinary shares at an
enhanced rate of conversion does not affect the income statement or shareholders’ funds with the difference in the nominal value between the
preference shares converted and ordinary shares issued being credited to the share premium account under us gaap  fas 84 “induced
conversions of convertible debt” requires an expense to be recorded against net income measured as being the difference between the fair value of
ordinary shares issued pursuant to the special conversion right and the fair value of ordinary shares issued pursuant to the original conversion terms
under uk gaap  costs relating to the preference share conversion are charged against share premium whereas under us gaap  such costs are
charged in arriving at net income
under uk gaap  the cost of repurchasing preference shares is treated as a movement in the proﬁt and loss reserve on cancellation of the shares a
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
foreign exchange hedging transactions
under uk gaap  gains or losses arising on foreign exchange forward contracts taken out in respect of anticipated trading receipts from overseas
subsidiaries may be deferred and recognised at the time of the trading receipt whereas under us gaap  such gains or losses may only be deferred
when designated and documented as a qualifying hedging relationship in accordance with fas133 “accounting for derivative instruments and
hedging activities” the company does not designate these derivative ﬁnancial instruments as qualifying hedging relationships therefore these
instruments are recorded at their fair values with gains and losses recorded currently in earnings the effect on net income of this difference is however
not considered signiﬁcant
ordinary dividends
under uk gaap  provision is made for dividends in the year in respect of which they are proposed by the directors whereas under us gaap 
provision for dividends is not made until they are formally declared by the directors
effect on net income of differences between uk and us gaap
2003 2002 2003 2002
£m £m m m
proﬁt after tax under uk gaap 416 386 636 552
us gaap adjustments
amortisation of goodwill and deﬁnite lived intangible assets 279 620 427 886
gain or loss on disposals 04 95 06 136
deferred taxation 103 112 158 160
interest rate hedging instruments – 24 – 34
pension costs 13 02 20 03
capitalisation of interest 16 – 24 –
stock based compensation 10 02 15 03
preference dividends 108 261 165 373
preference share induced conversion costs 1495 – 2287 –
preference share extinguishment gain 23 – 35 –
total us gaap adjustments 1759 654 2691 935
loss after tax under us gaap prior to cumulative effect of adoption of fas 142 1343 268 2055 383
cumulative effect of adoption of fas 142 7280 – 11138 –
net loss under us gaap 8623 268 13193 383
basic earnings per ordinary share under uk gaap 93p 46p 0142 0066
basic loss per ordinary share adr under us gaap
prior to cumulative effect of adoption of fas 142 and gain on the 
extinguishment of preference shares 824p 197p 1261 0282
cumulative effect of adoption of fas 142 4391p – 6718 –
preference share extinguishment gain 14p – 0021 –
net loss per ordinary share adr under us gaap 5201p 197p 7958 0282
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 153
2002 143
premier farnell plc notes to the accounts
annual report and accounts 2003 continued
72 premier farnell plc notes to the accounts
annual report and accounts 2003 continued
73
note 29 continued
effect on shareholders’ funds of differences between uk and us gaap
2003 2002 2003 2002
£m £m m m
shareholders’ funds under uk gaap 1035 1115 1697 1572
us gaap adjustments
goodwill and intangible assets 6763 15435 11092 21763
tangible ﬁxed assets 16 – 26 –
deferred taxation 1309 1665 2147 2348
ordinary dividends 181 136 297 192
pensions 172 83 282 117
interests in own shares 02 05 03 07
stock based compensation 10 13 16 18
convertible redeemable preference shares 1267 4867 2078 6862
total us gaap adjustments 4220 8964 6921 12639
shareholders’ funds under us gaap 5255 10079 8618 14211
total assets under uk gaap 5430 5658 8905 7977
total assets under us gaap 12035 21005 19737 29617
the cumulative effects on signiﬁcant balance sheet captions of differences between uk and us gaap are as follows
uk gaap us gaap us gaap uk gaap us gaap us gaap
adjustments adjustments
2003 £m £m £m m m m
fixed asset investments 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
2002
fixed asset investments 05 05 – 07 07 –
goodwill and intangible assets 511 15435 15946 720 21763 22483
tangible ﬁxed assets 1141 – 1141 1609 – 1609
net current assets 2315 66 2381 3264 93 3357
creditors – due after more than one year 2415 4867 7282 3405 6862 10267
provisions for liabilities and charges 442 1665 2107 623 2348 2971
the translation of sterling into us dollars has been presented for convenience purposes only using the yearend exchange rate of 164 2002 141 premier farnell plc directors’ responsibilities
annual report and accounts 2003 auditors’ report
74
the following statement which should be read in conjunction with the
auditors’ report is made with a view to distinguishing for shareholders the
respective responsibilities of the directors and of the auditors in relation to
the accounts
the directors are required by the companies act 1985 to prepare
accounts for each ﬁnancial year which give a true and fair view of the state
of affairs of the company and the group as at the end of the ﬁnancial year
and of the proﬁt and loss for the ﬁnancial year the directors consider that
in preparing the accounts on pages 48 to 73 the company has used
appropriate accounting policies consistently applied and supported by
reasonable and prudent judgements and estimates and that all applicable
accounting standards have been followed
the directors have responsibility for ensuring that the company keeps
accounting records which disclose with reasonable accuracy the ﬁnancial
position of the company and which enable them to ensure that the
accounts comply with the companies act 1985
the directors have general responsibility for taking such steps as are
reasonably open to them to safeguard the assets of the group and to
prevent and detect fraud and other irregularities
the 2003 annual report and accounts will be published on the
company’s website in addition to the normal paper version the
maintenance and integrity of the company’s website is the responsibility of
the directors and the work carried out by the auditors does not involve
consideration of these matters
legislation in the uk governing the preparation and dissemination of
ﬁnancial statements may differ from legislation in other jurisdictions
directors’ responsibilities
independent auditors’ report to the members of
premier farnell plc
we have audited the ﬁnancial statements which comprise the proﬁt and
loss account the statement of total recognised gains and losses the
balance sheets the cash ﬂow statement related notes and the accounting
policies set out in the statement of accounting policies we have also
audited the disclosures required by part 3 of schedule 7a to the
companies act 1985 contained in the remuneration report “the
auditable part”
respective responsibilities of directors and auditors
the directors’ responsibilities for preparing the annual report and the
ﬁnancial statements in accordance with applicable united kingdom law
and accounting standards are set out in the statement of directors’
responsibilities the directors are also responsible for preparing the
remuneration report
our responsibility is to audit the ﬁnancial statements and the auditable part
of the remuneration report in accordance with the relevant legal and
regulatory requirements and united kingdom auditing standards issued
by the auditing practices board this report including the opinion has
been prepared for and only for the company’s members as a body in
accordance with section 235 of the companies act 1985 and for no
other purpose we do not in giving this opinion accept or assume
responsibility for any other purpose or to any other person to whom this
report is shown or into whose hands it may come save where expressly
agreed by our prior consent in writing
we report to you our opinion as to whether the ﬁnancial statements give a
true and fair view and whether the ﬁnancial statements and the auditable
part of the remuneration report have been properly prepared in
accordance with the united kingdom companies act 1985 we also
report to you if in our opinion the directors’ report is not consistent with
the ﬁnancial statements if the company has not kept proper accounting
records if we have not received all the information and explanations we
require for our audit or if information speciﬁed by law regarding directors’
remuneration and transactions is not disclosed
we read the other information contained in the annual report and
consider the implications for our report if we become aware of any
apparent misstatements or material inconsistencies with the ﬁnancial
statements the other information comprises only the chairman’s
statement the group chief executive’s review the finance director’s
review the directors’ report the unaudited part of the directors’
remuneration report and the corporate governance statement
we review whether the corporate governance statement reﬂects the
company’s compliance with the seven provisions of the combined code
speciﬁed for our review by the listing rules of the financial services
authority and we report if it does not we are not required to consider
whether the board’s statements on internal control cover all risks and
controls or to form an opinion on the effectiveness of the company’s or
group’s corporate governance procedures or its risk and control
procedures
basis of audit opinion
we conducted our audit in accordance with auditing standards issued by
the auditing practices board an audit includes examination on a test
basis of evidence relevant to the amounts and disclosures in the ﬁnancial
statements and the auditable part of the remuneration report it also
includes an assessment of the signiﬁcant estimates and judgements made
by the directors in the preparation of the ﬁnancial statements and of
whether the accounting policies are appropriate to the company’s
circumstances consistently applied and adequately disclosed
we planned and performed our audit so as to obtain all the information
and explanations which we considered necessary in order to provide us
with sufﬁcient evidence to give reasonable assurance that the ﬁnancial
statements and the auditable part of the directors’ remuneration report
are free from material misstatement whether caused by fraud or other
irregularity or error in forming our opinion we also evaluated the overall
adequacy of the presentation of information in the ﬁnancial statements
opinion
in our opinion
– the ﬁnancial statements give a true and fair view of the state of affairs
of the company and the group at 2nd february 2003 and of the proﬁt
and cash ﬂows of the group for the year then ended
– the ﬁnancial statements have been properly prepared in accordance
with the companies act 1985
– those parts of the remuneration report required by part 3 of
schedule 7a to the companies act 1985 have been properly prepared
in accordance with the companies act 1985
pricewaterhousecoopers llp
chartered accountants and registered auditors
leeds
19th march 2003
auditors’ report premier farnell plc shareholder information
annual report and accounts 2003
75
20032004 financial calendar
quarter one results 28th may 2003
annual general meeting 11th june 2003
quarter two and interim results wc 8th september 2003
quarter three results wc 1st december 2003
final ordinary dividend key dates interim ordinary dividend key dates
exdividend record payment exdividend record payment
ordinary shares 28th may 2003 30th may 2003 25th june 2003 24th sept 2003 26th sept 2003 24th oct 2003
ordinary adss 28th may 2003 30th may 2003 25th june 2003 24th sept 2003 26th sept 2003 24th oct 2003
halfyearly preference dividend key dates
exdividend record payment exdividend record payment
preference shares 1st july 2003 4th july 2003 28th july 2003 7th jan 2004 9th jan 2004 26th jan 2004
preference adss 2nd july 2003 4th july 2003 28th july 2003 7th jan 2004 9th jan 2004 26th jan 2004
shareholder information
annual general meeting
the 2003 annual general meeting will be held at the mayfair conference
centre 17 connaught place marble arch london w2 2el on 11th june
at 1130 am
registrar
enquiries concerning shareholdings or dividends should be addressed in
the ﬁrst instance to the company’s registrar northern registrars limited
northern house woodsome park fenay bridge huddersﬁeld hd8 0la
united kingdom or telephone 44 0 1484 600900
email clientservicesnorthernregistrarscouk
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 website wwwpremierfarnellcom and
quarterly reporting
shareholder enquiries
if you have any enquiries as a shareholder please call nicholas ross
group director communications on 44 0 870 129 8608 or
email rossnpremierfarnellcom
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 st station new york ny 102861258
usa or telephone 1 888 269 2377
emailshareownersvcsbankofnycom
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 2003 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 premier farnell plc advisers
annual report and accounts 2003
76
advisers
auditors
pricewaterhousecoopers 
benson house
33 wellington street
leeds ls1 4jp
bankers
hsbc
47 market street
bradford bd1 1lw
registrar  share
transfer ofﬁce
northern registrars limited 
northern house
woodsome park
fenay bridge
huddersﬁeld hd8 0la
stockbrokers
cazenove  co ltd
12 tokenhouse yard
london ec2r 7an
abn amro
hoare govett limited
250 bishopsgate
london ec2m 4aa
adr depository bank
the bank of new york
investor relations dept
po box 11258
church street station
new york ny102861258
usa
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
registered in england and wales
no876412 registered ofﬁcefarnell 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
designed by bostock and pollitt
printed by polestar direct premier farnell plc five year record
annual report and accounts 2003
2003 2002 2001 2000 1999
£m £m £m £m £m
turnover 7590 8064 8762 7521 7050
operating proﬁt before amortisation of goodwill 829 884 1150 1037 1222
amortisation of goodwill 26 15 – – –
total operating proﬁt 803 869 1150 1037 1222
proﬁt before taxation amortisation of goodwill and
exceptional items 672 725 1021 918 1104
amortisation of goodwill 26 15 – – –
exceptional items 48 110 – – 100
proﬁt before taxation 598 600 1021 918 1004
proﬁt after taxation 416 386 713 662 666
preference dividends 108 261 253 237 232
proﬁt attributable to ordinary shareholders 308 125 460 425 434
ordinary dividends 326 245 245 245 245
retained lossproﬁt 18 120 215 180 189
shareholders’ funds – equity 232 3752 3754 3575 3677
– nonequity 1267 4867 4744 4313 4261
equity minority interests – – 03 03 03
total capital employed 1035 1115 993 741 587
dividend per share pence 90 90 90 90 90
basic earnings per share pence 93 46 169 156 160
exceptional items pence 19 46 – – 25
adjusted earnings per share pence 112 92 169 156 185
five year record
01 our mission
02 group at a glance
04 chairman’s statement
06 chief executive’s statement
operating review
10 marketing and 
distribution division
22 industrial products division
26 board of directors and ofﬁcers
28 group leadership t eam
30 finance director’s review
34 social responsibility report
38 directors’ report
40 remuneration report
46 corporate governance
48 consolidated proﬁt 
and loss account
49 consolidated balance sheet
50 company balance sheet
51 consolidated statement of 
cash ﬂow
52 statement of accounting
policies
53 notes to the accounts
74 directors’ responsibilities
74 auditors’ report
75 shareholder information
76 advisers
five year record premier farnell plc annual report and accounts 2003
premier farnell plc
annual report and 
accounts 2003
our customers’ needs 
drive our business
ready
group headquarters
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
wwwpremierfarnellcom


Summary:
 premier farnell plc chairman’s statement
annual report and accounts 2003
4
chairman’s statement
overview
market share gains and some 
large customer contract wins 
attest to a year of achievement 
in difficult economic circumstances
markets for the most part remained
slow particularly in north america
but despite this we have continued
to improve our ability to service 
our customers gross margins 
have been maintained and costs
tightly controlled so that net margins
have remained robust while working
capital has continued to be closely
managed
we have gained major financial
benefits through the capital
restructuring announced in april
2002 including increased earnings
per share and dividend cover
improved cash flow of £9 million 
for this and future years reduced
financial gearing and a more
balanced capital structure
we have developed comprehensive
skills to capitalise on the accelerating
demand by major companies to
improve the effectiveness of their
indirect materials procurement and
inventory management these skills
have opened access to large
customers and we are achieving
significant success which would
previously have been beyond our
reach there remains significant
potential to gain market share and the
group is in a strong position for further
progress when markets improve 
financial results
group sales for the year were 
£7590 million 2002 £8064 million
reflecting the tough market
conditions although on a sales per
day basis the group’ s businesses
returned to year on year growth in
the second half of the year and were
up 28 per cent in the fourth quarter
profit before tax and goodwill
amortisation and loss on disposal 
of businesses was £672 million
2002 £725 million with adjusted
earnings per share of 112 pence
2002 92 pence 
statutory profit before tax was
£598 million 2002 £600 million
and basic earnings per share were
93 pence 2002 46 pence
the board is recommending a final
dividend of 5 pence 2002 5 pence
making a total for the year of 9 pence
2002 9 pence the dividend is
covered 11 times the final dividend
is payable on 25th june 2003 to
shareholders on the register on
30th may 2003
strategic progress
the group has continued to 
execute its strategy of forging 
closer relationships with customers
by understanding and satisfying 
their needs the group has
strengthened its competitive position
in all its major territories by improving
performance and introducing new
products and added value services
work has been focused on winning
additional sales in the absence of any
help from the market this has been
achieved through concentrating on
improving operational effectiveness
and increasing share by targeting
specific market segments closer
customer relationships are being built
using the newly installed customer
relationship management software
added value services are helping
customers increase their own
productivity and reduce the overall
cost of indirect material procurement
evidence of the success of this
strategy is demonstrated by the
agreements signed with vauxhall
lockheed martin and the us
government in 2002 and
rollsroyce in march of this year premier farnell plc chairman’s statement
annual report and accounts 2003
5
business portfolio
early in the year the group sold
da lubricants the specialist oil
blending business based in
indianapolis this resulted in a loss
before tax on the disposal of
£49 million including £26 million of
goodwill previously eliminated against
reserves
buck  hickman the leading uk
distributor of tools and industrial
products acquired in july 2001 
has been successfully integrated 
into the group the buck  hickman
product range and its expertise in
vendor managed inventory services
both contributed to the group being
awarded important supply contracts
by vauxhall and rollsroyce 
balance sheet
in april 2002 the company
announced a special right 
for a limited period for preference
shareholders to convert their
cumulative redeemable preference
shares into ordinary shares 
at an enhanced conversion rate 
this resulted in 70 per cent of the
company’ s preference shares 
being converted and 898 million
new ordinary shares arising from
the conversion were issued 
the conversion has resulted in
increased earnings per share and
reduced financial gearing it has also
improved cash flow by more than 
£9 million this year enhanced
dividend cover and provided a more
balanced capital structure 
the company’ s borrowings include
155 million 70 per cent senior
notes repayable in june 2003 
in anticipation of this repayment 
the company has secured additional
funding to be drawn in june 2003
of 225 million comprising
159 million senior notes payable
2013 at an effective interest rate 
of 59 per cent and 66 million
senior notes payable 2010 at an
effective interest rate of 53 per cent
the additional funds will be used to
repay other loans this refinancing 
at investment grade interest rates
demonstrates the financial
soundness of the group 
staff
on behalf of the board i particularly
wish to thank all our employees 
for their hard work and commitment
during what has been another
challenging year it is their
determination and effort that has
resulted in the quality of the group’ s
businesses being further enhanced
and it is the reliability and
resourcefulness of our employees
which encourages our customers 
to buy repeatedly from the group
we have pleasure in welcoming
william korb to the board as a 
nonexecutive director mr korb 
a us citizen was president and 
ceo of gilbarco incorporated 
the leading manufacturer of retail
petrol pumps from 1988 to 1999
he is a nonexecutive director of
cambrex corporation which is 
listed on the nyse
outlook
the group’ s principal businesses
have secured market share gains
against a background of harsh
economic and industry conditions
this progress has been supported
by important initiatives in many areas
including customer eprocurement
arrangements vendor managed
inventory installations increased
product ranges improved service
levels and geographic expansion
the group has further enhanced its
proposition to customers during the
year enabling them to increase
productivity notwithstanding the
global political and economic outlook
and the lack of confidence in major
industrial markets the board remains
confident that it is pursuing the
appropriate strategy
sir malcolm bates
chairman
progress
the group’s principal
businesses have secured
market share gains against 
a background of harsh
economic and industry
conditions