Introduction
The Premier Farnell Group consists of two divisions: the Marketing and Distribution Division (MDD) and the Industrial Products Division (IPD).
MDD comprises five businesses which distribute a wide range of electronic components, equipment and maintenance, repair and operations (MRO) products. The businesses serve commercial, industrial and public sector markets in Europe, North America and Asia Pacific. Together they represented 90% of sales and 86% of underlying operating profit in the year before head office costs.
Customers include Electronic Design Engineers (EDEs), small scale production units, purchasing professionals and maintenance and repair engineers with a wide range of requirements. In aggregate, the MDD businesses have over two million customer contacts, attracted by a common need for a broad product range, rapid and reliable delivery and specialised value-adding services. They place many small orders, with average order values of approximately £240 in North America, £100 in Europe and £120 in Asia Pacific.
The Division stocks in excess of 400,000 different products sourced from a large number of suppliers and provides customers with access to a further four million products.
Through a dedicated plan to increase the proportion of sales made to EDEs, via the web, and through internationalisation into emerging markets, the Company intends to capitalise on available market growth at the same time as driving market share gain through an enhanced EDE proposition.
The Industrial Products Division (IPD) comprises businesses supplying high-performance products to specialist industrial markets, predominantly in North America (Review of Operations). The Division accounted for 10% of sales and 14% of underlying operating profit, before head office costs. Our IPD businesses have made good progress in identifying fast growing international markets and new industrial markets for its products.
The following sections cover only the MDD businesses on the basis that this Division represented 90% of sales. The IPD businesses are covered in the relevant section of the Review of Operations.
Note:
This Business Review is prepared in accordance with the
requirements of the Companies Act 2006 and is framed around the
principles and guidelines for Operating and Financial Reviews
published in the UK by the Accounting Standards Board. Its purpose
is to provide information which is significant to understanding the
development, performance and position of the Group, the principal
risks and uncertainties facing the Group and to include the Key
Performance Indicators (KPIs) used by the Group to monitor this
development, performance and position. Additionally, the Business
Review is intended to highlight trends, where identifiable, in
factors which affect the development, performance and position of
the Group.