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Key Performance Indicators

Transformation

We continue to see the transformation of our operations through consistent execution of our strategy – a focus on Electronic Design Engineering (EDE) customers, the web and internationalisation, while maintaining our profitable Maintenance, Repair and Operations (MRO) core. Our objectives remain clear and well understood by both internal and external stakeholders. We benchmark our performance in relation to market share data, competitive information and performance against other high performing companies. Through nine identified Key Performance Indicators (KPIs) that were set out when we announced our strategy in 2007, we monitor performance and communicate progress which is partly reflected by our share price performance (also graphed below).

Sales per day growth %

1.0%

Sales per day growth %

4.6% in 2008 1.0% in 2009 6%-8% as target

We target accelerated sales growth through a focus on the faster growing EDE sector and faster growing international economies.

Strategic progress continued during the year, resulting in sales growth of 1.0%. Sales in the first half were in line with our strategic target and helped to offset the impact of slowing global economies in the second half.

Gross margin %

39.6%

Gross margin %

Gross margin 39.7% in 2008 39.6% in 2009 stable as target

We will achieve gross margin stability through a balanced customer and geographic profile in order to manage risk.

Gross margin for the year was 39.6%. We have now achieved gross margin stability for more than three years.

Working capital as a % of sales

28.4%

Working capital as a % of sales

Working capital as a % of sales 25.7% in 2008 28.4% in 2009 <25.1% as target

The strategic review identified operational and working capital efficiencies, the achievement of which enables us to fund investment programmes.

Working capital as a percentage of sales in the year was 28.4%.

The efficiencies continue to deliver improvements and despite the slowdown experienced in the fourth quarter, we are on track to achieve this target.

Free cash flow to revenue %

6.8%

Free cash flow to revenue %

Free cash flow to revenue 5.6% in 2008 6.8% in 2009 6.0% as target

This is a combined measure of both the improved profitability and cash flow targets of the strategy.

Free cash flow as a percentage of sales in the year was 6.8% excluding the impact of restructuring. We continue to improve cash efficiencies.

Return on sales %

11.0%

Return on sales %

Return on sales 11.8% in 2008 11.0% for 2009 12% as target

Operating efficiencies and the success of our eCommerce strategy will result in an improving return on sales. During the year we increased this target to 12.0%.

Underlying return on sales for the year was 11.0%. Actions taken to ensure that our back office systems support our web front end, as well as rationalisation of our sales network will result in further improvements.

Return on net operating assets (RONA) %

29.6%

Return on net operating assets (RONA) %

Return on net operating assets (RONA) 30.2% in 2008 29.6% for 2009 >30% as target

The effective and efficient investment of our shareholders’ funds is a critical overall measure of the success of our strategy.

Underlying RONA was 29.6% in the year. We will continue to invest in the areas where we see growth during the year, specifically in support of EDE and international growth.

Sales from developing markets %

17.6%

Sales from developing markets %

Sales from developing markets 15.9% in 2008 17.6 % for 2009 20% as target

Targeting sales growth in the developing markets is a key part of our strategy, essential to the sustainability of our profitable growth.

As the world economies slow, China, India and most parts of Eastern Europe are expected to demonstrate growth. Sales from developing international markets accounted for 17.6% of sales in the year.

Sales via eCommerce channels %

32.0%

Sales via eCommerce channels %

Sales via eCommerce channels 27.6% in 2008 32.0% in 2009 50%-70% as target

Increasing sales on the web is a cost effective and sensible approach to growing our business, offering us and our customers increased flexibility.

The web is now becoming our primary sales channel in many regions. eCommerce sales accounted for 32.0% of MDD sales in the year and 34.8% by the fourth quarter with Farnell Europe at 50.8%, and actions to accelerate our transformation are ongoing.

Employee engagement %

76%

Employee engagement %

Employee engagement 74% in 2008 76% in 2009 79% as target

An engaged workforce is essential for any high performing business.

Engagement scores across the Group improved by 2.4% in the year. Programmes have been put in place to ensure that employee feedback is understood and changes are implemented as required. By doing so we expect to make further improvements to our engagement score going forward.

Share price performance %

%

Share price performance %

Share price performance % graph Jan08–Dec08

Although we have no control over the value the market places on our shares, we are pleased that the results of our strategic transformation are being recognised. We outperformed both the FTSE 250 and the Support Services segment in the year and were ranked as the 35th best performer out of the FTSE 250 companies for the year to 1 February 2009.

Notes:

  • Note: 2008 refers to the 53 week financial year ended 3 February 2008. Underlying performance in 2009 excludes restructuring costs of £3.4 million.

Other financial indicators

Group Sales

£804.4m

Group Sales

£774.7m in 2008 £804.4m in 2009 +1%

Group operating profit

£85.4m

Group operating profit

Total £88.8m in 2008 £85.4m in 2009 -13% Underlying £88.0m in 2008 £88.8m in 2009 -9%

Group operating margin

10.6%

Group operating margin

Group operating margin total 11.8% in 2008 10.6% in 2009 Underlying 11.8% in 2008 11.0% in 2009

Profit before taxation

£72.8m

Profit before taxation

Total £71.2m in 2008 £72.8m in 2009 +2% Underlying £70.3m in 2008 £72.5m in 2009 +3%

Earnings per share

14.3p

Earnings per share

Basic 13.9p in 2008 14.3p in 2009 +4% Underlying 13.4p in 2008 13.9p in 2009 +4%

Dividend per share

9.4p

Dividend per share

9.2p in 2008 9.4p in 2009 +2%

Notes:

  • Throughout the Annual Report and Accounts:
  • 1 Unless otherwise stated, 2008 refers to the 53 week period ended
  • 3 February 2008, 2009 refers to the 52 week period ended 1 February 2009, and 2010 refers to the 52 week period ending 31 January 2010.
  • 2 Sales growth is based on sales per day for continuing businesses at constant exchange rates and for like periods.
  • 3 Underlying operating profit and operating margin excludes restructuring costs of £3.4 million (2008: nil).
  • 4 Underlying profit before tax and earnings per share excludes restructuring costs of £3.4 million (2008: nil) and excludes gains on the purchase and cancellation of preference shares of £3.7 million (2008: £0.9 million).
  • 5 Growth in operating profit, is calculated at constant exchange rates, unless otherwise stated.