Internationalising our business model

Strategic goals for 2009

• Continue to strengthen our alignment with the needs of EDE customers in China through new product and by constantly improving their web experience.
• Support our operations in India and ensure that they have the wherewithal requirement to provide high service solutions to the local engineering community.
• Evaluate growth opportunities in global markets with high growth potential, particularly focusing on Eastern Europe.
• Support our American Industrial Products Division as it continues to expand internationally.

Achievements in 2009

• Ongoing investment in China has resulted in more than 50% of sales in EDE product and continued growth of web sales from our Mandarin and English websites.
• We launched our India website, catalogue and opened new branches to support the growing EDE market.
• Continued development of our Eastern European operations has been enhanced by a small, but strategically important acquisition. We have also launched further local language websites across Eastern Europe, including Bulgaria, Estonia, Latvia, Lithuania and Romania.
• By embracing internationalisation, our Industrial Products Division received 13% of their revenue from international markets in 2009.

Priorities for 2010

• Invest in the necessary products, tools and services that support the needs of customers in higher growth sectors.
• Ensure that we continue to evaluate our segmentation work to appropriately target the faster growing sectors of our markets, particularly in line with government investment programmes recently announced in China and the United States.
• Continue to invest in our EDE inventory position for the India market, ensuring customers across this fast growing region have access to our high service, next day delivery.
• Fully integrate our acquisition in Eastern Europe to ensure a smooth transition for customers to our high service proposition.
• Continue to identify new international markets for our Industrial Products Division.

More than two years ago when we evaluated our markets for strong growth opportunities, we chose to invest in the developing markets of China, India and Eastern Europe. Now, as the world in which we live changes rapidly, these markets have become even more relevant to our future growth. We have momentum behind us and a strong platform from which we can continue to expand our footprint and take advantage of our market position.

In China we have continued to expand and attract new customers every day. We have an industry leading management team in the region who understand the market and our opportunities within it. We now deliver next day to more than 110 cities across the country, touching customers in a wide variety of segments who design for both export and local consumption. We have noticed that the slowing economy has changed the Chinese commercial environment, offering new opportunities for Premier Farnell. The Chinese market remains predominantly EDE, however there is evidence that the country is beginning to see the emergence of an MRO market. We will continue to support EDE customers with our broad product offering, content rich websites in both Mandarin and English, and our high service, but we will also adapt our offering to ensure that we can support areas that are growing. If that means increasing our support for highly profitable and fast growing MRO customers then we will support them as we do in all other regions around the world.

Our business in India is small but growing in line with the vast opportunities that exist in the market. India has a large EDE population, with 500 PhD and 200,000 engineers graduating from universities every year. In one year we have accomplished a lot; our new management team is in place and driving our strategy in the local market with good results, we have a dedicated Indian website with local content and local prices, our local catalogue is also generating new leads, and we have added an additional sales office to support growing demand for our products and services. Our multi-channel approach permeates all of our operations, no matter how big or small. Premier Farnell continues to be a truly multi-channel distributor with innovative solutions for local markets.

Eastern Europe has performed even better than we first expected. We have continued to find growth in economies where we would not have expected to find such robust strength and are adapting our offering accordingly, launching local language websites and creating the tools we need to attract customers in these markets. EDE customers in Eastern Europe, as with all of our emerging markets, design product for local consumption. As Eastern Europe continues to develop and invest in infrastructure projects, there continues to be strong demand from local high service distributors. Opportunities vary across the region as differing economies are focused on differing areas of development enabling us to take advantage of the broad range of products situated in our distribution facility in Liège, Belgium. From Liège we are able to support all of Eastern Europe with next day delivery on over 400,000 products available through our 11 local language websites.

Towards the end of the year, we strengthened our East European proposition even further through the acquisition of part of the assets and trading rights of the Microdis Holdings group. This acquisition provides increased customer reach in the Polish, Hungarian and Czech markets.