Financial Highlights
- Group underlying sales growth was flat, with 2% maintenance growth offset by 2% electronics decline. Fewer trading days and currency movements reduced Group reported sales by 22m
- UK sales grew by 5%, benefitting from high maintenance exposure and Raspberry Pi * sales
- International sales declined by 2%; Europe and Asia Pacific were flat, North America declined 5%
- Gross margin declined by 1.2% points, operating costs grew by 3% at constant currency
- Fewer trading days and currency movements reduced headline profit before tax (2) by 5m
- Headline profit before tax (2) declined by 30% to 41.5m
- Headline free cash flow (2) grew by 6% to 24.0m, with lower capex and improved working capital
- Strong balancesheet with net debt:EBITDA of 1.2 times
- Interim dividend per share maintained at 5.0 pence, reflecting confidence in long-term prospects
Operational Highlights
- New organisation structure to accelerate strategy and deliver 6m - 8m p.a. of cost efficiencies
- International comprises c.70% of Group sales, with significant opportunity for future growth
- Maintenance sales grew by 2%, benefitting from enhanced automation and control offer
- Electronics sales declined by 2%, outperforming the market in challenging conditions
- North America sales impacted by high electronics exposure and adapting to a new IT system
- Group eCommerce sales growth of 2%, UK and Europe eCommerce sales growth of 12%
- Significant enhancements to our websites, increasing our advantage over smaller competitors
- UK contribution growth of 2%, with a contribution margin above 28%
CURRENT TRADING AND OUTLOOK
In October Group underlying sales growth was flat. The UK grew by 3% and International declined by 2%. The UK growth was 2% after excluding the global sales of Raspberry Pi *. Within International, Continental Europe grew by 1%, North America declined by 6% and Asia Pacific declined by 1%. Conditions in the electronics market continued to be tough, which particularly impacted North America and Japan as these markets have the highest electronics exposure in the Group. North America's performance was also impacted by Hurricane Sandy at the end of the month.
Whilst we remain mindful of the challenging global market conditions, particularly in electronics, results in the second half are expected to benefit from initiatives to drive sales growth, easier sales comparators and management actions to improve operating margins. Gross margins are expected to benefit from targeted selling price increases and actions to improve discount effectiveness. Headline operating costs as a percentage of sales should be lower in the second half as compared with the first half.
IAN MASON, GROUP CHIEF EXECUTIVE, COMMENTED:
"The business faced a number of headwinds in the first half, with a robust UK performance helping to maintain Group sales year-on-year. Whilst the macroeconomic environment is challenging, we expect a stronger second half of the year given initiatives to drive sales growth, easier sales comparators and actions we are taking to improve operating margins.
Our new global operating model will allow us to provide a larger, more consistent offer to customers worldwide via our industry-leading eCommerce platform. We are confident that this approach will enable us to accelerate the implementation of our strategic initiatives, drive efficiencies, gain market share from our numerous smaller competitors and deliver a higher rate of long-term growth."
