Review of Results

*Constant Exchange Rates.

Note: Prior year income statement figures have been restated to exclude the results of the BuckHickman business following its disposal on 10 April 2007. The results of this discontinued operation are shown as a single number on the face of the income statement below profit after tax from continuing operations, including comparative information which has been restated accordingly. Further details relating to the disposal of this business are given in note 24 to the Consolidated Financial Statements.

Group sales from continuing operations for the 53 week financial year were £744.7 million (2007, 52 weeks: £723.3 million), reflecting year on year sales growth, based on sales per day for continuing businesses at constant exchange rates, of 4.6%. All segments reported positive sales growth throughout the year. Group sales in the first half grew 3.5% despite more challenging markets in both the Americas and the UK. Although these market conditions continued in the second half, year on year sales growth improved to 4.2% in the third quarter and 7.0% in the fourth quarter, with sales growing faster than the market in our major territories, as the benefits from the Group’s strategic initiatives gained momentum. In particular, MDD North America sales growth accelerated throughout the second half with growth of 4.9% in the third quarter increasing to 9.0% in the fourth quarter as the business gained momentum.

Sales in Greater China also increased rapidly achieving 23.4% growth by the fourth quarter reflecting the transition of the business to become more focused on the higher margin EDE segment. In Mainland Europe the business continued its strong performance with full year sales growth of 10.2%, the second consecutive year of double digit sales growth. In the UK, the business continued to outperform the market and, following definitive steps taken to improve sales of the Farnell brand, fourth quarter sales in the UK grew 3.2% after a flat performance in the third quarter.

The Group’s gross margin in the year from continuing operations was 39.7% compared to the prior year of 39.5%. This reflects nine consecutive quarters of gross margin stability which underpins the Group’s strategy and differentiates Premier Farnell from the industry.

Operating profit from continuing operations for the 53 week financial year was £88.0 million compared to the prior year of £83.1 million (52 weeks). Operating margin for the year was 11.8% up from 11.5% in the prior year, reflecting the improved gross margin and a reduction in operating expenses as a percentage of sales, even after the ongoing investment in our strategy. There was an adverse impact on operating profit of £2.5 million from the translation of overseas results compared with the prior year, reflecting the continued weakness of the US dollar, partly offset by the strengthening of the Euro in the second half of the year. A one cent movement in the exchange rate between the US dollar and sterling, impacts the Group’s operating profit by approximately £0.25 million per annum, and a one cent movement in the exchange rate between the Euro and sterling impacts the Group’s operating profit by approximately £0.2 million per annum. At constant exchange rates, the increase in operating profit was 9.2%, or 7.1% after adjusting for the extra week. Operational gearing, representing the year on year increase in operating profit as a percentage of the increase in sales, both at constant exchange rates, was 16.4% for the year.

Return on net operating assets (operating profit expressed as a percentage of net assets excluding cash, financial liabilities, taxation and goodwill) for the year improved to 30.2% from 28.8% in the prior year.

Net finance costs for the year were £16.8 million compared to £20.8 million in 2007 a reduction of 16.4% at constant exchange rates, reflecting the benefit of the improved net borrowing position, the benefit arising from the purchase and cancellation of preference shares during the year and the impact of the US dollar exchange rate.

Profit before taxation from continuing operations was £71.2 million compared to the prior year of £62.3 million, an increase of 17.7% at constant exchange rates or 15.4% after adjusting for the extra week, reflecting the improvement in operating profit and the lower net finance costs.

The Group reported a loss after taxation from discontinued operations of £13.5 million comprising the post tax trading profit of the BuckHickman business up to the date of disposal of £0.1 million and the post tax loss on the sale of the business of £13.6 million. The profit after taxation from discontinued operations in 2007 of £10.1 million comprised the post tax trading loss of the BuckHickman business of £0.6 million, the post tax trading gain of the Kent business of £0.6million, and the post tax gain on the sale of the Kent business of £10.1 million.

Profit attributable to ordinary shareholders was £36.3 million (2007: £52.4 million).

Basic earnings per share for the year were as follows:

Earnings per share from continuing operations of 13.7p represented year on year growth of 18.1% or 21.2% at constant exchange rates.