Chairman's statement
Introduction
2008 has been a year of continued progress across the business as our strategy takes effect. We have demonstrated an ability to grow faster than the market, increasing profits and delivering value to shareholders.
We have delivered year on year sales growth of 5% with an accompanying gross margin of 39.7%. The gross margin stability reflects changes across the business with all geographic regions experiencing growth. Cash generation has also been strong and, combined with the ongoing focus on operational excellence, has led to an increase in operating profit for the year of 9%, at constant exchange rates.
Following on from the previous year’s senior management changes, we have made two more key additions to our board during the period. Dennis Millard and Paul Withers both joined as non-executive directors at the beginning of September. I welcome them both to, what I believe, is a strong and committed team. After nine years of dedicated service to the Company’s Board, John Roques and Cary Nolan will retire in June 2008. Both John and Cary have provided wise counsel, valuable guidance and continued support to their Board colleagues throughout their tenure. I would like to thank them for their significant contributions and on behalf of everyone at Premier Farnell wish them well for the future.
The implementation of the strategy, announced by Chief Executive Harriet Green at the end of 2006 is progressing well and starting to have a very positive impact on the business. In light of this the Board is proposing to increase the final dividend by 4%. This is the first proposed dividend increase in ten years. The strategy is delivering profitable growth through an increased focus on Electronic Design Engineers (EDEs) globally; driving sales via the web; and internationalising our business model. Harriet discusses how this is increasing shareholder value in her Q&A over the next few pages. You will also see the impact of our strategy throughout this report – from the growing levels of eCommerce to the development of new geographic markets.
We are measuring our performance and communicating our progress relative to these strategic objectives and have identified eight important Key Performance Indicators. These are highlighted and, once again, referred to throughout this document. Similarly, our CSR report includes a number of other indicators that show progress on our environmental, community and marketplace targets. We believe that together, these targets give a clear indication of our improved performance in responsible creation of value for our shareholders.
An innovative and accountable workplace is crucial to our future. Our employees are the drivers behind the business as we work to deliver what our customers need. Whether adding further product lines or helping to expand the business into Eastern Europe and Asia, it is our employees that execute flawlessly on a day by day basis. I take this opportunity to thank them once again for their contribution to our success.
The coming year will be about building on the positive momentum that we have developed since the new strategy was implemented. With a strong Board and a highly committed, customer focussed workforce, I am confident that we are building the foundations to deliver significant value to our shareholders.
Sir Peter Gershon, Chairman
