announcement of preliminary results year ended 31 march 2006 1 june 2006

ANNOUNCEMENT ANNOUNCEMENT OF PRELIMINARY OF PRELIMINARY

RESULTS RESULTS

YEAR ENDED 31 MARCH 2006YEAR ENDED 31 MARCH 2006

1 June 20061 June 2006

2Electrocomponents plc Preliminary Results 2005/06

BOB LAWSONBOB LAWSON

CHAIRMANCHAIRMAN


AGENDAAGENDA

Welcome

Current trading

Progress on strategy delivery

Regional overview

Financial performance

Bob Lawson

Ian Mason

Simon Boddie


CURRENT TRADINGCURRENT TRADING

Since the year end, Group revenue growth has remained strong at around 9%. The International

business has grown by around 15% and the UK business has been flat. As planned, gross

margins are lower than the equivalent period last year, largely due to actions taken to improve

competitiveness


IAN MASONIAN MASON

GROUP CHIEF EXECUTIVEGROUP CHIEF EXECUTIVE


STRATEGY ANNOUNCED IN MAY 2005STRATEGY ANNOUNCED IN MAY 2005

An update on developments, one year into the three year plan

11 Focus separately on two distinct customer groups Electronic and electromechanical (EEM) Maintenance, repair and operations (MRO)

22 Implement the Enterprise Business System (EBS)

33 Create a lower cost infrastructure


EEM STRATEGY PROGRESSEEM STRATEGY PROGRESS

Extended product range performed well Allied products available in Europe

Launched new leading edge technologies Wireless and Displays

Aligned offer with customer needs new packaging options enhanced search and presentation

Planned strategy actions all EEM products available worldwide massively increase EEM product range further improve customer service


EBS IMPLEMENTATION PROGRESSEBS IMPLEMENTATION PROGRESS

Successful UK implementation over Christmas 2005 UK, International supply and Group processes over 1 million customer orders so far!

European roll out underway and planned to be largely complete in 2006/07 accelerated roll out of established template learning and confidence from France and UK implementations

Asia Pacific EBS roll out will be complete with China implementation in 2006/07

EBS provides the essential systems platforms to support strategy delivery focus on benefits delivery


LOWER COST INFRASTRUCTURELOWER COST INFRASTRUCTURE

Sales growth to drive economies of scale high fixed cost infrastructure good cost leverage in International businesses

Cost reduction initiatives identified to achieve £10m target over 3 years £4.4m of annualised cost reduction achieved

– includes removal of c.110 roles– one-off reorganisation costs of £3.7m

further actions planned in 2006/07 including EBS enabled benefits

Costs being systematically redeployed to front end sales and marketing


BUSINESS PORTFOLIOBUSINESS PORTFOLIO

Revenue % of Group

Contribution % of revenue

Europe £268m 32% 22.4%

US £138m 17% 14.0%

Asia Pacific £69m 8% 10.4%

International £475m 57% 18.2%

UK £354m 43% 27.4%

Group £829m 100% 22.1%


INTERNATIONALINTERNATIONAL

Revenue growth full year : 12% second half : 15% current trading : 15%

Improvements in all regions

Gross margin reduction

Good operating cost leverage

Contribution increased by £9m

International sales growth

0%

5%

10%

15%

20%

H1 H2 H1 H2 H1 H22003/04 2004/05 2005/06


EUROPEEUROPERevenue growth

full year : 8% second half : 11% current trading : 12%

Improvements throughout Europe especially France, Germany and Italy

EEM strategy implementation extended range sales growth realigning marketing spend to EEM ‘halo’ effect on existing products

Successful MRO trial in Germany

Addressing key customer barriers price perception flexibility

Europe sales growth

-5%

0%

5%

10%

15%

H1 H2 H1 H2 H1 H2

France, Germany and Italy Smaller European Markets

2003/04 2004/05 2005/06


GROSS MARGIN POSITIONGROSS MARGIN POSITION

Targeted price reductions and increased discount flexibility to improve the competitiveness maintained overall price position and fixed price catalogue continued to implement and develop market price framework

– eg pass on commodity price increases quickly specific customer and large order discounts delivering growth

Significant net cost price reductions achieved supplier negotiation and range rationalisation particularly in MRO ongoing programme of margin recovery

Net impact is a reduction in gross margin high US growth and product mix have also impacted gross margin

Managing trade-off between gross margin, sales and gross profit greater focus on increasing gross profit rate of gross margin decline will slow as competitive position adjusted


IMPROVING COMPETITIVENESSIMPROVING COMPETITIVENESS

Product Range Operating Company

Time

Ind

ex

Sales Gross profit Gross margin

% c

hang

e

Price Volume Sales grow th Time


USUS


Continuation of proven growth strategy expansion of field sales 55 local branches expansion of product range marketing programmes developed with

suppliers improved customer service levels

Gross margin stabilised in H2 at 36%

New warehouse on track for mid 2007

US sales growth

0%

5%

10%

15%

20%

25%

H1 H2 H1 H2 H1 H22003/04 2004/05 2005/06


ASIA PACIFIC (INCLUDING JAPAN)ASIA PACIFIC (INCLUDING JAPAN)


Strong growth in all regions N Asia 21%, S Asia 19%, Australasia 12%,

Japan 11%

Japan sales growth recovered well in H2

Thailand sales office to open in mid 2006

Solid foundations built across the Asia Pacific region

potential to accelerate growth in China

Asia Pacific sales growth

0%

5%

10%

15%

20%

H1 H2 H1 H2 H1 H22003/04 2004/05 2005/06


CHINA ACCELERATIONCHINA ACCELERATION

RS currently has a leading position in China Same Day Offer in Shanghai, Beijing and Wuhan high ‘intangible’ value from official permissions and relationships

Research with RS customers identified they have three primary customer needs wide range of products assured delivery knowledgeable local sellers

Four point plan for meeting these needs and driving growth in China: product range expansion increased stock levels to improve delivery service further sales offices and resource to enhance face to face selling marketing investment to drive customer acquisition

Additional P&L investment of £1.5m in 2006/07


UKUK

Revenue change full year : -3% second half : -2% current trading : flat

Successful implementation of EBS

Continued manufacturing decline

Increased discount flexibility strong large order growth several large account wins

Strong e-Commerce growth and now 28% of sales

UK sales growth

-10%

-5%

0%

5%

10%

H1 H2 H1 H2 H1 H22003/04 2004/05 2005/06


UK STRATEGYUK STRATEGY

Objective is to generate a sustainable profit and enable future growth

The objective will be realised through the implementation of the Group strategy built on core strengths: range, availability, order facilitation and reliable delivery develop new MRO strategy on behalf of the Group 2 shop fronts leveraged off a common infrastructure

Significant changes to the operational approach to deliver the strategy rationalisation of MRO offer with increased RS own-brand greater price and discount flexibility with gross profit focus migration of business to web and reduce other channel costs changing role of the salesforce

Cost base will be reduced through targeted initiatives, reducing complexity and EBS benefits

Getting on with implementation


PROCESSESPROCESSES

Product Management reorganised to align with the strategy developing EEM and rationalising MRO ranges effective cost price management

IS aligned structure to post-EBS world upgraded supporting infrastructure

Supply Chain good stock and service level control

MPP continued catalogue and production process cost reduction

HR culture change programme more customer focused and quicker to act


e-COMMERCEe-COMMERCE

Revenue growth: 29%

Germany now c.40% e-Commerce particularly strong e-Procurement growth

e-Commerce is enabling the strategy

implementation allows low cost offer of extended range allows rapid product introduction,

discontinuation and price change enables global availability of products

% revenue: Group 25% Asia Pacific 27%

UK 28% (including Japan 53%)

Europe 28% US 8%

e-Commerce % of Group sales

0%

5%

10%

15%

20%

25%

30%

H1 H2 H1 H2 H1 H22003/04 2004/05 2005/06


SIMON BODDIESIMON BODDIE

GROUP FINANCE DIRECTORGROUP FINANCE DIRECTOR


Unless otherwise stated

This has been prepared using International Financial Reporting Standards (IFRS)

Changes in revenue are adjusted for exchange rates and the number of trading days

Changes in profit, cash flow, debt and share related measures, such as earnings per share, are at reported exchange rates

In order to make clear the costs of the EBS project and the underlying performance of the business, EBS costs have been disclosed separately. Therefore, unless explicitly stated, measures based on operating costs, contribution and process costs exclude EBS

A charge of £7.7m was incurred in the year for items excluded from headline profit. Key performance measures such as return on sales, EBITDA and ROCE use headline profit figures


(£m)

2005/06 2004/05

Revenue 828.5 773.9

Day adjusted growth 5.0% 4.5%

Gross margin % 51.5% 53.2%

Contribution 183.2 184.1

Group process costs (81.9) (74.1)

EBS costs (25.1) (9.2)

Net interest payable (3.4) (0.9)

Headline profit before tax 72.8 99.9

INCOME STATEMENT 1INCOME STATEMENT 1


2004/05 International UK EBS Processes Interest 2005/06

THE 5 MAIN MOVEMENTS IN PROFITTHE 5 MAIN MOVEMENTS IN PROFIT

£100m

£9m £(10)m

£(16)m

£(8)m

£(2)m £73m


INTERNATIONALINTERNATIONAL

Contribution growth: Europe £3.6m, US £3.5m and Asia Pacific £1.7m

(£m) 2005/06 Change

Revenue 474.9 11.8%

Gross margin 50.3% (1.8)% points reduction

Costs as a % of revenue 32.1% 1.3% points reduction

Contribution 86.3 8.8 increase

Contribution % of revenue 18.2%


UKUK

(£m) 2005/06 Change

Revenue 353.6 (3.0)%

Gross margin 53.0% (1.5)% points reduction

Costs as a % of revenue 25.6% (0.8)% points increase

Contribution 96.9 (9.7) decrease

Contribution % of revenue 27.4%


EBSEBS

Profit and loss account Cash flow

(£m) 2005/06 Change (£m) 2005/06 Change

Depreciation (6.8) (1.2) Profit and loss account (25.1) (15.9)

Project and support (12.4) (10.5) Depreciation 6.8 1.2

Local business costs (5.9) (4.2) Stock (7.0) (7.0)

(25.1) (15.9) Capital expenditure (12.7) 0.3

Cash flow impact (38.0) (21.4)

(£m) 2006/07 (£m) 2006/07

Estimated low 20’s Estimated c(20)

capex similar to 2005/06 half of 2005/06 stock unwinds due to European

roll out


GROUPWIDE PROCESS COSTSGROUPWIDE PROCESS COSTS

One-off IS costs: groupwide technology upgrade, IS restructuring

(£m) 2005/06 2004/05 Change Group process costs One-off IS costs

81.9

(3.1)

74.1

-

(7.8)

3.1

Comparable process costs Sales % of sales

78.8

828.5 9.5%

74.1

773.9 9.6%

(4.7)


INCOME STATEMENT 2INCOME STATEMENT 2(£m) 2005/06 2004/05

Headline profit before tax 72.8 99.9

Reorganisation costs (3.7) -

RoHS (4.0) -

Profit before tax 65.1 99.9

Tax (21.5) (32.3)

Tax rate % 33.0% 32.3%

Profit for period 43.6 67.6

Earnings per share

- Headline

- Basic

11.2p

10.0p

15.5p

15.5p

Dividend per share 18.4p 18.4p


RoHS: THE IMPACTRoHS: THE IMPACT

Takes effect from 1 July 2006 for products

used in production

70,000 RoHS compliant products currently

available in Europe

RS among the first to achieve BSI RoHS

trusted kitemark (in UK and Benelux)

Limited examples of dual stocking where

customer demand for compliant stock is

particularly strong

Additional provision of £4m made in 2005/06


CASH FLOW 1CASH FLOW 1

(£m) 2005/06 2004/05

Profit before tax 65.1 99.9

Depreciation 24.1 22.2

Employee share options 2.7 2.4

Finance expense (net) 3.4 0.9

Working capital (14.2) (8.0)

Cash generated from operations 81.1 117.4

% Profit before tax 125% 118%

Interest (3.3) (1.3)

Tax (25.8) (31.2)

Net capital expenditure (25.1) (23.8)

Free cash flow 26.9 61.1


WORKING CAPITALWORKING CAPITAL

(£m) 2005/06 2004/05

Stock (12.8) (13.6)Stock turn maintained at 2.5 times despite EBS stock £7m

Debtors (14.6) 9.3 Higher sales and timing of Easter

Creditors 13.2 (3.7)Higher purchases and accruals (eg reorganisation costs)

Movement in working capital

(14.2) (8.0)


CAPITAL EXPENDITURECAPITAL EXPENDITURE

(£m) 2005/06 2004/05

EBS 12.7 13.0

Other computer systems 4.0 5.5

Other 8.4 5.3

Net capital expenditure 25.1 23.8

Net capex / depreciation 1.0x 1.1x

2006/07 outlook £40m+ : European EBS roll out and US warehouse

Capital expenditure (£m)

05

101520253035404550

2001/02 2002/03 2003/04 2004/05 2005/06


CASH FLOW 2CASH FLOW 2

Financial ratios remain strong with high interest cover

(£m) 2005/06 2004/05

Free cash flow 26.9 61.1

Dividends paidDividends paid (80.0) (80.0)

Cash outflow (53.1) (18.9)

Exchange differences (7.2) (2.0)

New finance lease liabilities (5.1) -

Increase in net debt (65.4) (20.9)

Net debt (120.8) (55.4)

Pension deficit (net of deferred tax) (29.7) (32.4)


PENSIONS UPDATEPENSIONS UPDATE

Defined benefit schemes in UK, Ireland and Germany

all closed to new entrants

all other schemes are defined contribution

Under IAS 19, combined gross deficit of £41.8m at 31 March 2006

of which UK £35.0m

UK deficit lower than last year

improving bond yields greater than impact of people living longer


IMPROVING PERFORMANCEIMPROVING PERFORMANCE

To substantially improve the Group’s medium term financial performance need to grow profit and cash in 2006/07

Plans in place and management committed to deliver International growth and cost leverage sustainable profit and enable future growth in the UK lower cost infrastructure enabled by EBS improved cash delivery to restore a covered dividend


SAFE HARBOUR STATEMENTSAFE HARBOUR STATEMENT

This presentation contains certain statements, statistics and projections that are or may be forward-looking.

The accuracy and completeness of all such statements, including, without limitation, statements regarding the

future financial position, strategy, projected costs, plans and objectives for the management of future

operations of Electrocomponents plc and its subsidiaries is not warranted or guaranteed. These statements

typically contain words such as "intends", "expects", "anticipates", "estimates" and words of similar import.

By their nature, forward-looking statements involve risk and uncertainty because they relate to events and

depend on circumstances that will occur in the future. Although Electrocomponents plc believes that the

expectations reflected in such statements are reasonable, no assurance can be given that such expectations

will prove to be correct. There are a number of factors, which may be beyond the control of

Electrocomponents plc, which could cause actual results and developments to differ materially from those

expressed or implied by such forward-looking statements. Other than as required by applicable law or the

applicable rules of any exchange on which our securities may be listed, Electrocomponents plc has no

intention or obligation to update forward-looking statements contained herein.


QUESTIONSQUESTIONS


APPENDIXAPPENDIX


CONTINENTAL EUROPECONTINENTAL EUROPE

(£m) 2005/06 2004/05 Change

Revenue

267.9 243.5

8.3%

Contribution 59.9 56.3 3.6

% of revenue 22.4% 23.1% (0.7)% points


NORTH AMERICANORTH AMERICA

(£m) 2005/06 2004/05 Change

Revenue

137.5

112.8 18.0%


% of revenue 14.0% 13.9%

0.1% points


ASIA PACIFIC (INCLUDING JAPAN)ASIA PACIFIC (INCLUDING JAPAN)

(£m) 2005/06 2004/05 Change

Revenue 69.5

58.8

14.5%


% of revenue 10.4% 9.4% 1.0% points


JAPANJAPAN

(£m) 2005/06 2004/05 Change

Revenue 18.6

17.0

11.2%




ASIA PACIFIC (EXCLUDING JAPAN)ASIA PACIFIC (EXCLUDING JAPAN)

(£m) 2005/06 2004/05 Change

Revenue 50.9

41.8

15.8%



announcement of preliminary results year ended 31 march 2006 1 june 2006

Documents

marketing slide

competitiveness slide

customer service slide

group revenue growth

international revenue

benefits delivery slide

europe revenue growth

us revenue growth