ELECTROCOMPONENTS...Working capital as a percentage of sales increased by 1.5 percentage points to 22.7% – Like-for-like increase was 0.3 percentage points – Balance relates to

2019 Half-year Results

ELECTROCOMPONENTS

2019 half-year

financial results

20 November 2018


SAFE HARBOUR

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.

2


OVERVIEW

Above market,

sustainable growth and

strong execution

9.8% like-for-like(1)

revenue growth,

continuing to drive

share gains in

large, fragmented

market

Adjusted(2)

operating profit

margin rose 1.5

percentage points

aided by higher

gross margin and

cost control

Strong growth in

profit before tax,

earnings and free

cash flow

Further

improvement in

customer

experience –

Group NPS(3) up 3.8%

IESA acquisition

performing well –

>30% revenue

growth and

encouraging new contract wins

Good progress on

PIP II(4) – positioning

the Group to drive

continued growth

and superior returns

(1) Like-for-like change excludes the impact of acquisitions and the effects of changes in exchange rates on translation of overseas

operating results, with 2018 converted at 2019 average exchange rates for the period. Revenue is also adjusted to eliminate the

impact of trading days year on year.

(2) Adjusted excludes amortisation of intangible assets arising on acquisition of businesses, substantial reorganisation costs, asset

write-downs, one-off pension credits or costs, significant tax rate changes and associated income tax.

(3) Rolling 12-month Net Promoter Score – a measure of customer satisfaction.

(4) Second phase of Performance Improvement Plan (PIP).3


AGENDA

1

2 PERFORMANCE IMPROVEMENT PLAN

3

CURRENT TRADING & OUTLOOK

FINANCIAL RESULTS

6

4

BECOMING FIRST CHOICE

REGIONAL PERFORMANCE

5 ACCELERATING OWN-BRAND GROWTH

VALUE-ADDED SERVICES – IESA

7

David Egan

CFO

Lindsley Ruth

CEO

4

2019 Half-year Results2019 Half-year Results

FINANCIAL RESULTS

1

Significant progress


Significant growth in profit and earnings per share

FINANCIAL HIGHLIGHTS

Strong revenue growth Improving profitability EPS and dividend growth

13.0

17.2

H1 2018 H1 2019 Like-for-like change

Adjusted EPS (p)

5.25 5.30

H1 2018 H1 2019

Dividend per share (p)

9.911.4


Adjusted operating profit margin (%)

(1) Like-for-like change excludes the impact of acquisitions and the effects of changes in exchange rates on translation of overseas operating results, with 2018 converted at 2019 average exchange rates for the

period. Revenue is also adjusted to eliminate the impact of trading days year on year.

(2) Adjusted excludes amortisation of intangible assets arising on acquisition of businesses, substantial reorganisation costs, asset write-downs, one-off pension credits or costs, significant tax rate changes and

associated income tax.

(3) At the year end it was announced that in the normal course of business, the interim dividend would be equivalent to 40% of the prior year full-year dividend.

> > >

43.4 44.4


Gross margin (%)

30.5%

0.7 pts 1.4 pts

12.2

9.7 9.8

RS Pro Digital Group

Like-for-like revenue growth (%)

81.2

104.0


Adjusted operating profit (£m)

25.9%

6


1.0 percentage point improvement

– 0.3 percentage point accretion from IESA acquisition

– 0.7 percentage point like-for-like improvement

Driven by our own actions to:

– Grow higher-margin products, including RS Pro

– Improve discount discipline and pricing

Foreign exchange broadly neutral

Tougher H2 gross margin comparatives (gross margin was

43.4% in H1 2018 and 44.5% in H2 2018) but on track to deliver

stable gross margin in our base business(1) in the full year

Progress Going forward

DRIVING OPERATIONAL EXCELLENCE – GROSS MARGIN

> >

Shifting our culture to focus on profitability

We are focused on initiatives to drive gross margin:

Growing higher-margin products:

– Accelerating new product introductions at RS Pro

– 5,400 new products in 2018

– 5,290 new products in H1 2019

– On track for > 10,000 new products in 2019

Controls and process – more discipline on discounting

Pricing – dynamic pricing tool to be rolled out in EMEA in H2

Smarter purchasing:

– Today strategic supplier engagement

– Tomorrow global sourcing initiatives

7

(1) Base excludes the post-acquisition results of IESA.


We are focused on improving our operating profit margin towards best-in-class mid-teen operating profit margin

Revenue growth, higher gross margin and improvement in adjusted operating profit conversion ratio to 25.7% (H1 2018: 22.7%)

drove a 1.5 percentage point improvement in adjusted operating profit margin to 11.4% (H1 2018: 9.9%)

DRIVING OPERATIONAL EXCELLENCE – OPERATING PROFIT MARGIN

Revenue growth and gross margin

improvement – Market growth and

market share gains, plus improving product mix

Disciplined investment – In H1 we saw the annualisation of the

step up in digital and innovation investment made in H2 2018. Despite this, adjusted operating costs grew at 7.8% on a like-for-like basis, below revenue growth of 9.8%. Adjusted operating costs as a percentage of revenue fell to 33.0% (H1 2018: 33.5%)

Operating profit margin

6%

7%

8%

9%

10%

11%

12%

13%

14%

FY18 H1 IESA Revenue

Growth

Gross Margin Inflation Digital People Other FY19 H1

Ad

just

ed

op

era

tin

g p

rofi

t m

argi

n

2.7% 0.6% 0.6% 0.9% 0.2% 0.2%0.1%9.9% 11.4%

8


SUMMARY INCOME STATEMENT

£m H1 2019 H1 2018

Reported Adjustments Adjusted(1) Reported Adjustments Adjusted(1)

Revenue 911.8 - 911.8 823.8 - 823.8

Operating profit 96.8 7.2 104.0 77.9 3.3 81.2

Net finance costs (3.9) - (3.9) (2.2) - (2.2)

Share of profit of JV 0.1 - 0.1 - - -

Profit before tax 93.0 7.2 100.2 75.7 3.3 79.0

Income tax expense (23.0) (1.2) (24.2) (21.2) (0.6) (21.8)

Profit for the period 70.0 6.0 76.0 54.5 2.7 57.2

Earnings per share (p) 15.9 1.3 17.2 12.4 0.6 13.0

(1) Adjusted excludes amortisation of intangible assets arising on acquisition of businesses, substantial reorganisation costs, asset write-downs,

one-off pension credits or costs, significant tax rate changes and associated income tax.

Highlights

Revenue saw an adverse impact from

currency (£7.5 million); this was partially

offset by a positive impact from extra

trading days (£4.3 million)

Net finance costs increased to £3.9 million

(H1 2018: £2.2 million)

Adjusted PBT excludes:

– £5.4 million labour-related restructuring costs

– £1.8 million amortisation of intangible assets arising

on acquisition of IESA

H1 2019 adjusted tax rate of 24% (H1 2018:

28%)

9


CASH FLOW

Highlights £m H1 2019 H1 2018

EBITDA 111.8 90.7

Movement in working capital (49.1) (50.7)

Movement in provisions 2.2 2.4

Other 3.9 2.4

Cash generated from operations 68.8 44.8

Net interest paid (3.2) (2.5)

Income tax paid (20.3) (16.2)

Net cash from operating activities 45.3 26.1

Net capital expenditure (14.5) (9.4)

Free cash flow 30.8 16.7

Add back cash effect of adjustments(2) 3.2 0.7

Adjusted free cash flow 34.0 17.4

(1) Adjusted operating cash flow conversion is adjusted free cash flow before income tax and net interest paid as a percentage of adjusted

operating profit.

(2) Adjusted excludes the impact of substantial reorganisation cash flows.

Cash generated from operations increased

to £68.8 million (H1 2018: £44.8 million)

Working capital as a percentage of sales

increased by 1.5 percentage points to 22.7%

– Like-for-like increase was 0.3 percentage points

– Balance relates to acquisition of IESA

H1 2019 capex was 0.9 times depreciation

(H1 2018: 0.7 times) – expect the full year to

be around 1.7 times

Adjusted operating cash flow conversion(1)

55.3% (H1 2018: 44.5%)

Net debt increased to £139.0 million (H1

2018: £124.5 million)

Additional short-term investment of around

£30 million in fast-moving inventory in H2 to

ensure we can maintain customer service

during the UK’s exit from the EU

10


PERFORMANCE IMPROVEMENT PLAN – PHASE II

Setting ourselves up to drive continued success

2


PERFORMANCE IMPROVEMENT PLAN II - UPDATE

Objective

To build an even more

customer-centric, lean and

scalable platform for growth

More activities and decision making taking place closer to the customer

Good progress at building a scalable platform to support growthScalable

Simple New simpler regional structure in place

Customer

Centric

12



Simple

More activities closer to customers and suppliers

Increased accountability

On track to deliver:

– £4 million of savings in year to

March 2019

– £12 million of cumulative

annualised savings by March

2021

New regional model

Sup

plie

rs

Cu

sto

me

rs

EMEA

Americas

Asia Pacific

Regional focus:

Sales

Product & Inventory

Marketing & Digital

People

Finance

Corporate Services

Commercial Services

Group Finance

Group HR

Group Legal

Corporate

Development

Technology

Sourcing

Pricing

RS Pro

Electronics

Supply Chain

13



Global shared services strategy New regional centre of expertise (CoE) opened for Asia Pacific in Foshan, China

– Today – 100 people in finance, customer services and inventory

– H2 expansion – digital content teams, Australia / New Zealand support functions

EMEA regional shared service CoE in Corby

– Focus today is finance and customer services but scope to expand over time

Establishing regional CoE in the Americas

Global automation Pilots complete, third party automation partner identified and on track to deliver

our first automated solution this financial year

Identifying standardised transactional activities across the business which could be

automated

Plans to scale the use of automation across the business

Optimise and invest in supply chain Global track and trace capability now live

Launching global project to optimise transportation

Shared services

Automation

Customer-centric supply chain

Building the engine to

support continued growth

and drive improved

service at lower cost

Scalable

14


BECOMING FIRST CHOICE

3

Sustainable growth and superior returns over the longer term


OUR MISSION

Becoming first choice

More than just a slogan

Fundamental development

of the entire organisation

Delivering a customer-centric,

scalable and agile business capable

of driving sustainable growth

Sustainable growth and

superior financial returns over the

long term

16


WHICHEVER WAY YOU LOOK AT IT, OUR MARKETPLACE IS LARGE

Our market is large and highly

fragmented. We have significant scope to grow market share

organically and via acquisition

$155bn Global A&C(4)

market Source:

Business Wire

$570bn Global MRO (1)

market Source: W.W.

Grainger

$140bn US MRO(1)

marketSource: Fastenal

$343bn Semiconductor

and IP&E (6)

marketSource: Avnet

c.£300bn Global

Electronic component

marketSource:

DiscoverIE

c.£400bnGlobal MRO (1), HSE(2)market

Source: Electrocomponents

Our market today

Large

Highly fragmented

Traditional competition

– Largely offline businesses

– Regional / local players and / or vertical sub-category specialists

$800bn US MRO (1) &

OEM (5) marketSource: WESCO

c.$1 trillion US B2B (3)

e-commerce market

Source: Forrester Research(1) MRO is Maintenance Repair and Operations.

(2) HSE is the High Service Electronics market.

(3) B2B is Business to Business.

(4) A&C is Automation and Control.

(5) OEM is an Original Equipment Manufacturer.

(6) IPE is Interconnect, Passive and Electromechanical.

17


A SIGNIFICANT OPPORTUNITY TO TAKE SHARE

(1) Source: Oxford Economics. 2017 manufacturing value-added output, real US$, at constant 2010 prices and exchange rates.

UK Germany Japan US China

Our differentiation

Global scale

Digital leadership / expertise

One-stop shop

Range and inventory availability

Technical expertise and value-added services

(1)

We are focused on driving growth in customer numbers

Mu

ltip

le o

f U

K m

an

ufa

ctu

rin

g G

DP

Cu

stom

ers

18

0

50,000

100,000

150,000

200,000

0

5

10

15

20

Manufacturing GDP Number of customers

We have significant potential to grow the

number of customers we serve. We have

> 160K customers in the UK, over 2x that of

the US, despite the fact that the US market

is > 9x the size of UK


WE ARE FOCUSED ON DRIVING SHARE IN A FRAGMENTED MARKET

Increasing spend with

existing customers

Organic investment

and acquisitions to

accelerate strategy

We will be disciplined in our allocation of strong cash flow between investment in business to drive sustainable growth and superior returns for shareholders

Growing our customer

base

19


REGIONAL PERFORMANCE

4

Driving share in the regions


ANOTHER STEP FORWARD IN CUSTOMER / SUPPLIER EXPERIENCE

Driving a best-in-class online experience

Optimised and simplified online navigation

Scaled data-driven personalisation – making online experience more relevant to the user

Introduced solution-orientated bundles to provide customers with all the associated parts

to build a solution

Further acceleration in our mobile first strategy – with improved mobile experience –

faster page loads and search improvements

Other customer and supplier improvements

Continuous improvement project to drive a better returns process

Significant reduction in the time to launch new products from an average of 162 days in

Q1 2018 to 27 days in Q2 2019

Improvement in our on time to promise (OTTP) delivery of back orders(1) with a 25%

improvement in monthly OTTP during the current financial year

All our regions saw improved customer Net Promoter Scores in H1(1) Back orders are when stock is not held at the time the order is placed.

Customer-

centric

21


DRIVING MARKET SHARE

Strong revenue growth across board >

9.6

10.9

9.3

0 4 8 12

Asia Pacific

Americas

EMEA

Like-for-like revenue growth %

Estimated market growth Estimated market share gains

Increasing average order value across existing and new customers >

…and growing our customer count via

digital and more effective marketing

Average order value (AOV) – we are

selling more to our customer base…

Average order value (AOV) Customer numbers

When we are first choice, our research shows customers spend 25% more with us

22

Cu

sto

me

rs

Av

era

ge

ord

er v

alu

e

£160

£170

£180

£190

500,000

575,000

650,000

725,000

Ap

r

Jun

Au

g

Oct

Dec

Feb

Ap

r

Jun

Au

g

Oct

Dec

Feb

Ap

r

Jun

Au

g

Oct

Dec

Feb

Ap

r

Jun

Au

g

FY2016 FY2017 FY2018 H1 2019

Digital marketing

step-up


REGIONAL PERFORMANCE – EMEA

£m H1 2019 H1 2018Like-for-like

change(1)

Northern Europe revenue 254.2 217.8 10.8%

Southern Europe revenue 171.7 158.7 6.6%

Central Europe revenue 126.0 112.6 10.8%

Emerging Markets revenue 23.8 22.2 7.4%

EMEA revenue 575.7 511.3 9.3%

EMEA operating profit 89.1 73.5 16.6%

EMEA operating profit margin (%) 15.5% 14.4% 0.9 pts

Significant market share gains driving growth

9.3% like-for-like revenue growth

– Strong market share gains

– All sub-regions in growth

Selling more to existing customers

– Improved customer experience NPS up 4.3%

– Broader offer and value-added services

– Better utilisation of our sales resource

– Data-driven website personalisation and solution -

based selling

Adding new customers

– Brand awareness and digital marketing

Gross margin improvement and tight cost

control

16.6% like-for-like operating profit growth

and further improvement in operating

profit margin to 15.5%

Highlights

23

(1) Like-for-like adjusted for currency and to exclude the impact of acquisitions; revenue also adjusted for trading days.


REGIONAL PERFORMANCE – Americas


change(1)

Revenue 240.2 222.8 10.9%

Operating profit 31.4 25.8 25.6%

Operating profit margin (%) 13.1% 11.6% 1.6 pts

Double-digit like-for-like revenue growth

– Half market / half share gain

Selling more to existing customers


– Range expansion – 19,500 new stocked products in

H1, warehouse expansion project

– Automation and Control focus driving share

– Introducing RS Pro to our customer base

Adding new customers

– Brand awareness and digital marketing

– Geographic expansion (Mexico)

Gross margin improvement

– Discount discipline

– RS Pro expansion

25.6% like-for-like growth in operating profit,

improved operating profit margin

Highlights

Strong growth, gross margin improvement and tight cost control

24

(1) Like-for-like adjusted for currency; revenue also adjusted for trading days.


REGIONAL PERFORMANCE – Asia Pacific


change(1)

Revenue 95.9 89.7 9.6%

Operating profit / (loss) 0.7 (3.9) 115.9%

Operating profit / (loss) margin (%) 0.7% (4.3)% 5.7 pts

Highlights

9.6% like-for-like revenue growth

– Outgrowing the market: Australia / New Zealand,

South East Asia

– Growing more in line with market: China / Japan

We have fixed many of the basics


– Restructured cost base

– Opened shared service centre in Foshan

We need to build our capabilities to grow

– Strengthen local leadership team

– Improve local online experience

– Develop and build local offer

Good progress on RS Pro

– Local reseller strategy

Profitable in H1. Need to drive scale to

improve profitability longer term

Fixed basics, investing to build capabilities to drive faster growth

25

(1) Like-for-like adjusted for currency; revenue also adjusted for trading days.


ACCELERATING OWN-BRANDGROWTH

6


RS PRO ‒ BECOMING FIRST CHOICE FOR QUALITY AND VALUE

Longer term we aspire to generate 20% of revenue from RS Pro

Outperforming Group growth

Revenue growth accelerated to 12.2% in

H1

Focused on key markets

Strong today: UK > 20% of revenue and

France around 15% of revenue

Opportunities: Americas, Germany, Italy

and China

New channels to market

Reseller partnerships

IESA opportunities

Data-driven range expansion

10,000 new products in 2019

Expand range in A&C and IP&E

Localise range in T&C

27


VALUE-ADDED SERVICES − IESA ACQUISITION

5


Deepens customer relationships

Extends value-added services

Fast growing and accretive

Strong initial contribution

£11 million revenue and £2.8 million adjusted operating profit in first four months of ownership by Group

> 30% like-for-like revenue growth during first four months

Accretive to Group gross margin and Group operating profit margin

Encouraging new business pipeline with contract wins from blue chip clients

On track to cover our cost of capital in first full year of ownership

IESA

acquisition

VALUE-ADDED SERVICES – BECOMING FIRST CHOICE

29


Further growth with IESA’s existing client base – UK and overseas

Potential to sell IESA’s services to RS and Allied customers over time

Scope to deepen the supplier relationship between RS, RS Pro and IESA

Significant

potential

VALUE-ADDED SERVICES – BECOMING FIRST CHOICE

Singapore Slovakia

France

Sweden

IESA has 80 blue chip customers across 7 countries

Ireland Germany

2018

20082007

2001

30

2016


CURRENT TRADING AND OUTLOOK

7

Well positioned to show continued strong progress in current financial year


AN ENCOURAGING START TO H2 2019

We have seen around 7% like-for-like revenue growth in the first seven weeks of the second half

While the external environment in some of our key markets is uncertain, we are focused on driving market share

We are tightly managing our costs, while investing to drive longer-term growth

We are on track to deliver savings of £4 million in the year to 31 March 2019 and £12 million of savings by March 2021

We continue to make strong progress in full year

32


SUMMARY

We have a significant market opportunity

We have invested in talent and are building a simple, scalable model so we are well placed to exploit it

We will continue to drive share gains via:

– A relentless focus on the customer

– Leadership in digital

– Expansion of our range and value-added service offering

We will look to use value accretive acquisitions to accelerate our strategy

We remain excited by the significant opportunity for continued growth and improvement

33

Well positioned to

continue to drive

sustainable growth and

superior returns for

shareholders


Q&A

8

Thank you for your continued interest in Electrocomponents


APPENDIX

9


STORY IN A NUTSHELL

1SIGNIFICANT MARKET OPPORTUNITY We estimate the overall high-service electronics

and industrial market in which we operate is valued a c. £400bn

Growing at GDP+ Highly fragmented but beginning to see

consolidation Digitally immature but digital transition now

starting

2DRIVING MARKET SHARE GAINS Market-leading customer service Leadership in digital Strong supplier relationships, product knowledge

and technical expertise Best-in-class sales process and

go-to-market approach Value-added services Differentiation with technology, innovation and

data-led insight

3BUILDING A LEAN AND SCALABLE MODEL We aim to maintain stable and where possible

grow our gross margin We are committed to using shared services and

automation to lower our cost to serve while continuing to drive improved service

Since 2015, we have increased our adjusted operating profit conversion ratio from 15.3% to 25.7% at H1 2019, and our long-term goal is to further improve this ratio to 30%

Over the same period, we have increased adjusted operating profit margin from 6.7% to 11.4% at H1 2019 and our long-term aspiration is to achieve a mid-teen adjusted operating profit margin

4STRONG CASH GENERATION We are a highly cash-generative business We will be focused on disciplined reinvestment

both organic and inorganic to accelerate top-line growth

We are committed to growing our dividend while improving dividend cover and generating attractive returns for our shareholders

c. £400bnmarket opportunity

>2Xmarket growth is our goal

30%adjusted operating profit conversion ratio is our goal

> 80%adjusted operating cash flow conversion

36


PERFORMANCE OVER TIME

37

Since the change in management in

April 2015 and the launch of the first

Performance Improvement Plan in

November 2015, Electrocomponents

has delivered significantly improved

financial results

Adjusted operating profit margin has

increased from 6.7% in 2015 to 11.4%

in H1 2019

The Group has also consistently

grown adjusted operating profit and

adjusted earnings per share over this

period

Return on Capital Employed has also

benefited since the company’s

turnaround strategy, rising from 13.4%

in H1 2016 to 26.4% in H1 2019

5.27.4

9.1

11.913.0

15.417.2

H1 16 H2 16 H1 17 H2 17 H1 18 H2 18 H1 19

Adjusted earnings per share (p)

33.848.2

57.775.5 81.2

95.9 104.0

H1 16 H2 16 H1 17 H2 17 H1 18 H2 18 H1 19

Adjusted operating profit (£m)

(1) Adjusted excludes amortisation of intangible assets arising on acquisition of businesses, substantial reorganisation costs, asset write-downs,

one-off pension credits or costs, significant tax rate changes and associated income tax.

(2) ROCE is adjusted operating profit for 12 months expressed a percentage of net assets excluding net debt and retirement benefit obligations.

13.4%14.5%

17.6%

22.0%

25.2%

28.6%

26.4%

H1 16 FY16 H1 17 FY17 H1 18 FY18 H1 19

Return on Capital Employed (ROCE)


BASIS OF PREPARATION

Unless otherwise stated:

Figures have been prepared using International Financial Reporting Standards as adopted by the European Union

Adjusted measures of profitability and cash flow exclude amortisation of intangible assets arising on

acquisition of businesses, substantial reorganisation costs, asset write-downs, one-off pension credits or costs, significant tax rate changes and associated income tax

Like-for-like change excludes the impact of acquisitions and the effects of changes in exchange rates on translation of overseas operating results, with 2018 converted at 2019 average exchange rates for the period. Revenue is also adjusted to eliminate the impact of trading days year on year

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

Sign conventions: % changes in revenue and costs are positive if improving profit and negative if reducing profit

A net charge of £7.2 million (H1 2018: £3.3 million) was reported for items excluded from adjusted profit before tax

38


GUIDANCE POINTS

Trading days

Expect around £9 million positive

impact on revenue from additional

trading days in the year to March 2019

Other guidance points

Capex: £40 million Allied warehouse

expansion project will mean capex to

depreciation running at closer to 1.7x in

2019 and 2020

Stock turn: 2019 will be c. 2.5x given

additional potential inventory investment to

maintain service during the UK’s exit from

the EU

2019 effective tax rate: 24%

Cash tax rate: to converge with profit and

loss rate over time

Remain committed to a progressive

dividend policy. In the normal course the

interim dividend will be equivalent to 40%

of prior year full-year dividend

Foreign exchange

Foreign exchange rates (average for the period)

H1 2019 rates H1 2018 rates 2019 rates*

Euro 1.13 1.14 1.13

USD 1.33 1.29 1.31

* 2018 adjusted profit before tax converted at 2019 forecast average rates, using 16 November 2018 closing rates extrapolated for rest of year.

39

Currency movements decreased H1 2019 adjusted profit before tax by

£0.8 million

If November rates persist we would expect around a £0.7 million benefit on

adjusted profit before tax in the full year *


GROUP FINANCIAL HIGHLIGHTS

(£m) H1 2018 H1 2017

Adjusted cash generated from operations 45.5 82.1

Net interest paid (2.5) (2.6)

Income tax paid (16.2) (9.2)

Adjusted net cash inflow from operating activities 26.8 70.3

Net capital expenditure (9.4) (8.4)

Adjusted(1) free cash flow 17.4 61.9

Outflow related to restructuring (0.7) (3.0)

Free cash flow post restructuring 16.7 58.9

Net debt (124.5) (140.9)

H1 2019 H1 2018 Change

Like-for-

like

change

Revenue (£m) 911.8 823.8 10.7% 9.8%

Gross profit (£m) 404.8 357.4 13.3% 11.9%

Adjusted operating profit (£m) 104.0 81.2 28.1% 25.9%

Adjusted PBT (£m) 100.2 79.0 26.8% 24.9%

Adjusted EPS (p) 17.2 13.0 32.3% 30.5%

Adjusted free cash flow (£m) 34.0 17.4 95.4%

Net debt (£m) 139.0 124.5

Like-for-like revenue growth (%) 9.8 13.3

Gross margin (%) 44.4 43.4 1.0 pts 0.7 pts

Adjusted operating profit margin (%) 11.4 9.9 1.5 pts 1.4 pts

Adjusted operating profit conversion (%) 25.7 22.7 3.0 pts 2.8 pts

Adjusted operating cash flow conversion (%) 55.3 44.5

Net debt to adjusted EBITDA (x) 0.6 0.7

Return on capital employed (%) 26.4 25.2

40


KEY PERFORMANCE INDICATORS

KPI Changes

We have changed our Net

Promoter Score from RS to Group

We are changing Group Lost

Time Accident frequency to All

Accidents

Driving an improved performance for

customers, suppliers and shareholders

H1 2019 H1 2018 Change

Like-for-like revenue growth (%) 9.8 13.3 (3.5) pts

Group Net Promoter Score 52.5 50.6 3.8%

Adjusted operating profit conversion (%) 25.7 22.7 3.0 pts

Adjusted operating profit margin (%) 11.4 9.9 1.5 pts

Adjusted EPS (p) 17.2 13.0 32.3%

Return on capital employed (%) 26.4 25.2 1.2 pts

Adjusted operating cash flow conversion (%) 55.3 44.5

All Accidents 26 29

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Like-for-like adjusted operating cost growth of 7.8%, less than revenue growth of 9.8%. Adjusted operating cost as percentage

of revenue fell to 33.0% (H1 2018: 33.5%)

Improvement in adjusted operating profit conversion ratio to 25.7% (H1 2018: 22.7%)

ADJUSTED OPERATING COSTSA

dju

ste

d o

pe

ratin

g c

ost

(£

m)

Cost discipline

Inflation – 2.0% inflationary rises in

wages

Volume-related costs – During H1 2019

we saw higher variable costs driven by revenue growth

Disciplined investment – Annualisation

of the increased investment seen during H2 2018 in areas such as digital, talent and innovation

250

260

270

280

290

300

310

H1 FY18 FX IESA Inflation Volume FTEs Digital Other H1 FY19

Like-for-like change 2.0% 1.4% 0.6% 3.0% 0.7%

42


£m H1 2019 H1 2018

Net debt at 1 April (65.0) (112.9)

Adjusted free cash flow(1) 34.0 17.4

Acquisition of business (30.9) -

Cash and cash equivalents acquired with business 1.0 -

Loans acquired with business (42.0) -

Cash effect of adjustments (3.2) (0.7)

Equity dividends paid (35.4) (32.2)

New shares issued 2.1 0.3

Purchase of own shares by Employee Benefit Trust - (1.3)

Translation differences 0.4 4.9

Net debt at 30 September (139.0) (124.5)

NET DEBT MOVEMENTS

Strong balance sheet

Net debt rose to £139.0 million,

£74.0 million higher than at 31

March 2018 with the increase

largely due to the acquisition of

IESA and associated loans

In May 2018 the Group arranged

a new £120 million two-year loan

Net debt: EBITDA 0.6x (H1 2018:

0.7x)

Pension

Combined deficit £66.1 million

(September 2017: £100.9 million)(1) Adjusted excludes the impact of substantial reorganisation costs.

43


IMPACT OF FOREIGN EXCHANGE

Translation Exposure

Reported profit sensitivity to a one

cent movement in:

– Euro: £1.3 million

– USD: £0.4 million

Transaction Exposure Group treasury maintains 3-6 month hedging to smooth impact of currency

movements

Key exposures: net buyer of US dollars, net seller of euros and other currencies

Gross margin impacted over time from weakening in sterling versus:

– USD: negative impact

– Euro and other currencies: positive impact

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1.00

1.10

1.20

1.30

1.40

1.50

Euro and USD movements to Sterling € to £ $ to £

Documents

ELECTROCOMPONENTS...Working capital as a percentage of sales increased by 1.5 percentage points to 22.7% – Like-for-like increase was 0.3 percentage points – Balance relates to