Annual Report & Accounts 2015/16

Strategic Report

04. Chairman’s statement 06. Review of operations 10. Business model 12. Strategic review

14. Measuring our performance

16. Principal risks, uncertainties and opportunities 18. Viability report

20. Financial review 26. Sustainability report 31. Employees

Governance

34. Corporate governance report 54. Directors’ report

61. Remuneration report

Financial Statements

100. Notes to the consolidated financial statements 133. Company financial statements

138. Notes to the company financial statements

Further Information

147. Shareholder information 148. Historic record

Premier Farnell plc is a global leader in high service distribution of technology products and solutions for electronic system design, production, maintenance and repair. It has two main businesses: element14, which trades as Farnell element14 in Europe, Newark element14 in North America and element14 across Asia Pacific.

element14 distributes electronic components and related products to three main groups of customers: engineering; manufacturing; and component manufacturers.

Our second business is CPC/MCM which supplies mainly finished electrical products to customers in the UK and North America.

The Premier Farnell financial year for 2015/2016 ended on 31 January 2016 – our financial year end is the nearest Sunday to 31 January – and is referred to as 2015/16 in this report.

As we sold Akron Brass in March 2016, we have reported 2015/16 on the basis of continuing operations (excluding Akron Brass), as it is viewed as a discontinued operation.

Premier Farnell plc at a glance

Group revenue

(2014/15 £886.6m)

Sales per day growth

(2014/15: 3.5%)

Gross profit

(2014/15: £323.6m)

£

903.9m

1.7

%

£

307.2

Group revenue

(total operations)

(2014/15: £960.1m)

Gross margin

(2014/15: 36.5%)

Adjusted operating profit

(total operations)

(2014/15: £88.0m)

£

982.7m

34.0

%

£

73.0m

Total operating profit

(2014/15: £68.1m)

Adjusted earnings per share

(total operations)

(2014/15: 13.8p)

Proposed full year

dividend per share

(2014/15: 10.4p)

£

44.9m

11.1p

6.2p

Akron Brass is a global leader in the sale and manufacture of high performance fire-fighting and emergency response equipment. Akron Brass has further diversified into the marine, petrochemical, mining, and heavy truck markets. On 5 February 2016, we announced that we would be disposing of Akron Brass to IDEX Corporation for cash consideration of US$224.2m.

Key facts

ƒ Disposal of Akron Brass completed on 16 March 2016 Supplies mainly finished electrical

products such as audio visual, lights and lighting, security, test equipment, tools, computing, mains electrical accessories and PA equipment to customers in the UK and North America. We had revenue growth from £117.1m to £125.4m in 2015/16, driven by general growth within the consumer market and by growth in the single board computer (SBC) market. We supply the top SBC worldwide – the Raspberry Pi – and it, together with sales of the BeagleBone Black, our second best selling SBC, have also shown good revenue increase year on year. The majority of our SBC revenue is recognised within CPC/MCM, with the minority in element14.

Key facts

ƒ Launched Raspberry Pi 3 in February 2016

Distributes products worldwide and includes AVID and Embest, who design and manufacture development kits for component manufacturers. The year saw an increase in element14 revenue from £769.5m to £778.5m. There was good growth by AVID and Embest, which represent a small part of the business. We aim to stabilise gross margins by increasing our use of online sales and refreshing our product portfolio.

Key facts

ƒ Launched third phase of global online sales platform ƒ Global organisation in place ƒ Inventory investment in North America

£

125.4m

£

778.5m

14%

Percentage of total group sales (excludes Akron Brass)

86%

Percentage of total group sales (excludes Akron Brass)

Following the disposal of Akron Brass, we have two business divisions, element14 and CPC/MCM.

Akron Brass

CPC/MCM

Chairman’s statement

Premier Farnell’s core business is the provision

of a one-stop source of components and finished

products for our customers from the engineering,

manufacturing and components industries. This financial

year 2015/16 has been challenging for us, but it has

also been one in which we have addressed many of the

operating and structural issues facing the company.

Val Gooding

Summary of 2015/16

For the year 2015/16, revenue for our continuing businesses (which excludes Akron Brass) was £903.9m, a small increase from £886.6m in the prior financial year, 2014/15. Including Akron Brass, revenue was £982.7m, an increase on the prior year of £960.1m. However, at the same time as seeing a small uplift in sales, there was a significant slowdown in Group sales per day momentum during 2015/16 due to increased competition, particularly in our North American and UK markets. We saw a reduction in gross margin from 36.5% in the previous year to 34.0% in 2015/16, which in turn impacted our gross profitability, operating profit and earnings per share. Operational review

Given the decline in gross margin during 2015/16, in July 2015, we initiated a review of our business to look at the changes we needed

to make in order to achieve sustainable and profitable growth. Our operational review took account of the change in our gross margin profile, the status of our current businesses, growing competition and the need to compete effectively in an increasingly digital market.

In order to refocus on our core distribution capabilities, one of the first key decisions from the review was to dispose of Akron Brass, which, although it was and remains an excellent business, did not strategically fit within the portfolio. I am pleased that we achieved a sale price of $224.2m for Akron Brass and it marks an important milestone in the strategic refocusing of Premier Farnell, while also enabling us to reduce net debt. Mark Whiteling, our Deputy Chief Executive Officer, discusses the operational review in more detail on pages 6 to 8.

I am pleased to note that we completed our transition to a global operating model, which is discussed in further detail on pages 8 and 12.

Dividend

In addition to the decision to sell Akron Brass, the Board also gave careful consideration to the current shape and capacity of our balance sheet, and the need of rebasing the dividend. The Board recognises the significance of the dividend to our shareholders – but also the importance of it being sustainable and progressive – and will therefore target dividend cover in the range 1.5x to 2.0x. As a result of the decline in profitability during 2015/16, we have proposed a final dividend for 2015/16 of 3.6p, a reduction of 40% from the prior year (2014/15: 6.0p). Including the interim dividend of 2.6p, the proposed full year dividend for 2015/16 is 6.2p, a reduction of 40% from 10.4p in 2014/15.

Management and Board changes There have been a number of changes to the management structure and members of the Board during the year. In August 2015, Laurence Bain stepped down as Chief Executive Officer and Mark Whiteling, Chief Financial Officer was appointed Interim Chief Executive Officer. Mark’s responsibilities were transferred to Helen Willis, Global Director of Commercial Finance. The in-depth talent in the Company allowed us to achieve a seamless transfer of responsibilities.

In March 2016, I was pleased to announce that following an extensive global search, we appointed Jos

Opdeweegh as Chief Executive Officer on 11 April 2016. Jos was, until recently, Chief Executive Officer of Neovia Logistics, where he led the carve out from Caterpillar. For the past 16 years he has worked in senior leadership positions in a number of industrial sectors in North America, including Chief Executive Officer of Americold Realty Trust and Syncreon (formerly TDS Logistics).

I have no doubt that his international experience and achievements in enhancing value for shareholders in a number of different businesses will provide a strong platform for the next stage of Premier Farnell’s development. As Jos joined the company in April 2016, after the end of the financial year 2015/16, Mark will be reviewing the operations of the company in this year’s Annual Report and Accounts. We have also initiated a search for a permanent Chief Financial Officer and Helen Willis has been invited to consider applying for the role. On behalf of the Board, I would like to thank Mark for the excellent work he has done in guiding the Company as Interim Chief Executive Officer. I am pleased that he will assume the role of Deputy Chief Executive, providing continuity for the Company and strong support for Jos.

As indicated in last year’s Annual Report and Accounts, Andrew Dougal retired from his position as non-executive director of the Company in June 2015. I would like to thank Andrew for his valuable contribution to the Board. In November 2016, Geraint Anderson joined the Board as one of its non-executive directors. Geraint’s

former roles include Chief Executive Officer at TT Electronics plc, Vice President of Cisco Systems and Senior Vice President of Pirelli.

Our competitive environment Premier Farnell has a long and successful history of dealing with change and facing the challenges of the evolving marketplace for electronics. The Board is mindful of the challenges that lie ahead and we continue to evaluate the potential risks that could impact the Group. We address these matters in more detail on pages 16 to 17.

People

In a year such as this, there have been changes at all levels, including our leadership. On behalf of the Board, I would like to thank all the people in Premier Farnell for their effective contribution throughout the year. We work in an increasingly changing environment and I am pleased to see the high level of dedication from employees, as we rise to the challenges generated by the markets in which we compete.

Looking forward

The year 2015/16 has been one in which we have increased our focus on our core markets. While there will undoubtedly be challenges ahead, we believe we have the right portfolio of products, services and people and look forward to progress in the year ahead.

Val Gooding Chairman 25 April 2016

currency) for total operations (including Akron Brass) grow 2.9% year on year. However, sales momentum slowed in the second quarter, particularly in our UK and North American markets, which are our largest by revenue. Excluding Raspberry Pi, Group sales per day declined 0.4% in Q2 2015/16, compared with growth of 1.9% in Q1 2015/16. Group sales per day, excluding Raspberry Pi, also saw a slowdown, with 0.8% growth versus 3.3% growth in the prior year.

Americas’ sales per day growth slowed over the first half. While this was consistent with weaker US manufacturing purchasing managers’ indices (PMIs) in the second quarter, we initiated a product-led repositioning of the business with new inventory that focuses on industrial electronics. There was strong growth (total operations) of 9.3% year on year in Continental Europe, while this strong performance was offset by weakness in the UK, where conditions remain challenging and we saw a first half sales decline of 7.6% year on year. Dealing with the UK and US performance are a key focus for our management The past financial year 2015/16 has

been a difficult one for Premier Farnell, as we transform the business to face the changing marketplace and position ourselves for long-term sustainable growth. As discussed in the Strategic Review and the discussion of our Business model on pages 10 and 11, we face a number of challenges to our business which we are responding to − although much more needs to be done. Overall, our aim is to make it easier for our customers to do business with us and to grow revenue, restore gross margin stability and to increase gross profits, while maintaining cost control, driving efficiencies and an adequate return on investment.

Looking at the 2015/16 year as a whole for Premier Farnell, the financial performance for the year was below that which we would have wanted it to be as a company.

2015/16 First Half Trading

Trading in the first half of the year 2015/16 saw group sales per day (in constant

team and we have put in place new sales management in order to improve our performance. Although a smaller market for us than Europe and the Americas, within Asia Pacific, India sales momentum continued with first half sales growth of 27.6%, and our more established markets of Australia and Singapore delivered strong growth of 7.7% and 9.1% respectively. Greater China growth remained steady across the first half at 10.0%, despite the heightened economic uncertainty in the region, reflected in the significant weakening of PMI data.

While representing a small part of Group sales, we are the leader in the production and sale of the Raspberry Pi board, our biggest selling single board computer (SBC), and sales grew 67% in the first half following the launch of the Raspberry Pi 2. However, despite higher revenue year on year for the first half of 2015/16, total operations Group gross profit (including Akron Brass) fell £3.8m to £175.6m, and gross margin declined by 2.2 percentage points to 35.2%.

Review of operations

Our aim is to make it easier for our customers

to do business with us and to grow revenue,

look to restore gross margin stability and so increase

gross profits, while maintaining cost control.

Deputy Chief Executive Officer

Leeds CPC Mexico South Carolina MCM Liège Shanghai Singapore Sydney Our key warehouse locations

engineers at Embest & AVID Technologies sq ft warehouse space

in our distribution centres

element14 online community

including the Design Center

in stock products available packages shipped each day

1

1

650,000

30,000

100

The decline in gross margin in the first half primarily reflected continued downward pressure from price positioning of -0.8% percentage points, product mix given significant Raspberry Pi growth of -0.4% percentage points, and from unfavourable foreign exchange rates.

Operational Review

Given our weak first half 2015/16

performance, in July 2015 we announced that the Board had commenced a review of the Group’s operations. As noted by our Chairman on page 4, included in the review was intention to sell Akron Brass, the sale of which was announced in September 2015. The sale was subsequently approved by shareholders on 16 March 2016 and completed on the same day.

In December 2015, we presented the findings of the operational review, confirming opportunities to improve the operational and financial performance of the Group.

The review identified four areas that offered the greatest opportunity for simplification and improvement. These were:

ƒ Improved customer proposition and a more effective multi-channel experience. Our major focus has been to build on the global online platform implemented last year and we have subsequently implemented two major upgrades of our online platform. We discuss this in more detail on pages 10 and 12.

ƒ Improved sales force effectiveness through the redesign of the new global sales & marketing organisation. We have appointed new sales leaders in the UK and US, and a new global sales leader. ƒ Improved direct procurement

through a global product

organisation to drive product cost savings. We discuss this in more detail in our review of the business model on pages 10 and 11.

ƒ Operating and indirect procurement improvements across the business with the implementation of a global operating model.

During 2015/16, we discontinued our direct operations in Brazil, which were no longer cost-efficient.

Following the operational review, we are making good progress in achieving increased operating efficiency and are on track to deliver expected cost savings of £19m in financial year 2017/18. We also intend to reconsider the KPIs that we have been targeting over the last three years. Our current KPIs are reviewed on pages 14 and 15. While we remain committed to driving growth, efficiency, profitability and cash, future targets will be reviewed by management to reflect the revised shape of the Group.

Continuing Operations (which excludes Akron Brass) saw sales per day growth in 2015/16 of 1.7% year on year. Sales momentum increased slightly overall in the fourth quarter, due to growth in Continental Europe and APAC. We saw sales per day decline of 6.9% and 5.1% in Q3 and Q4 respectively in the Americas. We saw sales per day growth of 14.6% in APAC for 2015/2016.

Continental Europe benefitted from

strong sales per day growth of 7.0% year on year in the second half, in spite of the mixed economic backdrop across some of the Eurozone. This strong performance was offset by weakness in the UK, with a second half sales decline of 9.5%.

Excluding Raspberry Pi, continuing

operations sales per day declined 2.9% year on year in the second half.

CPC/MCM second half sales growth

benefitted significantly from sales of Raspberry Pi 2, with year on year revenue growth of 4.3%.

Operating profits

We continued to see weaker gross margins during the second half of 2015/16, with full year gross margin for continuing operations falling from 36.5% in 2014/15 to 34.0% in 2015/16, driven mainly by the continuing impact of foreign exchange of -1.0%

percentage point, -0.6% percentage points of price positioning and -0.6% percentage points of product mix. Adjusted operating profit contributions from element14, CPC/MCM and Akron Brass are shown opposite.

Adjusted operating profit from total operations for the full year was £73.0m (2014/15: £88.0m), representing a decline of 17.0% year on year. The operating margin of 7.4% (adjusted) reflected a decline in gross margin as noted opposite. Adjusting items are outlined on page 22 in the financial review. Outlook

Looking ahead, we expect global market conditions to remain variable and are not anticipating any near-term diminution in the competitive pressures on our businesses. We are focused on implementing the actions from our operational review in order to stabilise our gross margin and reduce our operating costs. Whilst we expect some gross margin decline, we anticipate making progress during 2016/17.

We believe that Premier Farnell is now better positioned to serve its customers and expect our business to make progress during the current financial year as we continue to focus on improving our operational and financial performance.

2017/18 and beyond

We are taking a series of measures, as outlined in the Strategic Review and the Business Model sections of this report, which are aimed at putting Premier Farnell on a path to sustainable and profitable growth. The operational review has already yielded positive results in company efficiency, which we will continue to build on.

We look forward to updating you on our progress as we continue to reshape the business.

Mark Whiteling Deputy Chief Executive Officer 25 April 2016

Review of operations

Full Year 2015/16 Trading

We experienced continued decline in our UK and North America markets during the second half of 2015/16 and saw strong growth in Asia-Pacific, ahead of regional GDP growth.

Revenue (£m) H2 15/16 H2 14/15 FY 15/16 FY 14/15

element14 378.5 382.7 778.5 769.5

CPC/MCM 64.1 60.6 125.4 117.1

Akron Brass 41.5 37.5 78.8 73.5

Total Group 484.1 480.8 982.7 960.1

Revenue for element14 for the full year 2015/16 was £778.5m (2014/15: £769.5m), a 1.2% increase on the prior year and revenue for CPC/MCM during 2015/16 was £125.4m (2014/15: £117.1m) a 5.0% increase on the prior year. Akron Brass revenue for 2015/16 was £78.8m (2014/15: £73.5m). Sales per day growth across our regions and per business for 2015/16 are shown below.

Sales growth(a) _{Q1 Q2 Q3 Q4 H2 FY}

Europe 5.9% 1.6% (0.5%) 1.1% 0.3% 2.1% Americas 2.2% (0.8%) (6.9%) (5.1%) (6.1%) (2.6%) APAC 16.2% 8.2% 14.9% 19.4% 17.2% 14.6% element14 5.3% 1.2% (1.9%) 0.3% (0.8%) 1.2% CPC/MCM 13.9% (1.9%) 7.7% 1.0% 4.3% 5.0% Continuing Operations 6.3% 0.8% (0.6%) 0.4% (0.1%) 1.7% Excluding Raspberry Pi 2.6% 0.0% (3.7%) (2.0%) (2.9%) (0.8%) Akron Brass (6.1%) (4.6%) 13.6% (2.7%) 5.1% (0.2%) Total Operations 5.4% 0.4% 0.5% 0.2% 0.3% 1.6%

(a) _{In order to reflect underlying business performance, sales growth is based on sales per day for continuing and total operations at constant exchange rates,}

unless otherwise stated.

Adjusted Operating Profit(b) _(£m)

Operating Margin % H2 15/16 H2 14/15(c) _{FY 15/16 FY 14/15}(c) element14 23.6 6.2% 8.8%33.9 56.5 7.3% 9.5%73.2 CPC/MCM 5.5 8.7% 10.2%6.1 9.4%11.8 10.0%11.7 Central costs (5.4) (5.0) (10.9) (11.9) Continuing Operations 23.7 5.4% 7.9%35.0 57.4 6.4% 8.2%73.0 Akron Brass 8.3 20.0% 20.0%7.5 15.6 19.8% 20.5%15.0 Total Group 32.0 6.6% 8.8%42.5 7.4%73.0 9.2%88.0

(b) _{2015/16 and 2014/15 adjusting items are outlined on page 22.} (c) _{Restated to reflect Akron Brass disposal.}

Key outputs from the operational review

to broaden range whilst controlling working capital

ƒ Gain greater purchasing efficiencies by procuring on a global basis ƒ Enhance global inventory visibility

for our customers

ƒ Product lifecycle management processes, including rigorous stocking criteria and mitigating inventory risk

ƒ We continue to develop and enhance our web capabilities as part of our multichannel sales strategy in order to maintain our competitive advantage digitally

ƒ We are partnering increasingly closer with key suppliers to provide the technical specifications and legislative information that customers need ƒ Enhance support (e.g. search, order

query functions) within successfully launched new web platform

ƒ Improve productivity and quality of call centres

Stock

We identify and stock the products that our customers require, benefitting from web analytics and insights from the element14 community. In total, we stock more than 650,000 products to help meet customers’ need for access to a vast range of technologies.

Support

Engineering customers require detailed information to ensure purchases meet their technical specifications.

The element14 community allows engineers to collaborate as well as access technical insights.

By connecting suppliers to customers around the world, we play a role in enabling innovation in technologies and extending the life of existing products across a broad number of industry segments, from manufacturing to

healthcare, renewable energy to marine technology. Through our business model, we aim to connect customers and suppliers while creating value for other stakeholders, including employees and shareholders.

Business model

ƒ Enhance functionality of successfully launched new web platform to support sales

ƒ Enhance sales force effectiveness to better leverage our specialist field sales capabilities

ƒ Improve margins through disciplined target pricing

Ship

Fast and reliable distribution of locally stocked products is at the core of our customer proposition. Our distribution centres located around the globe ship 30,000 packages each day.

ƒ Investment in systems and focus on workflow improvements will deliver operational efficiencies and allow us to meet a higher future demand. ƒ We remain focused on reducing the

environmental impact of doing business ƒ Refine our fulfilment network to improve

efficiency and better meet customer requirements

Sell

Customers interact and purchase from us in the way they prefer through our multichannel sales and marketing resources. Our innovative online presence combines with extensive telesales capability and field sales resources as well as significant technical resources to make it easy for customers to do business with us.

Looking across the business, we have several initiatives in place in order to deliver value. These include a restructuring programme to reduce long-term costs, improve back office processes, simplify internal support and increase the use of IT.

Component Manufacturer Engineers Design Technology Launch Pr ototype Small Pr oduction Volume Pr oduction Mass V olume Manufacturing Customers

The product lifecycle

We operate two main continuing divisions, element14, and CPC/ MCM and offer three segments of products and services as shown and illustrated on ‘The Product Lifecycle’ on this page: distribution of electronic components and related products, which is our main business; design services (principally delivered though CadSoft, Embest and AVID, which are within element14); and finished products, such as the Raspberry Pi, which is within both CPC/MCM (with the majority of sales) and element14. We sold Akron Brass on 16 March 2016.

Efficiency

Given the changing face of global distribution due to new competitors and the rise of online ordering, we have looked to reorganise the business and improve our online offering. Starting in 2014/15, we looked to move to a global structure from a regional basis, which was aimed at making us more efficient and save costs, while also enabling us to deliver a better service to customers. We completed the proposed design of the new global organisation in 2015/16. In addition, we completed our move to a single global code base, which enables us to efficiently create marketing programmes.

We were able to announce in the second half of 2015/16 that we expected greater cost savings on this and other initiatives compared

to our initial estimates, the cost savings are mentioned in review of operations on page 8.

Online upgrades

Moving onto ecommerce initiatives, we continue to look to improve our online experience and have undertaken a series of upgrades to our systems. Our major drive has been to build a global online platform using IBM’s WebSphere, which was completed in Q2 2015/16, providing greater system stability at a global scale.

Some of the major recent upgrades include an enhanced website search engine which can better process alpha-numeric, or natural language queries; greater product information, so customers can more easily complete to a sale; better mobile access, and we have overhauled the design of important web pages, so that the experience is more intuitive and faster. Our online system has around two million products available for US customers (delivered directly, or via partners) and 840,000 products available for European and Asia-Pacific customer (delivered directly, or via partners).

In addition to these initiatives, we aim to make pricing simpler for customers, especially around the area of freight delivery. During 2015/16, we saw 48.9% of sales via online compared to 49.5% in 2014/15 and we have a medium-term target of 70% online sales via ecommerce of our total Group sales.

Customer requirements

We continued our work during 2015/16 on the operational review, as we examine and scope the opportunities to restructure and reconfigure the business, so that we can serve our customers and deliver long-term sustainable shareholder value. The initial outcomes from the review are discussed on pages 10 and 11. As customer needs develop and the way they operate changes, we are reviewing the business in order to reposition ourselves in the evolving marketplace. We offer customers a differentiated service from the purely online sales model adopted by some competitors, as we have field

application engineers and direct sales people. In addition, we supply products mostly on a next day delivery schedule based on our extensive global network and we recognise that some customers are content with the three day delivery window adopted by some players in the industry. We are examining our market proposition as we see changes in the industry and in our customers. element14

element14 is one of the leaders in the global high service distribution marketplace, supplying products and services to mainly engineering customers to facilitate the building of electrical goods. The division has eight distribution centres worldwide with a total of around 1.1 million square feet of warehouse space, with approximately 1,300 customer facing staff. This division represents around 86% of continuing (this excludes Akron Brass) 2015/16 Group revenue.

It serves three main groups of

customers: engineering, manufacturing, and component manufacturers. Key to element14’s engagement with engineers is its deep knowledge of the requirements of our customers and this segment represents the majority of element14 sales. We look to identify, source and stock products globally that we believe will provide our customer base with the quality and choice to meet their needs. element14 stocks

approximately 650,000 products, of which 97% are delivered to customers within 24 hours.

In order to provide engineers with a high level of technical support, element14 has around 260,000 unique product datasheets, which are downloaded more than half a million times a week. This is supplemented by live online chat support and field application engineers who work closely with their customers. element14 also has around 400,000 registered community members who can share ideas online regarding our products and solutions. Customers can also buy products online in more than 30 languages and we continue to invest in online with two global upgrades undertaken during the year, as described above.

In 2014/15 we launched the element14 Design Center, where engineers can access the latest development kits and tools. And in 2015/16 we launched phase two of the Design Center, where customers can buy licences for embedded systems such as ARM, Timesys and Atollic, as well as via our exclusive online relationship with Altium’s Circuit Studio and CadSoft EAGLE computer-aided design software. We believe the serviceable addressable market for this form of high service distribution business to be around £20 billion per year.

Manufacturing customers represent around 20% of element14 sales. They typically want to purchase board components in the packaging options that enable them to be loaded directly onto automated assembly equipment and generally require higher volumes of products compared to engineers. This market has typically been serviced by component manufacturers directly, or through high volume distribution. We believe that as manufacturing processes use shorter production runs, element14 can become more relevant to these customers.

In order to service this market, we have invested in the past three years in order to implement systems and processes that allow us to trace certain date and lot codes on more than 150,000 products. We implemented the AS9120 standard which is required by the aerospace industry, in South Carolina six years ago and rolled out AS9120 in Europe in October 2015.

We continue to look to move into new and adjacent markets and in calendar years 2014 and 2015, we entered into the market for the design and manufacturing of development kits for component manufacturers, a market typically served by independent design houses and contract equipment manufacturers. These services are mainly offered via our recent acquisitions, Embest and AVID Technologies and customers include semiconductor manufacturers such as Freescale, NXP and AMD. This segment represents less than 5% of element14 revenue, and compared to our overall revenue, shows good growth. We acquired CadSoft in 2009, a business which produces printed circuit board layout software. Embest, based in China, was acquired in 2012 and has embedded technology based on ARM’s architecture, while AVID, based in Ohio, USA, specialises in wireless, connectivity, power and analog technologies.

Internet of Things

The Internet of Things (IoT) continues to represent significant growth opportunities; it encompasses a fusion of wireless, sensors and control technologies and represents a major shift and potential growth opportunity for connectivity, both machine-to-machine and people-to-machine-to-machine. We are well positioned to serve customers within this technology arena at a component level through element 14, as we stock connectivity sensors and controllers, while our solution based businesses of AVID and Embest are positioned to offer bespoke solutions based on ‘connect-communicate – control’ technologies.

In addition to the initiatives outlined above, we have invested in incremental inventory for element14 to enhance our product range in order to serve the engineering and manufacturing segments.

CPC/MCM

CPC/MCM supply mainly finished electrical products such as audio visual, lights and lighting, security, test equipment, tools, computing, mains electrical accessories and PA equipment to customers in the UK and North America. Their customers include wholesalers, education, government, utility companies, IT companies, broadcasters, internet resellers and hobbyists. CPC/MCM represent around 14% of continuing Group revenue (this excludes Akron Brass). These two distributors stock around 150,000 products in two warehouses and use a multichannel strategy through online, print, contact centre and trade counter sales and marketing capabilities. Together, they have around 80 sales people and 250 warehouse staff. As Raspberry Pi is primarily sold to end customers such as manufacturers and hobbyists, this and similar product lines are located mainly within CPC/MCM, with some sold via element14. Akron Brass

During 2015/16 we announced the proposed disposal of Akron Brass. Akron Brass is an industry leader in fire-fighting equipment including handheld nozzles, monitors and valves. It has extended its portfolio into specialised electronics and lighting, such as high-power LED lighting and custom designed nozzles. It is treated as a discontinued business in the statutory reports and accounts and the sale of Akron Brass was completed in March 2016.

Strategic objective 1

Growth

Strategic Priorities

ƒ Grow gross profit, which is the profit we make after buying the products and services we sell and is key to our overall profitability

Strategic objective 3

Efficiency

Strategic Priorities

ƒ Evolve our operating model into a more efficient and effective global, function based structure ƒ Develop attractive ecommerce channels that enable automation of processes

ƒ Stabilise gross margin, which is the level of profitability we make on our sales

KPI Definition Trend Commentary KPI Definition Trend Commentary

6% sales

growth Across the economic cycles, we target accelerated sales growth through the execution of our strategic growth priorities. We measure sales per

day on a constant exchange rate basis. 2015/16 2014/15 3.3%

1.7% Sales growth of 1.7% in 2015/16 which remains below our target, due to weakness in North America and the UK. We have appointed new sales leaders in these areas and are implementing the outcomes of the operational review in order to move towards our target.

>30% RONA The effective and efficient investment of our shareholders’ funds is a critical overall measure of the success of our strategy. Return on Net Assets is defined as operating profit expressed as a percentage of net assets excluding cash, financial liabilities, taxation and goodwill.

2014/15 2015/16

27.4%

22.1% RONA of 22.1% is below our target due to the reasons opposite. As we move to a more efficient global operating model and drive increased inventory turns, we intend to improve our future performance against this metric.

6% gross

profit growth We target gross profit growth as it captures the amount of profit available to the company to pay for operating

expenditure, finance costs and tax. 2015/16 2014/15 -3.3%

-5.1% Gross profit growth is a key measure for the company as we look to grow this element of the business while keeping control of costs. We saw a 5.1% reduction in gross profit in 2015/16. A key outcome of our operational review is the stabilisation of gross profits following weakness in sales growth and gross margin decline due to foreign exchange movements, product mix and price positioning.

70% of distribution sales from

ecommerce

ecommerce is a highly efficient route to market and an enabler of further efficiencies in our business model. Our target of 70% of sales in MDD via ecommerce means that the processing of transactions must be completed entirely through fully-automated processes.

2014/15 2015/16

49.3%

48.9% Approximately flat percentage of sales via ecommerce at 48.9% year on year. We have implemented two upgrades of our online system in 2015/16 and look to improve on this metric during 2016/17.

Strategic objective 2

Profitability

Strategic Priorities

ƒ Optimise our business through effective management of gross profit and costs

Strategic objective 4

Cash

Strategic Priorities

ƒ Optimise use of cash in the business and distribution of funds to shareholders through-the-cycle

10%-12% ROS Through the ongoing management of gross profit and costs, the Group targets an operating margin in the range of 10% to 12% through the

economic cycles. 2015/16 2014/15

8.2%

6.4% Full year operating margin of 6.4% was a decline on the previous year and lower than our target. This reflected the decline in gross margins and lower than target sales growth. As noted, we are taking actions to rectify both measures.

6% FCF to sales We remain committed to generating cash flow performance through the economic cycles. Free cash flow comprises total cash generated from operations, excluding cash flows related to adjusting items, less net capital expenditure, interest, preference dividends and tax payments.

2014/15 2015/16

3.7%

6.8% This measure is based on total operations including Akron Brass. Adjusted free cash flow to sales of 6.8% (2014/15: 3.7%) was above our through the cycle target of 6%, following strong control of working capital. We do not expect a similarly strong level of working capital to be repeated during 2016/17. We measure the Group’s performance and progress of our

strategic priorities against seven key performance indicators (KPIs) as we aim to deliver growth, efficiency, profitability and cash. Our 2015/16 performance in comparison to our targets reflects our journey to transform Premier Farnell, with investments made that will enable us to deliver improving future financial performance.

As we execute our strategic priorities and continue our journey to build our strategic vision of becoming the global destination for electronics customers, we will create sustainable shareholder value by growing our business, delivering efficiencies, optimising profitability and delivering free cash flow.

Strategic objective 1

Growth

Strategic Priorities

ƒ Grow gross profit, which is the profit we make after buying the products and services we sell and is key to our overall profitability

Strategic objective 3

Efficiency

Strategic Priorities

ƒ Evolve our operating model into a more efficient and effective global, function based structure ƒ Develop attractive ecommerce channels that enable automation of processes

ƒ Stabilise gross margin, which is the level of profitability we make on our sales

KPI Definition Trend Commentary KPI Definition Trend Commentary

6% sales

growth Across the economic cycles, we target accelerated sales growth through the execution of our strategic growth priorities. We measure sales per

day on a constant exchange rate basis. 2015/16 2014/15 3.3%

1.7% Sales growth of 1.7% in 2015/16 which remains below our target, due to weakness in North America and the UK. We have appointed new sales leaders in these areas and are implementing the outcomes of the operational review in order to move towards our target.

>30% RONA The effective and efficient investment of our shareholders’ funds is a critical overall measure of the success of our strategy. Return on Net Assets is defined as operating profit expressed as a percentage of net assets excluding cash, financial liabilities, taxation and goodwill.

2014/15 2015/16

27.4%

22.1% RONA of 22.1% is below our target due to the reasons opposite. As we move to a more efficient global operating model and drive increased inventory turns, we intend to improve our future performance against this metric.

6% gross

profit growth We target gross profit growth as it captures the amount of profit available to the company to pay for operating

expenditure, finance costs and tax. 2015/16 2014/15 -3.3%

-5.1% Gross profit growth is a key measure for the company as we look to grow this element of the business while keeping control of costs. We saw a 5.1% reduction in gross profit in 2015/16. A key outcome of our operational review is the stabilisation of gross profits following weakness in sales growth and gross margin decline due to foreign exchange movements, product mix and price positioning.

70% of distribution sales from

ecommerce

ecommerce is a highly efficient route to market and an enabler of further efficiencies in our business model. Our target of 70% of sales in MDD via ecommerce means that the processing of transactions must be completed entirely through fully-automated processes.

2014/15 2015/16

49.3%

48.9% Approximately flat percentage of sales via ecommerce at 48.9% year on year. We have implemented two upgrades of our online system in 2015/16 and look to improve on this metric during 2016/17.

Strategic objective 2

Profitability

Strategic Priorities

ƒ Optimise our business through effective management of gross profit and costs

Strategic objective 4

Cash

Strategic Priorities

ƒ Optimise use of cash in the business and distribution of funds to shareholders through-the-cycle

10%-12% ROS Through the ongoing management of gross profit and costs, the Group targets an operating margin in the range of 10% to 12% through the

economic cycles. 2015/16 2014/15

8.2%

6.4% Full year operating margin of 6.4% was a decline on the previous year and lower than our target. This reflected the decline in gross margins and lower than target sales growth. As noted, we are taking actions to rectify both measures.

6% FCF to sales We remain committed to generating cash flow performance through the economic cycles. Free cash flow comprises total cash generated from operations, excluding cash flows related to adjusting items, less net capital expenditure, interest, preference dividends and tax payments.

2014/15 2015/16

3.7%

6.8% This measure is based on total operations including Akron Brass. Adjusted free cash flow to sales of 6.8% (2014/15: 3.7%) was above our through the cycle target of 6%, following strong control of working capital. We do not expect a similarly strong level of working capital to be repeated during 2016/17. KPIs for 2014/15 and 2015/16 are for continuing businesses,

The principal risks and uncertainties facing the Group are summarised below. The disclosure of risks and uncertainties in the table below reflects the approach of the Company to also look for the opportunities presented when addressing significant risks.

The principal risks are formally reviewed, twice per year by the Board. Updates in terms of emerging risks or significant actions undertaken are addressed as and when required at Board meetings. The principal risks are determined through an evaluation of likelihood of occurrence and potential

impact, with a full review also undertaken by the Senior Executive Team (SET).

Management also review specific strategic, operational, financial and compliance risks in regular focused forums during the year: including SET meetings, quarterly functional reviews, major programmes and project reviews, and at other key executive management meetings. Further details on our risk management and internal control procedures are included on page 53.

Principal risks, uncertainties and opportunities

Risks and

uncertainties Relative increase/ decrease compared to prior year

Mitigating actions Opportunities

Business Risks

pressures increase

S O

We have rationalised our element14 organisation by globalising our operating model and leveraging the efficiencies of the web. Further work is being undertaken to drive efficiencies and save cost following an operational review undertaken with the support of Alvarez & Marsal.

Our major drive has been to build a global online platform using IBM’s WebSphere which was completed in Q2 2015/16, which has provided greater system stability on a global scale.

We have undertaken a set of online upgrades that enhance our search capabilities and will be simplifying our pricing, particularly with respect to freight services. Insufficient progress with improving performance in the Americas S O R

We have a fully integrated multichannel sales and marketing plan that is aligned with the wider element14 strategy and the evolution of our global proposition. This plan is aimed at addressing the needs of our customers, including a focus on specific segmentation by type of customers and vertical industries.

By enhancing and better targeting our offering, and developing the customer proposition by leveraging our global resources, we can significantly improve operating performance in the Americas. We have also invested in incremental inventory to support the Industrial Electronics segment in North America in 2015. Failure to leverage our technology expertise and partnerships with key suppliers S

In 2015 we launched phase two of the element14 Design Centre, where customers can buy licences for embedded systems. Since 2014 we have invested in capability through our acquisitions of Embest and AVID, for designing and manufacturing development kits for component manufacturers.

Leveraging our technology expertise offers significant opportunities in meeting the needs of our component manufacturer customers but also in our core engineering customer base. Long term evolution of the electronic component distribution model S

Software and services continues to play an increasing role. This increases value while diversifying our business model away from pure distribution.

The Group takes actions to reduce the impact of its business on the environment through carbon emissions and by encouraging recycling, especially of packaging. The regional warehouse model reduces impact of carbon emissions compared to alternatives.

Environmental and technology trends are sources of electronics innovation which underpin sales to our product development customers.

Through ongoing focus on reducing the environmental impact of doing business, we are introducing more efficient processes and can offer further complementary services to our customers.

Risks and uncertainties Relative increase/ decrease compared to prior year

Mitigating actions Opportunities

People

S O

Cultural change to support our global ways of working has been underpinned by the definition and roll out of Leadership Standards. Focus on priority improvement

programmes and cost efficiency has been defined through the recent operational review of the element14 businesses.

Our new global structure will facilitate better sharing of expertise and resources across the business globally. It will allow us to enhance the service we provide to meet the needs of customers and suppliers across regional boundaries.

Recruitment, development or retention of talented people

S O

We actively measure the retention of talent within our organisation which provides us with the ability to track trends and act with the appropriate and necessary actions. Reward schemes are continuously evaluated to drive and reward performance and ensure retention of key talent.

We seek to actively engage employees by focusing on customer relationships, leadership, social responsibility and communications.

The new global structure will provide our people with better ways of working and development opportunities.

Systems, data and infrastructure

Data and content quality inhibit effectiveness of our ecommerce strategy

S O

A dedicated data function has been established to ensure compliance with internal processes and external regulations. A data strategy and governance

framework has been developed to support the information requirements of our strategic programmes.

In order to provide engineers with a high level of technical support, element14 has around 260,000 unique product data sheets, which are downloaded more than a half million times per week.

Significant failure or inefficiencies in our systems and infrastructure

O

Business continuity plans are kept under review for all our key locations. There is ongoing review of our IT infrastructure and we conduct regular testing of our systems.

We continually improve workflows and operational efficiencies and provide increased capacity and investment in capability. Cyber security failure leading to revenue or reputational loss O

NEW

Providing a safe and secure online experience to customers is potentially differentiating compared to smaller, less established competitors.

Legal

O

We have exposure to a number of countries and their respective legal compliance requirements are addressed through a variety of controls.

The increase in environmental legislation for electronics, such as the introduction of REACH, allows us to provide real value to our customers through our legislative expertise.

Strategic

Requires a strategic response

Operational

Requires an operational response

Regional

Specific to one region

Following recent executive management changes the Board has taken a conservative approach to the group’s strategy, with the recent focus on implementing actions resulting from an extensive operational review which started in H2 2015/16. This is discussed in more detail on page 8, and on pages 10 and 11.

The Board stated in 2015/16, that the focus will be on developing the core distribution and related businesses. The Board decided to sell Akron Brass in H2 2015/16 and the sale was completed in March 2016. The Board also gave careful consideration to the strength of the balance sheet and decided to rebase the dividend, which is discussed by our Chairman in her review on pages 4 and 5. The assessment process and key assumptions

The Group’s prospects were assessed primarily through its strategic planning process. This process includes an annual review of the ongoing plan, led by the Deputy Chief Executive Officer through the management committee, and all relevant functions. The Board participates fully in the annual process by means, in particular, of an annual strategic away-day, which is discussed in more detail in the Corporate Governance Report on page 34.

The Board considers whether the plan continues to take appropriate account of the external environment and the changes in industrial production levels and technological changes. The annual review process delivers a set of objectives, an analysis of the strategic risks and financial forecasts.

During this year, additional business plans and financial projections were prepared to specifically consider the prospects of the core distribution businesses, and its impact on the Group’s future performance and funding requirements, both prior to and following completion of the sale of Akron Brass. Viability statement

The directors have assessed the viability of the Group over a three year period to 2019, taking into account of the Group’s present position and the potential impact of the principal risks documented on pages 16 and 17. Based upon this assessment the directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the period to 2019. The three year period was selected as this was seen as appropriate for the nature of the business of the Premier Farnell Group and was used as a basis for considering the output of the operational review programme undertaken in 2015.

Viability report

A business plan based on the strategy and risks facing the Group is reviewed and updated annually. The first year of the plan developed for the operational review forms the basis for the Group’s operating budget for 2016/17. This process has taken into account the current and prospective macro-economic conditions in the countries in which we operate and the competitive positioning that exists within the markets that we trade.

The forecast has encompassed the projected cash flows, dividend cover, and headroom against financial covenants under the Group’s existing facilities. The forecast also makes certain assumptions about the normal level of capital and therefore considers whether additional financing will be required. Current headroom against the Group’s existing facilities is £217m as detailed on page 25. The core facilities have maturity dates between 2017 and 2024, which exceeds the period under review and provides sufficient headroom to fund the capital expenditure and working capital requirements during the planned period.

The forecast has also considered the disposal of Akron Brass and the intended use of the proceeds. In making this statement, the directors have considered the resilience of the Group, taking into account its current position and the principal risks facing the business. The operational review plan and forecast were stress tested for severe but reasonable scenarios and the effectiveness of any mitigating actions that would reasonably be taken.

The Plan was specifically stress tested for scenarios resulting in revenue and margin decline which result from a number of the groups principal risks, which are set out on pages 16 and 17, as well as considering execution risk associated with the operational review.

The outcome of this testing satisfied the directors with respect to the on-going liquidity and solvency of the Group over the period under review and the ability to meet specific financial covenants. In particular, should there be a significant downturn in the demand for the Group’s business, cost mitigation actions can be taken to address falling profitability. Going concern

Having assessed the principal risks and the other matters discussed in connection with the viability statement, the directors considered it appropriate to adopt the going concern basis of accounting in preparing the financial statements.

CPC/MCM products in stock unique product data sheets registered community members

2015/16 has been a year in which

we saw a decline in our profitability.

We are implementing a series of actions

from our operational review as we seek

to improve our financial performance.

Financial review

Sales

Revenue for element14 for 2015/16 was £778.5m (2014/15: £769.5m), a 1.2%a

increase on the prior year and revenue for CPC/MCM during 2015/16 was £125.4m (2014/15: £117.1m) a 5.0%a

increase on the prior year. Akron Brass revenue for 2015/16 was £78.8m (2014/15: £73.5m) a decline of 0.2%a

year on year. Continuing Operations sales per day growth in 2015/16 was 1.7%a _{year on year.}

element14

Sales momentum increased slightly towards the end of the year, due to growth in Continental Europe and Asia Pacific (APAC). We saw sales per day decline of 6.9%a _{and 5.1%}a _{in Q3 and}

Q4 respectively in the Americas. We are addressing the performance in the UK and North America markets and have appointed new senior management, as announced in the Q3 2015/16 external update. We saw sales per day growth of 14.6%a _{in APAC for 2015/2016.}

Continental Europe benefitted from

strong sales per day growth of 7.0%a

year on year, in spite of the mixed economic backdrop across some of the Eurozone. This strong performance was offset by weakness in the UK, where conditions remain challenging and our performance has been mixed, with a second half sales decline of 9.5%a_.

Sales per day in the Americas

declined over the second half compared to the prior year. While this was consistent with weaker US manufacturing purchasing managers’ indices (PMI) in the second half, we have initiated a product-led repositioning of the business focused on industrial electronics. Excluding Raspberry Pi, continuing operations sales per day declined 0.8%a _{in 2015/16.}

CPC/MCM

CPC/MCM delivered combined full year sales growth of 5.0%a _{in 2015/16,}

benefitting from sales of the Raspberry Pi 2. In February 2016, we launched the latest version of the Raspberry Pi, the Raspberry Pi 3.

Akron Brass Disposal

In September 2015, we announced the decision to sell Akron Brass, as it did not fit strategically within the portfolio given the Group’s refocus on its core distribution activities. On 5 February 2016, we entered into a conditional agreement with IDEX Corporation with respect to the sale of Akron Brass Holding Corp. for a consideration of $224.2m payable in cash on completion, subject to customary working capital adjustments. On 16 March 2016 we received shareholder approval for the disposal, and announced that all conditions to the disposal had been satisfied and that the disposal had been completed. The sale of Akron Brass has been presented as a discontinued operation in this report, with the assets and liabilities of Akron Brass classified as “held for sale”. Total consideration receivable was $224.2m (excluding disposal costs) payable on completion, subject to customary adjustments. Net cash proceeds arising from the disposal will be used to reduce Premier Farnell’s existing indebtedness and to redeem its preference shares. Akron Brass contributed £15.6m adjusted operating profit and £9.1m profit after tax to the Group for the full year (2014/15: £15.0m and £10.7m respectively).

Key financials £m – Continuing Operations 2015/16 (52 weeks) 2014/15 (52 weeks) Total revenue 903.9 886.6

Adjusted operating profit(b) _{57.4 73.0}

Total operating profit 44.9 68.1

Adjusted profit before tax(b) _{41.7 59.0}

Total profit before tax 29.2 54.1

Adjusted earnings per share 8.2p 10.9p

Basic earnings per share 5.6p 10.0p

Free cash flow(c) _{66.7 35.2}

Divisional analysis Revenue 2015/16 (52 weeks) (52 weeks)2014/15 element14 Europe 347.9 357.1 Americas 341.0 333.1 APAC 89.6 79.3 778.5 769.5 CPC/MCM 125.4 117.1

Group – Continuing Operations 903.9 886.6

Akron Brass 78.8 73.5

Group – Total Operations 982.7 960.1

Adjusted operating profit/operating margin%

2015/16 (52 weeks) (52 weeks)2014/15 element14 56.5 73.2 7.3% 9.5% CPC/MCM 11.8 11.7 9.4% 10.0% Head office (10.9) (11.9)

Group – Continuing Operations 57.4 73.0

6.4% 8.2%

Akron Brass 15.6 15.0

19.8% 20.5%

Group – Total Operations 73.0 88.0

7.4% 9.2%

Notes

(a) In order to reflect underlying

business performance, sales growth is based on sales per day at constant exchange rates, and like for like periods, unless otherwise stated.

(b) 2015/16 and 2014/15 adjusted

operating profit, profit before tax and earnings per share exclude adjusting items and are outlined below.

(c) Adjusted free cash flow comprises

total cash generated from operations (including discontinued operations), excluding cash flows related to adjusting items, less net capital expenditure, interest, preference dividends and tax payments. Notes:

The current year results have been adjusted to exclude the following items: 1. Restructuring costs of £13.3m

(element14 £12.2m and Head Office £1.1m).

2. Costs associated with the closure of our Brazil operation of £1.1m. 3. A legal provision release (credit)

of £1.9m.

4. Akron Brass disposal costs of £1.9m. In the prior year, adjusting items comprise: 1. Restructuring costs of £5.1m

(element14 £1.3m and Head Office £3.8m).

2. Net gain on US property disposal of £0.3m related to savings on expenses incurred in the prior year relocation of Americas Head Office. 3. Acquisition costs of £0.1m.

Profitability

As outlined on pages 14 and 15 (KPIs), we target gross profit growth and gross profit margin percentage which we view as two of the key performance indicators for the Group. We aim to manage costs as we transform our business in line with changing market conditions. Full year operating margin of 6.4 % (continuing operations) reflected a decline in gross margin, mainly due to weakness in our UK and American operations. In December 2015, we presented the findings of our operational review, (discussed in more detail on page 8) confirming certain opportunities to improve the operational and financial performance of our business. A key focus of the operational review is the stabilisation of gross margins through improved controls on discounting. During our operational review we identified cost savings of £19m on an annualised basis by 2017/18. We discuss the operational review in more detail on page 8.

Gross profit and costs

Gross margin for continuing operations fell from 36.5% in 2014/15 to 34.0% in 2015/16, driven mainly by the continuing impact of foreign exchange of -1.0% percentage point, -0.6% percentage points of price positioning and -0.6% percentage points of product mix. Adjusted net operating expenses from continuing operations were reduced by £0.8m on the prior year, resulting in SG&A costs of 27.6% of sales, a reduction of 0.7 percentage points. Adjusting items

In 2015/16, we charged £14.4m of adjusting items to the income statement of which £1.9m related to Akron Brass disposal costs. The remaining £12.5m in continuing operations consists of £11.7m related to the Group’s operational review and global business reorganisation programme, £1.1m associated with the closure of our Brazil operation, £1.6m for senior management exit costs and a legal provision release (credit) of £1.9m booked in the year.

The £11.7m costs associated with the Group’s operational review and global business reorganisation programme consist of £3.8m of severance payments, £1.5m of asset write offs and £6.4m associated with the incremental resource requirements to design and plan the execution of the programmes, some of which will continue into 2016/17. Operating profit

Adjusted operating profit from continuing operations was £57.4m (2014/15: £73.0m,) representing a year on year decline of 21.4%, reflecting a reduction in the gross margin, as noted above.

Adjusted operating profit from total operations for the full year was £73.0m (2014/15: £88.0m), representing a decline of 17.0% year on year. Operating margin of 7.4% (adjusted) reflected a decline in gross margin. Total operating profit from total operations was £58.6m for the full year, reflecting a net cost from adjusting items of £14.4m (2014/15: £83.1m, after reflecting a net cost from adjusting items of £4.9m), representing a decline of 29.5% year on year.

Finance Costs

Net finance costs in 2015/16 were £15.7m (2014/15: £14.0m). This

comprises net interest payable of £12.0m (2014/15: £10.5m), which was covered 6.1 times by adjusted total operating profit, and a net charge of £3.7m (2014/15: £3.5m) in respect of the Company’s convertible preference shares. The net cost in respect of the Company’s convertible preference shares included the preference dividend for the year of £2.9m (2014/15: £2.9m), together with a £0.8m (2014/15: £0.6m) charge for the amortisation of the implied redemption premium on preference shares.

Adjusted profit before tax

Adjusted profit before tax from total operations for the full year was £57.3m (2014/15: £74.0m), a decline of 22.6% on the previous year. Total profit before tax from total operations for 2015/16 was £42.9m (2014/15: £69.1m), a decline of 37.9% on the previous year. Earnings per share

Adjusted basic earnings per share for the financial year are 11.1p (2014/15: 13.8p). Basic earnings per share after the net impact of adjusting items are 8.1p (2014/15: 12.9p). Adjusted basic earnings per share for continuing operations are 8.2p (2014/15: 10.9p). Basic earnings per share for continuing operations after the net impact of adjusting items are 5.6p (2014/15: 10.0p). Ordinary dividend

The Board recommends that the final dividend is 3.6p per share (2014/15: 6.0p per share), making a total for the year of 6.2p per share (2014/15: 10.4p per share). The final dividend, subject to approval at the Annual General Meeting on 14 June 2016, is payable on 23 June 2016 to shareholders on the register at 27 May 2016.

Tax

The taxation charge represents an effective tax rate for the 2015/16 financial year on profit before tax and preference dividends of 28.4% (2014/15: 30.0%). After excluding adjusting items, the effective rate is 27.2% (2014/15: 29.9%). The effective tax rate for continuing operations is 26.2% (2014/15: 30.4%). After excluding adjusting items, the effective rate is 25.8% (2014/15: 30.3%). The Group’s adjusted effective tax charge for continuing operations can be analysed as follows:

Financial review

£m

2015/16 2014/15

Profit

before tax chargeTax % before taxProfit chargeTax %

Total profit before tax 29.2 54.1

Add back preference dividends 2.9 2.9

32.1 8.4 26.2 57.0 17.3 30.4

Adjust for:

Restructuring costs 13.3 3.1 5.1 1.5

Net gain on disposal of US property – – (0.3) (0.1)

Acquisition costs – – 0.1 –

Brazil closure costs 1.1 – – –

Legal provision release (1.9) – – –

44.6 11.5 25.8 61.8 18.7 30.3

Post-retirement benefits

The Group accounts for pensions and other post-retirement benefits in accordance with IAS 19 (revised). The net charge for post-retirement benefits was £7.5m (2014/15: £8.0m) and can be analysed as follows:

Charge £m 2015/16 2014/15

Defined benefit pension plans 2.7 2.5

Defined contribution pension plans 4.3 5.0

Post-retirement medical benefits 0.5 0.5

7.5 8.0

The Group’s two principal defined benefit pension plans are in the US and the UK. The movement in the balance sheet liability of these plans during the year was as follows:

£m US Plan UK Plan

Liability at beginning of year (26.5) (23.9)

Expense (1.2) (1.1)

Actuarial gains 3.3 4.4

Contributions – 4.8

Currency translation (0.9) –

Liability at end of year (25.3) (15.8)

The contributions expected to be paid during the 2016/17 financial year amount to £4.6m in respect of the UK plan and £nil million in respect of the US plan. Post-employment benefits liabilities decreased to £58.2m from £70.7m at the end of the previous financial year, principally due to actuarial re-measurements. The main driver of these remeasurements was the impact of increased discount rates. In addition, £3.9m of post-employment benefit liability has been classified as held for sale and has been transferred on the sale of Akron Brass.