Picture of Ian Mason, Group Chief Executive

The 3 year plan announced in May 2005 comprised three key elements which together will substantially improve the financial performance of the Group.

The Group now plans to roll out EBS to the remainder of its European subsidiaries with the roll out being largely completed by the end of 2006/07.

Significant steps have been taken towards creating a lower cost infrastructure.

During the year, good progress has been made on the implementation of the 3 year plan, with the EBS 'go-live' in the UK being a major milestone.

PROGRESS ON 3 YEAR PLAN

The 3 year plan announced in May 2005 comprised three key elements which together will substantially improve the financial performance of the Group. These were

Focus separately on two distinct customer groups (EEM and MRO)
Implement the Enterprise Business System
Create a lower cost infrastructure

During the year, good progress has been made on the implementation of this plan, with the EBS 'go-live' in the UK being a major milestone. In addition, we have seen an improvement in sales within our International businesses.

ELECTRONIC AND ELECTROMECHANICAL (EEM)

To improve our competitiveness in this sector, we have increased our stocked product range across Europe, extended our range by an additional 90,000 products from our US company (Allied Electronics) and our existing suppliers for sale in our larger European markets, and have reorganised our Product Management process to align more closely to the EEM strategy. We have also increased the proportion of our overall marketing expenditure on EEM marketing. The initial results show a substantial increase in sales growth rate for these products which provides confidence in the strategy. The next steps will include further increasing the size of the EEM range, with the inclusion of new technologies e.g. wireless and displays, and additional customer driven packaging options, making all EEM products available to every business around the world and further improving EEM customer service through enhanced web based search and information facilities.

MAINTENANCE, REPAIR & OPERATIONS (MRO)

The primary focus of the strategy in the MRO sector is to simplify the offer to meet customer needs more effectively. This will involve better management of cost through product and supplier rationalisation and increased own branded products. Where we have particular strength in a range, we will promote that range in a similar way to the EEM strategy. The first of these has been the successful trial of an improved Process Control and Automation (PCA) offer in Germany aimed specifically at maintenance engineers in all industries. Following the positive response from our customers, we plan to roll out this offer to the rest of the Group.

ENTERPRISE BUSINESS SYSTEM (EBS)

The Enterprise Business System went live in the UK in December and has successfully supported the UK business and the International supply activities since then with more than one million customer orders processed to date. The Group now plans to roll out EBS to the remainder of its European subsidiaries with the roll out being largely completed by the end of 2006/07. In Asia, the EBS system will be rolled out to China during 2006/07. This system will then provide the platform for growth for our UK, European and Asian operations.

INFRASTRUCTURE

Significant steps have been taken towards creating a lower cost infrastructure. Reorganisations within the Group Processes and the businesses have led to the removal of around 110 roles including the closure of the telemarketing department in the UK. Reorganisation costs of £3.7m have been incurred this year leading to annualised benefits of £4.4m. Further cost reductions will be announced in the next financial year.

(Back to top of page)