2009	2008	Growth reported	Growth (constant exchange)
Revenue	£635.3m	£566.8m	12.1%	(4.5)%(1)
Gross margin	48.2%	48.5%
Operating costs % of revenue	(31.3)%	(30.5)%
Contribution	£107.1m	£102.3m	4.7%	(10.2)%
Contribution % of revenue	16.9%	18.0%

1. (1) Underlying revenue growth, adjusting for currency and trading days

The International business now represents around 65% of the Group’s revenue. The business comprises three regions: Continental Europe (55% of International business revenue), North America (29%) and Asia Pacific (16%).

On a reported basis, including the beneficial effect of the weakening of Sterling, revenue increased by 12.1% and contribution by 4.7%. Underlying revenue declined by 4.5%, with Continental Europe declining by 6.9%, North America by 2.2% and Asia Pacific flat.

Gross margin increased by 0.8% points from the first half to the second half of the year. Year on year, gross margin reduced by 0.3% points principally due to the impact of country mix and foreign exchange in Asia Pacific. Operating costs reduced slightly at constant foreign exchange and as a percentage of sales increased by 0.8% points, due to the sales decline in the second half of the year. Actions to reduce costs in light of the declining sales were taken principally in the final quarter of the year.

Continental Europe

	2009	2008	Growth reported	Growth (constant exchange)
Revenue	£346.7m	£316.2m	9.6%	(6.9)%(1)
Contribution	£75.9m	£71.0m	6.9%	(8.4)%
Contribution % of revenue	21.9%	22.5%

1. (1) Underlying revenue growth, adjusting for currency and trading days

Continental Europe includes eight businesses: France, Germany and Italy are the largest, representing around 75% of the region’s revenue, the remaining businesses are Austria, Benelux, Ireland, Scandinavia and Spain.

On a reported basis, including the benefit of the weakening of Sterling, revenue increased by 9.6% and contribution by 6.9%. Underlying revenue declined by around 7% with the business moving into decline in May. Gross margin was stable year on year as were costs in local currency.

The senior European management team was strengthened during the year with the appointment of the previous UK General Manager to lead the region. A more consistent and cross regional approach has been introduced to drive performance.

The Group’s electronics strategy has been implemented in Europe with the broadening of the product offer, increased competitiveness of prices and the successful launch of production packaging. Within maintenance, there have been successes in own brand promotion, joint supplier activities and large customer contract wins. The business has focused its large customer activity around more economically resilient sectors such as defence, government, utilities and education.

e‑Commerce revenue increased by 8% in the year with its share of revenue increasing from 35% to 41% year on year, exiting the year at 44%.

North America

	2009	2008	Growth reported	Growth (constant exchange)
Revenue	£186.6m	£163.3m	14.3%	(2.2)%(1)
Contribution	£24.3m	£22.0m	10.5%	(5.4)%
Contribution % of revenue	13.0%	13.5%

1. (1) Underlying revenue growth, adjusting for currency and trading days

The business has continued to pursue its local strategy to exploit both its extensive local sales office presence across North America and its supplier relationships to drive sales. Local initiatives with suppliers have included customised trade brochures, supplier funded joint advertising and web and parcel promotions.

On a reported basis, including the benefit of the weakening of Sterling, revenue increased by 14.3% and contribution by 10.5%. Underlying revenue declined by 2.2%. The business remained in revenue growth through the first half of the financial year, moving into decline in November 2008 as economic conditions deteriorated. Gross margin was stable year on year as were costs in local currency.

A particular focus for the year within the organisation has been the further development of the web site, providing new on‑line quote functionality and product recommendations. The latest initiative has been the launch of the web site for mobile phone users. This provides mobile phone users with search functionality, the ability to view pricing, stock availability and technical specifications and images. Allied is the first electronics components distributor in North America to offer such a mobile site to its customers.

As a result of this, and other web promotional activities, underlying e‑Commerce revenue increased by nearly 45% in the year. e‑Commerce share of revenue increased from 10% to 15% year on year and exited the year at 22%.

Asia Pacific

	2009	2008	Growth reported	Growth (constant exchange)
Revenue	£102.0m	£87.3m	16.8%	(0.3)%(1)
Contribution	£6.9m	£9.3m	(25.8)%	(34.9)%
Contribution % of revenue	6.8%	10.6%

1. (1) Underlying revenue growth, adjusting for currency and trading days

The Group has a large and well established footprint across Asia Pacific, operating in ten countries with a presence in the region for more than 20 years, having seven warehouses and local language catalogues including those for Japan and China.

Reported revenue including the benefit of the weakening of Sterling, increased by 16.8%. Underlying revenue was flat for the year but moved into decline in November. The Japanese economy suffered particularly badly in the economic downturn and this had a significant effect on the region’s overall sales performance. ‘Excluding the Japanese business, the region recorded 5% underlying sales growth for the year. A number of the region’s markets have delivered double digit sales growth, including China (17%), South Korea (24%), Singapore (18%) and Thailand (38%). e‑Commerce continues to be an important driver to sales performance in the region with our e‑Commerce share in Japan at nearly 70%.

The Group’s electronics production packaging offer was launched across the region during the third quarter of the financial year supported by increased local and on‑line marketing, to positive customer feedback. Local customer activities have focused on growing industry sectors and large customers.

During the year, the Asia Pacific business reorganised its activities onto a more regional, streamlined and functionally oriented structure. This change was in recognition of the business’s growing size, having doubled since March 2003, to allow it to benefit from changing customer needs whilst also delivering cost efficiencies across all areas.

The significant reduction in contribution as a percentage of revenue was caused by the reduction in gross margin, due to country mix and foreign exchange, and the full year effect of the additional investment made in the region in the prior year to exploit the growth potential.