Final Results

Northamber PLC 26 September 2002 Northamber plc Preliminary results for the year ended 30th June 2002 Results Given the extreme depression in the IT Hardware Sector, which in our case was exacerbated by the Hewlett-Packard (HP)/ Compaq merger, I believe that shareholders will be comforted by our results. These show that we returned profits, albeit small, in both the first and second half of the year. Reduced sales of £250 million (30th June 2001 £299 million) resulted in a Pre-Tax profit of £456,000 compared with the £5,508,000 a year ago. The earnings per share dropped to 0.91p against the 11.3p as at 30th June 2001. We generated a significant cash balance of £8,587,000 and despite the decline in profits, we have no core debt. This allows us to pay significant dividends, although subject to the AGM, reduced from last year's level. Trading The year opened with unusually low demand levels in volume I.T. hardware sales serving to drive further price erosion. The key corporate-user sector demand was further interrupted by both the aftermath of 11th September and the subsequent economic downturn. As Hewlett-Packard is our largest supplier, the long drawn HP/Compaq merger caused us significant additional problems. During the merger process, demand levels dropped, fuelling still further price erosion. Then, as a result of the merger, the previous ranges of HP branded computers were announced as being replaced as new, combined HP/Compaq, models are released. As our shareholders are aware, we take a very conservative attitude to business and avoid whenever possible low and potentially negative margin business. This attitude, together with high levels of price erosion, led to a fall of approximately £46m in our comparative H-P sales, which accounts for virtually all of our year on year decline in sales. On a positive note; as a result of the HP/Compaq merger, I can report that we will shortly be adding distribution of the Compaq brand to our existing offerings. A market leading brand from which we have until now been excluded. The reason for the relatively strong performance in the rest of our business was the introduction of new products and services. At the half-year, I advised we had taken steps to significantly reduce costs and these were successful. Including the newer activities, staff numbers at year-end were 350 against 415 a year ago. We also achieved improved efficiencies from fewer operational facilities. Our skills based activities have since been re-focused on new and incremental trading activities within the convergence and digital communications arena. These have far stronger margins and more stable product life cycles. The intention being to reduce future exposure to the volatile trends of the I.T. hardware sector. Whilst taking actions to avoid loss, the ongoing extent of the downturn and trading difficulties, negated the anticipated gains. That also included masking the stronger and growing contributions from our other and newer, higher value and more specialised activities. The Balance Sheet Our balance sheet remains very strong, with £8.6 million of cash at year-end. Net Assets of £32.7 million compare with £33.97 million a year ago, or 100.7p per share, are after dividend payments over the year of £2.02 million and the re-purchase of 305,000 shares for cancellation at a cost of £214,000. Within the generally depressed trading environment of the sector, there was necessary close focus on minimising our bad-debt exposure. This fell to very slightly over 0.13% of sales. The preserved financial strength benefited from appropriate, pre-emptive management actions a year ago. Although the further sales downturn largely dissipated the benefits. The close focus on key ratios, avoided a worse outcome within the limited, viable trading opportunities available to ourselves The Board We are pleased to advise that Michael Ayrton has agreed to join the Board as a non-executive director. Michael has very many years experience in the commercial banking sector, with emphasis on corporate credit risks An Associate of the Chartered Institute of Bankers, he has held various very senior executive positions, including time spent with AIB Group (UK) plc, with periods spent as Head of Corporate Banking and also as Head of Risk Management. Dividend When considering dividend policy, it is always pleasing to translate an upturn into an increased payment. However, in adverse conditions, that same objectivity sometimes needs to be applied in reverse. In balancing the wishes of our shareholders, it is important to ensure our healthy balance sheet is not compromised, pending a return to the cash demands of more normal trading levels Having generated £7.18 million net cash in the period, we are recommending a reduced final dividend of 2p making at total of 4.2p for the full year compared with the 6.2p last year The proposed dividend will be payable on 10th January 2003 to members on the Register as at 20th December 2002 OUTLOOK Any short-term market recovery remains unlikely. The extensive consolidations of the past year should provide the I.T. hardware sector the opportunity to commercially mature from a revenue growth focus, to one based on the value of the working capital employed The Compaq opportunity will shortly be available to us, on equal terms, and with the cost realignment actions being already taken, should also allow more of the contribution from the newer, higher margin activities to come through. Your Board is confident in a satisfactory outcome for the current trading year, if understandably cautious as to the extent of any recovery. D.M. Phillips Chairman 26th September 2002 NOTE:- These preliminary results were approved by the Board of Directors on 26th September 2002. A copy of these preliminary results is being sent to all shareholders and is available to the public from the Company's trading offices at 1 Lion Park Avenue, Chessington, Surrey KT9 1ST. Please call the shareholder support line on 0208 296 7205 with any enquiries Consolidated Profit And Loss Account Notes Year ended Year ended 30 June 2002 30 June 2001 £'000 £'000 Turnover 250,410 299,170 Cost of sales (231,093) (274,808) ------------ ------------ Gross profit 19,317 24,362 Distribution costs (11,150) (11,250) Administrative expenses (8,610) (7,821) Other operating income 472 486 ------------ ------------ Operating profit 29 5,777 Exceptional profit on sale of fixed assets in continuing operations 321 - Profit on Ordinary Activities before 350 5,777 interest Interest receivable 142 80 Interest payable (36) (349) Profit on ordinary activities before 456 5,508 taxation Tax on profit on ordinary activities (160) (1,762) ------------ ------------ Profit on ordinary activities after 296 3,746 taxation Equity dividends 3 (1,353) (2,000) ------------ ------------ Retained profit for year (1,057) 1,746 ===== ===== Earnings per ordinary share 2 0.91p 11.3p Diluted earnings per share 2 0.90p 11.2p Consolidated Balance Sheet 30 June 2002 30 June 2001 £'000 Restated* £'000 Fixed assets Tangible assets 6,289 7,320 Investments 2,837 2,837 ---------- ---------- 9,126 10,157 ---------- ---------- Current assets Stocks 14,590 14,944 Debtors - amounts falling due within one year 27,023 33,025 Cash at bank and in hand 8,587 1,403 ---------- ---------- 50,200 49,372 Current liabilities Creditors - amounts falling due within one year (25,743) (23,922) ---------- ---------- Net current assets 24,457 25,450 ---------- ---------- Total assets less current liabilities 33,583 35,607 Creditors - amounts falling due after more than one year - (831) Provisions for liabilities and charges (882) (804) ---------- ---------- Net assets 32,701 33,972 ====== ====== Capital and reserves Called up share capital 1,623 1,638 Share premium account 5,711 5,711 Capital redemption reserve 148 133 Profit and loss account 25,219 26,490 ---------- ---------- Equity shareholders' funds 32,701 33,972 ====== ====== *The consolidated balance sheet as 30 June 2001 has been restated for the adaption of FRS 19. Consolidated Cash Flow Statement Notes Year ended Year ended 30 June 2002 30 June 2001 £'000 £'000 Cash inflow from continuing operating activities 4 10,525 12,847 ---------- --------- Returns on investments and servicing of finance Interest received 142 80 Interest paid (36) (428) Income from fixed asset investments 255 196 ---------- --------- Net cash outflow from returns on investments and servicing of finance 361 (152) --------- --------- Taxation UK corporation tax paid (913) (2,639) ---------- --------- Capital expenditure and financial investment Purchase of tangible fixed assets (1,090) (5,435) Purchase of other investments - (4) Sale of tangible fixed assets 1,361 292 ---------- --------- Net cash outflow from capital expenditure and financial investment 271 (5,147) ---------- --------- Equity dividends paid (2,015) (2,049) ---------- --------- Cash inflow/(outflow) before financing 8,229 2,860 ---------- --------- Financing Purchase of shares (214) (1,440) Issue of ordinary share capital - - Debt due beyond a year: Repayment of a secured loan (831) (113) ---------- --------- Net cash outflow from financing (1,045) (1,553) Increase/ (decrease) in cash in the period 4 7,184 1,307 ====== ====== NOTES 1. Accounting policies The Financial information set out above does not constitute the Group's statutory accounts for the years ended 30th June 2001 or 30th June 2002, but it is derived from those accounts. The Statutory Accounts for 30th June 2001 have been delivered to the Registrar of Companies and those for 2002 will be delivered following the Group's Annual General Meeting. The Auditors have reported on these accounts, their reports were unqualified and did not contain statements under S237(2) or (3) of the Companies Act 1985. The information contained in this statement does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985. 2. Earnings per ordinary share The calculation of earnings per ordinary share is based on the profit after taxation of £296,000 (2001: £3,746,500) and on 32,524,260 ordinary shares (2001: 33,198,096). The number of ordinary shares in issue during the years ended 30th June 2002 and 30th June 2001 were the weighted average in issue during each year. Computation of Earnings per share for 2002 Per share Earnings Shares Net profit for year £296,000 Weighted average shares outstanding during year 32,524,260 Basic earnings per share 0.91p Dilutive effect of options 253,823 Diluted earnings per share 0.90p £296,000 32,778,083 3.Dividend An interim dividend has been paid during the year of 2.2p per share. A final dividend of 2.0p will be paid on 10th January 2003 to those members on the register at close of business on 20th December 2002. The ex-dividend date for the shares will be 18th December 2002. 4. Cash flow a) Reconciliation of operating profit to operating cash flows Group 2002 2001 £'000 £'000 Continuing operations Operating profit 29 5,777 Income from fixed assets investments (255) (196) Depreciation of tangible fixed assets 1,054 749 Loss/(profit) on sale of tangible fixed assets 27 (76) (Increase)/decrease in stocks 354 (3,682) Decrease/(increase) in trade debtors 6,119 8,074 (Increase)/decrease in other debtors (1) 18 Decrease/(increase) in prepayments and accrued income (116) 177 Increase/(decrease) in trade creditors 3,467 2,395 (Decrease/increase in other taxation and social security (205) (168) Increase/(decrease) in accruals and deferred income 54 (221) (Decrease)/increase in other creditors (2) - Net cash inflow from continuing operating activities 10,525 12,847 ====== ====== Reconciliation of net cash flow to movement in net funds Increase in cash in the period 7,184 1,307 Cash outflow from changes in debt 831 113 Change in net funds resulting from cash flows and the movement in net debt in the period 8,015 1,420 Net funds/(debt) brought forward 572 (848) Net funds carried forward 8,587 572 ===== ===== c)Analysis of net debt At 1st July 2001 Cashflow At 30th June 2002 £'000 £'000 £'000 Cash at bank and in hand 1,403 7,184 8,587 Debt due after more than one year (831) 831 - ------- ------- ------- Total 572 8,015 8,587 ======= ======= ======= A copy of this report is being sent to all Shareholders. Copies are available to the public on request from the Company's offices 1 Lion Park Avenue Chessington Surrey KT9 1ST Total number of shares in issue.......... 32,464,000 Weighted average number of shares..... 32,524,260 Date of AGM............................... 15th November 2002 Ex Dividend Date........................... 18th December 2002 Dividend Date............................... 10th January 2003 The Company's registered office is 1-3 Union Street, Kingston-upon-Thames, Surrey KT1 1RP This information is provided by RNS The company news service from the London Stock Exchange

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