Final Results

RNS Number : 6769N

Northamber PLC

28 October 2016

 

28 October 2016

Northamber PLC

("Northamber" or the "Company")

Preliminary Results for the year ended 30 June 2016

Chairman's Statement

Results

As we continue our transition into more consultative, solution driven sales, I am pleased to be able to announce an increase in gross profit to £4.8 million, driven by a gross margin ("GM") improvement to 7.8%. This is a significant increase from just over 7% for the previous year, especially against a challenging industry background and shows the traction we are making in evolving the business.

Unfortunately whilst margins increased, so did losses. This stemmed from increased administration costs, of which recruitment was a significant contributor, as we invested in building our future presence in these strategically important categories and sectors organically.

As we increased our focus on these higher margin solutions categories, we also moved away from some of our lower margin more transactional business, leading to an overall reduction in turnover of some £3.6 million to a total of £61.8 million compared with £65.4 million for last year.

We  now look at the business as 3 mutually reinforcing units, namely: "Wholesale" which provides a wholesale function for IT products: "Solutions" which focuses on a consultative approach to newer IT technologies with a heavy value-add: and "Retail" which focuses on providing consumer goods to national retailers.

The far more promising, newer technologies and higher margin added value areas, we labelled "Solutions", increased its GM year on year contribution significantly despite investment and staff recruitment costs. This division is an area with a strong potential that we are focusing on heavily.

The Retail sector of our business which is driven by the strength of our experienced logistics and I.T. systems is always subject to the vagaries of the retail industry demand generation focus.  Whilst a profitable contributor, it was nonetheless disappointing to experience a significant decline in revenue, albeit with retained margins.

In order to fully benefit from the strategy of providing higher margin Solutions, we have made significant investment in recruiting and training more experienced staff who can add value to very specialised products and gain the additional levels of margin. Whilst we are confident that this strategy will prove successful, and will be more fully reflected in the outcome for the current financial year, we cannot avoid the impact of the additional staff recruitment fees.

The reported operating loss of £1.29 million, disguises an annual gross profit improvement of £218,000.  The increase in reported loss of £360,000 over the prior year is partly due to the previously advised needs for key recruitment and associated costs. Those increased costs are included within the overall figure of £578,000 over the prior year.

Balance Sheet

During these challenging times of significant movements in structure and profile, of both the industry, our sector and consequently within our company, the need for conservation and control of finances becomes ever more important and critical.

We have always been extremely careful in the management of our finances and assets, and have always placed great emphasis on liquidity and cash.

I am pleased to be able to state each year that our balance sheet continues to be strong, our liquidity ratios more than adequate, our assets unencumbered and our cash balances positive. This year is no different and with cash at the year- end standing at £5.4 million, it is almost exactly the same as at the last year end.

Net Assets per share have inevitably declined to 67.9p per share (2015: 72.7p) although still well above the average share price in the year.

Dividend

As always, the subject of dividend is complicated by the message it also sends. Your board has taken particular consideration of the underlying improvement in the newer business areas, plus the strength of our ongoing debt free, tangible asset base.

At a total cost of £28,159 your Board is proposing a final dividend of 0.1p per share .The dividend will be paid on 18 January 2017 to shareholders on the register as at 9 December 2016.

Staff

Whilst we have maintained a lean management structure, it remains key that we continue our search for the right individuals to drive our forward management strategy. With an incredibly high percentage of long serving members of staff plus those more recently joined, I am very grateful to all our staff for their support and focus.

Board

Geoff Walters, with his non-executive financial skills, has made a very welcome contribution to the board in the role previously held by Gordon Hamilton.

Outlook

Although the forecast post referendum gloom has not yet happened, and hopefully will not be too great if and when it does become reality, the short and medium term future is fraught with uncertainty.

In view of the history of the last few years I am, to say the least, cautious. We are hopeful that the moves we have made in the profile and structure of the business will continue to develop the more profitable sides of the business and that we shall be in a position to move towards profitability sometime in the not too distant future, although I do not expect to reach that position within the next twelve months.

The company remains well placed to deal with both challenges and opportunities alike and the board is confident that the change in direction will prove fruitful in the years ahead.

D.M. Phillips

Chairman

28 October 2016

For more information please contact:

Northamber plc	020 8296 7000
David Phillips, Chairman
Cantor Fitzgerald Europe (Nominated Adviser & Broker)	020 7894 7000
Phil Davies / Michael Reynolds

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30 June 2016
			2016		2015
			Total		Total
			£'000		£'000
Revenue			61,844		65,452
Cost of sales			(57,025)		(60,851)
Gross Profit			4,819		4,601
Distribution costs			(3,310)		(2,950)
Administrative costs			(2,801)		(2,583)
Loss from operations			(1,292)		(932)
Investment revenue			59		46
Loss before tax			(1,233)		(886)
Tax (charge)			-		(2)
Loss for the year and total comprehensive loss			(1,233)		(888)
Basic and diluted loss per ordinary share			(4.38)p		(3.15)p

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 30 June 2016
			2016		2015
			£'000		£'000
Non current assets
Property, plant and equipment			7,995		8,129
Current assets
Inventories			5,006		4,519
Trade and other receivables			8,459		10,176
Cash and cash equivalents			5,466		5,441
			18,931		20,136
Total assets			26,926		28,265
Current liabilities
Trade and other payables			(7,805)		(7,798)
Total liabilities			(7,805)		(7,798)
Net assets			19,121		20,467
Equity
Share capital			281		281
Share premium account			5,734		5,734
Capital redemption reserve			1,505		1,505
Retained earnings			11,601		12,947
Equity shareholders' funds			19,121		20,467

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 30 June 2016
	Share Capital		Share Premium Account	Capital Redemption Reserve			Retained Earnings		Total Equity
	£'000		£'000		£'000		£'000		£'000
Balance at 1 July 2014	281		5,734		1,505		14,003		21,523
Dividends	-		-		-		(168)		(168)
Transactions with owners	-		-		-		(168)		(168)
Loss and total comprehensive loss for the year	-		-		-		(888)		(888)
Balance at 30 June 2015	281		5,734		1,505		12,947		20,467
Dividends	-		-		-		(113)		(113)
Transactions with owners	-		-		-		(113)		(113)
Loss and total comprehensive loss for the year	-		-		-		(1,233)		(1,233)
Balance at 30 June 2016	281		5,734		1,505		11,601		19,121

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 30 June 2016
			2016		2015
			£'000		£'000
Cash from operating activities
Operating (loss) from continuing operations			(1,292)		(932)
Depreciation of property, plant and equipment			167		247
Operating (loss)  before changes in working capital			(1,125)		(685)
(Increase)/decrease in inventories			(487)		534
Decrease in trade and other receivables			1,716		1,513
Increase/(decrease) in trade and other payables			7		(829)
Cash generated from operations			111		533
Income taxes paid			-		(2)
Net cash from operating activities			111		531
Cash flows from investing activities
Interest received			59		46
Purchase of property, plant and equipment			(32)		(44)
Net cash from investing activities			27		2
Cash flows from financing activities
Dividends paid to equity shareholders			(113)		(168)
Net cash used in financing activities			(113)		(168)
Net increase in cash and cash equivalents			25		365
Cash and cash equivalents at beginning of year			5,441		5,076
Cash and cash equivalents at end of year			5,466		5,441

Notes

1. Financial information

The results of the year ended 30 June 2016 have been prepared using the accounting policies and methods of computation consistent with those used in the Group's annual report for the year ended 30 June 2016. The results have also been presented and prepared in a form consistent with that which will be adopted in the Group's annual report for the year ended 30 June 2016 and in accordance with the recognition and measurement requirements of the International Reporting Standards as adopted by the European Union.

The financial information set out above does not constitute the group's statutory accounts for the years ended 30 June 2015 or 30 June 2016, but is derived from those accounts. The statutory accounts for the year ended 30 June 2015 have been delivered to the Registrar of Companies and those for 2016 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 s.498(2) or (3) of the Companies Act 2006. The information contained in this statement does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006.

2. Segmental reporting

Management has determined that there is only one operating segment of the group as the total business of the company is the sourcing and distribution of computer related products and this is how information is reported to the Chief Operating Decision Maker. The board in carrying out its strategic planning and decision making has, necessarily, to take consideration of the inter relatedness of the product range and the customer base and thus treat the operations of the group as a whole. All decisions on the allocation of resources impacts on all aspects of the group. Information presented to the Chief Operating Decision Maker is the same as is reported in these financial statements.

Although the sales of the group are predominantly to the UK there are sales to other countries and the following schedule sets out the split of the sales for the year. Revenue is attributable to individual countries based on the location of the customer. There are no non current assets outside the UK.

	UK		Other		Total
	£'000		£'000		£'000
Year to 30 June 2015
Total Segment revenue	65,226		226		65,452
Year to 30 June 2016
Total Segment revenue	61,615		229		61,844

One customer accounted for more than 10% of the group's revenue for the year, being £8.6m.

3. Loss per ordinary share

The calculation of the basic and diluted earnings per share is based on the following data:

			2016		2015
			£'000		£'000
(Loss) for the year attributable to equity holders of the parent company			(1,233)		(888)

			2016		2015
Number of shares			Number		Number
Weighted average number of ordinary shares for the purpose of basic earnings per share and diluted earnings per share			28,158,735		28,158,735

4. Dividends

A final dividend of 0.1p per share will be paid on 18 January 2017 to those members on the register at close of business on 9 December 2016.

5. Notice of meeting

The annual report and accounts for the year ended 30 June 2016 will be posted to shareholders in due course and the Annual General Meeting will be held on 14 December 2016.

The Company's registered office is Namber House, 23 Davis Road, Chessington, Surrey KT9 1HS.

 

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