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Northamber PLC (NAR)

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Tuesday 03 March, 2020

Northamber PLC

Half-year Report

RNS Number : 7453E
Northamber PLC
03 March 2020
 

Northamber PLC

("Northamber" or the "Company" or the "Group")

 

Interim Report for the Six months to 31 December 2019

 

Chairman's Statement

 

Results

 

It is pleasing to be able to report that we have seen revenues increase in the first half from £24.2 million to £26.3 million for the comparative period last year especially as this has been combined with an increase of percentage Gross Margin from 8.41% to 8.76%; the cumulative effect of both was to increase Gross Profit from £2.04 million to £2.3 million. Revenue and margin growth has been supported by growth from some of our strategic focus areas including Audio Visual and Solutions.

 

To support this increase in Gross Profit and the planned continued growth in Gross Profits our Distribution costs increased year on year from £1.39 million to £1.53 million. Administrative costs remained largely consistent year on year as we continued our focus on cost management meaning that our loss from operations for the first half was reduced from £0.5 million to £0.4million.

 

The Group sold its Weybridge distribution centre for £16.4 million against a net book value of £6.02 million. The Group also paid £0.18 million for legal and professional costs for the sale of the property. The gain on the sale is reported as an Exceptional Item. The Board were cautious to ensure this sale would not disrupt our core operations and were pleased to have agreed a sale and leaseback on the Weybridge distribution centre (at a rental cost of £85k for the first half) to allow us time to find a new suitable site and effect a move with the minimum possible disruption to our trading activity. A new warehouse has been purchased in Swindon for £3.2 million and we expect to complete the move from Weybridge during the second half of this financial year.

 

Financial position

 

Maintaining our prudence in financial matters, our working capital management is reflected in the Net Current Assets ratio which at 3.7 times (2018: 2.6 times) is a significant improvement.

 

Cash was £14.7 million at 31 December 2019 compared with £2.9 million at 31 December 2018, reflecting the sale of the distribution centre and the purchase of the new warehouse property. With Fixed Assets at book value at £5.2 million, including two unencumbered freehold properties, the Company's overall financial position is sound.

 

Net Assets at 91.3p per share are considerably in excess of the average price of the ordinary shares throughout the period.

 

Board

 

With great sadness, we lost our founder and Chairman David Phillips in December 2019. David made a very significant contribution to the development and leadership of the Company since he founded Northamber in 1980 and he will be greatly missed.

 

We are pleased to welcome David's son Alex Phillips who has recently joined  our very experienced Board as Commercial Director. Alex joined the Company in 2013 as Director of Strategy and gained valuable experience of the business and the wider sector.

 

Dividend

 

As in previous years, your Board has had regard to the strength of our debt free, tangible asset strong balance sheet and is proposing the interim dividend be 0.3p, at a total cost of £82,070.  The dividend will be paid on 15 May 2020 to shareholders on the register as at 16 April 2020.

 

Staff

 

We continue to invest in our evolving business model with added skills based services and which are heavily reliant on our staff to achieve our business case evolution and I am very grateful to all of our staff for their continued support and flexibility.

 

Event after the reporting date.

 

In January 2020 the Company acquired Audio Visual Material Limited (AVM), an Audio Visual Distributor, to enhance and expand Northamber's specialist AV division to focus on driving higher margin profitable growth. I am pleased to report the integration of AVM is going well and the Board is confident that the business will make an important contribution to Northamber in the years ahead.

 

Outlook

 

Whilst we are optimistic in the long-term strategy, we remain cautious due to the economic uncertainty, Brexit and the potential impact of coronavirus on the supply chain. Our continued focus on the new higher margin value categories continues to be an area we are confident and excited about, and where we see future opportunities for organic growth.  We will continue to review non-organic opportunities for growth should an appropriate acquisition be identified which meets our strict criteria and adds value for our shareholders.

 

 

G.P.Walters

Acting Chairman

 

3 March 2020

 

 

 

 

Consolidated Statement of Comprehensive Income

 

6 months to 31 December 2019

 

 

 

 

 

 

 

 

 

 

6 months

6 months

Year

 

 

 

Ended

Ended

Ended

 

 

 

31.12.19

31.12.18

30.06.19

 

 

 

£'000

£'000

£'000

 

 

 

Unaudited

Unaudited

Audited

 

 

 

 

 

 

 

Revenue

 

26,273

24,234

50,329

 

Cost of sales

 

(23,972)

(22,197)

(45,998)

 

Gross Profit

 

2,301

2,037

4,331

 

Distribution cost

 

(1,533)

(1,392)

(2,849)

 

Administrative costs

 

(1,152)

(1,142)

(2,352)

 

Loss  from operations

 

(384)

(497)

(870)

 

Investment revenue

 

167

144

272

 

Loss  before  Exceptional Items and tax

 

(217)

(353)

(598)

 

Exceptional  Item

 

10,203

-

-

 

Profit/ (Loss) before Tax

 

9,986

(353)

(598)

 

Tax(charge)

 

(1,643)

-

-

 

Profit/(Loss) and total comprehensive income

 

 

 

 

 

for the period

 

8,343

(353)

(598)

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted profit/

(loss) per ordinary share

 
 

 

 

30.50p

(1.28)p

(2.17)p

        

 

 

 

 

 

Consolidated Statement of Financial Position

 

 

As at 31 December 2019

 

 

 

 

 

 

 

As at

As at

As at

 

 

 

31.12.19

31.12.18

30.06.19

 

 

 

£'000

£'000

£'000

 

 

 

Unaudited

Unaudited

Audited

 

Non current assets

 

 

 

 

 

Property, plant and equipment

 

5,169

7,799

1,792

 

 

Current assets

 

 

 

 

 

Inventories

 

4,458

4,193

3,320

 

Trade and other receivables

 

8,137

7,662

9,492

 

Cash and cash equivalents

 

14,675

2,931

3,446

 

Assets classified as held for sale

 

-

-

6,019

 

 

 

27,270

14,786

22,277

 

 

 

 

 

 

 

Total assets

 

32,439

22,585

24,069

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

Trade and other payables

 

(7,461)

(5,643)

(7,434)

 

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

(7,461)

(5,643)

(7,434)

 

 

 

 

 

 

 

Net assets

 

24,978

16,942

16,635

 

 

 

 

 

 

 

Equity

 

 

 

 

 

Share capital

 

273

273

273

 

Share premium account

 

5,734

5,734

5,734

 

Capital redemption reserve fund

 

1,513

1,513

1,513

 

Treasury shares

 

(7)

-

(7)

 

Retained earnings

 

17,465

9,422

9,122

 

 

 

 

 

 

Equity shareholders' funds

 

24,978

16,942

16,635

       

 

 

 

 

 

Company Statement of Financial Position

 

 

As at 31 December 2019

 

 

 

 

 

 

 

As at

As at

As at

 

 

 

31.12.19

31.12.18

30.06.19

 

 

 

£'000

£'000

£'000

 

 

 

Unaudited

Unaudited

Audited

 

Non current assets

 

 

 

 

 

Property, plant and equipment

 

1,730

1,783

1,792

 

Investments

 

6,588

6,588

6,588

 

 

 

8,318

8,371

8,380

 

Current assets

 

 

 

 

 

Inventories

 

4,458

4,193

3,320

 

Trade and other receivables

 

7,974

7,665

9,492

 

Cash and cash equivalents

 

3,012

2,871

3,320

 

 

 

 

 

 

 

 

 

15,444

14,729

16,132

 

 

 

 

 

 

 

Total assets

 

23,762

23,100

24,512

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

Trade and other payables

 

(10,945)

(9,442)

(11,412)

 

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

(10,945)

(9,442)

(11,412)

 

 

 

 

 

 

 

Net assets

 

12,817

13,658

13,100

 

 

 

 

 

 

 

Equity

 

 

 

 

 

Share capital

 

273

273

273

 

Share premium account

 

5,734

5,734

5,734

 

Capital redemption reserve fund

 

1,513

1,513

1,513

 

Treasury shares

 

(7)

-

(7)

 

Retained earnings

 

5,304

6,138

5,587

 

 

 

 

 

 

Equity shareholders' funds

 

12,817

13,658

13,100

 

 

 

 

 

 

 

 

 

Consolidated Statement of Changes in Equity

 

 

 

 

As at 31 December 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share capital

Share premium account

Capital redemption reserve

Treasury Shares

Retained earnings

Total Equity

 

 

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

 

 

Period to 31 December 2018

 

 

 

 

 

 

 

Unaudited

 

 

 

 

 

 

 

Balance at 1 July 2018

281

5,734

1,505

-

10,000

17,520

 

Dividends

-

-

-

-

-

-

 

Loss and total comprehensive

 

 

 

 

 

 

 

Purchase of own Shares for cancellation

  (8)

  -

8

 

(225)

  (225)

 

loss for the period

-

-

-

-

(353)

(353)

 

Balance at 31 December  2018

273

5,734

1,513

-

9,422

16,942

 

 

 

 

 

 

 

 

 

Period to 31 December 2019

 

 

 

 

 

 

 

Unaudited

 

 

 

 

 

 

 

Balance at 1 July 2019

273

5,734

1,513

(7)

9,122

16,635

 

Dividends

-

-

-

-

-

-

 

Profit and total comprehensive

  -

  -

  -

-

 8,343

8,343

 

Profit for the period

 

 

 

 

 

 

 

Balance at 31 December  2019

 

273

5,734

1,513

(7)

17,465

24,978

 

 

 

 

 

 

 

 

 

Year to 30 June 2019

 

 

 

 

 

 

 

Audited

 

 

 

 

 

 

 

Balance at 1 July 2018

281

5,734

1,505

-

10,000

17,520

 

Dividends

-

-

-

-

(55)

(55)

 

Purchase  and cancellation of shares

(8)

 

8

 

(225)

(225)

 

Purchase  of  Treasury shares

 

 

 

(7)

 

(7)

 

Transactions with owners

(8)

-

8

(7)

(280)

(287)

 

Loss and total comprehensive

 

 

 

 

 

 

 

loss for the period

-

-

-

 

  (598)

  (598)

 

Balance at 30 June 2019

273

5,734

1,513

(7)

9,122

16,635

 

 

 

Company Statement of Changes in Equity

 

 

 

 

As at 31 December 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share capital

Share premium account

Capital redemption reserve

Treasury Shares

Retained earnings

Total Equity

 

 

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

 

 

Period to 31 December 2018

 

 

 

 

 

 

 

Unaudited

 

 

 

 

 

 

 

Balance at 1 July 2018

281

5,734

1,505

-

6,980

14,500

 

Dividends

-

-

-

 

-

-

 

Purchase  and cancellation of shares

(8)

-

8

 

(225)

(225)

 

Loss and total comprehensive

 

 

 

 

 

 

 

loss for the period

-

-

-

(617)

(617)

 

Balance at 31 December  2018

273

5,734

1,513

-

6,138

13,658

 

 

 

 

 

 

 

 

 

Period to 31 December 2019

 

 

 

 

 

 

 

Unaudited

 

 

 

 

 

 

 

Balance at 1 July 2019

273

5,734

1,513

(7)

5,587

13,100

 

Dividends

-

-

-

 

-

-

 

Purchase of own shares for cancellation

 

  -

 

 

-

 

 

Loss and total comprehensive

 

 

 

 

 

 

 

loss for the period

   -

  - 

   - 

-

(283)

(283)

 

Balance at 31 December  2019

273

5,734

1,513

(7)

5,304

12,817

 

 

 

 

 

 

 

 

 

Year to 30 June 2019

 

 

 

 

 

 

 

Audited

 

 

 

 

 

 

 

Balance at 1 July 2018

281

5,734

1,505

 

6,980

14,500

 

Dividends

-

-

-

 

(55)

(55)

 

Purchase  and cancellation of shares

(8)

 

8

 

(225)

(225)

 

Purchase  of  Treasury shares

 

 

 

(7)

 

(7)

 

Transactions with owners

(8)

-

8

(7)

(280)

(287)

 

Loss and total comprehensive

 

 

 

 

 

 

 

loss for the period

-

-

-

-

(1,113)

(1,113)

 

Balance at 30 June 2019

273

5,734

1,513

(7)

5,587

13,100

 

 

 

 

Consolidated Statement of Cash Flows

 

 

 

 

6 months to 31 December 2019

 

 

 

 

 

 

 

6 months

6 months

Year

 

 

 

 

Ended

Ended

Ended

 

 

 

 

31.12.19

31.12.18

 

30.06.19

 

 

 

 

£'000

£'000

£'000

 

 

 

 

Unaudited

Unaudited

Audited

 

 

Cash from operating activities

 

 

 

 

 

 

Operating (loss) from

 

 

 

 

 

 

continuing operations

 

(384)

(497)

(870)

 

 

Depreciation of property, plant

 

 

 

 

 

 

and equipment

 

62

95

153

 

 

(Profit)/loss on disposal of property,

 

-

-

-

 

 

plant and equipment

 

 

 

 

 

 

Operating (loss) before changes in

 

 

 

 

 

 

working capital

 

(322)

(402)

(717)

 

 

 

 

 

 

 

 

 

(Increase)/decrease in inventories

 

(1,138)

(815)

58

 

 

Decrease/(increase)  in trade and

 

 

 

 

 

 

other receivables

 

1,355

483

(1,346)

 

 

(Decrease)/increase  in trade and

 

 

 

 

 

 

other payables

 

(1,616)

(1,321)

470

 

 

Cash (used)/generated from operations

 

(1,721)

(2,055)

(1,535)

 

 

 

 

 

 

 

 

 

Income taxes received/(paid)

 

-

-

-

 

 

Net cash from operating activities

 

(1,721)

(2,055)

(1,535)

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

Interest received

 

167

144

272

 

 

Proceeds from disposal of property,

 

 

 

 

 

 

plant and equipment

 

16,222

-

-

 

 

Purchase of property, plant and

 

 

 

 

 

 

Equipment

 

(3,439)

-

(71)

 

 

Net cash from investing activities

 

12,950

144

201

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

Dividends paid to equity shareholders

 

-

-

(55)

 

 

Purchase of own shares for cancellation

 

-

(225)

(225)

 

 

Purchase of  Treasury shares

 

-

-

(7)

 

 

Net cash used in financing activities

 

-

(225)

(287)

 

 

 

 

 

 

 

 

 

Net (decrease)/increase in cash and

 

 

 

 

 

 

cash equivalents

 

11,229

(2,136)

(1,621)

 

 

Cash and cash equivalents at

 

 

 

 

 

 

beginning of period

 

3,446

5,067

5,067

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

14,675

2,931

3,446

 

           
 

 

Company Statement of Cash Flows

 

 

 

 

6 months to 31 December 2019

 

 

 

 

 

 

 

6 months

6 months

Year

 

 

 

Ended

Ended

Ended

 

 

 

31.12.19

31.12.18

30.06.19

 

 

 

£'000

£'000

£'000

 

 

 

Unaudited

Unaudited

Audited

 

Cash from operating activities

 

 

 

 

 

Operating (loss) from

 

 

 

 

 

continuing operations

 

(393)

(696)

(1,385)

 

Depreciation of property, plant

 

 

 

 

 

and equipment

 

62

58

120

 

(Profit)/loss on disposal of property,

 

 

 

 

 

plant and equipment

 

-

-

-

 

Operating (loss) before changes in

 

 

 

 

 

working capital

 

(331)

(638)

(1,265)

 

 

 

 

 

 

 

(Increase)/decrease in inventories

 

(1,138)

(815)

58

 

Decrease/(increase) in trade and

 

 

 

 

 

other receivables

 

1,518

480

(1,347)

 

(Decrease)/increase  in trade and

 

 

 

 

 

other payables

 

(467)

(1,044)

926

 

Cash (used)/generated from operations

 

(418)

(2,017)

(1,628)

 

 

 

 

 

 

 

Income taxes received/(paid)

 

-

-

-

 

Net cash from operating activities

 

(418)

(2,017)

  (1,628) 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

Interest received

 

110

79

  272

 

Proceeds from disposal of property,

 

 

 

 

 

plant and equipment

 

-

-

-

 

Purchase of property, plant and

 

 

 

 

 

Equipment

 

-

-

(71)

 

Net cash from investing activities

 

 

110

 

79

201

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

Dividends paid to equity shareholders

 

-

-

(55)

 

Purchase of own shares for cancellation

 

-

(225)

(225)

 

Purchase of  Treasury shares

 

-

-

(7)

 

Net cash used in financing activities

 

-

(225)

(287)

 

 

 

 

 

 

 

Net (decrease)/increase in cash and

 

 

 

 

 

cash equivalents

 

(308)

(2,163)

(1,714)

 

Cash and cash equivalents at

 

 

 

 

 

beginning of period

 

3,320

5,034

5,034

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

3,012

2,871

3,320

 

 

 

 

Notes to the financial statements

 

1.  Corporate Information

 

The financial information for the half year ended 31 December 2019 set out in this interim report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The Group's statutory financial statements for the year ended 30 June 2019 have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain statements under Sections 498(2) and 498(3) of the Companies Act 2006. The interim results are unaudited. Northamber Plc is a public limited company incorporated and domiciled in England and Wales. The Company's shares are publicly traded on the London Stock Exchange's AIM market.

 

2.  Basis of preparation

 

These interim consolidated financial statements are for the six months ended 31 December 2019. They have been prepared in accordance with IAS34 Interim Financial Reporting. They do not include all the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 30 June 2019.

 

These interim consolidated financial statements have been prepared under the historical cost convention.

 

These interim consolidated financial statements (the interim financial statements) have been prepared in accordance with accounting policies adopted in the last annual financial statements for the year to 30 June 2019 except for the adoption of IAS1 Presentation of Financial Statements (Revised 2007).

 

The adoption of IAS1 (Revised 2007) does not affect the financial position or profits of the Group, but gives rise to additional disclosures. The measurement and recognition of the Group's assets, liabilities, income and expenses is unchanged. A separate 'Statement of changes in equity' is now presented.

 

The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these interim consolidated financial statements.

 

3.  Basis of Consolidation

 

For the periods covered in these interim consolidated financial statements all trading has been carried out by the parent company alone. The Group includes some non-trading dormant subsidiaries.  All the assets and liabilities of all subsidiaries have been included in the statements of financial position.

 

4.  Segmental Reporting

 

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 period. 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

6 months to December 2019

 

 

 

 

 

Total Segment revenue

26,172

 

101

 

  26,273

 

 

 

 

 

 

Year to 30 June 2019

 

 

 

 

 

Total Segment revenue

49,655

 

674

 

50,329

 

One customer accounted for more than 10% of the Group's revenue for the period, being £3.27million.

 

5.  Taxation

 

The interim period tax charge is accrued on the estimated average annual effective tax rate of 19%.

 

6.  Earnings per Share

 

The calculation of earnings per share is based on the Profit after tax for the six months to  31 December 2019 of £8,343,000 (2018: loss £353,000) and a weighted average of 27,356,586 (2018: 27,639,779) ordinary shares in issue.

 

7.  Property, Plant and Equipment

 

The Group sold its freehold distribution centre on 8 July 2019 and purchased a new warehouse property on 12 December 2019.

 

8.  Risks and Uncertainties

 

The principal risks and uncertainties affecting the business activities of the Group are detailed in the strategic report which can be found on pages 7 to 11 of the Annual Report and Accounts for the year ended 30 June 2019 (the Annual Report). A copy of the Annual Report is available on the Company's web site at www.northamber.com.

 

The risks affecting the business remain the same as in the Annual Report. In summary these include:-

 

Market risk particularly those relating to the suppliers of products to the Group

 

Financial risks including exchange rate risk, liquidity risk, interest rate risk and credit risk

 

In the opinion of the Directors, these will remain the principal risks for the remainder of the year, however, the Directors have reviewed the Company's risk analysis and are of the opinion that steps have been taken to minimise the potential impact of such risks.

 

9.  Related Party Transactions

 

Mr D M Phillips (Deceased) is the ultimate controlling party of the Company.

 

During the six months period, the Company paid £12,925 (2018: £235,500) rent to Anitass Limited, a wholly owned subsidiary. At 31 December 2019 Northamber plc owed Anitass Ltd £4,510,000 (2018: £3,793,000).

 

10.  Directors' Confirmation

 

The Directors confirm that to the best of their knowledge these condensed consolidated half year financial statements have been prepared in accordance with IAS 34 and that the interim management report herein includes a fair review of the information required by DTR 4.2.7R, an indication of important events during the first 6 months and descriptions of principal risks and uncertainties for the remaining six months of the year, and DTR 4.2.8R the disclosure of related party transactions and changes therein.

 


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