Northamber Share Discussion Threads

[liarspoker] 30/9/2009 19:26

Posted the following on gurufocus:

Northamber is a trade only distributor of IT equipment.

Website is: [www.northamber.com]

Like all distributors ( especially trade only ) it operates on wafer thin margins.

Net Working Capital less 34% ( for margin of safety ) = GBP 15.17m

Cash + ( inventories X .5 ) + ( Receivables X .75 ) less all liabilities = GBP 14.37m

Market cap = GBP 14m @ 48p on the offer ( currently 47p )

NTAV X 80% = GBP 20.76m

# shares in issue: 29,171,182

Cash GBP 14.124m ( no debt so this is net cash figure too )

Dividends paid: June 2009 = GBP 465,000 June 2008 = GBP 646,000

Share buybacks: June 2009 = GBP 114,000 June 2008 = GBP 3,791,000

Current Assets:

Inventory GBP 7,173
Receivables GBP 20,112
Cash GBP 14,124

Current Liabilities:

Payables GBP ( 18,385 ) ( cancelled by receivables so rest of business is essentially for free )
Tax GBP ( 40 )

Non-current Liabilities

Tax GBP ( 2 )

* No finance costs
* No capital commitments
* Land & Buildings in 2008 report = GBP 2.868m
* No bank overdraft

Depreciation 2008 = GBP 425K 2007 = 456K
Capex 2008 = GBP 134K 2009 = GBP 154K ( I don't think any is expansionary but that all is maintenance )

Staff #: 2008 = 190 ( Pay GBP 36K each ) 2009 = 203 ( Pay GBP 35K each )

Director Holdings:

Phillips 17,308,295 Age 63
Matthews 1,004,724 Age 64
Caplin 94,000 Age 57
Heath 5,000 Age 67

Note age of directors - could well be a sale/merger etc on the cards over next few years

Numbers from 2009 through to 2004

T/O 139,275 179,677 182,191 204,408 236,271 232,809 ( yes declining but it wouldn't be this cheap if t/o was increasing )

PBT 47 627 592 434 2,613 1,812

EPS 0.18p 1.36p 3.62p 0.75p 5.47p 3.67p

Div 1.6p 2.2p 2.2p 2.1p 6.0p 4.1p


Substantial holding as at Sept 2008:

Phillips 58.91%
BNY Nominees 10.77%
Quiros Ltd 3.28%
Matthews 3.42%

Salaries & Fees 2008:

Phillips GBP 134K
Matthews GBP 234K
Caplin GBP 6K
Heath GBP 10K

For y/e 30 June, 2008 Phillips waived GBP 60K of his salary ( 2007 = GBP 52K )

Summary: Obviously the company has declining performances in part due to recent economic turmoil. The upturn in economic activity should see an upturn for company activity. Cheap on assets.

Diclosure: I hold NAR shares.

Edit: Usual purchase size in blocks of 5,000 ( ie GBP 2,350 at 47p +- just under $4,000 )

[cwa1] 30/9/2009 12:31

Sorry Rainmaker, I can't tell you that this doesn't look a great deal ;-)

[rainmaker] 30/9/2009 12:29

Name any Private business Owner that would sell you their business for their cash in the Bank, approx £14.1mln and where you got their stocks of £7mln and their fixed assets of £3mln completely free of charge?Yet this is situation we have here.Essentally we are buying £1 coins for about 50 pence each.Tell me that isn't a great deal?

regards

[rainmaker] 30/9/2009 12:21

Very interesting Ron and Northamber with a very strong balance sheet are ready to take advantage when their Rivals can't(I've been told they have weak balance sheets), offering great credit terms-extended payment periods to Customers that don't have any budget left in the current financial year. Northamber's range is obviously discretionary in nature but when will their Buyers return in numbers? I won't like to predict but it will probably be a shift in sentiment rather than any specific period and I'm very confident it will be sooner rather than later.

regards

[healyron] 30/9/2009 10:24

RM

Re; "Well done if you managed to buy at 42p", I actually bought them at 39.9p, so even better. I'm holding these as medium term to offset a risky punt in GKP.

Your comment in post 33 that "pent up deferred discretionary spending will come through" is somehting I have been giving some serious thought to, not just in NAR. I'm a university researcher and I note that we should have replaced all our computer hardware this year but didn't. We'll prob have to do it next year because the lifecycle of this stuff is not infinite of course. I daresay there are thousands of companies and orgs worldwide in a similar boat, esp as a lot of this stuff is paid for with loans etc. Do you see a heavy increase in buyin in the 1Q of 2010 (in lots of discretionary areas), due to the new budget year?

Ron

[rainmaker] 27/9/2009 15:37

Well they've lost just £300k in the last year and according to my calculations are trading at break even in the last six months after some £900k of annual cost saving over last year. Northamber's large cash mountain allows them to offer both Suppliers and Customers attractive deals which their Rivals can't match because they have weak balance sheets.Sooner rather than later their market will recover and all that pent up deferred discretionary spending will come through and I expect margin pressures will ease also as Competitors worry less about market share and more about repairing their battered balance sheets.

regards

[rainmaker] 27/9/2009 15:02

LP, that's exactly how I feel


regards

[cwa1] 27/9/2009 13:15

Hi Rainmaker. Interesting comment about it not being a long drawn out affair, which is something I have concerns about. Any chance of elucidating a little further on your comments?

Thanks for any input

[liarspoker] 27/9/2009 10:50

I had a limit order in on Friday and raised it at around 3pm. I can't see any trades through so perhaps the MM's rose the price because I raised my limit order ? Order is now of the table though and I'm hoping for a retrace. If the price continues to rise that's fine cause I hold a few, if it falls that's fine because I'll add. A nice win win situation. :O)

[rainmaker] 25/9/2009 13:02

Thanks Kiwihope, Of course deflation in it's markets is a problem but at current levels you not only get a discount to it's net cash but get those 36p of stocks for nothing.I don't see a long drawn out, patience testing wait for it's stored value to be realised and I'll explain later.

regards

[rainmaker] 25/9/2009 12:54

Thanks Old Boy thanks for your post, much appreciated.I want to check a few things before replying. Of course, you're absolutely right that their balance sheet strength puts them in a strong position.

regards

[rainmaker] 25/9/2009 12:49

Ron-Well done if you managed to buy at 42p, you'll have by my calculations(I'm using the last set of figures not the latest which aren't that much different)a 38p Margin Of Safety. So Northamber could pay a 18p special dividend and the shares would still be worth a minimum of 62p aproximately 50% more.

regards

[liarspoker] 24/9/2009 19:25

The first 5K was mine. I had a limit of 41p but broker put it through at 41.9p. Will probably get a free trade or two in return for mistake. Another nice Graham stock for my net net portfolio. :O)

[healyron] 24/9/2009 16:34

Rainmaker

I picked up a handful of these on the basis of your information (and some additional reading) and I see them as long term.

Any chance you could suggest to this clueless Newbie a reason why someone (albeit apparently only 1 person) sold NAR this morning after such results, esp if you think there's a potential 2+% special dividend in the offing...?

EDIT:
Oops, clueless Newbie is right. I just saw the trades on ADVFN and there are two buys, not sells, so ignore that clanger... :-)

[kiwihope] 24/9/2009 11:00

I've been watching NAR for years. I even owned some when the price was up around £1 or so, from memory. I class it as a do-nothing share. Thinly traded, no PR to speak of. You need huge patience to hold this (I mean years ...). Also the business suffers from permanent deflation so don't expect it to recover when the economy does. OK as a VERY long term asset play but you need huge patience.

[old boy returns] 24/9/2009 09:28

Yes, very reassuring performance from NAR. If they can preserve NTAV in this economic climate then the shares look an excellent bet at current levels.

One point to bear in mind Rainmaker is that NAR's cash is growing at the moment becuase sales are falling. The reason this happens is that the working capital requirement falls as sales fall (company needs less stock and debtors are lower). However when sales start to increase again they will need more working capital and so cash will start to fall rather than continue to increase. This could be a reason form them not paying another big special dividend (we had a 10p a share special dividend not that long ago) - ie to preserve cash to leave them in a strong position to finance sales growth.

[rainmaker] 24/9/2009 09:05

Agreed, CWA. We're still trading at less net cash and the stocks are still in the price for absolutely nothing. Cash generation has been excellent-that modest final dividend is still a 2.1% though but modest in terms of their large cash balance and the long term average dividend. Once the Economy recovers, Northamber's coffers will be overflowing-quite literally.

regards

[rainmaker] 24/9/2009 08:55

Northamber's balance sheet strength means they can offer their Customers great deals to secure their business and negotiate great deals with their Suppliers. I'll dig out the relevant part from the Accounts.

regards

[cwa1] 24/9/2009 08:53

Yes R, VERY reassuring to see net cash increasing and now comfortably ahead of of entire market cap., and strongly underpinned by a net asset figure well in excess of the current share price to boot. If there had just been a hint of things improving trading wise we would have been off to the races! But that will come soon IMHO and in the meantime we are solidly underpinned by cold, hard, cash alongside a modest dividend. I'm sure patience will be well rewarded here.

[rainmaker] 24/9/2009 08:43

Results released today and under the difficult trading conditions,excellent. Northamber have forced down costs and concentrated on cash generation.Losses are neglible and their cash balance has now grown to £14.1mln which now exceeds the current share price. Just think what the Company will do when the economy recovers and IMHO a very good chance of a special dividend for shareholders. Nevertheless the Company are paying a 1p final dividend-at the current offer price of 47p that's a 2.1% dividend just for buying the shares now.



Chairman's Statement


Results


Revenue for the year to 30th June 2009 reflected the severe recession in our
core commercial-user marketplace together with some resultant price erosion. As predicted in my 3rd quarter statement, revenue continued to decline with
GBP139.3 million for the year, some 22% less than the GBP179.7 million for the
previous year. Such hazardous trading conditions did not assist sales when we
necessarily sought lower stock and debtor exposures.


At the pre-tax level, profit of GBP47,000 represents a significant recovery over the GBP304,000 pre-tax interim loss reported last 19th February for the half year. (30th June 2008: GBP627,000).


Net Assets per Share at 89.4p only fell a marginal 0.7p from the 90.1p per share at June 2008. This result is after GBP465,000 of dividends and GBP114,000 spent re-purchasing shares for cancellation. The Net Asset Value of GBP25.95 million compared with the GBP26.48 million last year whilst Net Cash improved by GBP816,000 to GBP14.1 million against the GBP13.3million for the prior year.


Overheads were yet again the focus and lower than those for the previous year.
Distribution Costs were reduced by GBP1.36 million (21.7%); Administration Costs were reduced by GBP745,000 (13.4%), a total reduction of GBP2.1 million.
However, even such significant cost savings fell short of satisfying the
reduction in Gross Profit. This resulted in an Operating Loss of GBP320,000
compared with the Operating Profit of GBP25,000 in the previous year.


Nonetheless, in the exceedingly difficult conditions, I have to consider this
result creditable, and thank all members of the company for their efforts and
contribution

[rainmaker] 24/9/2009 01:46

Rainmaker - 24 Sep'09 - 01:43 - 67 of 68 edit


NORTHAMBER PLC, Interim results released 19/2/09 for the six months ended 31 December 2009.

Balance Sheet

Fixed Assets
£3,101

Current Assets
£40.724

Current Liabilities
£17.657

Long Term Liabilities
£48CR

Total Liabilities
£17.705

Net Assets
£26.12


Current Assets consist of the following-
Inventories
£11.488
Debtors and other receivables
£18.680
Cash and Cash Equivalents
£10.556

Anyone care to tell me the following-

a)Net Asset Value?

b)Net Working Capital?

regards

[rainmaker] 22/9/2009 12:50

Hi Inga,well done, results out on thursday.If you are lucky you may get an opportunity to top up in the low to mid thirties- if you could buy at 35p that would be a 22% discount to Northamber's net cash+36p of stocks for nothing.

regards

[inga66] 22/9/2009 09:24

Hi RM

Thank you for the information on this share. I have bought a small holding at 44.90p today.

With best wishes

ps i am finding your newbie thread very interesting

[balcony] 22/9/2009 09:19

Yes large trades for NAR

[cwa1] 22/9/2009 08:57

Interesting to see these three, relatively!, big trades for 85000 in total. Sales by the looks of things, perhaps they had been overhanging the market? Grabbed a few more first thing this morning that aren't showing yet......