Northamber PLC Final Results (6769N)

TIDMNAR

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 GBP4.8 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 GBP3.6 million to a total of GBP61.8 million compared with GBP65.4 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 GBP1.29 million, disguises an annual gross profit improvement of GBP218,000. The increase in reported loss of GBP360,000 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 GBP578,000 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 GBP5.4 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 GBP28,159 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 
                                   GBP'000      GBP'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 
                                       GBP'000      GBP'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      Share      Capital       Retained    Total 
                                  Capital    Premium    Redemption    Earnings    Equity 
                                             Account    Reserve 
                                 GBP'000    GBP'000    GBP'000       GBP'000     GBP'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 
                                          GBP'000      GBP'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 
 
                                 GBP'000          GBP'000          GBP'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 GBP8.6m.

3. Loss per ordinary share

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

 
                                          2016         2015 
                                          GBP'000      GBP'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.

This information is provided by RNS

The company news service from the London Stock Exchange

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October 28, 2016 02:00 ET (06:00 GMT)