Northamber PLC Final Results (8343G)

TIDMNAR

RNS Number : 8343G

Northamber PLC

18 November 2022

18 November 2022

Northamber PLC

(the "Company" or the "Group")

Preliminary Results for the year ended 30 June 2022

Chairman's Statement

Results

We are pleased to share that we have continued to grow revenue year on year by 10.4% from GBP60.01m to GBP66.26m whilst maintaining gross margins at 12.8% (13.0% prior year) despite challenging and very dynamic market conditions. This served to generate a continued increase in gross margins of GBP0.66m year on year to GBP8.47m and reflected our continued focus on evolving our product mix towards higher margin, more technical products through Northamber and AVM. The trend of this growth can be better seen when comparing results to even the year prior to that (June 2020) which had revenue of GBP52.8m and Gross Margins were GBP5.48m, albeit AVM was acquired early in the second half of that year.

Despite pleasing sales and gross margin growth for the year, performance in some of our focus areas remained impacted by the gradual recovery from Covid with continuing uncertainty for resuming events and large venue installations, as well as market disruptions from rapid changes in Sterling, particularly against the US Dollar. We remain optimistic and confident in these focus areas and believe that we can deliver significant long term value and growth in these segments for our partners and shareholders.

Distribution costs increased significantly from GBP4.59m to GBP5.56m as we continued to invest in developing the team for our significant growth ambitions. We were also affected by significant increases year on year on carriage costs (our biggest non-payroll cost).

The fall in the value of Sterling translated into a swing from a foreign exchange profit of GBP223k in 2021 to a loss of GBP164k in 2022, which was the main driver in increased administration costs from GBP2.84m to GBP3.36m.

It is frustrating that factors over which we have no control have led to increases in distribution and administration costs, which have outweighed the margin growth. The impact of carriage costs and a weaker Sterling, totalling approximately GBP0.30m, resulted in a reduction of EBITDA year on year to a loss of GBP75k and an operating loss for the year of GBP0.45m versus a profit of GBP0.38m last year.

We feel strongly, however, that to drive significant long term profitable growth it is important that we continue to invest for the future , albeit these investments are measured against the ability to generate value.

Financial position

We made a deliberate decision to profitably support our partners by maintaining sufficient stock in country during the uncertainty of chip shortages together with continued impact on supply chains of Brexit, the war in Ukraine and COVID. As a consequence, stock levels increased from GBP8.5 million in 2021 to GBP10.6 million at 30 June 2022. This investment in inventory meant that cash reserves fell from GBP7.45m at 30 June 2021 to GBP4.70m. With Fixed Assets at book value at GBP6.92m, including three unencumbered freehold properties, the Group's overall financial position is very sound. Net Assets at 89.8p per share are considerably in excess of the average price of the ordinary shares throughout the period.

Since the end of the financial year, the Board took the decision to relocate AVM into existing premises and to sell the freehold office where they are based. The Company has exchanged contracts for the sale of the office and completion is scheduled to occur on 28 November 2022. The consideration will be GBP1.48m, before costs, payable in cash, against a net book value of GBP1.43m. The net proceeds will be added to our cash reserves.

Board changes

In July 2022, Peter Dosanjh joined the Board as a director. Peter has over 25 years' experience within B2B AV and IT hardware resellers alongside AV distribution.

Geoff Walters is to stand down as a non-executive director with effect from 31 December 2022 and will not stand for re-election at this year's AGM. Geoff joined the Board in February 2016 and the Board is grateful for his contribution during this period and we wish him well for the future.

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 GBP81,695. The dividend will be paid on 18 January 2023 to shareholders on the register as at 16 December 2022.

Staff

Our staff remain a key asset for the business and an area we continue to invest in. The team has continued to work hard to support our partners and each other. Our plans remain to continue to invest in our evolving business model by continuing to invest in building out the best team in the market to achieve our business evolution.

Outlook

In keeping with prior outlooks that we shared, we remain cautiously optimistic that the investments we have made in supporting our partners will allow us to continue to drive growth of strategic business units. We have yet to fully benefit from these investments, given the ongoing impact of COVID, forex movements and supply chain issues which together with wider economic uncertainty due to rising interest rates, inflation and subsequent cost of living impacts, necessarily mean we must remain cautious about the near term . We do feel strongly, however, that our continued focus on strategic higher margin value categories provides a solid road map for the future with profitable growth opportunities and the ability to unlock long term value for shareholders. The strength of our balance sheet allows us to continue to do what is best for the business strategically and we continue to review organic and non-organic opportunities for growth which meet our strict criteria and add value for our shareholders.

C.M. Thompson

Chairman

18 November 2022

Contacts:

 
 Northamber PLC            Tel: [phone]          [e-mail] 
   Colin Thompson, Chairman 
 
 Singer Capital Markets (Nominated Adviser and Sole Broker)   Tel: [phone] 
 Philip Davies 
  Alex Bond 
 
 
 
           CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 
 
 For the year ended 30 June 2022 
 
 
 
  CONSOLIDATED STATEMENT OF FINANCIAL POSITION 
 
 At 30 June 2022 
                                                  2022         2021 
                                                 GBP'000      GBP'000 
 
 Non current assets 
 Property, plant and equipment                     6,919        7,079 
 Goodwill and intangible assets                    1,309        1,365 
                                             -----------  ----------- 
                                                   8,228        8,444 
                                             -----------  ----------- 
 Current assets 
 Inventories                                      10,649        8,468 
 Trade and other receivables                      11,245       10,753 
 Cash and cash equivalents                         4,696        7,449 
                                                  26,590       26,670 
                                             -----------  ----------- 
 
 
 
 Total assets                                     34,818       35,114 
                                             ===========  =========== 
 
 
 Current liabilities 
 Trade and other payables                       (10,329)      (9,866) 
 Corporation tax payable                            (38)        (159) 
                                             -----------  ----------- 
 
 Total liabilities                              (10,367)     (10,025) 
                                             -----------  ----------- 
 
 Net assets                                       24,451       25,089 
                                             ===========  =========== 
 
 
 Equity 
 Share capital                                       272          272 
 Share premium account                             5,734        5,734 
 Capital redemption reserve                        1,514        1,514 
 Retained earnings                                16,931       17,569 
                                             -----------  ----------- 
 
 Equity shareholders' funds attributable 
  to the owners of the parent                     24,451       25,089 
                                             ===========  =========== 
 
 
 
 
 
  CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 
 
 At 30 June 2022 
                   Share Capital   Share Premium      Capital      Retained Earnings   Total Equity 
                                      Account       Redemption 
                                                      Reserve 
                      GBP'000         GBP'000         GBP'000           GBP'000          GBP'000 
 
 Balance at 1 
  July 2020                  272       5,734           1,514            17,395            24,915 
 
 
 Dividends                     -         -               -               (163)            (163) 
 
 Transactions 
  with owners                  -               -         -               (163)            (163) 
 
 Loss and total 
  comprehensive 
  income for the 
  year                         -               -         -                337              337 
 
 Balance at 30 
  June 2021                  272       5,734           1,514            17,569            25,089 
 
 Dividends                     -               -         -               (191)            (191) 
 
 Transactions 
  with owners                  -               -         -               (191)            (191) 
 
 Profit and 
  total 
  comprehensive 
  income for the 
  year                         -               -         -               (447)            (447) 
 
 
 Balance at 30 
  June 2022                  272       5,734           1,514            16,931            24,451 
                  ==============  ==============  ==============  ==================  ============= 
 
 
 
 CONSOLIDATED STATEMENT OF CASH FLOWS 
 
 For the year ended 30 June 2022 

                                                            2022              2021 
                                                          GBP'000           GBP'000 
 
 Cash flows from operating activities 
 Operating profit from continuing operations                    (452)             377 
 Depreciation of property, plant and equipment                    336             350 
 Amortisation of intangible assets                                 56              56 
 Profit on disposal of property, plant 
  and equipment                                                  (15)            (13) 
                                                   ------------------  -------------- 
 Operating Profit/ (loss) before changes 
  in working capital                                             (75)             770 
 
 (Increase) in inventories                                    (2,181)         (2,520) 
 (Increase)/decrease in trade 
  and other receivables                                         (492)         (3,003) 
  Increase/(decrease) in trade 
   and other payables                                             463           2,923 
 
 Cash used in operations                                      (2,285)         (1,830) 
 
 Income taxes paid                                              (120)         (1,302) 
 
 Net cash used in operating activities                        (2,405)         (3,132) 
                                                   ------------------  -------------- 
 
 Cash flows from investing activities 
 Interest received                                                  5               8 
 Proceeds from disposal of property                                60              17 
 Purchase of property, plant and 
  equipment                                                     (222)           (249) 
  Purchase of AVM Limited                                           -               - 
 Net cash (used in)/generated 
  from investing activities                                     (157)           (224) 
 
 Cash flows from financing activities 
 Dividends paid to equity shareholders                          (191)           (163) 
 Interest paid                                                      -               - 
 Purchase of cancellation of shares                                 -               - 
 
 Net cash used in financing activities                          (191)           (163) 
                                                   ------------------  -------------- 
 
 
 Net (decrease)/increase in cash 
  and cash equivalents                                        (2,753)         (3,519) 
 Cash and cash equivalents at 
  beginning of year                                          7,449             10,968 
 
 
 Cash and cash equivalents at 
  end of year                                                   4,696           7,449 
                                                   ------------------  -------------- 
 
 
 
 

Notes

1. Financial information

This financial information is consistent with the consolidated financial statements of the group for the year ended 30 June 2022. The group's consolidated financial statements have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006.

The financial information set out above does not constitute the group's statutory accounts for the years ended 30 June 2021 or 30 June 2022 but is derived from those accounts. The statutory accounts for the year ended 30 June 2021 have been delivered to the Registrar of Companies and those for 2022 will be delivered following the group's annual general meeting. The auditor's report on the 2022 accounts will be unqualified, will not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their reports, and will 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. Revenue

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

 
 Revenues comprise:            2022       2021 
                             GBP'000    GBP'000 
 Revenue from contracts 
  with 
  customers - UK               65,602     59,137 
                 -other          658         872 
                            ---------  --------- 
                              66,260     60,009 
                            ---------  --------- 
 

No customer accounted for more than 10% of the group's revenue for the year.

3. Profit per ordinary share

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

 
                                                   2022         2021 
                                                  GBP'000      GBP'000 
 
 (Loss)/Profit for the year attributable 
 to equity holders of the parent company            (447)          337 
                                              ===========  =========== 
 
 
                                                2022         2021 
 Number of shares                             Number       Number 
 
   Weighted average number of ordinary 
   shares for the purpose of basic and 
   diluted earnings per share               27,231,586   27,231,586 
                                           ===========  =========== 
 

4. Dividends

A final dividend of 0.3p per share will be paid on 18 January 2023 to those members on the register at close of business on 16 December 2022.

5. Notice of meeting

The annual report and accounts for the year ended 30 June 2022 will be posted to shareholders in due course and the Annual General Meeting will be held on 21 December 2022.

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

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November 18, 2022 02:00 ET (07:00 GMT)