Final Results

RNS Number : 0794N

Northamber PLC

26 August 2011

 



Northamber plc

Preliminary Results for the year ended 30 June 2011

Chairman's Statement

Results

The £7.4 million (5.8%)  reduction in full year sales to £121.1 million (2010 £128.5 million) serves to further confirm the very widely reported decline both in volume product sales in this sector since last January and with that the extreme price erosion driven by the resultant supply/demand excesses.

The pre-tax profit reported at our interim was reversed into what is our first reported full year pre-tax loss for 18 years of (£106,000) compared with last year's £258,000 pre-tax.  The early guidance enabled by our position in the overall supply chain, enabled a degree of foresight and with that actions to minimise the exposures.

The Interim Statement shared our concern with the potential impact of the downturn on the UK economy and its effects on our industry in particular.  Unhappily those concerns have been realised.   Others in our overall sector have already reported year-on-year falls in computer hardware sales of between 17% to 23%.  Our own sales activities in our fourth and final quarter could not withstand the downward pressures and were some 10% lower than the previous quarter, during which we had achieved a small like-for-like increase in turnover.

We have consistently maintained our declared commercial stance that we shall avoid "Empty Revenue" despite the price erosion which has been endemic in the sector. With the exception of some selected overhead dilutive actions, we have been able to maintain our gross margins and for the year they increased by 0.15 percent from 6.69% to 6.84%.  On reduced sales, the resulting Gross Profit was £8.3 million compared with the £8.6 million in the previous year. A reduction of some £300,000.

The result was then exacerbated by inflationary cost pressures and increases of £243,000, the largest element relating to increased carriage and fuel costs. Areas within our control achieved a reduction and our administration costs were down by £189,000 again reflecting our tight control on costs.

The continuing low level of interest rates achievable on cash deposits failed to assist and resulted in our investment revenue being practically at the same level as last year at £140,000 compared with £142,000.

Our evolving business model is always under either review or levels of re-invention and has served us well and largely continues to do so. However with the very high levels of uncertainty which now pervades the whole economy both nationally and internationally, your Board considers it prudent to carry out a thorough and ongoing strategic review of the business.

Balance sheet

To reassure shareholders in the current overall uncertainty, our balance sheet remains strong and liquid.  The fixed assets are represented by quality freehold property to the extent of 94% and current assets of £22.1 million are liquid with a stock turnover of 9.9 times (compared with 11.6 times last year), debtor days at 38 days (2010: 35 days) and creditor days at 40 days (2010: 41 days).

After cash outflows which included £192,000 spent on repurchasing 318,100 of our own shares and the cost of dividends at £578,000; the cash balances at 30 June 2011 were £10.7 million compared with £14.0 million at 30 June 2010, a reduction of £3.3 million in the year.  £2.5 million of this was in increased working capital, which reflects current trading and by nature fluctuates from month to month. With a net current assets ratio of 2.4, which has been reasonably consistently maintained over the last few years, liquidity is sound.

The tax credit for the year arises from a claim for loss relief against the taxable profit of the previous year, thus partly alleviating the earnings per share which showed a loss for the year of 0.34p per share compared with a profit of 0.58p per share for 2009/10.

The Net Assets at 30 June 2011 were 86.5p per share (2010: 88.5p).

Dividend

Dividend policy against a pre-tax loss, albeit a not material 0.09% of sales, is a conundrum for your Board against our very strong but underperforming cash assets.  Having sought over recent years to re-grow the return to our patient investors, it is now proposed to pay a necessarily reduced final dividend of 1.00p making a total of 1.60p for the year (2010: 2.0p).

Staff

I cannot give adequate thanks for the efforts of our staff against the current difficulties being experienced at almost every level within the economy.  They have coped with the problems they have encountered magnificently.

Outlook

With daily headlines reminding or declaring new found levels of economic uncertainty, it would be far too courageous to provide any guidance.

Market events and our experience during this last year lead to the simple conclusion that it would not be sensible to offer any optimism for the near to medium future. As above, we are undertaking a great deal of work to once again re-focus or re-invent parts of our business model.  In the meantime we will continue, as we always have done, to be vigilant, cautious and ever mindful of optimising our opportunities whilst keeping close control of our operations and costs.

D. M. Phillips

Chairman

26 August 2011

For further information, contact:

Northamber Plc                                    David Phillips                                                 020 8296 7000

Fox-Davies Capital                               Simon Leather/ Jonathan Evans             020 3463 5010

STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2011
	2011		2010
	£'000		£'000
Revenue	121,083		128,481
Cost of Sales	(112,795)		(119,885)
Gross Profit	8,288		8,596
Distribution cost	(4,720)		(4,477)
Administrative expenses	(3,814)		(4,003)
(Loss)/Profit from operations	(246)		116
Investment revenue	140		142
(Loss)/Profit before tax	(106)		258
Tax credit/(charge)	7		(88)
(Loss)/Profit for the year from operations	(99)		170
Total basic and diluted (loss)/earnings per ordinary share	(0.34)p		0.58p

STATEMENT OF FINANCIAL POSITION
At 30 June 2011
		2011		2010
		£'000		£'000
Non current assets
Property, plant and equipment		2,527		2,695
Current assets
Inventories		11,415		10,322
Trade and other receivables		16,670		15,679
Cash and cash equivalents		10,701		14,013
Tax assets		80		-
		38,866		40,014
Total assets		41,393		42,709
Current liabilities
Trade and other payables		(16,603)		(17,040)
Tax liabilities		-		(18)
		(16,603)		(17,058)
Non current liabilities
Deferred tax liabilities		(45)		(37)
Total liabilities		(16,648)		(17,095)
Net assets		24,745		25,614
Equity
Share capital		286		289
Share premium account		5,734		5,734
Capital redemption reserve		1,500		1,497
Retained earnings		17,225		18,094
Equity shareholders' funds		24,745		25,614

STATEMENT OF CASH FLOWS
For the year ended 30 June 2011
	2011		2010
	£'000		£'000
Cash inflow from operating activities
Operating (loss)/profit from continuing operations	(246)		116
Depreciation of property, plant and equipment	247		283
(Profit)/loss on disposal of property, plant and equipment	-		(2)
	1		397
(Increase) in inventories	(1,093)		(3,149)
(Increase)/decrease in trade and other receivables	(991)		4,433
(Decrease) in trade and other payables	(437)		(1,345)
Cash (used in)/generated from operations	(2,520)		336
Income taxes paid	(83)		(74)
Net cash (used in)/from operating activities	(2,603)		262
Cash flow from investing activities
Interest received	140		142
Proceeds from disposal of property, plant and equipment	-		12
Purchase of property, plant and equipment	(79)		(21)
Net cash from investing activities	61		133
Cash flows from financing activities
Purchase of own shares for cancellation	(192)		(42)
Dividends paid to equity shareholders	(578)		(464)
Net cash used in financing activities	(770)		(506)
Net (decrease) in cash and cash equivalents	(3,312)		(111)
Cash and cash equivalents at beginning of year	14,013		14,124
Cash and cash equivalents at end of year	10,701		14,013
Cash and cash equivalents for the purpose of this statements comprise:
Cash and cash equivalents	10,701		14,013

STATEMENT OF CHANGES IN EQUITY

Statement of changes in Equity

At 30 June 2011

		Share	Capital
	Share	premium	redemption	Retained	Total
	capital	account	reserve	earnings	Equity
	£'000	£'000	£'000	£'000	£'000
Balance at 1 July 2009	290	5,734	1,496	18,430	25,950
	-------	-------	-------	-------	-------
Dividends	-	-	-	(464)	(464)
Purchase of own shares	(1)	-	1	(42)	(42)
	-------	-------	-------	-------	-------
Transactions with owners	(1)	-	1	(506)	(506)
Profit and total comprehensive
Income for the year	-	-	-	170	170
	-------	-------	-------	-------	-------
Balance at 30 June 2010	289	5,734	1,497	18,094	25,614
Balance at 1 July 2010	289	5,734	1,497	18,094	25,614
	-------	-------	-------	-------	-------
Dividends	-	-	-	(578)	(578)
Purchase of own shares	(3)	-	3	(192)	(192)
	-------	-------	-------	-------	-------
Transactions with owners	(3)	-	3	(770)	(770)
Loss and total comprehensive
Income for the year	-	-	-	(99)	(99)
	-------	-------	-------	-------	-------
Balance at 30 June 2011	286	5,734	1,500	17,225	24,745
	-------	-------	-------	-------	-------

Notes:

1.   Financial information

The financial information set out above does not constitute the group's statutory accounts for the years ended 30 June 2010 or 30 June 2011, but is derived from those accounts. The statutory accounts for the year ended 30 June 2010 have been delivered to the Registrar of Companies and those for 2011 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 company as the total business of the company is the sourcing and distribution of computer related products. 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 company as a whole. All decisions on the allocation of resources impacts on all aspects of the company.

Although the sales of the company 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	Austria	Sweden	Other	Total
Year to 30 June 2010	£'000	£'000	£'000	£'000	£'000
Total Segment revenue	105,633	8,875	4,636	9,337	128,481
Year to 30 June 2011
Total Segment revenue	102,506	2,433	7,839	8,305	121,083

No one customer accounted for 10% or more of the company's revenue for the year.

3.   Earnings per ordinary share

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

Earnings for the purpose of basic and diluted	2011	2010
earnings per share being (loss)/profit for the	£'000	£'000
year attributable to equity holders of the
parent company	(99)	170
	====	====

	2011	2010
Number of shares	Number	Number
Weighted average number of ordinary shares
for the purpose of basic earnings per share and	28,881,475	29,002,552
diluted earnings per share.	=========	=========

4.   Dividends

A final dividend of 1.0p per share will be paid on 11 January 2012 to those members on the register at close of business on 2 December 2011.

5.   Notice of meeting

The annual report accounts for the year ended 30 June 2011 will be posted to shareholders in due course and the Annual General Meeting will be held on 16 November 2011.

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

 

END

 

 

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