Half-year Report

RNS Number : 5397A

Northamber PLC

27 March 2017

 

Northamber PLC

("Northamber" or the "Company")

Interim Report for the Six months to 31 December 2016

Chairman's Statement

Results

After the tentative and optimistic comments in my last report to you in October last year, it is a little disappointing to report a timing mismatch in progress, albeit there are some positive factors for the half year to 31 December 2016.  There was an intended reduction in turnover from re-aligning activities, particularly away from lower margin business, with turnover at £29.0 million against £32.5 million for the comparative period in the previous year. 

This strategy resulted in an improvement in the gross profit for the period of £2.247 million (2015: £2.242 million), an 11.5% increase in margin, from 6.9% a year ago to 7.7% this year; in sector terms, this is a considerable improvement.  This achievement has been somewhat offset by the longer than anticipated time frame needed to reduce identified overheads.

Commercial trading pressures on values affected too many of the volume product ranges dealt with by the company.  To offset this, we have been progressively expanding another better margin product support service offering to our customers. This service has proven to be popular and revenues have nearly doubled over the comparative period last year and continue to grow.  This offering complements our other activities, particularly as it is a low cost operation and provides a very useful net income stream, albeit the gross margin opportunities are not as rewarding as with the more technical "software" products.

Our core business of major brand product distribution continued at more or less the same proportion of our business, as in the comparative period last year.  Sales in some areas fell below acceptable levels compared to previous periods and we continue to keep this under careful review.

The trend, previously referred to of moving from hardware type products to the "softer" type such as Security and Protection devices, has continued apace.  Although slower than hoped, this has underpinned the improvement in our gross margins referred to above and has gone some way to offsetting the reduction in sales volumes.

Interest income with the almost non existent interest rates provided only £23,000 compared with £27,000 last year.  Accordingly, the net result was a loss of £539,000 compared with a loss of £547,000 for the period to December 2015.

Balance Sheet

Net Cash of £4.3 million at the end of December 2016 was £0.55 million higher than at the same time in the previous year, although whilst £1 million lower than at the year end.  Cash regularly fluctuates during the year, whilst critical controls over the stock, debtor and creditor ratios were maintained within acceptable limits during the year.

With the unencumbered property assets the Company remains in its usual very strong financial position.  The losses sustained in recent periods have inevitably impacted the net assets per share, which at 31 December 2016 stood at 66 pence per share (2015: 70.7pence per share).

Dividend

As always, your board gives careful consideration to the subject of dividends with regard to the strength of our debt free, tangible asset strong balance sheet and the performance and trends of our continuing and newly introduced business.

Your Board is proposing the interim dividend be 0.1p, at a total cost of only £28,159.  The dividend will be paid on 12 May 2017 to shareholders on the register as at 18 April 2017.

Staff

The staff continues to deal with the problems of the industry with remarkable resilience and for that we are grateful.

Board

As I am now in my 73^rd year and blessed with some of those unwanted encumbrances of age, it is clearly time for me to take a non-executive role.  Happily, the support of an established and strong operations board makes this viable, in conjunction with the active search for a strong finance director, which we have commenced.

Outlook

We are striving to return the Company to profitability, but the sector obstacles are severe, as evidenced by further recent consolidations at the topmost levels.  Progress is being made in certain areas, only for such gains then being dissipated by matters beyond our control.  Nevertheless in those areas where we are making significant progress, we have hopes that this can be accelerated and at the same time the problem areas reduced.  As previously cautioned, to reach positive returns may take some patience.

D.M. Phillips

Chairman

27 March 2017

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
6 months to 31 December 2016
			6 months		6 months	Year
			Ended		ended	ended
			31.12.16		31.12.15	30.06.16
			£'000		£'000	£'000
			Unaudited		Unaudited	Audited
	Revenue		29,003		32,522	61,844
	Cost of sales		(26,756)		(30,280)	(57,025)
	Gross Profit		2,247		2,242	4,819
	Distribution cost		(1,575)		(1,446)	(3,310)
	Administrative expenses		(1,234)		(1,370)	(2,801)
	(Loss) from operations		(562)		(574)	(1,292)
	Investment revenue		23		27	59
	(Loss) before tax		(539)		(547)	(1,233)
	Tax credit/(charge)		-		-	-
	Loss and total comprehensive income
	for the period		(539)		(547)	(1,233)
	Basic and diluted (loss) per ordinary share		(1.91)p		(1.94)p	(4.38)p

Consolidated Statement of Financial Position
As at 31 December 2016
				As at	As at	As at
				31.12.16	31.12.15	30.06.16
				£'000	£'000	£'000
				Unaudited	Unaudited	Audited
	Non current assets
	Property, plant and equipment			7,914	8,012	7,995
	Current assets
	Inventories			5,028	4,588	5,006
	Trade and other receivables			9,488	14,393	8,459
	Cash and cash equivalents			4,357	3,805	5,466
				18,873	22,786	18,931
	Total assets			26,787	30,798	26,926
	Current liabilities
	Trade and other payables			(8,205)	(10,878)	(7,805)
	Total liabilities			(8,205)	(10,878)	(7,805)
	Net assets			18,582	19,920	19,121
	Equity
	Share capital			281	281	281
	Share premium account			5,734	5,734	5,734
	Capital redemption reserve fund			1,505	1,505	1,505
	Retained earnings			11,062	12,400	11,601
	Equity shareholders' fund			18,582	19,920	19,121

Company Statement of Financial Position
As at 31 December 2016
			As at	As at	As at
			31.12.16	31.12.15	30.06.16
			£'000	£'000	£'000
			Unaudited	Unaudited	Audited
	Non current assets
	Property, plant and equipment		1,769	1,823	1,810
	Investments		6,588	6,588	6,588
			8,357	8,411	8,398
	Current assets
	Inventories		5,028	4,588	5,006
	Trade and other receivables		9,487	14,392	8,458
	Cash and cash equivalents		4,316	3,796	5,426
			18,831	22,776	18,890
	Total assets		27,188	31,187	27,288
	Current liabilities
	Trade and other payables		(10,850)	(12,957)	(10,149)
	Total liabilities		(10,850)	(12,957)	(10,149)
	Net assets		16,338	18,230	17,139
	Equity
	Share capital		281	281	281
	Share premium account		5,734	5,734	5,734
	Capital redemption reserve fund		1,505	1,505	1,505
	Retained earnings		8,818	10,710	9,619
	Equity shareholders' fund		16,338	18,230	17,139

Consolidated Statement of Changes in Equity
As at 31 December 2016
		Share capital	Share premium account	Capital redemption reserve	Retained earnings	Total Equity
		£'000	£'000	£'000	£'000	£'000
	Period to 31 December 2015
	Unaudited
	Balance at 1 July 2015	281	5,734	1,505	12,947	20,467
	Dividends	-	-	-	-	-
	Loss and total comprehensive
	loss for the period	-	-	-	(547)	(547)
	Balance at 31 December  2015	281	5,734	1,505	12,400	19,920
	Period to 31 December 2016
	Unaudited
	Balance at 1 July 2016	281	5,734	1,505	11,601	19,121
	Dividends	-	-	-	-	-
	Loss and total comprehensive	-	-	-	(539)	(539)
	loss for the period
	Balance at 31 December  2016	281	5,734	1,505	11,062	18,582
	Year to 30 June 2016
	Audited
	Balance at 1 July 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 period	-	-	-	(1,233)	(1,233)
	Balance at 30 June 2016	281	5,734	1,505	11,601	19,121

Company Statement of Changes in Equity
As at 31 December 2016
		Share capital	Share premium account	Capital redemption reserve	Retained earnings	Total Equity
		£'000	£'000	£'000	£'000	£'000
	Period to 31 December 2015
	Unaudited
	Balance at 1 July 2015	281	5,734	1,505	11,490	19,010
	Dividends	-	-	-	-	-
	Loss and total comprehensive
	loss for the period	-	-	-	(780)	(780)
	Balance at 31 December  2015	281	5,734	1,505	10,710	18,230
	Period to 31 December 2016
	Unaudited
	Balance at 1 July 2016	281	5,734	1,505	9,619	17,139
	Dividends	-	-	-	-	-
	Loss and total comprehensive
	loss for the period	-	-	-	(801)	(801)
	Balance at 31 December  2016	281	5,734	1,505	8,818	16,338
	Year to 30 June 2016
	Audited
	Balance at 1 July 2015	281	5,734	1,505	11,490	19,010
	Dividends	-	-	-	(113)	(113)
	Transactions with owners	-	-	-	(113)	(113)
	Loss and total comprehensive
	loss for the period	-	-	-	(1,758)	(1,758)
	Balance at 30 June 2016	281	5,734	1,505	9,619	17,139

Consolidated Statement of Cash Flows
6 months to 31 December 2016
			6 months	6 months	Year
			ended	ended	Ended
			31.12.16	31.12.15	30.06.16
			£'000	£'000	£'000
			Unaudited	Unaudited	Audited
	Cash from operating activities
	Operating (loss) from
	continuing operations		(562)	(574)	(1,292)
	Depreciation of property, plant
	and equipment		83	114	167
	(Profit)/loss on disposal of property,		(4)
	plant and equipment				-
	Operating (loss) before changes in
	working capital		(483)	(460)	(1,125)
	(Increase)/decrease in inventories		(22)	(69)	(487)
	(Increase)/decrease  in trade and
	other receivables		(1,029)	(4,214)	1,716
	Increase/(decrease)  in trade and
	other payables		400	3,080	7
	Cash (used)/generated from operations		(1,134)	(1,663)	111
	Income taxes received/(paid)				-
	Net cash from operating activities		(1,134)	(1,663)	111
	Cash flows from investing activities
	Interest received		23	27	59
	Proceeds from disposal of property,
	plant and equipment		4		-
	Purchase of property, plant and
	Equipment		(2)		(32)
	Net cash from investing activities		25	27	27
	Cash flows from financing activities
	Dividends paid to equity shareholders		-	-	(113)
	Net cash used in financing activities		-	-	(113)
	Net (decrease)/increase in cash and
	cash equivalents		(1,109)	(1,636)	25
	Cash and cash equivalents at
	beginning of period		5,466	5,441	5,441
	Cash and cash equivalents at end of period		4,357	3,805	5,466

Company Statement of Cash Flows
6 months to 31 December 2016
			6 months	6 months	Year
			Ended	ended	Ended
			31.12.16	31.12.15	30.06.16
			£'000	£'000	£'000
			Unaudited	Unaudited	Audited
	Cash from operating activities
	Operating (loss) from
	continuing operations		(824)	(808)	(1,817)
	Depreciation of property, plant
	and equipment		45	51	95
	(Profit)/loss on disposal of property,
	plant and equipment		(4)		-
	Operating (loss) before changes in
	working capital		(783)	(757)	(1,722)
	(Increase)/decrease in inventories		(22)	(69)	(487)
	(Increase)/decrease in trade and
	other receivables		(1,029)	(4,217)	1,717
	Increase/(decrease)  in trade and
	other payables		699	3,388	580
	Cash (used)/generated from operations		(1,135)	(1,655)	88
	Income taxes received/(paid)				-
	Net cash from operating activities		(1,135)	(1,655)	88
	Cash flows from investing activities
	Interest received		23	27	59
	Proceeds from disposal of property,
	plant and equipment		4		-
	Purchase of property, plant and
	Equipment		(2)		(32)
	Net cash from investing activities		25	27	27
	Cash flows from financing activities
	Dividends paid to equity shareholders		-	-	(113)
	Net cash used in financing activities				(113)
	Net (decrease)/increase in cash and
	cash equivalents		(1,110)	(1,628)	2
	Cash and cash equivalents at
	beginning of period		5,426	5,424	5,424
	Cash and cash equivalents at end of period		4,316	3,796	5,426

Notes to the financial statements

1.            Corporate Information

The financial information for the half year ended 31 December 2016 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 2016 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 2016. 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 2016.

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 2016 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 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
	£'000		£'000		£'000
6 months to December 2016
Total Segment revenue	28,818		185		29,003
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 period, being £4.4m.

5.            Taxation

No tax charge has been provided in the interim consolidated financial statements due to the losses accumulated both in prior years and in the current period.

6.            Earnings per Share

The calculation of earnings per share is based on the loss after tax for the six months to 31 December 2016 of £539,000 (2015: loss £547,000) and a weighted average of 28,158,735 (2015: 28,158,735) ordinary shares in issue.

7.            Property, Plant and Equipment

There were no significant additions to or disposals of property, plant or equipment in the period to 31 December 2016.  The reduction in the total value of property, plant and equipment was primarily due to the depreciation charge for the year.

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 2016 (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 is the ultimate controlling party of the Company.

During the six months period, the company paid £300,500 (2015: £300,500) rent to Anitass Limited, a wholly owned subsidiary. At 31December2016 Northamber plc owed Anitass Ltd £2,676,000(2015:£2,100,000).

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.

 

END

 

 

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