Half-year Report

RNS Number : 8734O

Northamber PLC

12 February 2021

 

Northamber PLC

("Northamber" or the "Company" or the "Group")

Interim Report for the Six months to 31 December 2020

Chairman's Statement

Results

We are very pleased to be able to report an operating profit driven by year-on-year gross margin growth and year-on-year revenue growth for the last 6 months despite challenging market conditions.

Our early decision to stay true to our values and prioritise our team and partners by avoiding any furlough or COVID related cuts, evolved during the period and we invested further in growing our teams, all of which has proven fruitful. Revenues increased 13% in the first half from £26.3 million to £29.6 million for the comparative period last year. More significantly, this revenue growth was combined with a significant increase in Gross Margin from 8.8% to 12.8%; the cumulative effect of both was to increase Gross Profit by £1.5m from £2.3 million to £3.8 million, an increase of 65%. The improvement in Gross Margin resulted from our evolving product mix towards higher margin, more technical products through Northamber and AVM.

Previously discussed lockdown challenges have impacted performance in some of our strategic business units and our subsidiary AVM, as site restrictions limited access for higher end projects but we are hopeful of improved performance as these restrictions ease later in 2021 and beyond.

It is clearly pleasing to see a 65% increase in Gross Profit year on year however our focus on efficiency and cost management remains strong; we remain focused on optimising the business for long term results and investing as needed to drive this. Our warehouse changes in the last financial year was a significant undertaking and we are seeing the benefits through an improved cost base, whilst still providing significant capacity to scale the business further.

To support this increase in Gross Profit, and in anticipation of continued growth, our Distribution costs increased year on year from £1.53 million to £2.28 million; part of this costs increase also came from the addition of AVM to the group. Administrative costs also increased marginally from £1.15 million to £1.29 million as we continue to invest to support our future plans.

Financial position

Stock levels are higher than last year at £8.4 million against £4.5 million, in part due to the AVM acquisition, and also as we continued to seek to profitably support our partners by maintaining sufficient stock in country during the uncertainty of logistics derived from Brexit and COVID impacts on supply chains. We see our flexibility on local stock levels as a key driver of our future with our partners, who have recognised the benefits of Northamber's financial strength in underpinning this.

Cash was £10.8 million at 31 December 2020 compared with £14.7 million at 31 December 2019, reflecting the sale of the Brooklands distribution centre and the purchase of the new Swindon warehouse, the acquisition of AVM and a new office, where AVM is now located. With Fixed Assets at book value at £7.1 million, including three unencumbered freehold properties, the Group's overall financial position is very sound.

Net Assets at 92.3p per share are considerably in excess of the average price of the ordinary shares throughout the period.

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 £81,695. The dividend will be paid on 27 May 2021 to shareholders on the register as at 30 April 2021.

Staff

The Board remain grateful and pleased for how our team continues to pull together to flexibly support our partners and each other through these unprecedented times. We strongly believe that our staff are a key differentiator for our business and we are delighted to be able to continue to grow with them and offer them continued job security. We intend 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 the outlook we shared in our recently published full year results, we remain cautiously optimistic that the investments we have made in supporting our partners coupled with removing the one off costs tied to moving warehouse should be reflected in the trading results for the current financial year and allow us to build on our profitable first half. We necessarily remain cautious due to the economic uncertainty, Brexit and the potential further impact of COVID on demand and the supply chain, but feel strongly 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

12 February 2021

Contacts:

Northamber PLC                              Tel: [phone] Colin Thompson, Chairman	[e-mail]
N+1 Singer (Nominated Adviser and Sole Broker)	Tel: [phone]
Philip Davies (Corporate Finance) Alex Bond (Corporate Finance)

 

Consolidated Statement of Comprehensive Income
6 months to 31 December 2020
			6 months		6 months	Year
			Ended		Ended	Ended
			31.12.20		31.12.19	30.06.20
			£'000		£'000	£'000
			Unaudited		Unaudited	Audited
	Revenue		29,679		26,273	52,835
	Cost of sales		(25,878)		(23,972)	(47,998)
	Gross Profit		3,801		2,301	5,478
	Distribution cost		(2,284)		(1,533)	(3,601)
	Administrative costs		(1,294)		(1,152)	(2,613)
	Administrative costs-Exceptional acquisition costs		-		-	(220)
	Other income-Exceptional gain on disposal of property		-		10,203	10,804
	Profit  from operations		223		9,819	9,848
	Investment revenue		7		167	92
	Finance cost		-		-	(15)
	Profit  before Tax		230		9,986	9,925
	Tax charge		-		(1,643)	(1,413)
	Profit  and total comprehensive
	Income for the period		230		8,343	8,512
	Basic and diluted profit  per ordinary share		0.84p		30.50p	31.16p

Consolidated Statement of Financial Position

As At 31 December 2020

		6 months Ended 31.12.20				6 months Ended 31.12.19					Year Ended 30.06.20
		£'000 Unaudited				£'000 Unaudited					£'000 Audited
Non -current assets
Property, plant and equipment			7,102				5,169			7,184
Goodwill and intangible assets			1,391				-			1,421
			8,493				5,169			8,605
Current assets
Inventories			8,401				4,458			5,948
Trade and other receivables			8,821				8,137			7,750
Cash and cash equivalents			10,802				14,675			10,968
			28,024				27,270			24,666
Total assets			36,517				32.439			33,271
Current liabilities
Trade and other payables			(11,372)				(7,461)			(8,356)
Total liabilities			(11,372)				(7,461)			(8,356)
Net assets			25,145				24,978			24,915
Equity
Share capital			272				273			272
Share premium account			5,734				5,734			5,734
Capital redemption reserve			1,514				1,513			1,514
Treasury shares			-				(7)			-
Retained earnings			17,625				17,465			17,395
Equity shareholders' funds attributable to the owners of the parent			25,145				24,978			24,915

Company Statement of Financial Position

As At 31 December 2020

		6 Months Ended 31.12.20			6 months Ended 31.12.19			Year Ended 30.06.20
		£'000 Unaudited			£'000 Unaudited			£'000 Audited
Non -current assets
Property, plant and equipment			1,687			1,730		1,748
Investments			2,135			6,588		2,135
			3,822			8,318		3,883
Current assets
Inventories			7,748			4,458		5,304
Trade and other receivables			8,248			7,974		7,509
Cash and cash equivalents			7,809			3,012		4,700
			23,805			15,444		17,513
Total assets			27,627			23,762		21,396
Current liabilities
Trade and other payables			(14,684)			(10,945)		(8,709)
Total liabilities			(14,684)			(10,945)		(8,709)
Net assets			12,943			12,817		12,687
Equity
Share capital			272			273		272
Share premium account			5,734			5,734		5,734
Capital redemption reserve			1,514			1,513		1,514
Treasury shares			-			(7)		-
Retained earnings			5,423			5,304		5,167
Equity shareholders' funds attributable to the owners of the parent			12,943			12,817		12,687

Consolidated Statement of Changes in Equity
As at 31 December 2020
		Share capital	Share premium account	Capital redemption reserve	Treasury Shares	Retained earnings	Total Equity
		£'000	£'000	£'000	£'000	£'000	£'000
	Period to 31 December 2019
	Unaudited
	Balance at 1 July 2019	273	5,734	1,513	(7)	9,122	16,635
	Dividends	-	-	-	-	-	-
	Profit and total comprehensive
	income for the period	-	-	-	-	8,343	8,343
	Balance at 31 December  2019	273	5,734	1,513	-	17,465	24,978
	Period to 31 December 2020
	Unaudited
	Balance at 1 July 2020	272	5,734	1,514	-	17,395	24,915
	Dividends	-	-	-	-	-	-
	Profit and total comprehensive
	Income for the period	-	-	-	-	230	230
	Balance at 31 December  2020	272	5,734	1,514	-	17,625	25,145
	Year to 30 June 2020
	Audited
	Balance at 1 July 2019	273	5,734	1,513	(7)	9,122	16,635
	Dividends	-	-	-	-	(164)	(164)
	Purchase  and cancellation of shares	(1)	-	1		(68)	(68)
	Purchase  of  Treasury shares	-	-	-	7	(7)	-
	Transactions with owners	(1)	-	1	7	(239)	(232)
	Profit and total comprehensive
	income for the period	-	-	-	-	8,512	8,512
	Balance at 30 June 2020	272	5,734	1,514	-	17,395	24,915

 

Company Statement of Changes in Equity
As at 31 December 2020
		Share capital	Share premium account	Capital redemption reserve	Treasury Shares	Retained earnings	Total Equity
		£'000	£'000	£'000	£'000	£'000	£'000
	Period to 31 December 2019
	Unaudited
	Balance at 1 July 2019	273	5,734	1,513	(7)	5,587	13,100
	Dividends	-	-	-		-	-
	Loss and total comprehensive
	loss for the period	-	-	-	-	(283)	(283)
	Balance at 31 December  2019	273	5,734	1,513	(7)	5,304	12,817
	Period to 31 December 2020
	Unaudited
	Balance at 1 July 2020	272	5,734	1,514	-	5,167	12,687
	Dividends	-	-	-		-	-
	Profit and total comprehensive
	income for the period	-	-	-	-	256	256
	Balance at 31 December  2020	272	5,734	1,514	-	5,423	12,943
	Year to 30 June 2020
	Audited
	Balance at 1 July 2019	273	5,734	1,513	(7)	5,587	13,100
	Dividends	-	-	-	-	(164)	(164)
	Purchase  and cancellation of shares	(1)	-	1		(68)	(68)
	Purchase  of  Treasury shares	-	-	-	7	(7)	-
	Transactions with owners	(1)	-	1	7	(239)	(232)
	Loss and total comprehensive
	loss for the year	-	-	-	-	(181)	(181)
	Balance at 30 June 2020	272	5,734	1,514	-	5,167	12,687

 

Consolidated Statement of Cash Flows
6 months to 31 December 2020
				6 months			6 months			Year
				Ended			Ended			Ended
				31.12.20			31.12.19			30.06.20
				£'000			£'000			£'000
				Unaudited			Unaudited			Audited
	Cash from operating activities
	Operating profit from
	continuing operations			223			9,819			9,848
	Depreciation of property, plant
	and equipment			167			62			228
	Amortisation of intangible assets			30			-			-
	(Profit)/loss on disposal of property,			-			(10,203)			(10,982)
	plant and equipment
	Operating profit/(loss) before changes in
	working capital			420			(322)			(906)
	(Increase)/decrease in inventories			(2,453)			(1,138)			(2,039)
	(Increase)/decrease  in trade and
	other receivables			(1,070)			1,355			2,899
	Increase/(decrease)  in trade and
	other payables			3,015			(1,616)			(1,172)
	Cash (used)/generated from operations			(88)			(1,721)			(1,218)
	Income taxes received/(paid)			-			-			-
	Net cash from operating activities			(88)			(1,721)			(1,218)
	Cash flows from investing activities
	Interest received			7			167			92
	Interest paid			-			-			(15)
	Proceeds from disposal of property,
	plant and equipment			-			16,222			16,400
	Purchase of property, plant and
	Equipment			(85)			(3,439)			(5,370)
	Purchase of AVM Ltd			-			-			(2,135)
	Net cash from investing activities			(78)			12,950			8,972
	Cash flows from financing activities
	Dividends paid to equity shareholders			-			-			(164)
	Purchase of own shares for cancellation			-			-			(68)
	Net cash used in financing activities			-			-			(232)
	Net (decrease)/increase in cash and
	cash equivalents			(166)			11,229			7,522
	Cash and cash equivalents at
	beginning of period			10,968			3,446			5,446
	Cash and cash equivalents at end of period			10,802			14,675			10,968
Company Statement of Cash Flows
6 months to 31 December 2020
					6 months			6 months			Year
					Ended			Ended			Ended
					31.12.20			31.12.19			30.06.20
					£'000			£'000			£'000
					Unaudited			Unaudited			Audited
	Cash from operating activities
	Operating profit/(loss) from
	continuing operations				249			(393)			(198)
	Depreciation of property, plant
	and equipment				68			62			131
	Operating profit/(loss) before changes in
	working capital				317			(331)			(67)
	(Increase)/decrease in inventories				(2,444)			(1,138)			(1,984)
	(Increase)/decrease in trade and
	other receivables				(739)			1,518			1,983
	Increase/(decrease)  in trade and
	other payables				5,975			(476)			(2,703)
	Cash generated/(used) from operations				3,109			(418)			(2,771)
	Income taxes received/(paid)				-			-			-
	Net cash from operating activities				3,109			(418)			(2,771)
	Cash flows from investing activities
	Interest received				7			110			17
	Purchase of property, plant and
	Equipment				(7)			-			(87)
	Purchase of AVM Ltd				-			-			(2,135)
	Repayment of long term loan held as investment				-			-			6,588
	Net cash from investing activities				-			110			4,383
	Cash flows from financing activities
	Dividends paid to equity shareholders				-			-			(164)
	Purchase of own shares for cancellation				-			-			(68)
	Net cash used in financing activities				-			-			(232)
	Net increase/(decrease) in cash and
	cash equivalents				3,109			(308)			1,380
	Cash and cash equivalents at
	beginning of period				4,700			3,320			3,320
	Cash and cash equivalents at end of period				7,809			3,012			4,700

 

Notes to the financial statements

1.  Corporate Information

The financial information for the half year ended 31 December 2020 set out in this interim report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The auditor's report on the financial statements for the year ended 30 June 2020 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 2020. 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 2020.

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 2020 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

The consolidated financial statements incorporate the financial statements of Northamber plc and entities controlled by Northamber plc. Control is achieved if all three of the following are achieved: power over the investee, exposure to variable returns for the investee, and the ability of the investor to use its power to affect those variable returns.

The results of subsidiaries are included in the consolidated statement of comprehensive income and consolidated statement of financial position.

The results of entities acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, the accounts of the subsidiaries are adjusted to conform to the group's accounting policies. All intra-group transactions, balances, income and expenses are eliminated on consolidation.

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 period. 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 2020
Total Segment revenue	29,292		387		29,679
Year to 30 June 2020
Total Segment revenue	52,391		444		52,835

No customer accounted for more than 10% of the Group's revenue during the period.

5.  Taxation

No tax charge has been provided in the interim consolidated financial statements due to the availability of carried forward losses.

6.  Earnings per Share

The calculation of earnings per share is based on the Profit after tax for the six months to 31 December 2020 of £230,000 (2019:8,343,000) and a weighted average of 27,231,586 (2019: 27,356,586) ordinary shares in issue.

7.  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 10 to 12 of the Annual Report and Accounts for the year ended 30 June 2020 (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

· Brexit risk

· Covid-19 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 A M Phillips is the ultimate controlling party of the Company.

During the six months period, the company paid £150,000 (2019: £12,925) rent to Anitass Limited, a wholly owned subsidiary. At 31 December 2020 Northamber plc owed Anitass Ltd £6,325,000 (2019:£4,510,000).

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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