Interim Management Statement

RNS Number : 7153E

Northamber PLC

15 May 2013

 



Northamber plc

("Northamber" or the "Company")

Interim Management Statement

The continued strong decline in demand for PC's during the first quarter of 2013 has been well publicised and confirms our statements on trading made over a number of recent years.  This trend and, more specifically the accompanying price and margin erosion, show no signs of abating.  Several major vendors have quantified the effects on their business; IBM is reportedly negotiating the exit of its "X Series" server market via a sale to Chinese I.T. giant Lenovo, with Siemens having terminated its investment and I.T. sector partnership with Fujitsu a few years ago.

The search for new products and our own exit from some mature major PC & Server franchises has not held us harmless and it will be no surprise that the reducing turnover trends previously reported, have continued; for our three quarters ended 31^st March 2013, turnover was some 20% lower than for the comparative period last year.  This was, however, a slightly better result than achieved for the half year to December 2012 where turnover was 22% lower than the previous comparative period.

We continued our policy, adopted some time ago, of seeking ranges of products more pertinent to current customer demands and higher margins. The industry wide pressure on prices and profits was to some extent, therefore, neutralised and our operating gross margin was very slightly increased for the 9 months to end of Q3 when compared with the relative same period last year.

Such a major and ongoing reduction in turnover and its dilution of overhead costs inevitably causes difficulties in maintaining overall profitability. The continual need to restructure costs and align operations with revenue takes time and with it significant additional staff restructuring.

We have kept our usual careful oversight on costs, being wary not to decimate the business whilst mindful of the need to invest and develop alternative strategies, which cater to the shift in user expectations . Significant cost savings have been and are being implemented and operating expenses have fallen by 14% for the 9 months to 31^st March, compared with the previous year. That is after taking account of some exceptional very significant redundancy and related costs.  Nevertheless, despite cost savings, the inevitable result was an operating loss for the 9 month period which exceeded that made in the comparative period last year.

We continue to drive necessary changes in moving from high volume, very low margin solutions and the policy of seeking higher margins and products that better meet the commercial needs of our customers own businesses. Steps are being taken to accelerate this movement, however it will take some time for the impact to be fully realised.  

Whilst the update on our trading position is not comforting and a turnaround will not be immediate, the outlook is not all gloom. There are opportunities available which we shall endeavour to maximise over the shortest time feasible.

The very considerable core strength of our totally tangible asset base, including annual formula depreciation, is such that we are not restricted in being able to effect change.  

We remain both cash positive with zero debt or borrowings, with our net current assets ratio still within the highly acceptable range of 2.7 to 3.0 despite the pressure from both customers and suppliers to extend debtor days and decrease creditor days.  Our Net Assets per share of 82.7 pence (as at 31 March 2013) are more than 2.5 times the current market value of our shares (based on the closing mid market price as at 14 May 2013 of 30.5 pence).

The Board strives to maximise returns for shareholders and continues to review all potential courses of action in that regard.

15 May 2013

For further information please contact:

Northamber plc                                   020 8296 7000

David Phillips / John Henry

Charles Stanley Securities                 020 7149 6942

Philip Davies

 

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