Half Yearly Report

RNS Number : 7719X

Northamber PLC

21 February 2012

 



Northamber Plc ("the Company")

Interim Statement for the six months to 31 December 2011

Chairman's Statement

Trading

The improvements reported in last November's Interim Management Statement, then stalled in keeping with the economy at large and our sector in particular.  Though not comparative, following the ongoing reprofiling changes, Sales for the half year were £53.8 million against £67.7 million reported a year ago.

After discontinued very low margin bulk export sales are ignored, turnover for the first six months of the current year was £53.8 million.  Some 7% ahead of the same period for the previous year.  In this business an on-going comparative result gives a more accurate assessment of progress.

The November Interim Management Statement reminded the changes made during last year (to June 2011) where we had commenced reviewing and then progressively discontinuing low margin sales; which though contributing turnover volume, after price erosion had surpassed empty revenue and become costly.

Whilst we continue the reprofiling tasks, Gross Margins for the period improved by 80 basis points over the comparative period for the previous year.  The combination of reduced turnover and the unavoidable time lag for pending efficiencies, Gross Profits were £3.8 million compared with £4.2 million in the comparative period last year.

Distribution expenses are a very significant cost and were and still are heavily impacted by inflation.  They are 4% higher than in the previous year, whilst the carriage cost component is 14% higher, reflecting the increases in fuel and other charges.

Administration expenses increased by only 1%.  This was partly due to an increase in our provision for bad debts in the period.  However, the total bad debt charge for the period even on our normal cautious basis, remains at only just over 0.1% of sales.

The resulting operating loss was £487,000 for the first half year compared with an operating profit of £75,000 for the same period last year.

As has now become the norm; earnings on cash remain at a low level and despite a closing balance of £13.2 million at the end of December.  Our interest earned for the six months only amounted to £69,000 (2110: £76,000).

Balance Sheet

Cash generated in the period was £2.5 million.  The principal element of this was the conscious decision to reduce inventory and increase stock turn.  In a slowing environment, slow stocks are an expensive risk from value depreciation.  The impact on Stock Turn was to increase the rate from 11.8 times in 2010 to 13.6 times for 2011.

Although there was a slight increase in both debtor and creditor days in the period, the overall net current assets ratio remained high at 2.7 times, with cash alone accounting for more than 50% of our net assets.

During the six months to the end of December 2011 we repurchased 314,265 Ordinary shares of 1p each in the market at a cost of £174,000 at an average cost of 55.4p per share.  All the shares repurchased in the period are held in Treasury.

Dividend

In view of all the circumstances, your board had decided to pay a reduced dividend of 0.3p per share (2011: 0.6p per share).  The interim dividend will be paid on 10th May 2012 to those shareholders on the register at 13th April 2012.

Board

To further our announced strategic review and succession strategy, there have also been some internal changes to the board.

After some 30 years, Henry Matthews has decided to retire and relinquish the role of managing director.  

Having gained experience as our general manager, with company wide responsibilities, we are pleased to welcome John Henry to the board as Operations Director.  John, originally a foreign exchange trader, joined the company nearly 20 years ago on the sales side of the business.

With these changes, together with those made last year, I believe that the company is better placed to master the challenges and opportunities which undoubtedly confront ourselves and the economy.

Outlook

Against the remarkable falls in the prices of both I.T. equipment and consumer electronics, little has changed over the past few years.  Confidence in and expectation of any considerable improvement in the whole economic background has, if anything, declined.

The obvious impact has been pressure on product prices and margins versus increasing costs.  There is little justification for optimism in the short term and all that be stated is, as always, we are conscious of all these factors and their impact on our business.  As a consequence the board will continue to strive to maximise opportunities and utilise its resources as effectively as possible.

David Phillips

Chairman

21 February 2012

Northamber Plc
Statement of comprehensive income
6 months to 31 December 2011
		Notes	6 months	6 months	Year
			ended	ended	ended
			31.12.11	31.12.10	30.06.11
			£'000	£'000	£'000
			Unaudited	Unaudited	Audited
	Revenue		53,813	67,707	121,083
	Cost of sales		50,011	63,460	112,795
	Gross Profit		3,802	4,247	8,288
	Distribution cost		2,328	2,236	4,720
	Administrative expenses		1,961	1,936	3,814
	Profit/(loss) from Operations		(487)	75	(246)
	Investment revenue		69	76	140
	Profit/(loss) before tax		(418)	151	(106)
	Tax charge		0	(40)	7
	Total comprehensive income
	for the period attributable to
	equity holders of the parent		(418)	111	(99)
	Basic and diluted earnings/(loss)
	pence per ordinary share		-1.47	0.39	-0.34

Statement of financial position
As at 31 December 2011
			As at	As at	As at
			31.12.11	31.12.10	30.06.11
			£'000	£'000	£'000
			Unaudited	Unaudited	Audited
	Non current assets
	Property, plant and equipment		2,502	2,608	2,527
	Current assets
	Inventories		7,374	10,764	11,415
	Trade and other receivables		15,489	14,857	16,670
	Cash and cash equivalents		13,213	12,085	10,701
	Tax assets		36		80
			36,112	37,706	38,866
	Total assets		38,614	40,314	41,393
	Current liabilities
	Trade and other payables		14,416	14,574	16,603
	Current taxation		0	6	0
			14,416	14,580	16,603
	Non current liabilities
	Deferred tax liabilities		45	37	45
	Total liabilities		14,461	14,617	16,648
	Net assets		24,153	25,697	24,745
	Equity
	Share capital		283	289	286
	Share premium account		5,734	5,734	5,734
	Capital redemption reserve fund		1,503	1,497	1,500
	Retained earnings		16,633	18,177	17,225
	Equity shareholders' funds		24,153	25,697	24,745

Statement of changes in equity
As at 31 December 2011
		Share capital	Share premium account	Capital redemption reserve	Retained earnings	Total Equity
		£'000	£'000	£'000	£'000	£'000
	Period to 31 December 2010
	Unaudited
	Balance at 1 July  2010	289	5,734	1,497	18,094	25,614
	Dividends				0	0
	Purchase of own shares	0		0	(28)	(28)
	Transaction costs of purchase				0	0
		0	0	0	(28)	(28)
	Comprehensive income
	for the period				111	111
	Balance at 31 December  2010	289	5,734	1,497	18,177	25,697
	Period to 31 December 2011
	Unaudited
	Balance at 1 July 2011	286	5,734	1,500	17,225	24,745
	Dividends				0	0
	Purchase of own shares	(3)		3	(172)	(172)
	Transaction costs of purchase				(2)	(2)
		(3)	0	3	(174)	(174)
	Loss and total comprehensive
	Income for the period				(418)	(418)
	Balance at 31 December  2011	283	5,734	1,503	16,633	24,153
	Year to 30 June 2011
	Audited
	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)
	Transaction costs of purchase				0	0
		(3)	0	3	(770)	(770)
	Loss and total comprehensive
	Income for the period				(99)	(99)
	Balance at 30 June 2011	286	5,734	1,500	17,225	24,745

Statement of Cash Flows
6 months to 31 December 2011
			6 months	6 months	Year
			ended	ended	ended
			31.12.11	31.12.10	30.06.11
			£'000	£'000	£'000
			Unaudited	Unaudited	Audited
	Cash inflow from operating activities
	Operating (loss)/ profit from
	continuing operations		(487)	75	(246)
	Depreciation of property, plant
	and equipment		125	127	247
	(Profit)/loss on disposal of property,
	plant and equipment		(8)	0	0
	Operating profit before changes in
	working capital		(370)	202	1
	Decrease/(increase) in inventories		4,041	(442)	(1,093)
	Decrease/(increase)  in trade and
	other receivables		1,181	822	(991)
	(Decrease)/increase  in trade and
	other payables		(2,187)	(2,466)	(437)
	Cash generated/(used in) from operations		2,665	(1,884)	(2,520)
	Income taxes received/(paid)		45	(53)	(83)
	Net cash from operating activities		2,710	(1,937)	(2,603)
	Cash flows from investing activities
	Interest received		69	76	140
	Proceeds from disposal of property,
	plant and equipment		8	0	0
	Purchase of property, plant and
	Equipment		(101)	(39)	(79)
	Net cash from investing activities		(24)	37	61
	Cash flows from financing activities
	Purchase of own shares for cancellation		(174)	(28)	(192)
	Dividends paid to equity shareholders		0	0	(578)
	Net cash used in financing activities		(174)	(28)	(770)
	Net Increase)(decrease) in cash and
	cash equivalents		2,512	(1,928)	(3,312)
	Cash and cash equivalents at
	beginning of period		10,701	14,013	14,013
	Cash and cash equivalents at
	end of period		13,213	12,085	10,701
	Cash and cash equivalents  for the
	purpose of of this statement comprise:
	Cash and cash equivalents		13,213	12,085	10,701

INTERIM STATEMENT

Six months to 31 December 2011

Notes to the financial statements

1.         Corporate Information

The financial information for the year ended 30 June 2011 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 2011 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.

2.         Basis of preparation

These interim consolidated financial statements are for the six months ended 31 December 2011. 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 2011.

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 2011 except for the adoption of IAS1 Presentation of Financial Statements (Revised 2007), The group has only one reportable segment therefore no statement of segmental reporting is shown in these interim financial statements.

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.         Taxation

The tax charge shown in the interim consolidated financial statements is accrued on an estimated average annual effective rate of tax of 22% (6 months to December 2010: 27.0%)

5.         Earnings per Share

The calculation of earnings per share is based on the loss after tax for the six months to 31 December 2011 of £418,000 (2010: profit £111,000) and a weighted average of 28,471,521 (2010: 28,925,029) ordinary shares in issue.

6.         Property, Plant and Equipment

There were no significant additions to or disposals of property, plant or equipment in the period to 31 December 2011.  The reduction in the total value of property, plant and equipment was primarily due to the depreciation charge for the year.

7.         Risks and Uncertainties

The principal risks and uncertainties affecting the business activities of the group are detailed in the director's report which can be found on pages 8 and 9 of the Annual Report and Accounts for the year ended 30 June 2011 (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:-

Marketing 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.

8.         Related Party Transactions

Mr D M Phillips is the ultimate controlling party of the Company.

During the period to 31 December 2011 the company paid £15,000 as salary and no benefits to the company's personnel manager, Samantha Matthews, who is the wife of Mr H Matthews. In the director's opinion the payments were on an arm's length basis.

9.         Director's 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.

D.M. Phillips

Chairman

 

END

 

 

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