Half Yearly Report

RNS Number : 7352Y

Northamber PLC

27 February 2013

 



Northamber Plc ("the Company")

Interim Statement for the six months to 31 December 2012

Chairman's Statement

Results

After the return to profit in our 30th June 2012 Full Year results, negating the loss at the interim stage; turnover for the half year was £41.5million, reflecting the caution in last November's interim management statement and the since reported falls in sector sales by major brand I.T. vendors.  At 22% lower than the comparable sales for the six months to end December 2011 (£53.8 million), they were reflective of an ongoing extremely challenging period in the U.K. and the recent very high profile domestic business failures.

More positive were our ongoing efforts to evolve towards newer and more rewarding technologies and products, moving away from some of the tired and historic brand vendor product offerings with their associated aged inventory and high support cost features.  Typified by brand vendors seeking to reverse falling demand levels with still further reduced prices and with that our margins, despite our own inflationary costs and empty revenue results.  There was however, a balance sheet cash benefit gain with the release of our capital from related stocks and debtors.

Our efforts did deliver an increase in our gross profit margins.   Despite the effect on revenues of increased "credit risk avoidance" measures, the gross profit at £3.2 million represented 7.7% and nearly half a point higher than for the comparative period.  Unfortunately, the reduced level of sales against lower overheads, diluted the benefit with a gross profit £0.6 million lower than the comparative period of 2011. 

Net operating expense gains were depressed by our bad debt experience, which increased to less than 0.4% from 0.2% a year ago.  Providing logistics and facilitation for a significant overseas vendor's products, we were not immune from the Comet failure, which left us with a one-off loss of £217,000. 

The resultant loss before tax was £310,000 for the six months which is a £100,000 improvement against the loss for the comparative period of £418,000.

Ongoing efforts on reducing our net operating expenses produced further savings but with the still uncertain economic climate depressing the discretionary element of computer hardware refresh purchasing, we necessarily continue to watch our overheads closely.

A further impact on margin opportunities and operating costs, was the reduction in the level of support available from vendor's for marketing activities.

As at 31^st December, our £3.1million cash balance was despite the usual pre/post Christmas cash collection slowdown. We remain cash positive and debt free.  After early settlements, creditors were £7 million lower than a year ago.

Disappointment continues with the interest income earned on our cash balances, at £50,000 less than that for a year ago.

Balance Sheet

We have reduced our working capital elements so that stock, debtors and creditors are all lower than they were either at 30^th June 2012 or 31^st December 2011. The current ratio has improved from 2.5 to 3.0 times year-on-year. Although the extraordinary pressures in the economy are unavoidable, the strength of the balance sheet remains very high and places us in a strong position vis-a -vis our vendors and customers.

Dividend

Taking into consideration the results for the period and the underlying strength of the company, the board has decided to maintain the interim dividend at the same level as for the interim in the previous year at 0.3p per share. This will be paid on 10 May 2013 to shareholders on the register as at 12 April 2013.

Outlook

We are very disappointed by the difficulty in covering our costs and we are focused on correcting this.  I did caution in my quarterly report for last September, that the movements in the channel to economise and rationalise may well impact on the market generally.

In view of the high level of uncertainty in the economy and most especially in the ultimate commercial user customer base, until there is more positive confidence in the economy, regretfully it is not possible to be positive about the immediate future.

We are fortunate to have deep strengths in our balance sheet and capable of withstanding pressures. Coupled with the ability and willingness to detect and  act quickly and decisively to changing circumstances, we are best placed to benefit from any commercially viable opportunity that becomes available that do not overly risk our custodianship of  our shareholders asset base.

David Phillips

Chairman

27 February 2013

For further information please contact:

Northamber plc                                  020 8296 7000

David Phillips / John Henry

Charles Stanley Securities                020 7149 6942

Philip Davies

Consolidated Statement of comprehensive income
6 months to 31 December 2012
		Notes	6 months	6 months	Year
			ended	ended	ended
			31.12.12	31.12.11	30.06.12
			£'000	£'000	£'000
			Unaudited	Unaudited	Audited
	Revenue		41,576	53,813	100,615
	Cost of sales		38,372	50,011	92,807
	Gross Profit		3,204	3,802	7,808
	Distribution cost		1,748	2,328	4,267
	Administrative expenses		1,784	1,961	3,638
	(Loss) from Operations		(328)	(487)	(97)
	Investment revenue		18	69	134
	Profit/(Loss) before tax		(310)	(418)	37
	Tax recovery/(charge)		39	-	(39)
	Total comprehensive (loss)
	for the period attributable to
	equity holders of the parent		(271)	(418)	(2)
	Basic and diluted (loss)
	per ordinary share		-0.96	-1.47	-0.01

Consolidated Statement of financial position
As at 31 December 2012
			As at	As at	As at
			31.12.12	31.12.11	30.06.12
			£'000	£'000	£'000
			Unaudited	Unaudited	Audited
	Non current assets
	Property, plant and equipment		8,838	2,502	9,050
	Current assets
	Inventories		6,562	7,374	6,733
	Trade and other receivables		12,677	15,489	14,659
	Cash and cash equivalents		3,176	13,213	4,304
	Tax assets		36	36	0
			22,451	36,112	25,696
	Total assets		31,289	38,614	34,746
	Current liabilities
	Trade and other payables		7,389	14,416	10,575
	Current taxation		0	0	0
			7,389	14,416	10,575
	Non current liabilities
	Deferred tax liabilities		45	45	45
	Total liabilities		7,434	14,461	10,620
	Net assets		23,855	24,153	24,126
	Equity
	Share capital		281	283	281
	Share premium account		5,734	5,734	5,734
	Capital redemption reserve fund		1,505	1,503	1,505
	Retained earnings		16,335	16,633	16,606
	Equity shareholders' funds		23,855	24,153	24,126

Company Statement of financial position
As at 31 December 2012
			As at	As at	As at
			31.12.12	31.12.11	30.06.12
			£'000	£'000	£'000
			Unaudited	Unaudited	Audited
	Non current assets
	Property, plant and equipment		2,237	2,502	2,402
	Investments		6,588	0	6,588
			8,825	2,502	8,990
	Current assets
	Inventories		6,562	7,374	6,733
	Trade and other receivables		12,360	15,489	14,659
	Cash and cash equivalents		3,115	13,213	4,285
	Tax assets		36	36	14
			22,073	36,112	25,691
	Total assets		30,898	38,614	34,681
	Current liabilities
	Trade and other payables		7,333	14,416	10,574
	Current taxation		0	0	0
			7,333	14,416	10,574
	Non current liabilities
	Deferred tax liabilities		45	45	45
	Total liabilities		7,378	14,461	10,619
	Net assets		23,520	24,153	24,062
	Equity
	Share capital		281	283	281
	Share premium account		5,734	5,734	5,734
	Capital redemption reserve fund		1,505	1,503	1,505
	Retained earnings		16,000	16,633	16,542
	Equity shareholders' funds		23,520	24,153	24,062

Consolidated Statement of changes in equity
As at 31 December 2012
		Share capital	Share premium account	Capital redemption reserve	Retained earnings	Total Equity
		£'000	£'000	£'000	£'000	£'000
	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)
	Comprehensive loss
	for the period				(418)	(418)
	Balance at 31 December  2011	283	5,734	1,503	16,633	24,153
	Period to 31 December 2012
	Unaudited
	Balance at 1 July 2012	281	5,734	1,505	16,606	24,126
	Dividends				0	0
	Purchase of own shares				0	0
	Transaction costs of purchase				0	0
		0	0	0	0	0
	Loss and total comprehensive
	Income for the period				(271)	(271)
	Balance at 31 December  2012	281	5,734	1,505	16,335	23,855
	Year to 30 June 2012
	Audited
	Balance at 1 July 2011	286	5,734	1,500	17,225	24,745
	Dividends				(367)	(367)
	Purchase of own shares	(5)		5	(250)	(250)
	Transaction costs of purchase				0	0
		(5)	0	5	(617)	(617)
	Loss and total comprehensive
	Income for the period				(2)	(2)
	Balance at 30 June 2011	281	5,734	1,505	16,606	24,126

Company Statement of changes in equity
As at 31 December 2012
			Share capital	Share premium account			Capital redemption reserve		Retained earnings		Total Equity
			£'000	£'000			£'000		£'000		£'000
		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)	0			3		(172)		(172)
		Transaction costs of purchase							(2)		(2)
			(3)	0			3		(174)		(174)
		Comprehensive income
		for the period							(418)		(418)
		Balance at 31 December  2011	283	5,734			1,503		16,633		24,153
		Period to 31 December 2012
		Unaudited
		Balance at 1 July 2012	281	5,734			1,505		16,542		24,062
		Dividends							0		0
		Purchase of own shares							0		0
		Transaction costs of purchase							0		0
			0	0			0		0		0
		Loss and total comprehensive
		income for the period							(542)		(542)
		Balance at 31 December  2012	281	5,734			1,505		16,000		23,520
		Year to 30 June 2012
		Audited
		Balance at 1 July 2011	286	5,734			1,500		17,225		24,745
		Dividends							(367)		(367)
		Purchase of own shares	(5)	0			5		(250)		(250)
		Transaction costs of purchase							0		0
			(5)	0			5		(617)		(617)
		Loss and total comprehensive
		income for the period							(66)		(66)
		Balance at 30 June 2011	281	5,734			1,505		16,542		24,062

Consolidated Statement of Cash Flows
6 months to 31 December 2012
			6 months	6 months	Year
			ended	ended	ended
			31.12.12	31.12.11	30.06.12
			£'000	£'000	£'000
			Unaudited	Unaudited	Audited
	Cash inflow from operating activities
	Operating (loss) from
	continuing operations		(328)	(487)	(97)
	Depreciation of property, plant
	and equipment		249	125	277
	(Profit)/loss on disposal of property,
	plant and equipment		0	(8)	(10)
	Operating profit before changes in
	working capital		(79)	(370)	170
	Decrease/(increase) in inventories		171	(641)	4,682
	Decrease/(increase)  in trade and
	other receivables		1,982	(830)	2,011
	(Decrease)/increase  in trade and
	other payables		(3,186)	3,841	(6,030)
	Cash (used)/ generated from operations		(1,112)	2,000	833
	Income taxes received/(paid)		0	45	43
	Net cash from operating activities		(1,112)	2,045	876
	Cash flows from investing activities
	Interest received		18	69	134
	Proceeds from disposal of property,
	plant and equipment		0	8	10
	Purchase of property, plant and
	Equipment		(34)	(101)	(6,809)
	Net cash from investing activities		(16)	(24)	(6,656)
	Cash flows from financing activities
	Purchase of own shares for cancellation		0	(174)	(250)
	Dividends paid to equity shareholders		0	0	(367)
	Net cash used in financing activities		0	(174)	(617)
	Net Increase/(decrease) in cash and
	cash equivalents		(1,128)	1,847	(6,397)
	Cash and cash equivalents at
	beginning of period		4,304	10,850	10,701
	Cash and cash equivalents at
	end of period		3,176	12,697	4,304

Company Statement of Cash Flows
6 months to 31 December 2012
			6 months	6 months	Year
			ended	ended	ended
			31.12.12	31.12.11	30.06.12
			£'000	£'000	£'000
			Unaudited	Unaudited	Audited
	Cash inflow from operating activities
	Operating (loss) from
	continuing operations		(563)	(487)	(177)
	Depreciation of property, plant
	and equipment		202	125	246
	(Profit)/loss on disposal of property,
	plant and equipment		0	(8)	(10)
	Operating (loss)/profit before changes in
	working capital		(361)	(370)	59
	Decrease/(increase) in inventories		171	(641)	4,682
	Decrease/(increase)  in trade and
	other receivables		2,277	(830)	2,011
	(Decrease)/increase  in trade and
	other payables		(3,241)	3,841	(6,029)
	Cash (used)/ generated from operations		(1,154)	2,000	723
	Income taxes received/(paid)		0	45	43
	Net cash from operating activities		(1,154)	2,045	766
	Cash flows from investing activities
	Interest received		18	69	134
	Proceeds from disposal of property,
	plant and equipment		0	8	10
	Purchase of property, plant and
	Equipment		(34)	(101)	(6,709)
	Net cash from investing activities		(16)	(24)	(6,565)
	Cash flows from financing activities
	Purchase of own shares for cancellation		0	(174)	(250)
	Dividends paid to equity shareholders		0	0	(367)
	Net cash used in financing activities		0	(174)	(617)
	Net Increase)(decrease) in cash and
	cash equivalents		(1,170)	1,847	(6,416)
	Cash and cash equivalents at
	beginning of period		4,285	10,850	10,701
	Cash and cash equivalents at
	end of period		3,115	12,697	4,285

Notes to the financial statements

1.         Corporate Information

The financial information for the year ended 30 June 2012 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 2012 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 2012. 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 2012.

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 2012 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 20% (6 months to December 2011: 22.0%)

5.         Earnings per Share

The calculation of earnings per share is based on the loss after tax for the six months to 31 December 2012 of £271,000 (2011: loss £418,000) and a weighted average of 28,158,735 (2011: 28,471,521) 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 2012.  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 2012 (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.

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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