Preliminary Results for the YE 30 June 2012
RNS Number : 2691N
Northamber PLC
27 September 2012
Northamber plc
("Northamber" or the "Company")
Preliminary Results for the year ended 30 June 2012
CHAIRMAN'S PRELIM STATEMENT
Results
We are happy to report a return to profit for the full year of £37,000 pre tax, reversing the £418,000 pre tax loss reported at the 31 December interim stage. This was achieved despite an anticipated fall in revenue to £101 million from the £121 million for the prior year, demonstrating the ongoing change of emphasis I have been advising in previous reports. The rate of revenue decline for the second half of this year was lower than the comparative period of last year.
The sought upturn in pre tax operating profit evolved into the third quarter of our year, as reported in our Interim Management Statement published 26 April this year. That progress continued into the final quarter of our year, although unhelpfully depressed by the effects of the Jubilee holiday and the general UK economic capital expenditure malaise.
The reduced level of turnover needs to be seen within the context of our need to re-profile our offerings away from empty revenue and towards more value added content. It also reflects our sector in particular and the UK economy in general. From published information and from intelligence within the sector, it is apparent that the downturn Northamber experienced may not have been as severe as that which seemed to have affected others.
The change in the profit profile also came from a combination of improved gross margins and ongoing containment of overheads. Gross margins improved from 6.8% for the year to end June 2011 to 7.7% for the year ended June 2012 and demonstrate our stated ongoing policy of seeking the higher margin business rather than just volume and turnover.
Overheads were also reduced from £8.5 million to £7.9 million, a saving of £0.6m. These were achieved principally by a reduction in the wages bill, a necessary if unpalatable consequence of the general economic climate and its effect on demand. There was also a marginal saving in rental charges for a few of the final months of the year after the 21st April purchase of the freehold of our warehouse. As these savings only benefited a part of the year, we anticipate more extensive benefits will be achieved in a full year.
Balance Sheet
We remain debt free, with Net Assets of £24.1 million or 85.7p per share compared with 86.5p per share for the previous year. Our cash reserves at 30th June 2012 were £4.3 million, which following our £6.8 million warehouse freehold purchase including costs compares with the £10.7 million a year ago.
The significant Balance Sheet change and consequential rent savings during the last two months of the year were the result of the £6.8million purchase of the freehold of our warehouse which we had leased for the last 12 years at an annual cost of £601,000 and which contains a significant investment in logistic and support infrastructure. However, the lease was due to expire in December 2014 and with cash available when the opportunity presented itself and which we had been trying to facilitate for some time, we were able to take advantage of that opportunity. The background and details of that purchase were set out in the circular issued to shareholders in 21 June of this year. That purchase also resulted in an effective 9.0% return on our cost.
The strength of our Balance Sheet has always been one of our basic tenets and with the purchase of the warehouse, this tangible asset is added to the freehold of our eleven year old, 18,000 sq ft Davis Road Chessington offices.
Net cash inflow from operations of £876,000 (2011: cash outflow of £2.6 million) arose partly from improvements in our stock holding profile. This was assisted by being more selective in the range of products stocked. The stock turnover ratio improved from 9.9 times per annum to 13.8 times per annum and resulted in £4.7 million of cash released in the year.
During the year we continued to buy back our shares on the market and spent circa £250,000 and also paid dividends to shareholders amounting to £367,000. The total outflow from these discretionary payments (including the freehold purchase) amounted to £7.4 million.
Excluding these discretionary elements, we had a positive cash flow in the year of over £1 million which compared with an equivalent cash outflow for the previous year of £2.5 million
Dividend
Without revisiting the strength of our cash, free stock and debtor financial resources, your Board is proposing to pay a final dividend of 0.75 pence per share for the year.
As chairman and with a substantial shareholding, I am conscious of the impact that my contractual salary could have on the finances of the company. I have followed the principle of prior years and again waived a large portion of my contractual £180,000 p.a. service contract salary. Against last year's salary taken of £90,000, for the year just ended it was further reduced to £15,000 and commensurate with our non-executive directors remuneration.
Taking into account the results for the year, the reduction in our total cash resources after the £6.8 million warehouse purchase referred to above, and the disappointing start to the year, the board is of the opinion that the dividend should be restricted to the 0.75p per share being proposed, compared to the 1.0 p per share final proposed last year.
Staff
With the UK's economic malaise and reduced enthusiasm for capital expenditure, it was an unpleasant but necessary action to make a reduction in our workforce by 13 over the year. We are very appreciative of the dedication and hard work of our staff in achieving a positive outcome and furthered the restructure of our business model.
Outlook
Although we cannot fully counteract the general economic and sector downturn and feeling of depression, we had "bucked the trend" and operated at a profit before tax for the period ended 30th June.
However, we strongly felt the Olympics had an adverse effect on trade resulting in reduced economic activity with turnover being at a lower level. Combined with the extended "holiday effect" this unavoidably means that the first quarter of the current year is not looking as encouraging as we might otherwise have expected. Nevertheless we continue with our proven policy of attention to the basics, balance sheet strength, solvency and concentration on profitable activities.
D.M.Phillips
Chairman
27 September 2012
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2012
2012 2011
Total Total
£'000 £'000
Revenue 100,615 121,083
Cost of sales (92,807) (112,795) ________ ________
Gross profit 7,808 8,288
Distribution costs (4,267) (4,720)
Administrative expenses (3,638) (3,814)
________ ________
(Loss) from operations (97) (246)
Investment revenue 134 140
________ ________
Profit/(Loss) before tax 37 (106)
Tax (charge)/credit (39) 7
__ ________
(Loss) for the year and total comprehensive (loss) (2) (99)
======== =======
Basic and diluted (loss) per ordinary share (0.01)p (0.34)p
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 30 June 2012
2012 2011
£'000 £'000
Non current assets
Property, plant and equipment 9,050 2,527
Current assets
Inventories 6,733 11,415
Trade and other receivables 14,659 16,670
Cash and cash equivalents 4,304 10,701
Tax assets - 80
_____ _____
25,696 38,866
_____ _____
Total assets 34,746 41,393
_____ _____
Current liabilities
Trade and other payables (10,575) (16,603)
______ ______
(10,575) (16,603)
______ ______
Non current liabilities
Deferred tax liabilities (45) (45)
_______ ______
Total liabilities (10,620) (16,648)
_______ ______
_______ ______
Net assets 24,126 24,745
====== ======
Equity
Share capital 281 286
Share premium account 5,734 5,734
Capital redemption reserve 1,505 1,500
Retained earnings 16,606 17,225
_______ ______
Equity shareholders' funds 24,126 24,745
====== ======
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2012
2012 2011
£'000 £'000
Cash inflow from operating activities
Operating (loss)/profit from continuing operations (97) (246)
Depreciation of property, plant and equipment 277 247
(Profit) on disposal of property, plant and equipment (10) -
______ _____
Operating profit before changes in working capital 170 1
Decrease/(increase) in inventories 4,682 (1,093)
Decrease/(increase) in trade and other receivables 2,011 (991)
(Decrease) in trade and other payables (6,030) (437)
Cash generated/(used) from operations 833 (2,520)
Income taxes repaid/(paid) 43 (83)
Net cash from/(used in) operating activities 876 (2,603)
Cash flows from investing activities
Interest received 134 140
Proceeds from disposal of property, plant and equipment 10 -
Purchase of property, plant and equipment (6,800) (79)
Net cash (used)/generated from investing activities (6,656) 61
Cash flows from financing activities
Purchase of own shares for cancellation (250) (192)
Dividends paid to equity shareholders (367) (578)
Net cash used in financing activities (617) (770)
Net (decrease) in cash and cash equivalents (6,397) (3,312)
Cash and cash equivalents at beginning of year 10,701 14,013
Cash and cash equivalents at end of year 4,304 10,701
_____ ______
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
At 30 June 2012
Share Capital Retained Total
Share premium redemption earnings equity
Capital account reserve
£'000 £'000 £'000 £'000 £'000
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)
______ ______ ______ ______ ______
Transactions with owners (3) - 3 (770) (770)
Loss and total comprehensive loss for the year - - - (99) (99)
______ ______ ______ ______ ______
Balance at 30 June 2011 286 5,734 1,500 17,225 24,745
Dividends - - - (367) (367)
Purchase of own shares (5) - 5 (250) (250)
______ ______ ______ ______ ______
Transactions with owners (5) - 5 (617) (617)
Loss and total comprehensive loss for the year - - - (2) (2)
Balance at 30 June 2012 281 5,734 1,505 16,606 24,126
====== ====== ====== ====== ======
Notes
1. Financial information
The financial information set out above does not constitute the group's statutory accounts for the years ended 30 June 2011 or 30 June 2012, but is derived from those accounts. The statutory accounts for the year ended 30 June 2011 have been delivered to the Registrar of Companies and those for 2012 will be delivered following the group's annual general meeting. The auditors have reported on these accounts, their reports were unqualified and did not contain statements under s.498(2) or (3) of the Companies Act 2006. The information contained in this statement does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006.
2. Segmental Reporting
Management has determined that there is only one operating segment of the group as the total business of the company is the sourcing and distribution of computer related products and this is how information is reported to the Chief Operating Decision Maker. The board in carrying out its strategic planning and decision making has, necessarily, to take consideration of the inter relatedness of the product range and the customer base and thus treat the operations of the group as a whole. All decisions on the allocation of resources impacts on all aspects of the group. Information presented to the Chief Operating Decision Maker is the same as is reported in these financial statements.
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 Italy Austria Sweden Other Total
Year to 30 June 2011 £'000 £'000 £'000 £'000 £'000 £'000
Total Segment revenue 102,506 264 2,433 7,839 8,041 121,083
Year to 30 June 2012
Total Segment revenue 97,790 1,453 0 0 1,372 100,615
No one customer accounted for 10% or more of the group's revenue for the year.
3. Loss per ordinary share
The calculation of the basic and diluted earnings per share is based on the following data:
2012 2011
(Loss) for the £'000 £'000
year attributable to equity holders of the
parent company (2) (99)
==== ====
2012 2011
Number of shares Number Number
Weighted average number of ordinary shares
for the purpose of basic earnings per share and 28,336,868 28,881,475
diluted earnings per share ========= =========
4. Dividends
A final dividend of 0.75p per share will be paid on 18 January 2012 to those members on the register at close of business on 7 December 2012.
5. Notice of meeting
The annual report accounts for the year ended 30 June 2012 will be posted to shareholders in due course and the Annual General Meeting will be held on 4 December 2012.
The Company's registered office is Namber House, 23 Davis Road, Chessington, Surrey KT9 1HS.
For further information, please contact:
Northamber plc 020 8296 7000
David Phillips
FoxDavies Capital 020 3463 5000
Simon Leathers
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