RNS Number : 7453E
Northamber PLC
03 March 2020
Northamber PLC
("Northamber" or the "Company" or the "Group")
Interim Report for the Six months to 31 December 2019
Chairman's Statement
Results
It is pleasing to be able to report that we have seen revenues increase in the first half from £24.2 million to £26.3 million for the comparative period last year especially as this has been combined with an increase of percentage Gross Margin from 8.41% to 8.76%; the cumulative effect of both was to increase Gross Profit from £2.04 million to £2.3 million. Revenue and margin growth has been supported by growth from some of our strategic focus areas including Audio Visual and Solutions.
To support this increase in Gross Profit and the planned continued growth in Gross Profits our Distribution costs increased year on year from £1.39 million to £1.53 million. Administrative costs remained largely consistent year on year as we continued our focus on cost management meaning that our loss from operations for the first half was reduced from £0.5 million to £0.4million.
The Group sold its Weybridge distribution centre for £16.4 million against a net book value of £6.02 million. The Group also paid £0.18 million for legal and professional costs for the sale of the property. The gain on the sale is reported as an Exceptional Item. The Board were cautious to ensure this sale would not disrupt our core operations and were pleased to have agreed a sale and leaseback on the Weybridge distribution centre (at a rental cost of £85k for the first half) to allow us time to find a new suitable site and effect a move with the minimum possible disruption to our trading activity. A new warehouse has been purchased in Swindon for £3.2 million and we expect to complete the move from Weybridge during the second half of this financial year.
Financial position
Maintaining our prudence in financial matters, our working capital management is reflected in the Net Current Assets ratio which at 3.7 times (2018: 2.6 times) is a significant improvement.
Cash was £14.7 million at 31 December 2019 compared with £2.9 million at 31 December 2018, reflecting the sale of the distribution centre and the purchase of the new warehouse property. With Fixed Assets at book value at £5.2 million, including two unencumbered freehold properties, the Company's overall financial position is sound.
Net Assets at 91.3p per share are considerably in excess of the average price of the ordinary shares throughout the period.
Board
With great sadness, we lost our founder and Chairman David Phillips in December 2019. David made a very significant contribution to the development and leadership of the Company since he founded Northamber in 1980 and he will be greatly missed.
We are pleased to welcome David's son Alex Phillips who has recently joined our very experienced Board as Commercial Director. Alex joined the Company in 2013 as Director of Strategy and gained valuable experience of the business and the wider sector.
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 £82,070. The dividend will be paid on 15 May 2020 to shareholders on the register as at 16 April 2020.
Staff
We continue to invest in our evolving business model with added skills based services and which are heavily reliant on our staff to achieve our business case evolution and I am very grateful to all of our staff for their continued support and flexibility.
Event after the reporting date.
In January 2020 the Company acquired Audio Visual Material Limited (AVM), an Audio Visual Distributor, to enhance and expand Northamber's specialist AV division to focus on driving higher margin profitable growth. I am pleased to report the integration of AVM is going well and the Board is confident that the business will make an important contribution to Northamber in the years ahead.
Outlook
Whilst we are optimistic in the long-term strategy, we remain cautious due to the economic uncertainty, Brexit and the potential impact of coronavirus on the supply chain. Our continued focus on the new higher margin value categories continues to be an area we are confident and excited about, and where we see future opportunities for organic growth. We will continue to review non-organic opportunities for growth should an appropriate acquisition be identified which meets our strict criteria and adds value for our shareholders.
G.P.Walters
Acting Chairman
3 March 2020
Consolidated Statement of Comprehensive Income
6 months to 31 December 2019
6 months
6 months
Year
Ended
Ended
Ended
31.12.19
31.12.18
30.06.19
£'000
£'000
£'000
Unaudited
Unaudited
Audited
Revenue
26,273
24,234
50,329
Cost of sales
(23,972)
(22,197)
(45,998)
Gross Profit
2,301
2,037
4,331
Distribution cost
(1,533)
(1,392)
(2,849)
Administrative costs
(1,152)
(1,142)
(2,352)
Loss from operations
(384)
(497)
(870)
Investment revenue
167
144
272
Loss before Exceptional Items and tax
(217)
(353)
(598)
Exceptional Item
10,203
-
-
Profit/ (Loss) before Tax
9,986
(353)
(598)
Tax(charge)
(1,643)
-
-
Profit/(Loss) and total comprehensive income
for the period
8,343
(353)
(598)
Basic and diluted profit/ (loss) per ordinary share
30.50p
(1.28)p
(2.17)p
Consolidated Statement of Financial Position
As at 31 December 2019
As at
As at
As at
31.12.19
31.12.18
30.06.19
£'000
£'000
£'000
Unaudited
Unaudited
Audited
Non current assets
Property, plant and equipment
5,169
7,799
1,792
Current assets
Inventories
4,458
4,193
3,320
Trade and other receivables
8,137
7,662
9,492
Cash and cash equivalents
14,675
2,931
3,446
Assets classified as held for sale
-
-
6,019
27,270
14,786
22,277
Total assets
32,439
22,585
24,069
Current liabilities
Trade and other payables
(7,461)
(5,643)
(7,434)
Total liabilities
(7,461)
(5,643)
(7,434)
Net assets
24,978
16,942
16,635
Equity
Share capital
273
273
273
Share premium account
5,734
5,734
5,734
Capital redemption reserve fund
1,513
1,513
1,513
Treasury shares
(7)
-
(7)
Retained earnings
17,465
9,422
9,122
Equity shareholders' funds
24,978
16,942
16,635
Company Statement of Financial Position
As at 31 December 2019
As at
As at
As at
31.12.19
31.12.18
30.06.19
£'000
£'000
£'000
Unaudited
Unaudited
Audited
Non current assets
Property, plant and equipment
1,730
1,783
1,792
Investments
6,588
6,588
6,588
8,318
8,371
8,380
Current assets
Inventories
4,458
4,193
3,320
Trade and other receivables
7,974
7,665
9,492
Cash and cash equivalents
3,012
2,871
3,320
15,444
14,729
16,132
Total assets
23,762
23,100
24,512
Current liabilities
Trade and other payables
(10,945)
(9,442)
(11,412)
Total liabilities
(10,945)
(9,442)
(11,412)
Net assets
12,817
13,658
13,100
Equity
Share capital
273
273
273
Share premium account
5,734
5,734
5,734
Capital redemption reserve fund
1,513
1,513
1,513
Treasury shares
(7)
-
(7)
Retained earnings
5,304
6,138
5,587
Equity shareholders' funds
12,817
13,658
13,100
Consolidated Statement of Changes in Equity
As at 31 December 2019
Share capital
Share premium account
Capital redemption reserve
Treasury Shares
Retained earnings
Total Equity
£'000
£'000
£'000
£'000
£'000
£'000
Period to 31 December 2018
Unaudited
Balance at 1 July 2018
281
5,734
1,505
-
10,000
17,520
Dividends
-
-
-
-
-
-
Loss and total comprehensive
Purchase of own Shares for cancellation
(8)
-
8
(225)
(225)
loss for the period
-
-
-
-
(353)
(353)
Balance at 31 December 2018
273
5,734
1,513
-
9,422
16,942
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
-
-
-
-
8,343
8,343
Profit for the period
Balance at 31 December 2019
273
5,734
1,513
(7)
17,465
24,978
Year to 30 June 2019
Audited
Balance at 1 July 2018
281
5,734
1,505
-
10,000
17,520
Dividends
-
-
-
-
(55)
(55)
Purchase and cancellation of shares
(8)
8
(225)
(225)
Purchase of Treasury shares
(7)
(7)
Transactions with owners
(8)
-
8
(7)
(280)
(287)
Loss and total comprehensive
loss for the period
-
-
-
(598)
(598)
Balance at 30 June 2019
273
5,734
1,513
(7)
9,122
16,635
Company Statement of Changes in Equity
As at 31 December 2019
Share capital
Share premium account
Capital redemption reserve
Treasury Shares
Retained earnings
Total Equity
£'000
£'000
£'000
£'000
£'000
£'000
Period to 31 December 2018
Unaudited
Balance at 1 July 2018
281
5,734
1,505
-
6,980
14,500
Dividends
-
-
-
-
-
Purchase and cancellation of shares
(8)
-
8
(225)
(225)
Loss and total comprehensive
loss for the period
-
-
-
-
(617)
(617)
Balance at 31 December 2018
273
5,734
1,513
-
6,138
13,658
Period to 31 December 2019
Unaudited
Balance at 1 July 2019
273
5,734
1,513
(7)
5,587
13,100
Dividends
-
-
-
-
-
Purchase of own shares for cancellation
-
-
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
Year to 30 June 2019
Audited
Balance at 1 July 2018
281
5,734
1,505
6,980
14,500
Dividends
-
-
-
(55)
(55)
Purchase and cancellation of shares
(8)
8
(225)
(225)
Purchase of Treasury shares
(7)
(7)
Transactions with owners
(8)
-
8
(7)
(280)
(287)
Loss and total comprehensive
loss for the period
-
-
-
-
(1,113)
(1,113)
Balance at 30 June 2019
273
5,734
1,513
(7)
5,587
13,100
Consolidated Statement of Cash Flows
6 months to 31 December 2019
6 months
6 months
Year
Ended
Ended
Ended
31.12.19
31.12.18
30.06.19
£'000
£'000
£'000
Unaudited
Unaudited
Audited
Cash from operating activities
Operating (loss) from
continuing operations
(384)
(497)
(870)
Depreciation of property, plant
and equipment
62
95
153
(Profit)/loss on disposal of property,
-
-
-
plant and equipment
Operating (loss) before changes in
working capital
(322)
(402)
(717)
(Increase)/decrease in inventories
(1,138)
(815)
58
Decrease/(increase) in trade and
other receivables
1,355
483
(1,346)
(Decrease)/increase in trade and
other payables
(1,616)
(1,321)
470
Cash (used)/generated from operations
(1,721)
(2,055)
(1,535)
Income taxes received/(paid)
-
-
-
Net cash from operating activities
(1,721)
(2,055)
(1,535)
Cash flows from investing activities
Interest received
167
144
272
Proceeds from disposal of property,
plant and equipment
16,222
-
-
Purchase of property, plant and
Equipment
(3,439)
-
(71)
Net cash from investing activities
12,950
144
201
Cash flows from financing activities
Dividends paid to equity shareholders
-
-
(55)
Purchase of own shares for cancellation
-
(225)
(225)
Purchase of Treasury shares
-
-
(7)
Net cash used in financing activities
-
(225)
(287)
Net (decrease)/increase in cash and
cash equivalents
11,229
(2,136)
(1,621)
Cash and cash equivalents at
beginning of period
3,446
5,067
5,067
Cash and cash equivalents at end of period
14,675
2,931
3,446
Company Statement of Cash Flows
6 months to 31 December 2019
6 months
6 months
Year
Ended
Ended
Ended
31.12.19
31.12.18
30.06.19
£'000
£'000
£'000
Unaudited
Unaudited
Audited
Cash from operating activities
Operating (loss) from
continuing operations
(393)
(696)
(1,385)
Depreciation of property, plant
and equipment
62
58
120
(Profit)/loss on disposal of property,
plant and equipment
-
-
-
Operating (loss) before changes in
working capital
(331)
(638)
(1,265)
(Increase)/decrease in inventories
(1,138)
(815)
58
Decrease/(increase) in trade and
other receivables
1,518
480
(1,347)
(Decrease)/increase in trade and
other payables
(467)
(1,044)
926
Cash (used)/generated from operations
(418)
(2,017)
(1,628)
Income taxes received/(paid)
-
-
-
Net cash from operating activities
(418)
(2,017)
(1,628)
Cash flows from investing activities
Interest received
110
79
272
Proceeds from disposal of property,
plant and equipment
-
-
-
Purchase of property, plant and
Equipment
-
-
(71)
Net cash from investing activities
110
79
201
Cash flows from financing activities
Dividends paid to equity shareholders
-
-
(55)
Purchase of own shares for cancellation
-
(225)
(225)
Purchase of Treasury shares
-
-
(7)
Net cash used in financing activities
-
(225)
(287)
Net (decrease)/increase in cash and
cash equivalents
(308)
(2,163)
(1,714)
Cash and cash equivalents at
beginning of period
3,320
5,034
5,034
Cash and cash equivalents at end of period
3,012
2,871
3,320
Notes to the financial statements
1. Corporate Information
The financial information for the half year ended 31 December 2019 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 2019 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's AIM market.
2. Basis of preparation
These interim consolidated financial statements are for the six months ended 31 December 2019. 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 2019.
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 2019 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
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. 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 2019
Total Segment revenue
26,172
101
26,273
Year to 30 June 2019
Total Segment revenue
49,655
674
50,329
One customer accounted for more than 10% of the Group's revenue for the period, being £3.27million.
5. Taxation
The interim period tax charge is accrued on the estimated average annual effective tax rate of 19%.
6. Earnings per Share
The calculation of earnings per share is based on the Profit after tax for the six months to 31 December 2019 of £8,343,000 (2018: loss £353,000) and a weighted average of 27,356,586 (2018: 27,639,779) ordinary shares in issue.
7. Property, Plant and Equipment
The Group sold its freehold distribution centre on 8 July 2019 and purchased a new warehouse property on 12 December 2019.
8. 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 7 to 11 of the Annual Report and Accounts for the year ended 30 June 2019 (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
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 D M Phillips (Deceased) is the ultimate controlling party of the Company.
During the six months period, the Company paid £12,925 (2018: £235,500) rent to Anitass Limited, a wholly owned subsidiary. At 31 December 2019 Northamber plc owed Anitass Ltd £4,510,000 (2018: £3,793,000).
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.
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