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    Half-year Report

    Picture of Northamber logoNorthamber
    12/02/2021 07:00
    RNS Number : 8734O

Northamber PLC

12 February 2021

 

Northamber PLC

("Northamber" or the "Company" or the "Group")

 

Interim Report for the Six months to 31 December 2020

 

Chairman's Statement

 

Results

 

We are very pleased to be able to report an operating profit driven by year-on-year gross margin growth and year-on-year revenue growth for the last 6 months despite challenging market conditions.

 

Our early decision to stay true to our values and prioritise our team and partners by avoiding any furlough or COVID related cuts, evolved during the period and we invested further in growing our teams, all of which has proven fruitful. Revenues increased 13% in the first half from £26.3 million to £29.6 million for the comparative period last year. More significantly, this revenue growth was combined with a significant increase in Gross Margin from 8.8% to 12.8%; the cumulative effect of both was to increase Gross Profit by £1.5m from £2.3 million to £3.8 million, an increase of 65%. The improvement in Gross Margin resulted from our evolving product mix towards higher margin, more technical products through Northamber and AVM.

 

Previously discussed lockdown challenges have impacted performance in some of our strategic business units and our subsidiary AVM, as site restrictions limited access for higher end projects but we are hopeful of improved performance as these restrictions ease later in 2021 and beyond.

 

It is clearly pleasing to see a 65% increase in Gross Profit year on year however our focus on efficiency and cost management remains strong; we remain focused on optimising the business for long term results and investing as needed to drive this. Our warehouse changes in the last financial year was a significant undertaking and we are seeing the benefits through an improved cost base, whilst still providing significant capacity to scale the business further.

 

To support this increase in Gross Profit, and in anticipation of continued growth, our Distribution costs increased year on year from £1.53 million to £2.28 million; part of this costs increase also came from the addition of AVM to the group. Administrative costs also increased marginally from £1.15 million to £1.29 million as we continue to invest to support our future plans.

 

Financial position

 

Stock levels are higher than last year at £8.4 million against £4.5 million, in part due to the AVM acquisition, and also as we continued to seek to profitably support our partners by maintaining sufficient stock in country during the uncertainty of logistics derived from Brexit and COVID impacts on supply chains. We see our flexibility on local stock levels as a key driver of our future with our partners, who have recognised the benefits of Northamber's financial strength in underpinning this.

 

Cash was £10.8 million at 31 December 2020 compared with £14.7 million at 31 December 2019, reflecting the sale of the Brooklands distribution centre and the purchase of the new Swindon warehouse, the acquisition of AVM and a new office, where AVM is now located. With Fixed Assets at book value at £7.1 million, including three unencumbered freehold properties, the Group's overall financial position is very sound.

 

Net Assets at 92.3p per share are considerably in excess of the average price of the ordinary shares throughout the period.

 

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 £81,695. The dividend will be paid on 27 May 2021 to shareholders on the register as at 30 April 2021.

 

Staff

 

The Board remain grateful and pleased for how our team continues to pull together to flexibly support our partners and each other through these unprecedented times. We strongly believe that our staff are a key differentiator for our business and we are delighted to be able to continue to grow with them and offer them continued job security. We intend to continue to invest in our evolving business model by continuing to invest in building out the best team in the market to achieve our business evolution.

 

Outlook 

 

In keeping with the outlook we shared in our recently published full year results, we remain cautiously optimistic that the investments we have made in supporting our partners coupled with removing the one off costs tied to moving warehouse should be reflected in the trading results for the current financial year and allow us to build on our profitable first half. We necessarily remain cautious due to the economic uncertainty, Brexit and the potential further impact of COVID on demand and the supply chain, but feel strongly that our continued focus on strategic higher margin value categories provides a solid road map for the future with profitable growth opportunities and the ability to unlock long term value for shareholders. 

The strength of our balance sheet allows us to continue to do what is best for the business strategically and we continue to review organic and non-organic opportunities for growth which meet our strict criteria and add value for our shareholders.

 

C.M.Thompson

Chairman

 

12 February 2021

 

 

Contacts:

 


    Northamber PLC  Tel: +44 (0) 208 744 8200
    Colin Thompson, Chairman    		investor_relations@northamber.com
    N+1 Singer(Nominated Adviser and Sole Broker)Tel: +44 (0) 207 496 3000
    Philip Davies (Corporate Finance)
    Alex Bond (Corporate Finance)
    

 

 

 

 

 


    Consolidated Statement of Comprehensive Income
    6 months to 31 December 2020
    6 months6 monthsYear
    EndedEndedEnded
    31.12.2031.12.1930.06.20
    £'000£'000£'000
    UnauditedUnauditedAudited
    Revenue29,67926,27352,835
    Cost of sales(25,878)(23,972)(47,998)
    Gross Profit3,8012,3015,478
    Distribution cost(2,284)(1,533)(3,601)
    Administrative costs(1,294)(1,152)(2,613)
    Administrative costs-Exceptional acquisition costs--(220)
    Other income-Exceptional gain on disposal of property-10,20310,804
    Profit from operations2239,8199,848
    Investment revenue716792
    Finance cost--(15)
    Profit before Tax2309,9869,925
    Tax charge-(1,643)(1,413)
    Profit and total comprehensive
    Income for the period2308,3438,512
    Basic and diluted profit per ordinary share
    		0.84p30.50p31.16p
    

 

 

 

 

Consolidated Statement of Financial Position

As At 31 December 2020

 


    6 months Ended 31.12.206 months
    Ended 31.12.19    		Year Ended
    30.06.20
    £'000
    Unaudited    		£'000
    Unaudited    		£'000
    Audited
    Non -current assets
    Property, plant and equipment7,1025,1697,184
    Goodwill and intangible assets1,391-1,421
    8,4935,1698,605
    Current assets
    Inventories8,4014,4585,948
    Trade and other receivables8,8218,1377,750
    Cash and cash equivalents10,80214,67510,968
    28,02427,27024,666
    Total assets36,51732.43933,271
    Current liabilities
    Trade and other payables(11,372)(7,461)(8,356)
    Total liabilities(11,372)(7,461)(8,356)
    Net assets25,14524,97824,915
    Equity
    Share capital272273272
    Share premium account5,7345,7345,734
    Capital redemption reserve1,5141,5131,514
    Treasury shares-(7)-
    Retained earnings17,62517,46517,395
    Equity shareholders' funds attributable to the owners of the parent25,14524,97824,915
    

 

 

 

Company Statement of Financial Position

As At 31 December 2020

 


    6 Months Ended
    31.12.20    		6 months Ended
    31.12.19    		Year Ended
    30.06.20
    £'000
    Unaudited    		£'000
    Unaudited    		£'000
    Audited
    Non -current assets
    Property, plant and equipment1,6871,7301,748
    Investments2,1356,5882,135
    3,8228,3183,883
    Current assets
    Inventories7,7484,4585,304
    Trade and other receivables8,2487,9747,509
    Cash and cash equivalents7,8093,0124,700
    23,80515,44417,513
    Total assets27,62723,76221,396
    Current liabilities
    Trade and other payables(14,684)(10,945)(8,709)
    Total liabilities(14,684)(10,945)(8,709)
    Net assets12,94312,81712,687
    Equity
    Share capital272273272
    Share premium account5,7345,7345,734
    Capital redemption reserve1,5141,5131,514
    Treasury shares-(7)-
    Retained earnings5,4235,3045,167
    Equity shareholders' funds attributable to the owners of the parent12,94312,81712,687
    

 

 

 

 


    Consolidated Statement of Changes in Equity
    As at 31 December 2020
    Share capitalShare premium accountCapital redemption reserveTreasury SharesRetained earningsTotal Equity
    £'000£'000£'000£'000£'000£'000
    Period to 31 December 2019
    Unaudited
    Balance at 1 July 20192735,7341,513(7)9,12216,635
    Dividends------
    Profit and total comprehensive
    income for the period----8,3438,343
    Balance at 31 December 20192735,7341,513-17,46524,978
    Period to 31 December 2020
    Unaudited
    Balance at 1 July 20202725,7341,514-17,39524,915
    Dividends------
    Profit and total comprehensive
    Income for the period----230230
    Balance at 31 December 20202725,7341,514-17,62525,145
    Year to 30 June 2020
    Audited
    Balance at 1 July 20192735,7341,513(7)9,12216,635
    Dividends----(164)(164)
    Purchase and cancellation of shares(1)-1(68)(68)
    Purchase of Treasury shares---7(7)-
    Transactions with owners(1)-17(239)(232)
    Profit and total comprehensive
    income for the period----8,5128,512
    Balance at 30 June 20202725,7341,514-17,39524,915
    

 

 

 


    Company Statement of Changes in Equity
    As at 31 December 2020
    Share capitalShare premium accountCapital redemption reserveTreasury SharesRetained earningsTotal Equity
    £'000£'000£'000£'000£'000£'000
    Period to 31 December 2019
    Unaudited
    Balance at 1 July 20192735,7341,513(7)5,58713,100
    Dividends-----
    Loss and total comprehensive
    loss for the period----(283)(283)
    Balance at 31 December 20192735,7341,513(7)5,30412,817
    Period to 31 December 2020
    Unaudited
    Balance at 1 July 20202725,7341,514-5,16712,687
    Dividends-----
    Profit and total comprehensive
    income for the period----256256
    Balance at 31 December 20202725,7341,514-5,42312,943
    Year to 30 June 2020
    Audited
    Balance at 1 July 20192735,7341,513(7)5,58713,100
    Dividends----(164)(164)
    Purchase and cancellation of shares(1)-1(68)(68)
    Purchase of Treasury shares---7(7)-
    Transactions with owners(1)-17(239)(232)
    Loss and total comprehensive
    loss for the year----(181)(181)
    Balance at 30 June 20202725,7341,514-5,16712,687
    

 

 

 


    Consolidated Statement of Cash Flows
    6 months to 31 December 2020
    6 months6 monthsYear
    EndedEndedEnded
    31.12.2031.12.1930.06.20
    £'000£'000£'000
    UnauditedUnauditedAudited
    Cash from operating activities
    Operating profit from
    continuing operations2239,8199,848
    Depreciation of property, plant
    and equipment16762228
    Amortisation of intangible assets30--
    (Profit)/loss on disposal of property,-(10,203)(10,982)
    plant and equipment
    Operating profit/(loss) before changes in
    working capital420(322)(906)
    (Increase)/decrease in inventories(2,453)(1,138)(2,039)
    (Increase)/decrease in trade and
    other receivables(1,070)1,3552,899
    Increase/(decrease) in trade and
    other payables3,015(1,616)(1,172)
    Cash (used)/generated from operations(88)(1,721)(1,218)
    Income taxes received/(paid)---
    Net cash from operating activities(88)(1,721)(1,218)
    Cash flows from investing activities
    Interest received716792
    Interest paid--(15)
    Proceeds from disposal of property,
    plant and equipment-16,22216,400
    Purchase of property, plant and
    Equipment(85)(3,439)(5,370)
    Purchase of AVM Ltd--(2,135)
    Net cash from investing activities(78)12,9508,972
    Cash flows from financing activities
    Dividends paid to equity shareholders--(164)
    Purchase of own shares for cancellation--(68)
    Net cash used in financing activities--(232)
    Net (decrease)/increase in cash and
    cash equivalents(166)11,2297,522
    Cash and cash equivalents at
    beginning of period10,9683,4465,446
    Cash and cash equivalents at end of period10,80214,67510,968
    Company Statement of Cash Flows
    6 months to 31 December 2020
    6 months6 monthsYear
    EndedEndedEnded
    31.12.2031.12.1930.06.20
    £'000£'000£'000
    UnauditedUnauditedAudited
    Cash from operating activities
    Operating profit/(loss) from
    continuing operations249(393)(198)
    Depreciation of property, plant
    and equipment6862131
    Operating profit/(loss) before changes in
    working capital317(331)(67)
    (Increase)/decrease in inventories(2,444)(1,138)(1,984)
    (Increase)/decrease in trade and
    other receivables(739)1,5181,983
    Increase/(decrease) in trade and
    other payables5,975(476)(2,703)
    Cash generated/(used) from operations3,109(418)(2,771)
    Income taxes received/(paid)---
    Net cash from operating activities3,109(418)(2,771)
    Cash flows from investing activities
    Interest received711017
    Purchase of property, plant and
    Equipment(7)-(87)
    Purchase of AVM Ltd--(2,135)
    Repayment of long term loan held as investment--6,588
    Net cash from investing activities-1104,383
    Cash flows from financing activities
    Dividends paid to equity shareholders--(164)
    Purchase of own shares for cancellation--(68)
    Net cash used in financing activities--(232)
    Net increase/(decrease) in cash and
    cash equivalents3,109(308)1,380
    Cash and cash equivalents at
    beginning of period4,7003,3203,320
    Cash and cash equivalents at end of period7,8093,0124,700
    

 

 

 

 

Notes to the financial statements

 

1.            Corporate Information

 

The financial information for the half year ended 31 December 2020 set out in this interim report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The auditor's report on the financial statements for the year ended 30 June 2020 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 2020. 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 2020.

 

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 2020 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

 

The consolidated financial statements incorporate the financial statements of Northamber plc and entities controlled by Northamber plc. Control is achieved if all three of the following are achieved: power over the investee, exposure to variable returns for the investee, and the ability of the investor to use its power to affect those variable returns.

 

The results of subsidiaries are included in the consolidated statement of comprehensive income and consolidated statement of financial position.

 

The results of entities acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the effective date of acquisition or up to the effective date of disposal, as appropriate.

 

Where necessary, the accounts of the subsidiaries are adjusted to conform to the group's accounting policies. All intra-group transactions, balances, income and expenses are eliminated on consolidation.

 

 

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.

 


    UKOtherTotal
    £'000£'000£'000
    6 months to December 2020
    Total Segment revenue29,29238729,679
    Year to 30 June 2020
    Total Segment revenue52,39144452,835
    

 

No customer accounted for more than 10% of the Group's revenue during the period.

 

5.            Taxation

 

No tax charge has been provided in the interim consolidated financial statements due to the availability of carried forward losses.

 

6.            Earnings per Share

 

The calculation of earnings per share is based on the Profit after tax for the six months to 31 December 2020 of £230,000 (2019:8,343,000) and a weighted average of 27,231,586 (2019: 27,356,586) ordinary shares in issue.

 

7.            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 10 to 12 of the Annual Report and Accounts for the year ended 30 June 2020 (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

 

·    Brexit risk

 

·    Covid-19 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 A M Phillips is the ultimate controlling party of the Company.

 

During the six months period, the company paid £150,000 (2019: £12,925) rent to Anitass Limited, a wholly owned subsidiary. At 31 December 2020 Northamber plc owed Anitass Ltd £6,325,000 (2019:£4,510,000).

 

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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