REG - Northamber PLC - Final Results
21/11/2024 07:00
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RNS Number : 0467N Northamber PLC 21 November 2024
21 November 2024
Northamber PLC
(the "Company" or the "Group")
Preliminary Results for the year ended 30 June 2024
Chairman's Statement
Results
During the year under review, Northamber took significant, exciting strategic
strides forward that position the Group for a strong mid and long term
performance, albeit the financial performance was disappointing.
Our continued focus on sustainable and healthy gross margin business yielded a
record gross profit percentage of 14.4%, up from 13.3% for the prior year and
continuing a trend of 3 years of gross margin increases. Some of this gross
margin increase came as a result of exiting non-strategic commodity business
which, when combined with a challenging macro-economic background resulted in
a drop in revenue. The gross margin increase was also supported by the
acquisition of leading UC&C distributor Tempura Communications Group at
the end of April 2024 which was margin accretive and should support further
healthy Group gross margins for the long term, with a more significant impact
expected in the current financial year, its first full year of contribution.
Unfortunately, the revenue declines in the first half of FY2024 continued into
the second half and overall revenue declined year on year from £67 million to
£56 million (a 16% decline) as market challenges continued. The gross profit
for the period declined £0.9m to £8m (a 9.7% decline).
During H2 FY2024 we maintained our market share position on key vendors and
remain number 1 or number 2 for most of our key supplier franchises. We are
therefore confident that as the market recovers from the continued economic
downturn we will be in a strong position to capitalise on this. Our focus will
remain on working with suppliers who offer a strong gross profit and strategic
fit where we can add and capture value.
Following a change in management, we did initiate a number of strategies aimed
at stimulating sales, but as these did not deliver the anticipated benefits,
the Board took steps to re-balance the approach taken.
In addition, the Board made key strategic decisions to provide a strong
foundation for sustainable and profitable growth from the current year
onwards, including:
- The acquisition of the Tempura Communications Group, a leading
Value-Add UC&C distributor based in Basingstoke, with a strong services
experience and a presence in the Netherlands and Ireland which will enable us
to grow our European presence. We have already invested in a sales team in
the Netherlands and already have several leading franchises interested in
partnering with us.
- The launch of a new ERP systems launched in the original
Northamber trading business which encompasses all processes of the
organisation from logistics to administration and sales. As is often the case
with a new ERP system this had an impact on the business during transition but
we see this new system as key to driving efficient scalability.
The ERP system roll out continued into the second half of the year with a new
webstore which should also help us improve our customer experience for
customers who prefer to procure online. We remain committed to a proactive,
people-centric business model where we provide a flexible, value add approach
but want to allow our customers to procure as they prefer.
We have also launched a CSOP share option scheme for all employees in the
business; we see this as a strong mechanism for both rewarding our employees
who play a key role in the value of our business as well as firmly aligning
shareholder and employee interests by focusing all the team on shareholder
value.
There were a number of exceptional costs tied to these and other changes
totalling £387k, including £104k of exceptional recruitment or termination
costs, £283k of acquisition and related costs. Our continued investment in
improving and automating processes resulted in IT costs increasing to £231k
up from £157k in the prior year.
After allowing for these exceptional costs combined with the reduction in
Gross Profit this resulted in an adjusted EBTDA loss of £396K vs £3K profit
on EBTDA for the prior year.
Shortly after the start of the current financial year, we announced the
acquisition of Renaissance Contingency Services Limited, a value-add
distributor of cyber security solutions and services in Ireland which as
previously reported will:
· build on Northamber's almost 30 year heritage in Cyber Security; a
core strategic focus area for the Group
· provide European expansion, especially into the Irish market,
following the recent acquisition of Tempura Communications which has an Irish
and Dutch Subsidiary;
· provide strong cross selling opportunities in Ireland with an
enhanced offering in audio-visual, unified communications, and cyber solutions
and services; and
· be value enhancing in the first full year of ownership (FY25), before
consideration of potential synergies, with an expectation that it will be
earnings enhancing from the second year of ownership (FY26)
Financial position
We remain diligent in managing our balance sheet; whilst we have taken some
debt we have done this in a flexible manner through invoice discounting to
allow us to complete acquisitions and react to opportunities.
Cash reserves reduced from £5.5 million at 30 June 2023 to £4.7 million at
30 June 2024, due mainly to the acquisition of Tempura Communications for
£3.3 million of cash with a further deferred consideration of £2.64 million
based on performance over the next 3 years. The group has drawn £2.8 million
of its invoice discounting facility. With Net Assets at £22.4 million,
including two freehold properties, the Group's overall financial position
remains very sound.
Group stock levels remained consistent at £11.8 million, up from £11.4
million the prior year albeit the £11.8 million includes the stock from
Tempura Communications as well. Like for like stock levels reduced to £8.7
million.
Net Assets at 82 p per share are considerably in excess of the average price
of the ordinary shares throughout the period.
Dividend
The Board is proposing a final dividend of 0.3p, at a total cost of £82,240.
The dividend will be paid on 17 January 2025 to shareholders on the register
as at 13 December 2024.
Staff
Our staff remain a key asset for the business and an area we continue to
invest in. The team has continued to work hard to support our partners and
each other. Our plans remain 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
Following the period end, we have had a number of changes coming into effect.
These include
- Acquisition of leading Irish cybersecurity value-add distributor
- Renaissance Contingency Services Limited
- Investment in developing a Group wide services business under
the Avail brand name that will unite expertise across Group companies in our
AV, UC, Cyber security offerings and offer a consistent growth framework.
- A significant cost reduction exercise targeting £750,000 of
annualised savings within Northamber Plc which will start to take effect from
January 2025, with initial benefits seen in the current financial year, before
becoming more fully realised in FY2026.
- Restructure of the senior management team.
We expect to see the benefit of the above in the current financial year,
albeit more so in the second half. As it stands, despite a soft market
impacting Q1 than anticipated, the Group is trading at an EBITDA positive
level year to date and is hopeful of delivering an EBITDA profit for the first
half. Cost savings and the benefit from some new initiatives will benefit H2
and beyond.
Whilst we necessarily remain cautious short term as the UK market continues to
be challenging, we believe we are well positioned to capture business as
demand levels and business confidence hopefully return. Our wider geographic
footprint and investment in strategic acquisitions should also serve to
de-risk the Group.
Mid-term we are optimistic that our focus and investments will allow us to
drive growth of strategic business units and therefore 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. We remain primarily interested in strategic acquisitions in
technical, higher margin distributors who we can help scale and who re-enforce
our strategic focus areas.
Alexander Phillips
Chairman
20 November 20
Contacts:
Northamber PLC Tel: +44 (0) 208 744 8200 investor_relations@northamber.com
Alex Phillips, Chairman
Singer Capital Markets (Nominated Adviser and Sole Broker) +44 (0) 207 496 3000
Philip Davies
investor_relations@northamber.com
Singer Capital Markets (Nominated Adviser and Sole Broker)
+44 (0) 207 496 3000
Philip Davies
NORTHAMBER PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2024
2024 2023
Notes £'000 £'000
Revenue 2 56,008 67,149
Cost of sales (47,969) (58,243)
Gross Profit 8,039 8,906
Distribution costs (5,308) (5,907)
Administrative costs (4,147) (3,491)
Operating Loss (1,416) (492)
87 81
Finance income
Finance cost - -
Loss before tax (1,329) (411)
Tax expense - -
Loss for the year and total comprehensive income attributable to the owners (1,329) (411)
Basic and diluted Loss per ordinary share 3 (4.85) p (1.51)p
NORTHAMBER PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 30 June 2024
2024 2023
£'000 £'000
Non-current assets
Property, plant and equipment 5,835 5,519
Intangible assets 3,933 1,251
9,768 6,770
Current assets
Inventories 11,838 11,447
Trade and other receivables 12,107 12,099
Cash and cash equivalents 4,687 5,512
28,632 29,058
Total assets 38,400 35,828
Current liabilities
Trade and other payables (15,459) (11,951)
- -
Corporation tax payable
Non-current liabilities (456) -
Deferred tax liability
Total liabilities (15,915) (11,951)
Net assets 22,485 23,877
Equity
Share capital 274 272
Share premium account 5,832 5,734
Capital redemption reserve 1,514 1,514
Retained earnings 14,865 16,357
Equity shareholders' funds attributable to the owners of the parent 22,485 23,877
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
At 30 June 2024
Share Capital Share Premium Account Capital Redemption Reserve Retained Earnings Total Equity
£'000 £'000 £'000 £'000 £'000
Balance at 1 July 2022 272 5,734 1,514 16,931 24,451
Dividends - - - (163) (163)
Transactions with owners - - - (163) (163)
Loss and total comprehensive income for the year - - - (411) (411)
Balance at 30 June 2023 272 5,734 1,514 16,357 23,877
Issue of Shares 2 98 - - 100
Dividends - - - (163) (163)
Transactions with owners 2 98 - (163) (63)
Loss and total comprehensive income for the year - - - (1,329) (1,329)
Balance at 30 June 2024 274 5,832 1,514 14,865 22,485
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2024
2024 2023
£'000 £'000
Cash flows from operating activities
Operating Loss from continuing operations (1,416) (492)
Depreciation of property, plant and equipment 180 357
Amortisation of intangible assets 128 58
Profit on disposal of property, plant and - (74)
equipment
Operating loss before changes in working capital (1,108) (151)
Decrease/(Increase) in inventories 2,588 (798)
Decrease/(Increase) in trade and other receivables 2,193 (854)
(Decrease)/Increase in trade and other payables (3,942) 1,622
Cash used in operations (269) (181)
Income taxes paid - (38)
Net cash used in operating activities (269) (219)
Cash flows from investing activities
Interest received 87 81
Proceeds from disposal of Property, plant and equipment - 1,475
Purchase of subsidiaries (net of cash acquired) (2,865) -
Purchase of property, plant equipment (40) (358)
Purchase of software (395) -
Net cash (used in )/generated from investing activities (3,213) 1,198
Cash flows from financing activities
Dividends paid to equity (163) (163)
shareholders
Interest Paid - -
New invoice discounting facility 2,820 -
Net cash generated from/(used in) financing activities 2,657 (163)
Net (decrease)/increase in cash and cash equivalents (825) 816
Cash and cash equivalents at beginning of 5,512 4,696
year
Cash and cash equivalents at end of 4,687 5,512
year
Notes
1. Financial information
This financial information is consistent with the consolidated financial
statements of the group for the year ended 30 June 2024. The group's
consolidated financial statements have been prepared in accordance with
international accounting standards in conformity with the requirements of the
Companies Act 2006.
The financial information set out above does not constitute the group's
statutory accounts for the years ended 30 June 2023 or 30 June 2024 but is
derived from those accounts. The statutory accounts for the year ended 30 June
2023 have been delivered to the Registrar of Companies and those for 2024 will
be delivered following the group's annual general meeting. The auditor's
report on the 2024 accounts will be unqualified, will not include references
to any matters to which the auditors drew attention by way of emphasis without
qualifying their reports, and will 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. Revenue
Although the sales of the group are predominantly to the UK there are sales to
other countries and the following table sets out the split of the sales for
the year. Revenue is attributed to individual countries based on the location
of the customer. There are no non-current assets outside the UK.
Revenues comprise: 2024 2023
£'000 £'000
Revenue from contracts with
customers - UK 55,339 66,489
-other 669 660
56,008 67,149
No customer accounted for more than 10% 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:
2024 2023
£'000 £'000
Loss for the year attributable to equity holders of the parent company (1,329) (411)
2024 2023
Number of shares Number Number
27,261,889 27,231,586
Weighted average number of ordinary shares for the purpose of basic and
diluted earnings per share
4. Dividends
A final dividend of 0.3p per share will be paid on 17 January 2025 to those
members on the register at close of business on 13 December 2024.
5. Notice of meeting
The annual report and accounts for the year ended 30 June 2024 will be posted
to shareholders in due course and the Annual General Meeting will be held on
19 December 2024.
The Company's registered office is Namber House, 23 Davis Road, Chessington,
Surrey, KT9 1HS.
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