REG - Northamber PLC - Half-year Report
Northamber PLC
("Northamber" or the "Company")
Interim Report for the Six months to 31 December 2018
Chairman's Statement
Results
Having reported a strong and encouraging performance for the full year to June 2018, it is disappointing to report that the commercial sector upon which our B2B offering is focussed has been negatively impacted by the widespread Brexit malaise hanging over us all. Back in September 2018, I did highlight the difficulties of forecasting future performance but as ever we have worked hard to maximise our opportunities and exert influence over those factors we do have in our control.
In the first half we have seen revenues fall from £31.7 million to £24.2 million for the comparative period last year, although this has reflected our planned refocusing of our core business case and it is worth noting that revenues in the second half of the year ended 30 June 2018 were £26.5 million. What I am pleased to report is that the trend of improvement in the Gross Profit margin has continued, increasing from 7.6% to 8.4% in the first half, alongside lower overheads including distribution costs.
Frustratingly, a supplier for a significant new product area breached our contract during the first half which results in lost sales and contribution. We took swift legal action against this supplier, and a related party, which could result in a settlement in our favour. The matter has yet to be concluded, but has so far resulted in an interim award judgement in our favour of £431,000 plus costs. More importantly, we have secured replacement vendors and those results will start coming on stream during the second half of our financial year.
Partly as a result of the event reported immediately above, at the pre-tax level we made a loss of £353,000 compared with a £201,000 loss in the comparative period a year ago. As stated, we nonetheless gained improvement in our gross margins, whilst continued proactive cost monitoring resulted in overhead economies in both Distribution and Administration compared with the comparative period last year, with a comparative saving of £113,000 for the period.
Financial position
Maintaining our prudence in financial matters, our working capital management is reflected in the Net Current Assets ratio which at 2.6 times (2018: 2.0 times) is a healthy improvement.
Free Cash was £2.9 million at 31 December 2018 compared with £2.2 million at 31 December 2017. With Fixed Assets at book value at £7.8 million, including two unencumbered freehold properties whose value is, in the Board's strong view, in excess of book, the Company's overall financial position is sound.
Net Assets at 61.9p per share are considerably in excess of the average price of the ordinary shares throughout the period.
Board
I am very pleased to highlight that Colin Thompson has recently joined the board as a non-executive director and who will support my own role. Colin originally joined the Company in 1982 and was a board director from September 1991 until January 1999. He was instrumental in the design, construction and effective efficiencies of all our IT and logistics systems.
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 0.1p, at a total cost of only £27,357. The dividend will be paid on 13th May 2019 to shareholders on the register as at 12th April 2019.
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.
Outlook
My comments in previous statements, especially those made in recent years, have tended to be cautionary, which by and large has been borne out in actual outcomes.
As regards the current underlying trading position, the state of the economy at large, the extremely and damaging fluid Brexit scenario, and the associated effects on our own sector offers, offer no greater incentive for optimism now than they have in the past. 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 our future opportunities.
D.M. Phillips
Chairman
8th March 2019
For more information please contact:
Northamber plc
020 8296 7000
David Phillips, Chairman
Cantor Fitzgerald Europe (Nominated Adviser & Broker)
020 7894 7000
Phil Davies / Michael Boot
Consolidated Statement of Comprehensive Income
6 months to 31 December 2018
6 months
6 months
Year
Ended
Ended
Ended
31.12.18
31.12.17
30.06.18
£'000
£'000
£'000
Unaudited
Unaudited
Audited
Revenue
24,234
31,659
58,136
Cost of sales
(22,197)
(29,239)
(53,589)
Gross Profit
2,037
2,420
4,547
Distribution cost
(1,392)
(1,471)
(2,850)
Administrative expenses
(1,142)
(1,176)
(2,276)
(Loss) from operations
(497)
(227)
(579)
Investment revenue
144
26
90
(Loss) before tax
(353)
(201)
(489)
Tax credit/(charge)
-
-
-
Loss and total comprehensive income
for the period
(353)
(201)
(489)
Basic and diluted (loss) per ordinary share
(1.28)p
(0.71)p
(1.74)p
Consolidated Statement of Financial Position
As at 31 December 2018
As at
As at
As at
31.12.18
31.12.17
30.06.18
£'000
£'000
£'000
Unaudited
Unaudited
Audited
Non current assets
Property, plant and equipment
7,799
7,953
7,894
Current assets
Inventories
4,193
5,953
3,378
Trade and other receivables
7,662
12,005
8,145
Cash and cash equivalents
2,931
2,247
5,067
14,786
20,205
16,590
Total assets
22,585
28,158
24,484
Current liabilities
Trade and other payables
(5,643)
(10,294)
(6,964)
Total liabilities
(5,643)
(10,294)
(6,964)
Net assets
16,942
17,864
17,520
Equity
Share capital
273
281
281
Share premium account
5,734
5,734
5,734
Capital redemption reserve fund
1,513
1,505
1,505
Retained earnings
9,422
10,344
10,000
Equity shareholders' funds
16,942
17,864
17,520
Company Statement of Financial Position
As at 31 December 2018
As at
As at
As at
31.12.18
31.12.17
30.06.18
£'000
£'000
£'000
Unaudited
Unaudited
Audited
Non current assets
Property, plant and equipment
1,783
1,864
1,841
Investments
6,588
6,588
6,588
8,371
8,452
8,429
Current assets
Inventories
4,193
5,953
3,378
Trade and other receivables
7,665
12,005
8,145
Cash and cash equivalents
2,871
2,210
5,034
14,729
20,168
16,557
Total assets
23,100
28,620
24,986
Current liabilities
Trade and other payables
(9,442)
(13,515)
(10,486)
Total liabilities
(9,442)
(13,515)
(10,486)
Net assets
13,658
15,105
14,500
Equity
Share capital
273
281
281
Share premium account
5,734
5,734
5,734
Capital redemption reserve fund
1,513
1,505
1,505
Retained earnings
6,138
7,585
6,980
Equity shareholders' funds
13,658
15,105
14,500
Consolidated Statement of Changes in Equity
As at 31 December 2018
Share capital
Share premium account
Capital redemption reserve
Retained earnings
Total Equity
£'000
£'000
£'000
£'000
£'000
Period to 31 December 2017
Unaudited
Balance at 1 July 2017
281
5,734
1,505
10,545
18,065
Dividends
-
-
-
-
-
Loss and total comprehensive
loss for the period
-
-
-
(201)
(201)
Balance at 31 December 2017
281
5,734
1,505
10,344
17,864
Period to 31 December 2018
Unaudited
Balance at 1 July 2018
281
5,734
1,505
10,000
17,520
Dividends
-
-
-
-
-
Purchase of own Shares for cancellation
(8)
-
8
(225)
(225)
Loss and total comprehensive
-
-
-
(353)
(353)
loss for the period
Balance at 31 December 2018
273
5,734
1,513
9,422
16,942
Year to 30 June 2018
Audited
Balance at 1 July 2017
281
5,734
1,505
10,545
18,065
Dividends
-
-
-
(56)
(56)
Transactions with owners
-
-
-
(56)
(56)
Loss and total comprehensive
loss for the period
-
-
-
(489)
(489)
Balance at 30 June 2018
281
5,734
1,505
10,000
17,520
Company Statement of Changes in Equity
As at 31 December 2018
Share capital
Share premium account
Capital redemption reserve
Retained earnings
Total Equity
£'000
£'000
£'000
£'000
£'000
Period to 31 December 2017
Unaudited
Balance at 1 July 2017
281
5,734
1,505
8,050
15,570
Dividends
-
-
-
-
-
Loss and total comprehensive
loss for the period
-
-
-
(465)
(465)
Balance at 31 December 2017
281
5,734
1,505
7,585
15,105
Period to 31 December 2018
Unaudited
Balance at 1 July 2018
281
5,734
1,505
6,980
14,500
Dividends
-
-
-
-
-
Purchase of own shares for cancellation
(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
Year to 30 June 2018
Audited
Balance at 1 July 2017
281
5,734
1,505
8,050
15,570
Dividends
-
-
-
(56)
(56)
Transactions with owners
-
-
-
(56)
(56)
Loss and total comprehensive
loss for the period
-
-
-
(1,014)
(1,014)
Balance at 30 June 2018
281
5,734
1,505
6,980
14,500
Consolidated Statement of Cash Flows
6 months to 31 December 2018
6 months
6 months
Year
Ended
ended
Ended
31.12.18
31.12.17
30.06.18
£'000
£'000
£'000
Unaudited
Unaudited
Audited
Cash from operating activities
Operating (loss) from
continuing operations
(497)
(227)
(579)
Depreciation of property, plant
and equipment
95
91
188
(Profit)/loss on disposal of property,
-
-
-
plant and equipment
Operating (loss) before changes in
working capital
(402)
(136)
(391)
(Increase)/decrease in inventories
(815)
(1,777)
798
(Increase)/decrease in trade and
other receivables
483
(2,953)
907
Increase/(decrease) in trade and
other payables
(1,321)
2,134
(1,196)
Cash (used)/generated from operations
(2,055)
(2,732)
118
Income taxes received/(paid)
-
-
-
Net cash from operating activities
(2,055)
(2,732)
118
Cash flows from investing activities
Interest received
144
26
90
Proceeds from disposal of property,
plant and equipment
-
-
-
Purchase of property, plant and
Equipment
-
(19)
(57)
Net cash from investing activities
144
7
33
Cash flows from financing activities
Purchase of own shares for cancellation
(225)
-
-
Dividends paid to equity shareholders
-
-
(56)
Net cash used in financing activities
(225)
-
(56)
Net (decrease)/increase in cash and
cash equivalents
(2,136)
(2,725)
95
Cash and cash equivalents at
beginning of period
5,067
4,972
4,972
Cash and cash equivalents at end of period
2,931
2,247
5,067
Company Statement of Cash Flows
6 months to 31 December 2018
6 months
6 months
Year
Ended
Ended
Ended
31.12.18
31.12.17
30.06.18
£'000
£'000
£'000
Unaudited
Unaudited
Audited
Cash from operating activities
Operating (loss) from
continuing operations
(696)
(491)
(1,103)
Depreciation of property, plant
and equipment
58
55
115
(Profit)/loss on disposal of property,
plant and equipment
-
-
-
Operating (loss) before changes in
working capital
(638)
(436)
(988)
(Increase)/decrease in inventories
(815)
(1,777)
798
(Increase)/decrease in trade and
other receivables
480
(2,953)
907
Increase/(decrease) in trade and
other payables
(1,044)
2,435
(594)
Cash (used)/generated from operations
(2,017)
(2,731)
123
Income taxes received/(paid)
-
-
-
Net cash from operating activities
(2,017)
(2,731)
123
Cash flows from investing activities
Interest received
79
26
90
Proceeds from disposal of property,
plant and equipment
-
-
-
Purchase of property, plant and
Equipment
-
(19)
(57)
Net cash from investing activities
79
7
33
Cash flows from financing activities
Purchase of own shares for cancellation
(225)
-
-
Dividends paid to equity shareholders
-
-
(56)
Net cash used in financing activities
(225)
-
(56)
Net (decrease)/increase in cash and
cash equivalents
(2,163)
(2,724)
100
Cash and cash equivalents at
beginning of period
5,034
4,934
4,934
Cash and cash equivalents at end of period
2,871
2,210
5,034
Notes to the financial statements
1. Corporate Information
The financial information for the half year ended 31 December 2018 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 2018 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 2018. 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 2018.
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 2018 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 2018
Total Segment revenue
23,967
267
24,234
Year to 30 June 2018
Total Segment revenue
57,661
475
58,136
One customer accounted for more than 10% of the group's revenue for the period, being £3.6m.
5. Taxation
No tax charge has been provided in the interim consolidated financial statements due to the losses accumulated both in prior years and in the current period.
6. Earnings per Share
The calculation of earnings per share is based on the loss after tax for the six months to 31 December 2018 of £353,000 (2017: loss £201,000) and a weighted average of 27,639,779 (2017: 28,158,735) ordinary shares in issue.
7. Property, Plant and Equipment
There were no significant additions to or disposals of property, plant or equipment in the period to 31 December 2018. The reduction in the total value of property, plant and equipment was primarily due to the depreciation charge for the year.
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 2018 (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 is the ultimate controlling party of the Company.
During the six months period, the company paid £235,500 (2017: £300,500) rent to Anitass Limited, a wholly owned subsidiary. At 31 December 2018 Northamber plc owed Anitass Ltd £3,793,000 (2017:£3,259,000).
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.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.ENDIR JRMRTMBJMBJL
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