REG - Northamber PLC - Half-Year Report
28/03/2024 07:00
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RNS Number : 5960I Northamber PLC 28 March 2024
Northamber PLC
("Northamber" or the "Company" or the "Group")
Interim Report for the Six months to 31 December 20223
Chairman's Statement
Results
It is disappointing to report that we were not immune to the UK market
challenges last half and saw a Gross Profit decline year on year. The broader
macro-economic factors and market sentiment impacted our industry with
industry analyst Context reporting UK distribution sales were circa 10% down
July to December year on year with nuances by technology segment.
Despite further increasing our already strong gross margins by 10 bps to 14.0%
(13.0% prior year), the reduction in group revenue from £33.6m to £29.2m
meant a 5% decrease in Gross Profit of £0.2m to £4.0m. This class leading
gross margin reflects the value add work we provide to our customers and
suppliers and is a healthy indicator of our value add to the market. As a
reminder, 4 years ago in December 2019 our gross margin was 8.8% and
translated to £2.3 million of Gross Profit so we are confident that the
business continues to evolve in the right direction despite market challenges
We closely track our position with our key supplier franchises and remain
number 1 or number 2 for most of our key supplier franchises, we are therefore
confident that as the market recovers from these temporary hardships we will
be in a strong position to capitalise on this.
Softer demand resulted in slower stock turns, leading to an increase in stock
at period end of £10.3m vs £9.6m the prior year We are proud of our role in
supporting our customers and suppliers with having healthy stock availability
but actively work on managing stock levels.
A new ERP systems was launched in the half across the Company which
encompasses all elements 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 roll out has continued into the second half of the
year with a new webstore due to go live in fiscal Q4 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.
Whilst costs reduced year on year by £76k in the half, the reduction in gross
margins outweighed these savings and unfortunately resulted in a loss of
£171K on Earnings Before Tax and Depreciation vs £15K loss for the prior
year.
We are proud to have launched a CSOP share option scheme to 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.
We have continued to make in-roads to our key long term business categories
that require and reward value add from distribution. This includes increasing
our presence in Audio Visual & Unified Communications technology,
Infrastructure Solutions, Document Management and Peripherals business.
Financial position
We remain diligent in managing our balance sheet and were pleased to be able
to remain debt free. AS stated above softer demand led to an increase in stock
levels year on year but stock reduced from £11.4 million at 30 June 2023 to
£10.3 million at 31 December 2023. We recognise the importance to maintain
strong stock holding for our partners as stock availability and supply chains
remain fragile at times so we accept fluctuations on stock levels when this
makes commercial sense but we actively manage this
Cash reserves reduced from £5.5 million at 30 June 2023 to £2.5 million at
31 December 2023. With Net Assets at £23.9 million, including two
unencumbered freehold properties, the Group's overall financial position
remains very sound.
Net Assets at 88.8p 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 26
April 2024 to shareholders on the register as at 12 April 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
that were planned during the period. These include bringing on a new Managing
Director Jeremy Keefe who has significant experience in driving profitable
growth in distribution & technology companies.
The focus on performance and efficiency, supported by a new systems, has
driven a number of changes across team structures as well as condensing office
space to right size for our needs whilst continuing to invest in growth.
We necessarily remain cautious short term as the UK market continues to be
challenging but industry analysts expect a recovery through calendar year 2024
in demand levels as business confidence hopefully returns. Despite a
challenging environment we remain committed to proactively finding
opportunities.
Mid term we remain cautiously 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
28 March 2024
Contacts:
Northamber PLC Tel: +44 (0) 208 744 8200 investor_relations@northamber.com (mailto:investor_relations@northamber.com)
Alexander Phillips, Chairman
Singer Capital Markets (Nominated Adviser and Sole Broker) Tel: +44 (0) 207 496 3000
Philip Davies
Finn Gordon
investor_relations@northamber.com (mailto:investor_relations@northamber.com)
Singer Capital Markets (Nominated Adviser and Sole Broker)
Tel: +44 (0) 207 496 3000
Philip Davies
Finn Gordon
Northamber PLC
("Northamber" or the "Company" or the "Group")
Interim Report for the Six months to 31 December 2023
Consolidated Statement of Comprehensive Income
6 months to 31 December 2023
6 months 6 months Year
Ended Ended Ended
31.12.23 31.12.22 30.06.23
£'000 £'000 £'000
Unaudited Unaudited Audited
Revenue 29,246 33,626 67,149
Cost of sales (25,149) (29,251) (58,243)
Gross Profit 4,097 4,375 8,906
(2,766) (2,878) (5,907)
Distribution cost
Administrative costs (1,796) (1,760) (3,491)
Loss from operations (465) (263) (492)
Finance income 52 13 81
Loss before Tax (413) (250) (411)
Tax charge - - -
Loss and total comprehensive
Income for the period (413) (250) (411)
Basic and diluted loss per ordinary share (1.52p) (0.92p) (1.51p)
(1.52p)
(0.92p)
(1.51p)
Consolidated Statement of Financial Position
As At 31 December 2023
6 months Ended 31.12.23 6 months Year Ended
Ended 31.12.22 30.06.23
£'000 £'000 £'000
Unaudited Unaudited Audited
Non -current assets
Property, plant and equipment 5,830 5,516 5,519
Goodwill and intangible assets 1,203 1,279 1,251
7,033 6,795 6,770
Current assets
Inventories 10,301 9,588 11,447
Trade and other receivables 10,966 9,701 12,099
Cash and cash equivalents 2,534 6,055 5,512
23,801 25,344 29,058
Total assets 30,834 32,139 35,828
Current liabilities
Trade and other payables (7,370) (7,938) (11,951)
Corporation tax payable - - -
Total liabilities (7,370) (7,938) (11,951)
Net assets 23,464 24,201 23,877
Equity
Share capital 272 272 272
Share premium account 5,734 5,734 5,734
Capital redemption reserve 1,514 1,514 1,514
Retained earnings 15,944 16,681 16,357
Equity shareholders' funds attributable to the owners of the parent 23,464 24,201 23,877
Consolidated Statement of Changes in Equity
As at 31 December 2023
Share capital Share premium account Capital redemption reserve Treasury Shares Retained earnings Total Equity
£'000 £'000 £'000 £'000 £'000 £'000
Period to 31 December 2022
Unaudited
Balance at 1 July 2022 272 5,734 1,514 - 16,931 24,451
Dividends - - - - - -
Loss and total comprehensive
income for the period - - - - (250) (250)
Balance at 31 December 2022 272 5,734 1,514 - 16,681 24,201
Period to 31 December 2023
Unaudited
Balance at 1 July 2023 272 5,734 1,514 - 16,357 23,877
Dividends - - - - - -
Loss and total comprehensive
Income for the period - - - - (413) (413)
Balance at 31 December 2023 272 5,734 1,514 - 15,944 23,464
Year to 30 June 2022
Audited
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 period - - - - (411) (411)
Balance at 30 June 2023 272 5,734 1,514 - 16,357 23,877
Consolidated Statement of Cash Flows
6 months to 31 December 2023
6 months 6 months Year
Ended Ended Ended
31.12.23 31.12.22
30.06.23
£'000 £'000 £'000
Unaudited Unaudited Audited
Cash from operating activities
Operating loss from
continuing operations (465) (264) (492)
Depreciation of property, plant
and equipment 223 194 357
Amortisation of intangible assets 48 30 57
Profit on disposal of property, - (84) (73)
plant and equipment
Operating (loss)/profit before changes in
working capital (194) (124) (151)
Decrease/(Increase) in inventories 1,146 1,061 (798)
Decrease/(increase) in trade and
other receivables 1,133 1,544 (854)
(Decrease)/increase in trade and
other payables (4,581) (2,391) 1,624
Cash generated/(used) from operations (2,496) 90 (180)
Income taxes paid - (38) (39)
Net cash from operating activities (2,496) 52 (219)
Cash flows from investing activities
Interest received 52 13 81
Proceeds from disposal of property,
plant and equipment - 1,475 1,475
Purchase of property, plant and
Equipment (534) (181) (358)
Net cash from investing activities (482) 1,307 1,198
Cash flows from financing activities
Dividends paid to equity shareholders - - (163)
Net cash used in financing activities - - (163)
Net increase/(decrease) in cash and
cash equivalents (2,978) 1,359 816
Cash and cash equivalents at
beginning of period 5,512 4,696 4,696
Cash and cash equivalents at end of period 2,534 6,055 5,512
Notes to the financial statements
1. Corporate Information
The financial information for the half year ended 31 December 2023 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 2023 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 2023. 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
2023.
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 2023 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.
UK Other Total
£'000 £'000 £'000
6 months to December 2023
Total Segment revenue 28,707 539 29,246
Year to 30 June 2023
Total Segment revenue 66,489 660 67,149
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 Loss after tax for the
six months to 31 December 2023 of £413,000 (2022: Loss £250,000) and a
weighted average of 27,231,586 (2021: 27,231,586) 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 8 to 10
of the Annual Report and Accounts for the year ended 30 June 2023 (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
· Inflationary 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 (2022: £150,000)
rent to Anitass Limited, a wholly owned subsidiary. At 31 December 2023
Northamber plc owed Anitass Ltd £9,124,000 (2022: £9,023,000).
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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