REG - Northamber PLC - Half-year Report
27/03/2023 07:00
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RNS Number : 2099U Northamber PLC 27 March 2023
Northamber PLC
("Northamber" or the "Company" or the "Group")
Interim Report for the Six months to 31 December 2022
Chairman's Statement
Results
We are pleased to have continued to grow revenue year on year by 4.1% from
£32.3m to £33.6m whilst maintaining strong gross margins up 10 bps at 13.0%
(12.9% prior year) despite challenging market conditions. This served to
generate an increase in Gross Profit of £0.2m to £4.4m year on year and
reflected our continued focus on evolving our product mix towards higher
margin, more technical products through Northamber and AVM.
We are confident that we are investing in the right places and continuing to
build a strong long term business around some core technology pillars that
require and reward value add from distribution. We are pleased to have evolved
over recent years to now be recognized as a destination for Audio Visual
technology as well as further developing our already strong Infrastructure
Solutions, Document Management and Peripherals business.
We have expanded our Audio Visual (AV) unit into Unified Communications and
Collaborations (UC&C) during the first half of the year with a new
partnership with Yealink who are a significant brand in the Microsoft Teams
Room and Zooms room space. This new partnership allows us to access a
significant new UC&C market for our existing reseller customers as well as
bring existing products from our Audio Visual and Infrastructure Solutions
business units to a wider market. Whilst costs were accrued last half in
developing this category we have already seen a promising pipeline and sales
from the category and expect to see the results translate to significant
returns for the business.
The continued investment in developing our long term strategic areas was
unfortunately coupled with significant inflationary pressures and foreign
exchange fluctuations, resulting in an increase of 8.6% in distribution and
administrative costs year on year from £4.27 million to £4.64 million.
These increased costs outweighed the gross margin growth and resulted in a
reduction of EBITDA year on year from £64K last year to negative £28k EBITDA
this year. The Group made an operating loss for the six months of £250k
versus an operating loss of £116k the year before. We feel strongly,
however, that to drive significant long term profitable growth it is important
that we continue to invest for the future. We regularly review these
investments and all costs to ensure we are generating value.
Financial position
We remain diligent in managing our balance sheet and were pleased to be able
to remain debt free. An increased focus on stock levels yielded a reduction in
stock levels across the group from £10.6 million to £9.6 million, freeing up
additional working capital. We recognize 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. We also disposed of an office
building in Lightwater in H1 that was no longer core to our operation for a
consideration of £1.48 million.
Cash reserves increased to £6.0 million from £4.7 million at 30 June 2022.
With Net Assets at £24.2 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 25
April 2023 to shareholders on the register as at 11 April 2023.
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
In keeping with prior outlooks that we shared, we remain cautiously optimistic
that the investments we have made in supporting our partners will allow us to
continue to drive growth of strategic business units although some of these
investments returns have been hampered by the impact of inflationary issues.
We necessarily remain cautious due to the economic uncertainty 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.
We are also investing in new systems for warehousing and Enterprise Resource
Planning which we believe will deliver substantial efficiency gains for the
future.
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
27 March 2023
Contacts:
Northamber PLC Tel: +44 (0) 208 744 8200 investor_relations@northamber.com (mailto:investor_relations@northamber.com)
Colin Thompson, Chairman
Singer Capital Markets (Nominated Adviser and Sole Broker) Tel: +44 (0) 207 496 3000
Philip Davies
Alex Bond
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
Alex Bond
Northamber PLC
("Northamber" or the "Company" or the "Group")
Interim Report for the Six months to 31 December 2022
Consolidated Statement of Comprehensive Income
6 months to 31 December 2022
6 months 6 months Year
Ended Ended Ended
31.12.22 31.12.21 30.06.22
£'000 £'000 £'000
Unaudited Unaudited Audited
Revenue 33,626 32,276 66,260
Cost of sales (29,251) (28,123) (57,791)
Gross Profit 4,375 4,153 8,469
(2,878) (2,670) (5,556)
Distribution cost
Administrative costs (1,760) (1,599) (3,365)
Loss from operations (263) (116) (452)
Finance income 13 - 5
Loss before Tax (250) (116) (447)
Tax charge - - -
Loss and total comprehensive
Income for the period (250) (116) (447)
Basic and diluted loss per ordinary share (0.92p) (0.43p) (1.64p)
(0.92p)
(0.43p)
(1.64p)
Consolidated Statement of Financial Position
As At 31 December 2022
6 months Ended 31.12.22 6 months Year Ended
Ended 31.12.21 30.06.22
£'000 £'000 £'000
Unaudited Unaudited Audited
Non -current assets
Property, plant and equipment 5,516 7,004 6,919
Goodwill and intangible assets 1,279 1,336 1,309
6,795 8,340 8,228
Current assets
Inventories 9,588 11,190 10,649
Trade and other receivables 9,701 9,639 11,245
Cash and cash equivalents 6,055 4,737 4,696
25,344 25,566 26,590
Total assets 32,139 33,906 34,818
Current liabilities
Trade and other payables (7,938) (8,885) (10,329)
Corporation tax payable - (48) (38)
Total liabilities (7,938) (8,933) (10,367)
Net assets 24,201 24,973 24,451
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 16,681 17,453 16,931
Equity shareholders' funds attributable to the owners of the parent 24,201 24,973 24,451
Consolidated Statement of Changes in Equity
As at 31 December 2022
Share capital Share premium account Capital redemption reserve Treasury Shares Retained earnings Total Equity
£'000 £'000 £'000 £'000 £'000 £'000
Period to 31 December 2021
Unaudited
Balance at 1 July 2021 272 5,734 1,514 - 17,569 25,089
Dividends - - - - - -
Loss and total comprehensive
income for the period - - - - (116) (116)
Balance at 31 December 2021 272 5,734 1,514 - 17,453 24,973
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
Year to 30 June 2021
Audited
Balance at 1 July 2021 272 5,734 1,514 - 17,569 25,089
Dividends - - - - (191) (191)
Transactions with owners - - - - (191) (191)
Loss and total comprehensive
income for the period - - - - (447) (447)
Balance at 30 June 2022 272 5,734 1,514 - 16,931 24,451
Consolidated Statement of Cash Flows
6 months to 31 December 2022
6 months 6 months Year
Ended Ended Ended
31.12.22 31.12.21
30.06.22
£'000 £'000 £'000
Unaudited Unaudited Audited
Cash from operating activities
Operating loss from
continuing operations (264) (116) (452)
Depreciation of property, plant
and equipment 194 151 336
Amortisation of intangible assets 30 28 56
Profit on disposal of property, (84) - (15)
plant and equipment
Operating (loss)/profit before changes in
working capital (124) 63 (75)
Decrease/(Increase) in inventories 1,061 (2,722) (2,181)
Decrease/(increase) in trade and
other receivables 1,544 1,114 (492)
(Decrease)/increase in trade and
other payables (2,391) (981) 463
Cash generated/(used) from operations 90 (2,526) (2,285)
Income taxes paid (38) (111) (120)
Net cash from operating activities 52 (2,637) (2,405)
Cash flows from investing activities
Interest received 13 - 5
Proceeds from disposal of property,
plant and equipment 1,475 - 60
Purchase of property, plant and
Equipment (181) (75) (222)
Net cash from investing activities 1,307 (75) (157)
Cash flows from financing activities
Dividends paid to equity shareholders - - (191)
Net cash used in financing activities - - (191)
Net increase/(decrease) in cash and
cash equivalents 1,359 (2,712) (2,753)
Cash and cash equivalents at
beginning of period 4,696 7,449 7,449
Cash and cash equivalents at end of period 6,055 4,737 4,696
Notes to the financial statements
1. Corporate Information
The financial information for the half year ended 31 December 2022 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 2022 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 2022. 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
2022.
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 2022 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 2022
Total Segment revenue 33,385 241 33,626
Year to 30 June 2022
Total Segment revenue 65,602 658 66,260
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 2022 of £250,000 (2021: Loss £116,000) 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 6 to 9
of the Annual Report and Accounts for the year ended 30 June 2022 (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 (2021: £150,000)
rent to Anitass Limited, a wholly owned subsidiary. At 31 December 2022
Northamber plc owed Anitass Ltd £9,023,000 (2021: £7,194,000).
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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