NORTHAMBER PLC

Interim / Quarterly Report • Mar 29, 2022

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RNS Number : 2709G

Northamber PLC

29 March 2022

Northamber PLC

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

Interim Report for the Six months to 31 December 2021

Chairman's Statement

Results

We are pleased to share that we have continued to grow revenue year on year by 8.8% from £29.7m to £32.3m whilst maintaining gross margins at 12.9% (12.8% prior year) despite challenging and very dynamic market conditions. This served to generate an increase in Gross Margins of £0.35m year on year and reflected our continued focus on evolving our product mix towards higher margin, more technical products through Northamber and AVM.

Previously discussed lockdown challenges eased but still impacted some performance in some of our strategic business units and our subsidiary AVM, as Covid easing still impacted some site access for higher end projects and the rental market, but we are hopeful of improved performance as these restrictions continue to ease.

Distribution costs increased significantly however as we continued to invest in developing the team for our significant growth ambitions; we were also affected by significant increases year on year on carriage costs (our biggest non-payroll cost).

Unfortunately the increase in distribution and administration costs outweighed the margin growth and resulted in a reduction of EBITDA year on year to £64K and an operating loss for the half of £0.1m versus a profit of £0.2m last year.  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

Stock levels are higher than last year at £11.2 million against £8.4 million at 31 December 2020 as we continued to seek to profitably support our partners by maintaining sufficient stock in country during the uncertainty of chip shortages together with continued impact of Brexit and COVID on supply chains.

The investment in inventory meant that cash reserves fell from £7.4 million at 30 June 2021 to £4.7 million.  With Fixed Assets at book value at £7.0 million, including three unencumbered freehold properties, the Group's overall financial position is very sound.

Net Assets at 91.7p 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 28 April 2022 to shareholders on the register as at 8 April 2022.

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 as some of these investments returns have been hampered by the impact of COVID and supply chain issues. We necessarily remain cautious due to the economic uncertainty, Brexit, the potential further impact of COVID and supply chain pressures 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

29 March 2021

Contacts:

Northamber PLC Colin Thompson, Chairman	Tel: +44 (0) 208 744 8200 investor_relations@northamber.com
Singer Capital Markets (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 2021

6 months

6 months

Year

Ended

Ended

Ended

31.12.21

31.12.20

30.06.21

£'000

£'000

£'000

Unaudited

Unaudited

Audited

Revenue

32,276

29,679

60,009

Cost of sales

(28,123)

(25,878)

(52,200)

Gross Profit

4,153

3,801

7,809

Distribution cost

(2,670)

(2,284)

(4,595)

Administrative costs

(1,599)

(1,294)

(2,837)

(Loss)/Profit  from operations

(116)

223

377

Finance income

-

7

8

(Loss)/Profit  before Tax

(116)

230

385

Tax charge

-

-

(48)

(Loss)/Profit  and total comprehensive

Income for the period

(116)

230

337

Basic and diluted profit  per ordinary share

(0.43p)

0.84p

1.24p

Consolidated Statement of Financial Position

As At 31 December 2021

		6 months Ended 31.12.21				6 months Ended 31.12.20					Year Ended 30.06.21
		£'000 Unaudited				£'000 Unaudited					£'000 Audited
Non -current assets
Property, plant and equipment			7,004				7,102			7,079
Goodwill and intangible assets			1,336				1,391			1,365
			8,340				8,493			8,444
Current assets
Inventories			11,190				8,401			8,468
Trade and other receivables			9,639				8,821			10,753
Cash and cash equivalents			4,737				10,802			7,449
			25,566				28,024			26,670
Total assets			33,906				32.439			35,114
Current liabilities
Trade and other payables			(8,885)				(11,372)			(9,866)
Corporation tax payable			(48)				-			(159)
Total liabilities			(8,933)				(11,372)			(10,025)
Net assets			24,973				25,145			25,089
Equity
Share capital			272				273			272
Share premium account			5,734				5,734			5,734
Capital redemption reserve			1,514				1,514			1,514
Retained earnings			17,453				17,625			17,569
Equity shareholders' funds attributable to the owners of the parent			24,973				25,145			25,089

Consolidated Statement of Changes in Equity
As at 31 December 2021
		Share capital	Share premium account	Capital redemption reserve	Treasury Shares	Retained earnings	Total Equity
		£'000	£'000	£'000	£'000	£'000	£'000
	Period to 31 December 2020
	Unaudited
	Balance at 1 July 2020	273	5,734	1,514	-	17,395	24,915
	Dividends	-	-	-	-	-	-
	Profit and total comprehensive
	income for the period	-	-	-	-	230	230
	Balance at 31 December  2020	273	5,734	1,514	-	17,625	25,145
	Period to 31 December 2021
	Unaudited
	Balance at 1 July 2021	272	5,734	1,514	-	17,569	25,089
	Dividends	-	-	-	-	-	-
	Profit and total comprehensive
	Income for the period	-	-	-	-	(116)	(116)
	Balance at 31 December  2021	272	5,734	1,514	-	17,453	24,973
	Year to 30 June 2021
	Audited
	Balance at 1 July 2020	272	5,734	1,514	-	17,395	24,915
	Dividends	-	-	-	-	(163)	(163)
	Transactions with owners	-	-	-	-	(163)	(163)
	Profit and total comprehensive
	income for the period	-	-	-	-	337	337
	Balance at 30 June 2021	272	5,734	1,514	-	17,569	25,089

Consolidated Statement of Cash Flows
6 months to 31 December 2021
				6 months		6 months		Year
				Ended		Ended		Ended
				31.12.21		31.12.20		30.06.21
				£'000		£'000		£'000
				Unaudited		Unaudited		Audited
	Cash from operating activities
	Operating (loss)/profit from
	continuing operations			(116)		223		337
	Depreciation of property, plant
	and equipment			151		167		350
	Amortisation of intangible assets			28		30		56
	Profit on disposal of property,			-		-		(13)
	plant and equipment
	Operating profit/(loss) before changes in
	working capital			63		420		770
	Increase in inventories			(2,722)		(2,453)		(2,520)
	Decrease/(increase) in trade and
	other receivables			1,114		(1,070)		(3.003)
	(Decrease)/increase in trade and
	other payables			(981)		3,015		2,923
	Cash (used)/generated from operations			(2,526)		(88)		(1,830)
	Income taxes paid			(111)		-		(1,302)
	Net cash from operating activities			(2,637)		(88)		(3,132)
	Cash flows from investing activities
	Interest received			-		7		8
	Proceeds from disposal of property,
	plant and equipment			-		-		17
	Purchase of property, plant and
	Equipment			(75)		(85)		(249)
	Net cash from investing activities			(75)		(78)		(224)
	Cash flows from financing activities
	Dividends paid to equity shareholders			-		-		(163)
	Net cash used in financing activities			-		-		(163)
	Net decrease in cash and
	cash equivalents			(2,712)		(166)		(3,519)
	Cash and cash equivalents at
	beginning of period			7,449		10,968		10,968
	Cash and cash equivalents at end of period			4,737		10,802		7,449

Notes to the financial statements

1.            Corporate Information

The financial information for the half year ended 31 December 2021 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 2021 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 2021. 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 2021.

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 2021 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 2021
Total Segment revenue	31,944		332		32,276
Year to 30 June 2021
Total Segment revenue	59,137		872		60,009

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 2021 of £116,000 (2020: Profit £230,000) and a weighted average of 27,231,586 (2020: 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 10 to 12 of the Annual Report and Accounts for the year ended 30 June 2021 (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 (2020: £150,000) rent to Anitass Limited, a wholly owned subsidiary. At 31 December 2021 Northamber plc owed Anitass Ltd £7,194,000 (2020: £6,325,000).

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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