18 November 2022

Northamber PLC

(the "Company" or the "Group")

Preliminary Results for the year ended 30 June 2022

Chairman's Statement

Results

We are pleased to share that we have continued to grow revenue year on year by 10.4% from £60.01m to £66.26m whilst maintaining gross margins at 12.8% (13.0% prior year) despite challenging and very dynamic market conditions. This served to generate a continued increase in gross margins of £0.66m year on year to £8.47m and reflected our continued focus on evolving our product mix towards higher margin, more technical products through Northamber and AVM. The trend of this growth can be better seen when comparing results to even the year prior to that (June 2020) which had revenue of £52.8m and Gross Margins were £5.48m, albeit AVM was acquired early in the second half of that year.

Despite pleasing sales and gross margin growth for the year, performance in some of our focus areas remained impacted by the gradual recovery from Covid with continuing uncertainty for resuming events and large venue installations, as well as market disruptions from rapid changes in Sterling, particularly against the US Dollar. We remain optimistic and confident in these focus areas and believe that we can deliver significant long term value and growth in these segments for our partners and shareholders.

Distribution costs increased significantly from £4.59m to £5.56m 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).

The fall in the value of Sterling translated into a swing from a foreign exchange profit of £223k in 2021 to a loss of £164k in 2022, which was the main driver in increased administration costs from £2.84m to £3.36m.

It is frustrating that factors over which we have no control have led to increases in distribution and administration costs, which have outweighed the margin growth.  The impact of carriage costs and a weaker Sterling, totalling approximately £0.30m, resulted in a reduction of EBITDA year on year to a loss of £75k and an operating loss for the year of £0.45m versus a profit of £0.38m 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, albeit these investments are measured against the ability to generate value.

Financial position

We made a deliberate decision to profitably support our partners by maintaining sufficient stock in country during the uncertainty of chip shortages together with continued impact on supply chains of Brexit, the war in Ukraine and COVID. As a consequence, stock levels increased from £8.5 million in 2021 to £10.6 million at 30 June 2022. This investment in inventory meant that cash reserves fell from £7.45m at 30 June 2021 to £4.70m. With Fixed Assets at book value at £6.92m, including three unencumbered freehold properties, the Group's overall financial position is very sound. Net Assets at 89.8p per share are considerably in excess of the average price of the ordinary shares throughout the period.

Since the end of the financial year, the Board took the decision to relocate AVM into existing premises and to sell the freehold office where they are based.  The Company has exchanged contracts for the sale of the office and completion is scheduled to occur on 28 November 2022.  The consideration will be £1.48m, before costs, payable in cash, against a net book value of £1.43m.  The net proceeds will be added to our cash reserves.

Board changes

In July 2022, Peter Dosanjh joined the Board as a director. Peter has over 25 years' experience within B2B AV and IT hardware resellers alongside AV distribution.

Geoff Walters is to stand down as a non-executive director with effect from 31 December 2022 and will not stand for re-election at this year's AGM.  Geoff joined the Board in February 2016 and the Board is grateful for his contribution during this period and we wish him well for the future.

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 18 January 2023 to shareholders on the register as at 16 December 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. We have yet to fully benefit from these investments, given the ongoing impact of COVID, forex movements and supply chain issues which together with wider economic uncertainty due to rising interest rates, inflation and subsequent cost of living impacts, necessarily mean we must remain cautious about the near term. We do feel strongly, however, 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

18 November 2022

Contacts:

Notes

1. Financial information

This financial information is consistent with the consolidated financial statements of the group for the year ended 30 June 2022.  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 2021 or 30 June 2022 but is derived from those accounts. The statutory accounts for the year ended 30 June 2021 have been delivered to the Registrar of Companies and those for 2022 will be delivered following the group's annual general meeting. The auditor's report on the 2022 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.

No customer accounted for more than 10% of the group's revenue for the year.

3. Profit per ordinary share

The calculation of the basic and diluted earnings per share is based on the following data:

4. Dividends

A final dividend of 0.3p per share will be paid on 18 January 2023 to those members on the register at close of business on 16 December 2022.

5. Notice of meeting

The annual report and accounts for the year ended 30 June 2022 will be posted to shareholders in due course and the Annual General Meeting will be held on 21 December 2022. 

The Company's registered office is Namber House, 23 Davis Road, Chessington, Surrey, KT9 1HS.