Northamber Regulatory News (NAR)

23 October 2015

Northamber PLC

("Northamber" or the "Company")

Preliminary Results for the year ended 30 June 2015

Chairman's Statement

Results

The year to 30 June 2015 has proved to be one of contrasting fortunes, with the positive performance in the first half underpinning year on year revenue growth of 4.14%, followed in the second half by events largely beyond our control.

My positive statement at the interim stage, announcing an overall 18.1% sales increase over the equivalent period last year, enabled a relatively confident and buoyant view of the Company's progress. That was supported by our management accounts showing we had broken back into operating profit in March 2015.

At the time, I raised a commercially prudent note of caution and that then proved well founded. On 19 March, and just a week after the interims, Microsoft announced the cancellation of Windows 9 and the proposed "summer launch" of Windows 10 later in 2015, later identified as 29 July.

After the earlier removal of support for XP and the criticisms of Windows 8, the resultant uncertainty created within the Commercial User sector, running business critical legacy software and peripheral devices, was such that a strong hiatus was created in the otherwise normal anticipated demand run-rates.

The effect has been clearly demonstrated by the recent release of HP's globally depressed Q3 2015 results and the actions both Lenovo and other brands took as the result of overstocks of unsold product.

Whilst seeking to support new product sales during the uncertainty, Microsoft simultaneously announced the offer of free upgrades from Windows 7 and 8 to Windows 10. Commercial users, however, proved understandably reticent to risk any unnecessary data or incompatible hardware or software exposures.

The then eventual release of Windows 10 and inevitable press reports of discovered aspects or problems and awaited 'fixes', served to continue the hiatus. Whilst commercial users continue to seek to fully understand the new operating system's exact capabilities, or limitations, and the effect on their established in-use legacy software and hardware, they are largely refusing to commit to further hardware or software purchases.

Despite the Windows 10 interruption, the results for the whole year showed an increase in turnover of £2.6m (4.1%) and a £269,000 reduction in the comparative pre-tax loss from £1,155,000 to £886,000.

Also, with further ongoing actions to refine trading, we were again able to increase our gross margin from 6.8% to 7.0%. This is a trend we have been achieving from our ongoing moves away from the remaining empty revenue products.

Whilst we are exiting "empty revenue" products, a shareholder's view of the reported trading profile might be distorted. Our focus remains on generating higher margins but also with greater scope to add value and increase the potential for even closer trading relationships with our vendors and reseller customer base.

It is worth recalling that we began some time ago to move the emphasis of the business from the initial concentration on PC hardware, to the "softer" type of product and which has a greater level of application complexity and which require a greater level of expertise to operate and install. This transition can only be at an evolutionary pace and which is effectively in line with the requirements of both customers and suppliers.

Support for our achievements are in securing prestigious awards. MicroScope Ace's 2015 Hardware Distributor of the Year, plus CRN's Specialist Distributor of the Year Channel Awards 2014 and now a 2015 finalist. These example the progress achieved from the changes to our strategy and also demonstrate the valued support provided by existing and new vendors.

Balance Sheet

Our usual and expected ongoing care of the Group's resources in relation to fixed and current assets and cash management, enables our ability to absorb the result of slower growth and consequential losses during the overly extended transition period driven by Windows 10.

Cash balances at the end of the trading year were £5.4 million compared with £5.1 million at the end of last year. We delivered effective gains through both reduced debtor and creditor days during the year and also increased the stock turn in the year whilst retaining our overall Working Capital Ratio.

Current Cash Position

The Net Assets per share, include property assets at depreciated costs which ignore development opportunities, did decline slightly from 76.4p per share to 72.7p per share, compared with the average share price during the year of 38.2p per share.

Dividend

After consideration of our debt free balance sheet and cash position, your board is proposing a final dividend of 0.3p per share same as last year. Together with the 0.3p interim dividend, totals 0.6p for the year.

Board

After almost five years and a heavy international travel burden, Gordon Hamilton has indicated that he feels it time he reduced his level of non-executive commitments and disappointingly will not be seeking re-election. We are unreserved in our gratitude for his cool and worthy contributions.

Also, I am now closing on the age of 71, so it is clearly time I commence the process to enable my own executive role to be downsized and will seek to assume a more non-executive chairman's role. The search for an executive managing director is already under way.

Staff

Again I cannot express any greater appreciation for the dedication and effort produced by the staff during this period and we continue to drive changes in strategy.

Outlook

The current sales hiatus for both hardware and peripherals, driven by insufficient certainty within the commercial user sector, is beyond any influence we might have and is totally driven by understandable caution and uncertainty surrounding Windows 10. That has driven an even greater spur to the pace of implement of our planned strategy.

After too many years in this sector, we remain prudently optimistic that we will continue to reverse the trend in the Company of the last few years and provide a profitable business for the future.

No matter the quality of the strategy, against shifting external effects, it cannot but take time to deliver the desired end results.

Although remaining optimistic regarding the future of the Company, at this point in time I am unable to forecast the immediate future with any certainty but will continue to use our very best endeavours to deliver change and continue to aggressively dilute our empty revenue exposure to the commercial impossibilities of the mainstream hardware based sector.

D.M. Phillips

Chairman

22 October 2015

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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

CONSOLIDATED STATEMENT OF CASH FLOWS

Notes

1. Financial information

The results of the year ended 30 June 2015 have been prepared using the accounting policies and methods of computation consistent with those used in the Group's annual report for the year ended 30 June 2015. The results have also been presented and prepared in a form consistent with that which will be adopted in the Group's annual report for the year ended 30 June 2015 and in accordance with the recognition and measurement requirements of the International Reporting Standards as adopted by the European Union.

The financial information set out above does not constitute the group's statutory accounts for the years ended 30 June 2014 or 30 June 2015, but is derived from those accounts. The statutory accounts for the year ended 30 June 2014 have been delivered to the Registrar of Companies and those for 2015 will be delivered following the group's annual general meeting. The auditors have reported on these accounts, their reports were unqualified and did 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. Segmental reporting

Management has determined that there is only one operating segment of the group as the total business of the company is the sourcing and distribution of computer related products and this is how information is reported to the Chief Operating Decision Maker. The board in carrying out its strategic planning and decision making has, necessarily, to take consideration of the inter relatedness of the product range and the customer base and thus treat the operations of the group as a whole. All decisions on the allocation of resources impacts on all aspects of the group. Information presented to the Chief Operating Decision Maker is the same as is reported in these financial statements.

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 year. Revenue is attributable to individual countries based on the location of the customer. There are no non current assets outside the UK.

One customer accounted for more than 10% of the group's revenue for the year, being £11.8m.

3. Loss 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 15 January 2016 to those members on the register at close of business on 4 December 2015.

5. Notice of meeting

The annual report accounts for the year ended 30 June 2015 will be posted to shareholders in due course and the Annual General Meeting will be held on 15 December 2015.

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