Northamber Plc
Annual Report 2013

Plain-text annual report

Report & Accounts for Northamber Plc Year ended 30 June 2013 northamber Contents Summary of Last Five Years’ Trading Chairman’s Statement Business and Financial Review Report of the Directors Report to Shareholders by the Board on Directors’ Remuneration Corporate Governance Statement of Directors’ Responsibilities Directors and Advisers Report of the Independent Auditor Statement of Comprehensive Income Statements of Changes in Equity Statements of Financial Position Statements of Cash Flows Notes to the Financial Statements Notice of Meeting 3 5-6 7-10 11-15 16-18 19-24 25 26 27-28 29 30-31 32-33 34-35 36-53 54-55 33 Northamber RepoRt & Accounts FuLL YeAR enDeD 30 June 2013 SUMMARY OF LAST FIVE YEARS’ TRADING ----------------------Years ending 30 June------------------ 2013 £’000 2011 £’000 2010 £’000 2012 £’000 2009 £’000 Revenue (Loss)/Profit before tax (Loss)/earnings per share Net Assets per share 77,521 (1,047) (3.49)p 81.0p 100,615 37 (0.01)p 85.7p 121,083 (106) (0.34)p 86.5p 128,481 258 0.58p 88.5p 139,275 47 0.18p 89.4p Dividends per share (net) 1.05p 1.3p 2.0p 1.6p 1.6p 4 CHAIRMAN’S STATEMENT Results To those members who have read my statements over recent years and those who follow press reports, it will come as no surprise that the P.C. sector has seen repeated declines. In recent months independent sources have reported the further and worst downturn that the industry has known, as vendor after vendor who, despite falling prices, have reported substantially falling demand for their products. Without dwelling or delving into the core causes, our foresight and focus over recent years was to move away from “Empty Revenue”, a term I have repeatedly used in my reports to shareholders, as the cash value of margins continued to fall, whilst growing our non P.C. hardware based revenues. However, we were outpaced by the severity and speed of the latest downward twist in the spiral. The direct effect of the unexpected acceleration in the downturn of demand, on stock turns, prices and margins for P.C.s on the Group’s sales, resulted in revenues for the year ended 30 June 2013 falling by 23% from £100.6 million to £77.5 million. Whilst we managed our gross margins to be near stable at 7.6% from last year’s 7.8%, responsive delays to the revenue shift were unavoidable. The reduction in turnover necessitated reduction in both staffing and overheads. We had to make costly redundancies during the year, which will result in ongoing savings of some £800,000 and are the major element in achieving more immediate reductions in our total overhead of approximately £850,000. Otherwise, as commented above, some of the other overheads incurred in a business such as ours can only move in step changes and take time to effect and reveal a benefit. The necessary restructure of our cost base, product focus and staffing, had a considerable effect on our resultant pre-tax result. Overall, there was a pre-tax loss of £1.05 million, compared with a profit of £37,000 a year ago. Whilst the sector predictions do not offer any forecast of an early upturn in P.C. sector profitability, happily, management of our core financial strengths remain sound. Net cash of £6.13 million (2012: £4.3 million), with a depreciated and tangible net asset value of £22.8 million (2012: £24.1 million) and we remain debt free, with net assets of 81p (2012: 85.7p) per share. Balance Sheet As the ultimate purpose of any business is in the finances, each year I stress the importance of retaining both liquidity and a strong, debt free balance sheet. In the extremely challenging times being experienced, this becomes ever more important. This past year we have reduced both our debtor days and our creditor days to 34 and 26 respectively, compared with 40 and 31 days in our previous year. We were also able to improve our liquidity ratio to 3.0 compared with 2.4 in the previous year. The results of working capital management meant that we were able to produce a positive cash flow for the year of £1.8 million (2012:£6.4 million outflow) and that after the £6.8 million purchase of our warehouse’s freehold in May 2012. Our cash holdings at the end of the year increased from £4.3 million at 30 June 2012 to £6.1 million at 30 June 2013. Of our net assets, some 37% is represented by the net book value of our freehold properties and 27% by cash. In total, our net assets per share were 81p at 30 June 2013 (2012: 85.7p). 5 Northamber RepoRt & Accounts FuLL YeAR enDeD 30 June 2013 It is noticeable that the highest price quoted for the shares during the year represented less than half the net asset value per share, one of the factors that influenced our decision to move to AIM from the Official list. The move to AIM The industry has changed since the company first became a plc 29 years ago and was then floated on the Official List or main market. The main market has become far more appropriate for those much larger companies which have a much wider range of shareholders and where potential need for funding is paramount. For those reasons, as well as for the cost savings associated with the lower level of bureaucracy involved in the junior market, the Directors considered it right that the Company change from the main market to AIM. This became effective on 2 September 2013. Dividend Your Board has considered this long and hard, although ultimately the conclusion was that it would be fair on shareholders to pass the dividend, even if that course of action was regarded as very prudent. The Company remains cash generative and positive in its medium term forward view. Accordingly, the Board is proposing a final dividend of 0.3p which together with the 0.3p interim would make 0.6p for the year. Staff As I have reported above, we had no option but to make redundancies during the year. This is always an unhappy and distasteful process both for those we have to lose and for those who remain and miss respected long term friends and associates. The need to do so was absolute and understood by the staff who continue to work hard and with dedication to maintain the company. I was personally very sorry we had to take those actions and am very grateful to the remaining staff for their efforts. Outlook The sector is in the throes of monumental changes and the future direction and product/software format is extremely difficult to forecast.  The true role of the distributor is one of a wholesaler enabling the fulfilment of demand and wholly  dependent on decisions made by prime vendors over which it has no control. This is particularly true when it is the major vendors who are the primary innovators and drivers of manufactured technologies, products and demand. The company’s strategy is dependent on perceiving opportunities within the actions of major vendors and whose actions are at present unclear. Therefore I am unable to give a clear view on the immediate way forward for the company. Our strength, as always lies in our liquidity and our balance sheet. We have a very tightly managed operating model, hold a healthy cash balance of £6.1 million further supported by un-encumbered, substantial and very well located freehold property assets. Obviously, with the goodwill and dedication of our staff, the Directors are in a position to maximise whatever opportunities arise and will continue to monitor both costs and all available marketing opportunities. D M Phillips Chairman 4 October 2013 6 BUSINESS AND FINANCIAL REVIEW The Business Model The Group has, since its inception, been involved in the distribution of computer related products to the non domestic market. Initially this was predominantly printers but has been extended over the years to include not only computers themselves but also a wide range of peripheral and ancillary related products. The Group has a two pronged approach in driving the business, being both demand driven and supply driven. The demand drivers are the requirements of our customers where we strive to provide a wide range of products and get them to the customer in the quickest possible time and at acceptable prices. The supply drivers are the requirements of our suppliers – the vendors. Vendors in the main are one of two types, there is the major brand type of supplier who is looking for us to increase its turnover, to physically get them to the customer and bear the risk of the customer defaulting. The second type of supplier differs only in that they tend to be the smaller producers, who often develop new or innovative products and are looking for a method of reaching an established wide ranging customer base which is beyond their own resources. Our business model is to satisfy all those wants by providing a marketing and selling operation to optimise the penetration of the products to the customers and a distribution facility which includes warehousing and bulk breaking using sophisticated systems and procedures to achieve a first class delivery service. Operating Review An explanation of the business model of the group has been set out above. During the year under review that model did not change. As has been stated previously, the market for the type of products which we sell and distribute is and has been exceedingly difficult for a number of years. Although we sell to the corporate world, those products do in part filter through to the domestic market as well. Thus the total demand is affected both by the corporate market retrenching and reducing the level of replacement of IT equipment and by the domestic market being more cautious in its spending patterns. This trend of deferring replacement is exacerbated by the fact that although IT products are becoming ever faster, with greater capacity and more advanced, such advantages are often seen by the end user as not being so great that there is an urgency to replace what is working quite adequately. Another factor affecting the industry is the applications becoming ever more available on the “smart” electronic devices which are encroaching on the traditional computer market and reducing the demand for the smaller types of computer equipment. The impact of the “smart” tablets and phones has been even more dramatic in recent periods than hitherto. The effect on the major vendors of the downturn in the demand for servers, desktop and laptop computers has been well publicised. This of course directly affects the distribution chain and the impact on our particular business can be seen from the results for the last year. As a result of the factors noted above, revenue for the year fell by £23 million (23%) compared with the previous year. The pressure on margins continues to be an ever present factor, a fact exacerbated this last year by a reduction in the support provided by some vendors so that despite our often stated policy of seeking the higher margin type products our gross margins for the year fell a little compared with the previous year. Gross margins were 7.61% for the year compared with 7.76% for the previous year. Administrative expenses and distribution costs in total decreased by £853,000 compared with the previous year, mainly as a result of reductions in the staff costs of £811,000 (7.3%) in the year. At the operating level the result was that there was a loss in the year of £1,155,000 compared with an operating loss in the previous year of £97,000. 7 Northamber RepoRt & Accounts FuLL YeAR enDeD 30 June 2013 BUSINESS AND FINANCIAL REVIEW (Continued) Financial Review Overall there was a positive cash flow during the year despite the reduced level of turnover and gross profit. With the disappointing results it became even more imperative to exercise strict controls over the working capital, even though this has always been a high priority in the management of the company. We were able to reduce debtor days from 40 last year to 34 for the current year under review and at the same time reduce creditor days from 31 last year to 26 this year. The net impact after taking working capital into account was to achieve a positive cash flow at the operational level in excess of £2 million. As a result of the above we were able to improve our liquidity ratios from 2.4 to 3.0 for Net Current Assets. Interest received at £108,000 compared with £134,000 for the previous year included interest payment from HM Customs and Excise to partly compensate for the withholding of a substantial level of VAT refund over an extended period. The dividend we paid out during the year was £71,000 less than for the previous year. The net result of this cash management was that we were able to increase our cash balance to £6.1 million at 30 June 2013 compared with £4.3 million at the end of last year whilst remaining debt free. Some 38% of the Net Assets comprise freehold properties, 27% cash and the balance working capital. The Net Assets were 81p per share which represented more than twice the highest share price in the year. Financial Risk Management The group uses various financial instruments, including cash, equity, trade receivables and trade payables in the course of its operations. The use of these instruments gives rise to risks associated with exchange rate risk, liquidity risk, interest rate risk and credit risk. The directors review and agree policies to deal with each of these risks as summarised below. Exchange rate risk The group purchases some of its products in foreign currency. Where required for supplier payments, foreign currency purchases are subject to close management supervision. The directors are informed regularly of the potential impact of exchange rate movements on the business and act to mitigate any adverse movement wherever possible. It is the group’s policy not to speculate in derivative financial instruments in either sterling or foreign currencies, nor to hedge translation or currency exposures. Liquidity risk The group seeks to manage financial risk of liquidity by ensuring it has sufficient cash resources available to meet foreseeable needs at all times through cash flow forecasting. Interest rate risk The group’s exposure to interest rate risk is principally with its cash asset. This risk has been reduced, as discussed above, following the purchase of the freehold property. It is the policy of the Group not to have long term loans or other financial instruments except in particular circumstances and when specifically approved by the board. There have been no changes in the role of financial instruments during the year. 8 BUSINESS AND FINANCIAL REVIEW (Continued) Credit risk The group and company’s principal financial assets are cash and trade receivables. The credit risk associated with cash is reduced through deposits being split across a number of banks. The credit risk arising from the group and company’s trade receivables is reduced through prescribing credit limits for customers based on a combination of payment history and third party credit references. Credit limits are reviewed on a regular basis in conjuction with debt ageing and collection history. Other Principal Risks and Uncertainties Other than the risks stated above and the marketing risk, which is addressed below, in the opinion of the directors, the principal operating risks are as stated in the section on Internal Control on page 23. The risks and uncertainties associated with the business model are set out below. The model depends in part on working closely with the brand names in the industry as it is often the products from these vendors which form the core of the business, and in part on the development of new vendors particularly for the innovative products which are integral to the IT industry. Co-operation with vendors is therefore key and this risk of attrition is addressed by a combination of mutual co- operation with vendors on the range of products being offered, the pricing of those products and the marketing of those products. The company’s continual search for new and improved products, particularly in peripherals, from new vendors also improves the range of products we can offer and thereby attract more customers to ourselves which enhances our attraction to the vendors and reduces the risk of loss of vendors. The existence of the group’s facilities such as the warehouse, the sales staff, the control systems and not least the financial soundness of the company means that we can offer a distribution facility which is quick and efficient, an attraction to both vendors and customers. The principal risks involved in these requirements are that the warehouse could be destroyed or made inoperable – the cost of such eventuality is of course covered by insurance, including loss of profits cover, but the operation is such that alternative accommodation could quickly be brought into action, or alternatively – a warehousing function could be subcontracted at very short notice. Although such an event would have costs attached and would cause some disruption in the business, it would be far from catastrophic. All systems within the group, including the control systems, are backed up securely on a daily basis, thus limiting the risk to one day’s operations. The financial soundness of the company is a matter which is constantly in the minds of the senior staff and directors of the company. Systems are in place to ensure that any deviation from the norm is immediately brought to the attention of staff and directors. These systems have a proven history as shown in the strength of the balance sheet. Not only has the company sufficient working capital to enable it to meet its requirements, but it believes that it has an untapped resource in borrowing on its substantial assets should it require to do so. 9 Northamber RepoRt & Accounts FuLL YeAR enDeD 30 June 2013 BUSINESS AND FINANCIAL REVIEW (Continued) Market Risk The group is subject to both general market conditions and particularly to those affecting its own particular industry. The company is a distributor of other businesses’ products and is therefore dependent on the suppliers of such products to continue to provide products which are required by the customers of the company, at prices which are acceptable to those customers. This is managed within the company by being alert to all the movements in the market place relating to both products and suppliers and to negotiating with existing and prospective suppliers for the supply of goods on the best possible terms to enable the company to trade effectively. As noted above in the Operational Review, the impact of the smart electronic equipment such as tablets and phones has had major repercussions in the industry and it is not yet known how the sector will respond to the change. Where products are bought in foreign currency, the company manages the risk inherent in such currencies by continuously updating its rates of conversion in calculating its costs to ensure prices remain competitive and in order to minimise the currency conversion risk. The Company recognises the importance of providing additional services to its customers in relation to next day deliveries, credit limits, handling queries efficiently and by maintaining a strong relationship with the customer and in this way aims to resist the competitive pressures in the sector. J.P. Henry Operations Director 4 October 2013 10 REPORT OF THE DIRECTORS The directors have pleasure in presenting their report and the accounts for the year ended 30 June 2013. The financial statements include the individual entity Northamber Plc and its wholly owned subsidiary Anitass Limited. Anitass Limited owns the freehold of the premises at Weybridge which is the group’s distribution centre. The other subsidiaries of Northamber Plc are dormant and not material to the financial statements for the year to 30 June 2013. Principal Activities The group’s principal activities are those of specialist supply of computer hardware, computer printers and peripheral products, computer telephony products and other electronic transmission equipment. Review of Business The Chairman, in his statement on pages 5 to 6, and the Business and Financial Review on pages 7 to 10 sets out a review of the business. These statements are incorporated into this report by reference to them. The consolidated statement of comprehensive income for the financial year is set out on page 29. Although the results for the year were unsatisfactory, given the circumstances and conditions referred to earlier in this Annual Report, they were acceptable. Further steps are being taken to minimse current losses and to return the group to profitability. The creditor days were significantly reduced to 26 days (2012: 31) and similarly the debtor days also significantly reduced to 34 days (2012: 40 days). Stock turn for the year was 10.6 times (2012: 13.8), this decrease was due in part to the stock policy of Vendors. Financial Risks The group uses various financial instruments including cash, equity and various items such as trade receivables and trade payables that arise directly from its operations. The existence of these instruments exposed the group to a number of financial risks, the main ones being exchange rate risk, liquidity risk, interest rate risk and credit risk. The directors review and agree policies for managing each of these risks and these are summarised in the Business and Financial review. Corporate Governance The Corporate Governance Report on pages 18 to 23 forms part of the Directors’ Report and is incorporated into this report by reference. Dividends The following dividends were paid in the year ended 30 June 2013 Ordinary dividends Previous year’s final dividend paid Interim paid 2013 £’000 2012 £’000 212 84 296 283 84 367 The final proposed dividend of 0.3p (2012: 0.75p) will be paid on 17 January 2014 to all members on the register at the close of business on 6 December 2013. 11 Northamber RepoRt & Accounts FuLL YeAR enDeD 30 June 2013 REPORT OF THE DIRECTORS (Continued) Directors The current directors of the company are listed on page 25. There has been no change in the directors during the year. Share Capital At 30 June 2013 the company had 28,158,735 ordinary shares of 1p each issued. The shares have no special rights and there is no restriction on their voting rights. The company repurchased no ordinary shares of 1p each in the year. Substantial Shareholdings The following shareholders held disclosable interests, as defined by SI 2008/410 Sch 7 Para 13, at 18 September 2013 as detailed below: D.M. Phillips BNY(OCS) Nominees Limited Goodbody Nominees Ltd Quiros Limited Purchase of Own Shares Ordinary Shares of 1p each 61.47% 11.24% 3.57% 3.32% At the end of the year, the directors had authority, under the shareholders’ resolutions of 17 November 2012 to purchase through the market 2,815,874 of the company’s ordinary shares at prices ranging between 1p and 105% of the average middle market quotations for those shares as derived from the Daily Official List of the London Stock Exchange on the ten dealing days immediately preceding the day on which the shares are contracted to be purchased. This authority expires on 6 December 2013, the date of the next Annual General Meeting. Auditors A resolution to appoint Grant Thornton UK LLP as the group’s auditors will be proposed at the forthcoming Annual General Meeting. During the year ended 30 June 2013 the Board and Audit Committee approved an extension to the engagement term of the Senior Statutory Auditor responsible for the audit opinion in relation to Northamber Plc. The term was extended from 6 to 7 years to ensure continued audit quality given the appointment of a new Audit Committee Chairman and changes in key management. The Audit Committee is satisfied that this extension does not in any way prejudice the objectivity and independence of the auditor. Creditors’ Payment Policy The group’s payment policy is to: (i) determine terms of payment with suppliers when agreeing the terms of transactions; (ii) ensure that suppliers are made aware of the terms of payment; and (iii) pay in accordance with its contractual and other legal obligations. 12 The payment policy applies to all payments to creditors for revenue and capital supplies of goods and services. Creditor days at 30 June 2013 were 26, (2012: 31). It is the company’s policy to take full advantage of settlement discounts offered by suppliers. REPORT OF THE DIRECTORS (Continued) Social and Community Policy The group has a policy of being socially responsible. To this end it treats all its stakeholders and its neighbours in a fair and reasonable manner in that all its actions are designed to optimise the benefits and minimise any aggravation to its employees, suppliers and customers as well as those in the community generally. Operations are conducted in a businesslike manner and any nuisance which could possibly arise from such operations are pre-considered and minimised. Such matters as bulk deliveries are scheduled to reduce to a minimum any local congestion and car parking is provided to staff to avoid any on street parking causing any offence. Environmental Policy The main matters arising from the company’s operations on the environment, apart from the matters stated above relating to traffic, are packaging and waste. Due to the type of operation carried out by the company, i.e. the distribution of computer related products to other than end users, the need for packaging is crucial to the state and quality of the products eventually received by the end user (the consumer). Although excess packaging is discouraged, the company is largely in the hands of its suppliers regarding the packaging actually involved in selling products. Any surplus packaging which remains with the company is disposed of in an environmentally considered manner. The company attempts wherever possible to enforce, as one of its terms of trade with its suppliers, the undertaking to dispose of waste and returned products in accordance with the regulations. Any waste produced by the company is similarly disposed of. Amendment of Articles of Association Unless expressly specified to the contrary in the Articles, the Articles may be amended by a special resolution of the company’s shareholders. Appointment and replacement of directors Unless otherwise determined by the company in general meeting, the directors shall not be fewer than two nor more than ten. A director does not require any share holding in the company as qualification shares and there is no restriction on the age of a director. A director may be appointed by the company by ordinary resolution, or by the board. A director appointed by the board holds office only up to the date of the next annual general meeting and is then eligible for reappointment. The board or any committee authorised by the board may from time to time appoint one or more directors to hold any employment or executive office for such period and on such terms as they may determine and may also revoke or terminate such appointment. At every annual general meeting of the company whoever has been appointed by the board since the last annual general meeting retires from office but is eligible for reappointment. One third of the directors retire by rotation at each annual general meeting but are eligible for reappointment. Any non executive director who has been a director of the company for nine years or more, retires each year but is eligible for reappointment. Power of the directors Subject to the company’s Memorandum of Association, the Articles and any directions given by the company by special resolution, the business of the company will be managed by the board who may exercise all the powers of the company, whether relating to the management of the business or not. In particular the board may exercise all the powers of the company to borrow money, to mortgage or charge any of its undertaking, property or assets (present and future) and uncalled capital and to issue debentures and other securities and to give security for any debt, liability or obligation of the company or of a third party. 13 Northamber RepoRt & Accounts FuLL YeAR enDeD 30 June 2013 REPORT OF THE DIRECTORS (Continued) Contractual Relationships By the nature of its business, the company has contractual relationships with virtually all of its suppliers. Such contracts are entered into and terminated on a regular basis with new suppliers being taken on and with some being terminated either by mutual consent or if, in the opinion of the company, they are no longer viable. Because product development continues to change dramatically over a relatively short period of time, such change is not only inevitable, it is also highly desirable to ensure that the company continues to be able to meet the demands of its customers. Similarly there are written contracts with all of the company’s customers so that they are fully aware of our terms of trade and to safeguard as far as possible against any losses arising from trading with them. During the year to 30 June 2013 there were no significant changes in either the terms of trade encompassed within these contracts nor any significant change in the range and size of our customers. There are no contractual arrangements which are considered essential to the business of the group. Employees Every effort is made to keep staff as fully informed as possible about the operations and progress of the company. This is achieved through regular communication from the Operations Director to all staff and from the CEO to the Operational Management team meetings. The group encourages its staff to pursue career development and to that end has made available resources for training courses including video and computer training aids. Applications received from disabled persons are given full and equal consideration but are small in number as our type of business does not seem to attract such applicants. The company fulfils its obligations towards employees who are disabled or who become so whilst in the employment of the company. KEY PERFORMANCE INDICATORS (KPIs) The group has an extensive management reporting system and uses a wide variety of information in its everyday management of the business, including both those of a financial and non financial nature. This information is tailored to the various aspects of the business with individual managers being responsible for variances in movements within their particular sphere of operations to the executive management of the company. The majority of this information is highly sensitive and it is considered by the directors that it would be commercially disadvantageous to the company to identify the information used in a public document such as this Annual Report. Non financial information used by the business is not considered to constitute a KPI as it is not information by which the development, performance or position of the company’s business can be measured effectively. Some of the broader KPIs which are used and which have been reported elsewhere in our Annual Reports are the following:- Ratio Revenue Gross Profit Stock Turn Debtor days Creditor days Net Assets per share Format £m % Times Days Days Pence 2012-13 77.5 7.60 10.6 34 26 81.0 2011-12 100.6 7.76 13.8 40 31 85.7 14 The Revenue and Gross Profit are discussed in the Operating Review. Stock Turn and Creditor days are discussed in the Review of Business in the Directors Report. Debtor days have decreased due to the change of mix in customers with varying credit terms. Net Assets per share have fallen due to dividend payments and the loss reported for the period. REPORT OF THE DIRECTORS (Continued) Donations During the year the group made no charitable donations (2012: £750). No political donations were made in the year (2012: £Nil). By order of the Board S. Yoganathan ACMA Company Secretary 4 October 2013 15 Northamber RepoRt & Accounts FuLL YeAR enDeD 30 June 2013 REPORT TO SHAREHOLDERS BY THE BOARD ON DIRECTORS’ REMUNERATION Introduction This report has been prepared in accordance with section 420 of the Companies Act 2006, SI2008/410 and the UK Corporate Governance Code 2010 relating to directors’ remuneration (the “Regulations”). This report has been approved by the board and, as required by the regulations, a resolution to approve the report will be proposed at the Annual General Meeting of the company at which the financial statements will be approved. The Regulations require the auditors to report to the company’s shareholders on certain parts of the Directors’ Remuneration Report and to state whether in their opinion these parts of the report have been properly prepared in accordance with the Companies Act 2006. The report has therefore been divided into separate sections for audited and unaudited information. Unaudited information Remuneration Committee The Remuneration Committee comprised the non-executive directors Mr R.F. Heath and Mr A.G.K. Hamilton, with Mr R.F. Heath the chairman of the committee. This committee meets at least once a year and decides the remuneration policy that applies to executive directors. In setting the policy it considers a number of factors including: a) b) c) the basic salaries and benefits available to executive directors of comparable companies; the need to attract and retain directors of an appropriate calibre and experience; and the need to ensure executive directors’ commitment to the continued success of the company by means of incentive schemes. The group’s remuneration policy for executive directors is to: a) have regard to the directors’ experience and the nature and complexity of their work in order to pay a b) c) competitive salary that attracts and retains management of the highest quality; link individual remuneration packages to the company’s performance through target-related bonuses which are not considered to be excessive in terms of salary; provide employment-related benefits including the provision of a company car, life assurance, insurance relating to the directors’ duties and medical insurance. The final determination of an individual director’s remuneration is taken by the board as a whole but with no director participating in the discussions, nor voting on his own remuneration package. The non-executive directors each receive a fee for their services which is agreed by the Board following recommendation by the chairman. The non-executive directors do not receive any pension or other benefits from the company, nor do they participate in any of the bonus or incentive schemes. When reviewing or amending remuneration arrangements the committee considers any impact on the cost to the company, employee behaviour, stakeholders (including shareholders, governance bodies and employees) best practice, corporate governance and market competitiveness. Salaries and benefits The Remuneration Committee meets at least once a year in order to consider and set the remuneration packages for executive directors . The remuneration packages are benchmarked to ensure comparability with companies of a similar size and complexity. The bonuses have regard to personal performance measured against pre-stated objectives and profitability of the company. 16 REPORT TO SHAREHOLDERS BY THE BOARD ON DIRECTORS’ REMUNERATION Share options There are no share option schemes in force in the group or company. Contracts of service The two executive directors, D.M. Phillips and J.P. Henry, have service contracts. Mr Phillip’s contract was renewed and carried forward with effect from 1 June 2013. Mr Henry’s contract as a director, commenced on 20 February 2012. Both contracts are one year rolling contracts and contain no specific provisions in relation to any termination payments over and above the notice periods as stated below. D.M. Phillips - Notice period – six months. J.P. Henry – Notice period – six months. The non-executive directors do not have service contracts with the company. The terms of their appointment are reviewed by the board every two years and are available for inspection on request. Non executive directors who have been in service for more than nine years are subject to annual election. Performance graph The following graph shows the company’s performance compared with the FTSE all share index measured by total shareholder return (“TSR”). The all share index has been selected for this comparison as it is the index within which Northamber and other comparable UK quoted companies are classified. TSR is calculated as the growth or fall in value of a shareholding from the date of initial investments over time, with the assumption that dividends are reinvested to purchase additional shares in the company. The source of the data is Datastream and the figures were provided by Charles Stanley & Co Limited, the company’s brokers. FTSE All Share Index Northamber Plc 17 Northamber RepoRt & Accounts FuLL YeAR enDeD 30 June 2013 REPORT TO SHAREHOLDERS BY THE BOARD ON DIRECTORS’ REMUNERATION Audited information Directors’ detailed emoluments Details of directors’ emoluments are as follows: Executive D.M. Phillips H.W. Matthews (to February 2012) J. P. Henry (from February 2012) Non-Executive R.F. Heath A.G.K. Hamilton Salaries and Fees 2013 2012 `£’000 £’000 Benefits 2013 2012 £’000 £’000 Pension 2013 2012 £’000 £’000 Total 2013 2012 £’000 £’000 15 - 15 60 26 12 - 12 - - 74 30 4 2 10 15 15 15 15 - - - - - - 119 135 30 26 10 - - 3 - - 3 41 - 88 15 15 27 72 35 15 15 159 164 For the year ended 30 June 2013, Mr D.M. Phillips has waived £165,000 of his salary, (2012: £165,000). Directors’ interests (not subject to audit) Interests in shares Directors in office at 30 June 2013 had the following beneficial interests in the shares of the company: Ordinary Shares of 1p each D.M. Phillips R.F. Heath A.G.K. Hamilton J.P. Henry 30 June 2013 17,308,295 5,000 - - 30 June 2012 17,308,295 5,000 - - Between 30 June 2013 and 18 September 2013 there have been no changes in the interests of the above named directors in the shares of the company. The market price of the company’s shares at 18 September 2013 was 31.50p. The range of market prices during the year was 28.5p to 38p. S.Yoganathan ACMA By order of the Board 4 October 2013 18 CORPORATE GOVERNANCE The Corporate Governance Report forms part of the Directors’ Report included here on pages 11 to 15. On 2 September 2013, the Group moved to the AIM market of the London Stock Exchange. The Group is committed to high standards of corporate governance in all its activities. The Board is accountable to the Group’s shareholders for good corporate governance. Although the Group is not required under AIM rules to comply with the UK Corporate Governance Code of June 2010 (the Code), the Board recognises the value of the Code and has regard to its requirements as far as is practicable and appropriate for a public company of its size and nature. This statement describes how the principles of corporate governance are applied to the Group. CORPORATE GOVERNANCE POLICY The group’s policy on Corporate Governance is published on the group’s web site which is www.northamber.com. DIRECTORS Board of Directors The group is led and controlled through the Board of Directors, which during the year comprised two executive and two non-executive directors. Biographical details of each director in office during the year appear on page 26. All directors have access to the advice and services of the company secretary and the board has established a procedure whereby any director may seek independent professional advice in the furtherance of his duties at the company’s expense. All directors are able to allocate sufficient time to the company to discharge their responsibilities. As required by the company’s articles of association, directors offer themselves for re-election at least once every three years. Non-executive Directors The board considers that the non-executive directors were independent throughout the year. The non- executive directors actively contribute to the functioning of the board and bring a range of views and experience from different fields. As part of their role, the non executive directors constructively challenge and develop proposals on strategy. The non executive directors scrutinise the performance of management in meeting agreed goals and objectives and monitor the reporting of performance. They satisfy themselves on the integrity of financial information and that financial controls and systems of risk management are robust and defensible. They determine appropriate levels of remuneration of executive directors and have a prime role in appointing and, where necessary, removing executive directors, and in succession planning. The senior independent non executive director, as included in the biographical details on page 26, is available to shareholders if they have concerns which contact through the normal channels of chairman or other executive directors has failed to resolve or for which such contact is inappropriate. 19 Northamber RepoRt & Accounts FuLL YeAR enDeD 30 June 2013 CORPORATE GOVERNANCE (Continued) Main board responsibilities The board meets formally at regular intervals during the year. Meetings are chaired by the executive chairman. The board is responsible for the overall direction and strategy of the group to secure optimum performance. The board has specified those areas of operations in the group which are specifically in its domain and may not be delegated; these matters include:- • • • • • • • determination of the group’s objectives and strategy all financial information which is published, including the interim results and management statements and the annual report and all other corporate communications decisions and recommendations on dividends changes in the group’s business, its capital and corporate structure or its risk profile changes in the scope or operation of the group’s internal control structure all board changes or changes in the company secretary the remuneration policy of the senior executives All board members receive weekly summary financial information and monthly management accounts. All financial information which is to be published is also circulated for discussion and approval prior to publication. Information on other matters, as required, is also circulated by the company secretary. Any board member may request the company secretary to report on any specific matter and prepare information for discussion at the board meetings. The board of the company comprises only four members and whilst formal board meetings are held at regular intervals, many of the matters are also discussed informally throughout the year. The operations director normally chairs the operations committee of the company which holds weekly meetings. It is at these meetings that the decisions of the board are communicated to the senior management who also sit on the operations committee. It is also this forum which reports back, through the operations director to the board, on the implementation of the decisions of the board. The operations committee also raises matters which they consider should be communicated to the board on any aspect of the business which comes within the matters reserved for the board. Directors attendance The following table shows the attendance of directors at the board and committee meetings held in the last year. Board Audit Meetings Committee Committee Remuneration No of meetings: David Michael Phillips John Phelim Henry Reginald Frank Heath Alexander Gordon Kelso Hamilton 4 2 4 4 N/A N/A 4 4 N/A N/A 1 1 Board Committees During the year the Audit Committee comprised two non executive directors. Non executive directors – during the year to 30 June 2013, the non executive directors comprised Mr R.F. Heath and Mr A.G.K. Hamilton. 20 CORPORATE GOVERNANCE (Continued) Audit Committee The Audit Committee, currently chaired by Mr A.G.K. Hamilton, comprised the two non-executive directors, both of whom are considered by the board to be independent and to have sufficient recent and relevant financial experience to discharge the committee’s duties. The company secretary, who is also the chief financial officer of the company, acts as secretary to the committee. The board considers that the members of the audit committee have the required understanding of:- • • the principles of, content of and developments in financial reporting, including the applicable accounting standards and statements of recommended practice key aspects of the company’s operations, including corporate policies, financing and systems of internal control • matters that could influence or distort the presentation of accounts and key information • the role of external auditors The primary function of the audit committee is to enable the board to monitor the integrity of the company’s financial reports and manage the board’s relationship with the external auditors. Its other functions include the review and monitoring of:- • • • • the financial reporting process the annual audit the effectiveness of the company’s internal controls and risk management the independence of the external auditors The audit committee reports to the board its findings identifying any matters which it considers requires that action or improvement is required and makes recommendations on the steps to be taken. The committee’s terms of reference include all relevant matters required by the Disclosure and Transparency Rules and the relevant code provisions. The terms of reference of the audit committee have been reviewed and are available on request by writing to the company secretary at the registered address. Overview of the actions taken by the audit committee to discharge its duties During the year the audit committee:- • • • • • • reviewed the June 2013 annual report and financial statements and the December half yearly financial report. As part of the review the committee received a report from the external auditors on their audit of the annual report and financial statements reviewed the effectiveness of the company’s internal controls reviewed and agreed the scope of the audit work to be undertaken by the external auditors agreed the fees to be paid to the external auditors for their audit of the 2013 report and financial statements reviewed the whistle blowing procedures in place to enable staff to raise concerns in confidence about possible wrongdoing considered the requirement for an internal audit function in the company and decided to recommend to the board that such a function was not necessary at this stage • recommended that the board reappoint the external auditors 21 Northamber RepoRt & Accounts FuLL YeAR enDeD 30 June 2013 CORPORATE GOVERNANCE (Continued) External audit The engagement and independence of external auditors is considered annually by the Audit Committee before it recommends its selection to the board. The Audit Committee concluded that it was in the best interests of the Group for the external auditors to provide a number of non-audit services during the year due to their experience, expertise and knowledge of the Group’s operations. Auditor objectivity and independence was achieved by ensuring that personnel involved in the non- audit work were not involved in the audit, and by ensuring that management took responsibility for all decisions made. The fees paid to the Auditors in the year are disclosed in Note 4 to the Group financial statements. Grant Thornton also follow its own ethical guidelines and continually reviews its audit team to ensure it independence is not compromised. Remuneration Committee At the year end the Remuneration Committee comprised both non-executive directors and was chaired by Mr R.F. Heath. The company secretary acts as secretary to the committee. The committee meets at least once a year and is responsible for setting the remuneration policy and annual salaries that apply to executive directors. Operations Committee The Operations Committee comprises the executive directors and certain senior business managers. It meets weekly, and deals with the operatiaonal matters of the company other than those dealt with by the Remuneration and Audit Committees or by the full board. Board Effectiveness The role of the board is to ensure that the company is managed to optimise the benefits to its stakeholders including shareholders, staff, customers, suppliers and the community at large. To achieve this objective the board reserves to itself certain matters such as the formulation of strategy, the assessment of risk, and the setting of internal control systems. Certain areas of responsibility of the board are dealt with by committees of the board such as the audit committee and the remuneration committee reporting back to the main board. The implementation of the decisions of the main board are delegated to the senior management of the company through the Operations Committee chaired by the operations director. During the year the board reviewed each aspect of its role to ensure that it was fulfilling its role effectively and that each director was individually making a full and effective contribution to the process. This was carried out by the chairman reviewing the individual and collective contribution of the board members against objectives and by the audit committee reviewing the performance of the chairman. The result of that review was that, having reviewed each director’s contribution and the requirements of the company as a whole, each director was effective and that the composition of the board was appropriate and more than adequate for the time being. 22 CORPORATE GOVERNANCE (Continued) GOING CONCERN BASIS The group’s activities together with the factors likely to affect its future development, performance and position are set out in the Business and Financial Review and the Directors' Report on pages 7 to 15. The financial position of the group, its cash flow and its liquidity position are described in the Chairman’s Statement on pages 5 to 6. In addition, the Business Review also includes the group’s objectives, policies and processes for managing its capital; its financial risk management objectives; and its exposure to credit risk and liquidity risk. The group has considerable financial resources and established market profile and relationships with a number of suppliers and customers. As a consequence, the directors believe that the company is well placed to manage its business risks appropriately despite the current economic outlook. After making enquiries, the directors have formed a judgement, at the time of approving the financial statements, that there is a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. For this reason the directors continue to adopt the going concern basis in preparing the financial statements. RELATIONS WITH SHAREHOLDERS The Directors are available to meet with the group’s institutional shareholders throughout the year at request. Notice of the Annual General Meeting (AGM) is circulated to all shareholders at least 21 days prior to the meeting. Directors attend the AGM and will be available to answer shareholders’ questions. ACCOUNTABILITY AND AUDIT Financial Reporting The board believes that its Annual Reports and financial statements represent a balanced and understandable assessment of the company’s position and prospects whilst also complying with the legal and regulatory requirements for financial reporting relevant to the company. Internal Control The board of directors has overall responsibility for the group’s systems of internal control and for monitoring their effectiveness. The board maintains full control and direction over appropriate strategic, financial, organisational and compliance issues and has put in place an organisational structure with formally defined lines of responsibilities and delegation of authority. There are established procedures for planning, capital expenditure, information and reporting systems and for monitoring the company’s business and its performance. The board has delegated to executive management the implementation of the systems of internal control within an established framework that applies within the company. The group’s control systems address key business and financial risks. The board considers the greatest risks to be related to the realisable value of current assets, principally inventories and trade receivables. Particular attention is paid to all matters relating to purchasing, inventories, revenues, trade receivables, cash, capital expenditure and foreign exchange. Comprehensive documented procedures are used and are available to all staff via the extensive computer system. A system of control is designed to manage rather than eliminate the risk of failure to achieve business objectives, and can only provide reasonable and not absolute assurance against material misstatement or loss. As and when areas of improvement are brought to the attention of the board and management steps are taken to further embed internal control and risk management into the operations of the business. 23 Northamber RepoRt & Accounts FuLL YeAR enDeD 30 June 2013 CORPORATE GOVERNANCE (Continued) The group financial statements are prepared by management and are subject to review by the directors to ensure that they are in agreement with the accounting records. The financial reporting process is non- complex due to the size of the group. The board has considered the need for internal audit but has decided that because of the size of the group it cannot be justified at present. A review of internal control was undertaken by the board in June 2013. The conclusion of this review was that the systems and operations of the internal controls including financial, operational and compliance controls remained effective and appropriate to the operations of the company. Other matters The Directors have published the company’s Corporate Governance policies which the directors consider are relevant to the company on the company’s website. Induction programmes for new directors are specifically designed for each director as appointed as the content varies depending on the background and experience of the appointee. There is therefore no standard induction programme for new directors. By order of the Board S.Yoganathan ACMA Company Secretary 4 October 2013 24 STATEMENT OF DIRECTORS’ RESPONSIBILITIES The directors are responsible for preparing the Annual Directors’ Report, the Remuneration Report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have to prepare the group financial statements and have elected to prepare the parent company financial statements in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs and profit or loss of the group and the company for that period. In preparing these financial statements, the directors are required to: select suitable accounting policies and then apply them consistently; • • make judgments and accounting estimates that are reasonable and prudent; • state whether applicable IFRSs have been followed, subject to any material departures disclosed and explained in the financial statements; prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. • The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements and the remuneration report comply with the Companies Act 2006 and Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. In so far as each of the directors is aware: • • there is no relevant audit information of which the company’s auditors are unaware; and the directors have taken all steps that they ought to have taken as directors to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information. The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. To the best of my knowledge: • • the financial statements, prepared in accordance with IFRS as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit or loss of the company and the undertakings included in the consolidation taken as a whole; and the Business and Financial Review includes a fair review of the development and performance of the business and the position of the company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face. D. M. Phillips Chairman 4 October 2013 25 Northamber RepoRt & Accounts FuLL YeAR enDeD 30 June 2013 DIRECTORS AND ADVISERS Non-executive Directors Alexander Gordon Kelso Hamilton *† (Age 68) FCA Senior independent non executive director. Non executive director of Barloworld Ltd, Netbank Private Wealth Ltd and Petra Diamonds Ltd. Gordon Hamilton was a partner in Deloitte & Touche LLP (and predecessor practices) for more than 30 years and retired as a senior audit partner in 2006. Reginald Frank Heath *† (Age 72) FCIS, FIMI Non executive director. Reginald Heath has over 30 years experience in the motor trade, formerly being Director of Motor Operations at Inchcape plc. * Member of Remuneration Committee † Member of Audit Committee Executive Directors David Michael Phillips (Age 68) Executive chairman David Phillips is the founder of Northamber plc and has been actively involved with the company since its inception in the 1970s. John Phelim Henry (Age 51) Operations director John Henry joined Northamber plc in 1992 in the Sales Department. He was promoted to Operations Director in 2012. Registered Office 23 Davis Road Chessington Surrey KT9 1HS Registrars Computershare Services plc PO Box 82 The Pavilions Bridgwater Road Bristol BS99 7NH Registered Auditors Grant Thornton UK LLP Chartered Accountants No.1 Dorset Street Southampton SO15 2DP 26 Bankers Bank of Ireland Bow Bells House 1 Bread Street London EC4M 9BE Barclays Bank Limited 6 Clarence Street Kingston upon Thames Surrey KT1 1NY Nominated Advisors & brokers Charles Stanley Securities 131 Finsbury Pavement London EC2A 1NT Independent auditor’s report to the members of Northamber Plc We have audited the financial statements of Northamber Plc for the year ended 30 June 2013 which comprise the consolidated and company statements of financial position, the consolidated statement of comprehensive income, the consolidated and company statements of cash flows, the consolidated and company statements of changes in equity and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and as regards the parent company financial statements as supplied in accordance with the provisions of the Companies Act 2006. This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditor As explained more fully in the Directors’ Responsibilities Statement set out on page 24, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors. Scope of the audit of the financial statements A description of the scope of an audit of financial statements is provided on the APB’s website at www. frc.org.uk /apb/scope/private.cfm. Opinion on financial statements In our opinion: • • • • the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 30 June 2013 and of the group’s loss for the year then ended; the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the group financial statements, Article 4 of the IAS Regulation. Separate opinion in relation to IFRSs as issued by the IASB As explained in Note 2 to the group financial statements, the group in addition to complying with its legal obligation to apply IFRSs as adopted by the European Union, has also applied IFRSs as issued by the International Accounting Standards Board (IASB). In our opinion the group financial statements comply with IFRSs as issued by the IASB. Opinion on other matters prescribed by the Companies Act 2006 In our opinion: • the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006; and 27 Northamber RepoRt & Accounts FuLL YeAR enDeD 30 June 2013 Independent auditor’s report to the members of Northamber Plc • the information given in the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements Matters on which we are required to report by exception We have nothing to report in respect of the following: Under the Companies Act 2006 we are required to report to you if, in our opinion: • • adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or the parent company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting records and returns; or • certain disclosures of directors’ remuneration specified by law are not made; or • we have not received all the information and explanations we require for our audit. Other Matter The Company delisted from the main market on 2 September and relisted on the AIM market following a special resolution requiring 75% shareholder approval. As a result the auditor’s responsibilities as required under the Listing rules did not apply at the date of the audit report. Norman Armstrong Senior Statutory Auditor for and on behalf of Grant Thornton UK LLP Statutory Auditor, Chartered Accountants Southampton 4 October 2013 28 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended 30 June 2013 Revenue Cost of sales Gross profit Distribution costs Administrative expenses (Loss) from operations Investment revenue Profit/(Loss) before tax Tax (charge)/credit Notes 3 2013 Total £’000 2012 Total £’000 77,521 (71,624) 100,615 (92,807) 5,897 7,808 (3,358) (3,694) (4,267) (3,638) 4 6 7 (1,155) 108 (1,047) 63 (97) 134 37 (39) (2) (Loss) for the year and total comprehensive (loss) (984) Basic and diluted (loss) per ordinary share 9 (3.49)p (0.01)p 29 Northamber RepoRt & Accounts FuLL YeAR enDeD 30 June 2013 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY At 30 June 2013 Capital Retained Share premium redemption earnings Share Total equity Capital £’000 account £’000 reserve £’000 £’000 £’000 Balance at 1 July 2011 286 5,734 1,500 17,225 24,745 Dividends Purchase of own shares Transactions with owners Loss and total comprehensive loss for the year - (5) (5) - - - - - - 5 5 - (367) (250) (367) (250) (617) (617) (2) (2) Balance at 30 June 2012 281 5,734 1,505 16,606 24,126 Dividends Purchase of own shares Transactions with owners Loss and total comprehensive loss for the year - - - - - - - - - - - - (296) (296) - - (296) (296) (984) (984) Balance at 30 June 2013 281 5,734 1,505 15,326 22,846 30 COMPANY STATEMENT OF CHANGES IN EQUITY At 30 June 2013 Capital Retained Share premium redemption earnings Share Total equity Capital £’000 account £’000 reserve £’000 £’000 £’000 Balance at 1 July 2011 286 5,734 1,500 17,225 24,745 Dividends Purchase of own shares Transactions with owners Loss and total comprehensive loss for the year - (5) (5) - - - - - - 5 (367) (250) (367) (250) 5 (617) (617) - (66) (66) Balance at 30 June 2012 281 5,734 1,505 16,542 24,062 Dividends Purchase of own shares Transactions with owners Loss and total comprehensive income for the year - - - - - - - - - - - - (296) (296) - - (296) (296) (1,454) (1,454) Balance at 30 June 2013 281 5,734 1,505 14,792 22,312 31 Northamber RepoRt & Accounts FuLL YeAR enDeD 30 June 2013 CONSOLIDATED STATEMENT OF FINANCIAL POSITION At 30 June 2013 Non current assets Property, plant and equipment Notes 2013 £’000 2012 £’000 10 8,601 9,050 Current assets Inventories Trade and other receivables Cash and cash equivalents 12 13 14 6,765 8,475 6,136 6,733 14,659 4,304 Total assets Current liabilities Trade and other payables Non current liabilities Deferred tax liabilities Total liabilities Net assets Equity Share capital Share premium account Capital redemption reserve Retained earnings Equity shareholders’ funds 21,376 25,696 29,977 34,746 15 (7,131) (10,575) (7,131) (10,575) 17 - (45) 18 (7,131) (10,620) 22,846 24,126 281 5,734 1,505 15,326 281 5,734 1,505 16,606 22,846 24,126 32 COMPANY STATEMENT OF FINANCIAL POSITION At 30 June 2013 Non current assets Property, plant and equipment Investments Current assets Inventories Trade and other receivables Cash and cash equivalents Tax assets Total assets Current liabilities Trade and other payables Non current liabilities Deferred tax liabilities Total liabilities Net assets Equity Share capital Share premium account Capital redemption reserve Retained earnings Notes 10 11 12 13 14 16 2013 £’000 2,078 6,588 8,666 6,765 8,475 6,102 14 2012 £’000 2,402 6,588 8,990 6,733 14,659 4,285 14 21,356 25,691 30,022 34,681 (7,710) (10,574) (7,710) (10,574) 17 - (45) (7,710) (10,619) 22,312 24,062 18 281 5,734 1,505 14,792 281 5,734 1,505 16,542 Equity shareholders’ funds 22,312 24,062 The financial statements on pages 29 to 53 were approved by the board of directors on 4 October 2013 and were signed on its behalf by: D.M. Phillips Chairman J.P. Henry Operations Director Company Registration number: 01499584 33 Northamber RepoRt & Accounts FuLL YeAR enDeD 30 June 2013 CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 30 June 2013 Cash from operating activities Operating (loss) from continuing operations Depreciation of property, plant and equipment (Profit) on disposal of property, plant and equipment 2013 £’000 2012 £’000 (1,155) 531 (1) (97) 277 (10) Operating (loss)/ profit before changes in working capital (625) 170 (Increase)/decrease in inventories Decrease in trade and other receivables (Decrease) in trade and other payables Cash generated from operations Income taxes repaid Net cash from operating activities Cash flows from investing activities Interest received Proceeds from disposal of property, plant and equipment Purchase of property, plant and equipment (32) 6,184 (3,447) 4,682 2,011 (6,030) 2,080 833 21 2,101 43 876 108 1 (82) 134 10 (6,800) Net cash generated/(used) from investing activities 27 (6,656) Cash flows from financing activities Purchase of own shares for cancellation Dividends paid to equity shareholders Net cash used in financing activities - (296) (296) (250) (367) (617) Net increase /(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year 1,832 4,304 (6,397) 10,701 Cash and cash equivalents at end of year 6,136 4,304 34 COMPANY STATEMENT OF CASH FLOWS For the year ended 30 June 2013 Cash from operating activities Operating (loss) from continuing operations Depreciation of property, plant and equipment (Profit) on disposal of property, plant and equipment 2013 £’000 2012 £’000 (1,630) 406 (1) (177) 246 (10) Operating (loss)/profit before changes in working capital (1,225) 59 (Increase)/decrease in inventories Decrease in trade and other receivables (Decrease) in trade and other payables Cash generated/(used) from operations Income taxes repaid Net cash from operating activities Cash flows from investing activities Interest received Proceeds from disposal of property, plant and equipment Purchase of property, plant and equipment Decrease/(increase) in investments (32) 6,184 (2,862) 4,682 2,011 (6,029) 2,065 723 21 2,086 43 766 108 1 (82) - 134 10 (121) (6,588) Net cash generated/(used) from/(in) investing activities 27 (6,565) Cash flows from financing activities Purchase of own shares for cancellation Dividends paid to equity shareholders Net cash used in financing activities - (296) (250) (367) (296) (617) Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year 1,817 4,285 (6,416) 10,701 Cash and cash equivalents at end of year 6,102 4,285 35 Northamber RepoRt & Accounts FuLL YeAR enDeD 30 June 2013 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 1. General information Northamber Plc is a company incorporated and domiciled in the United Kingdom under the Companies Act 2006. The address of the registered office is given in the shareholder information on the inside back cover. The nature of the company’s operations and its principal activities are set out in the business review and the report of the directors on pages 7 to 15. 2. Significant accounting policies Basis of accounting The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU. The group has also complied with IFRS as issued by the IASB. The financial statements have been prepared under the historical cost basis. The financial statements cover the individual entity Northamber plc and one subsidiary Anitass Limited, all other subsidiaries are dormant and not material to the financial statements for the year to 30 June 2013 or 30 June 2012. The principal accounting policies adopted are set out below. Adoption of new and revised standards The Group will apply relevant new standards from their effective date. The directors do not anticipate that any of the standards and interpretations issued by the IASB and IFRIC that have an effective date after the date of the financial statements will have a material impact on the Group’s financial statements in the period of initial application. Key sources of estimation uncertainty and critical accounting judgements Estimation uncertainty Provisions Within the Group there are a number of short term provisions. The carrying amount of the provisions is estimated based on the estimated net realisable value of inventories and recoverability of receivables. Inventories Initial measurement of inventories is at cost. Subsequent to initial recognition the group measures inventories at the lower of cost and net realisable value. Impairment losses are recognised as and when they occur. The write down is determined on an item by item basis or based on a group of items where such an assessment is not practical. Receivables Provision against trade receivables is made when there is objective evidence that the Group will not be able to collect all amounts due to it in accordance with the original terms of those receivables. The amount of the write-down is determined as the difference between the asset’s carrying amount and the present value of estimated future cash flows. 36 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 Critical accounting judgements Judgments are required to make an assessment as to whether there is an indication of impairment of property, plant and equipment (with the exception of small value items of vehicles, plant and equipment). Estimations of the carrying value of property, plant and equipment consider valuation in use calculations and current property prices in the area. Revenue recognition Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods provided in the normal course of business, net of discounts, VAT and other sales related taxes. Sales of goods are recognised when goods are delivered and title has passed. Investment revenue is accrued on a time basis in accordance with the effective interest rate method. Leasing Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. The Company as lessee Rentals payable under operating leases are charged to profit or loss on a straight line basis over the term of the relevant lease. Benefits received and receivable as an incentive to enter into an operating lease are also spread on a straight line basis over the lease term. Foreign currencies Transactions in currencies other than pounds sterling, the functional currency of all group entities, are recorded at the rates of exchange prevailing on the date of the transactions. At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting date. Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in profit or loss for the period. Loss from operations Loss from operations is stated before investment income and finance costs. Retirement benefit costs Payments to defined contribution retirement benefit schemes are charged as an expense in the period in which they are incurred. The Group has no defined benefit retirement schemes. Taxation The tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on the taxable profit for the year. Taxable profit differs from net profit as reported in the profit or loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted, or substantially enacted, by the reporting date. 37 Northamber RepoRt & Accounts FuLL YeAR enDeD 30 June 2013 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary differences arise from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are substantially enacted in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited to the profit or loss, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax which relates to items recognised in other comprehensive income is recognised in other comprehensive income. Deferred tax balances have not been discounted. Property, plant and equipment Land and buildings are held for use in the production or supply of goods and services, or for administrative purposes and are stated in the balance sheet at cost less accumulated depreciation and impairment losses. Fixtures and equipment are stated at cost less accumulated depreciation and any recognised impairment loss. Depreciation is charged so as to write off the cost of assets less any residual value, other than land, over their estimated useful lives, using the straight line method, on the following bases: Land and Buildings: Freehold premises 4% on freehold buildings, freehold improvements 25% straight line Plant and equipment 25% straight line The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss. Material residual value estimates are updated as required, but at least annually. 38 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 Impairment of tangible assets At each balance sheet date, the group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Company estimates the recoverable amount of the cash generating unit to which the asset belongs. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. Where an impairment loss subsequently reverses, the carrying amount of the asset (cash generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash generating unit) in prior years. A reversal of an impairment loss is recognised as income immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. Inventories Inventories are stated at the lower of cost and net realisable value. Cost is on the FIFO basis and comprises direct materials. Net realisable value represents the estimated selling price less costs to be incurred in marketing, selling and distribution. Cost of inventories is based on original cost as amended by credits subsequently received or agreed with suppliers in respect of specific products. The provision for obsolete and slow moving stock is determined by frequent and regular reviews of stock, its ageing and rate of sale, provisions are made which enable such obsolete stock as not returned to suppliers and slow moving stock to be sold at no loss. Investments Investment in subsidiaries is held at cost less any provision for impairment. Financial instruments Financial assets are classified as loans and receivables. The designation of financial assets is re- evaluated at every reporting date at which a choice of classification or accounting treatment is available. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables include trade receivables, cash and cash equivalents and are initially recognised at fair value plus transaction costs. Loans and receivables are measured subsequent to initial recognition at amortised cost using the effective interest method, less provision for impairment. Any change in their value through impairment or reversal of impairment is recognised in the profit or loss. 39 Northamber RepoRt & Accounts FuLL YeAR enDeD 30 June 2013 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 Provision against trade receivables is made when there is objective evidence that the company will not be able to collect all amounts due to it in accordance with the original terms of those receivables. The amount of the write-down is determined as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the original effective interest rate. An assessment for impairment is undertaken at least at each reporting date. A financial asset is derecognised only where the contractual rights to the cash flows from the asset expire or the financial asset is transferred and that transfer qualifies for derecognition. A financial asset is transferred if the contractual rights to receive the cash flows of the asset have been transferred or the company retains the contractual rights to receive the cash flows of the asset but assumes a contractual obligation to pay the cash flows to one or more recipients. A financial asset that is transferred qualifies for derecognition if the company transfers substantially all the risks and rewards of ownership of the asset, or if the company neither retains nor transfers substantially all the risks and rewards of ownership but does transfer control of that asset. Financial liabilities Financial liabilities are obligations to pay cash or other financial assets and are recognised when the company becomes a party to the contractual provisions of the instrument. Financial liabilities are initially recognised at fair value plus transaction costs. Financial liabilities subsequent to initial recognition are recorded at amortised cost using the effective interest method, with interest related charges recognised as an expense in finance charges in the income statement. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are charged to the income statement on an accruals basis using effective interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise. A financial liability is derecognised only when the obligation is extinguished, that is, when the obligation is discharged or cancelled or expires. Cash and cash equivalents Cash and cash equivalents comprise cash on hand, demand deposits and highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value. Equity Equity comprises the following: Share Capital – represents the nominal value of equity shares. Share Premium – represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue. Capital Redemption Reserve – represents the nominal value of shares which have been redeemed and cancelled. Retained Earnings – represents retained earnings. The transaction costs of an equity transaction are accounted for as a deduction from equity (net of any related income tax benefit) to the extent that they are incremental costs directly attributable to the equity transaction that otherwise would have been avoided. The costs of an equity transaction that is abandoned are recognised as an expense. 40 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 Capital management The Group manages its equity as capital. The company’s policy is to not have external debt finance and pay dividends as appropriate whilst maximising the long term return to stakeholders. In line with Group policy, the group has no external debt finance hence gearing is not measured. The company have paid final and interim dividends in the year. Equity comprises the items detailed within the principal accounting policy for equity and financial details can be found in the statement of financial position. The company adheres to the capital maintenance requirements set out in the Companies Act. Going Concern basis The going concern basis of preparing the financial statements has been adopted as in the view of the directors, as set out in the notes on Corporate Governance, the company has adequate resources to continue in operational existence for the foreseeable future. 3. 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. Year to 30 June 2012 Total Segment revenue Year to 30 June 2013 Total Segment revenue UK Italy Other Total £’000 97,790 £’000 1,453 £’000 1,372 £’000 100,615 77,013 0 508 77,521 No one customer accounted for 10% or more of the group’s revenue for the year. 41 Northamber RepoRt & Accounts FuLL YeAR enDeD 30 June 2013 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 4. Loss from operations Operating loss is stated after (crediting)/charging: Foreign exchange loss/(gains) Depreciation of property plant and equipment Amounts written off stock (Profit) on disposal of property, plant and equipment Operating lease charges – land and buildings Staff Costs (see note 5) Fees paid to the company’s auditor for the audit of the company annual financial statements for other services – regarding the purchase of property 2013 £’000 38 531 75 (1) 6 3,835 42 - 2012 £’000 (1) 277 213 (10) 487 4,646 41 32 No profit and loss account for Northamber Plc has been presented as permitted by Section 408 of the Companies Act 2006. The retained loss for the financial year dealt within the financial statements of the parent company, Northamber Plc, was £1,454,000 (2012: loss of £66,000) and is stated after taxation. 5. Staff costs The average monthly number of persons (including executive directors) employed by the company during the year was: Sales Administration Warehouse Engineering Their aggregate remuneration comprised: Staff costs: Wages and salaries Social security costs Other pension costs 2013 Number 35 48 27 3 113 2013 £’000 3,379 353 103 3,835 2012 Number 42 51 35 4 132 2012 £’000 4,078 436 132 4,646 Included in the above is key management personnel compensation of £170,000 (2012: £178,000). Full details of directors' remuneration are set out in the report to the shareholders by the board on directors’ remuneration on page 18. The company has identified the key management personnel as the executive and non-executive directors and all their remuneration received amounts to short-term employment benefits. 42 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 6. Investment revenue Bank interest receivable Other interest receivable 7. Tax on loss/profit on ordinary activities Current taxation UK corporation tax: charge for the year Adjustment in respect of prior periods Loss relief against prior year Deferred tax: Charge for the year Group Group 2013 £’000 38 70 108 2013 £’000 (14) (4) - (45) Charge/(credit) for the year (63) 2012 £’000 133 1 134 2012 £’000 39 - - - 39 The charge for the year can be reconciled to the profit per the Statement of comprehensive income as follows: Group 2013 £’000 2012 £’000 (Loss)/profit on ordinary activities before tax (1,047) Tax at the UK corporation tax rate of 20% average (2012: 20%) Losses carried forward Expenses not deductible for tax purposes Adjustment in respect of prior periods Total actual amount of (credit)/charge for the year The Group has tax losses of £700,000 to carry forward. (209) 140 (69) 10 (4) (63) 37 7 - 7 32 - 39 43 Northamber RepoRt & Accounts FuLL YeAR enDeD 30 June 2013 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 8. Dividends Amounts recognised as distribution to equity holders in the period: Dividends paid in year Final – for year ended 30 June 2012 Interim – for year ended 30 June 2013 2013 Pence per share 0.75 0.30 1.05 2012 Pence per share 1.00 0.30 1.30 £’000 283 84 367 £’000 211 84 295 Proposed final for the year ended 30 June 2013 0.30 84 0.75 211 The proposed final dividend is subject to approval at the Annual General Meeting and has not been included as a liability in these financial statements. 9. Loss per ordinary share The calculation of the basic and diluted earnings per share is based on the following data: (Loss) for the year attributable to equity holders of the parent company Number of shares Weighted average number of ordinary shares for the purpose of basic earnings per share and diluted earnings per share 2013 £’000 (1,008) 2012 £’000 (2) 2013 Number 2012 Number 28,158,735 28,336,868 Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the year. Net Assets per share, as disclosed within the summary of the last five years of trading, is calculated by dividing the net assets as disclosed in the consolidated statement of financial position by the number of ordinary shares in issue at the year end. 44 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 10. Property, plant and equipment Group Cost At 1 July 2011 Additions Disposals Land and Buildings £’000 Plant and Equipment £’000 4,262 6,694 - 1,371 106 (132) Total £’000 5,633 6,800 (132) At 30 June 2012 10,956 1,345 12,301 Depreciation At 1 July 2011 Depreciation charge for the year Disposals 1,875 195 - 1,231 82 (132) At 30 June 2012 2,070 1,181 Net book value at 30 June 2012 8,886 164 Group At 1 July 2012 Additions Disposals Land and Buildings £’000 Plant and Equipment £’000 10,956 - (1,704) 1,345 82 (13) 3,106 277 (132) 3,251 9,050 Total £’000 12,301 82 (1,717) At 30 June 2013 9,252 1,414 10,666 Depreciation At 1 July 2012 Depreciation charge for the year Disposals 2,070 457 (1,704) 1,181 74 (13) 3,251 531 (1,717) At 30 June 2013 823 1,242 2,065 Net book value at 30 June 2013 8,429 172 8,601 45 Northamber RepoRt & Accounts FuLL YeAR enDeD 30 June 2013 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 Company Cost At 1 July 2011 Additions Disposals Land and Buildings £’000 Plant and Equipment £’000 4,262 15 - 1,371 106 (132) At 30 June 2012 4,277 1,345 Depreciation At 1 July 2011 Depreciation charge for the year Disposals 1,875 164 - 1,231 82 (132) At 30 June 2012 2,039 1,181 Total £’000 5,633 121 (132) 5,622 3,106 246 (132) 3,220 Net book value at 30 June 2012 2,238 164 2,402 Company Cost At 1 July 2012 Additions Disposals Land and Buildings £’000 Plant and Equipment £’000 4,277 - (1,704) 1,345 82 (13) Total £’000 5,622 82 (1,717) At 30 June 2013 2,573 1,414 3,987 Depreciation At 1 July 2012 Depreciation charge for the year Disposals 2,039 332 (1,704) 1,181 74 (13) 3,220 406 (1,717) At 30 June 2013 667 1,242 1,909 Net book value at 30 June 2013 1,906 172 2,078 46 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 11. Investment in group companies Company Cost At 1 July 2012 and 30 June 2013 Total £’000 6,588 In the opinion of the directors, the aggregate value of the company’s investment is not less than the amount included in the company statement of financial position. The investment relates to Anitass Limited. Name Anitass Limited Solution Point Limited Solution Technology Limited Thripple-Thrift Limited 12. Inventories Country of Incorporation % owned England England England England 100 99 100 100 Status Operational Dormant Dormant Dormant Group and Company 2012 £’000 2013 £’000 Goods for resale 6,765 6,733 Cost of sales include £71,444,000 (2012: £92,571,000) inventory expensed in the year’s statement of comprehensive income. In the opinion of the directors the net realisable value of inventories held at 30 June 2013 against which provision has been made was £5,172,000 net of the provision (2012: £4,233,000). 13. Trade and other receivables Trade receivables Less provision for impairment of receivables Net trade receivables VAT receivable Other receivables Prepayments Group and Company 2012 £’000 13,389 (189) 2013 £’000 8,598 (235) 8,363 - 16 96 8,475 13,200 1,397 2 60 14,659 An allowance has been made for estimated at risk amounts from the sale of goods of £235,000 (2012: £189,000). The allowance has been determined by assessing each individual debtor as well as making assessments based on past experience and knowledge of the customers and the prevailing economic conditions. The group is exposed to credit risk on its trade and other receivables due to the credit terms offered to its customers. In the opinion of the directors there is no particular credit risk in any one customer. It is confirmed that the fair value of trade receivables is not materially different from the carrying value. Trade receivables are not interest bearing. 47 Northamber RepoRt & Accounts FuLL YeAR enDeD 30 June 2013 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 The average days credit is 34 days (2012: 40 days). The company uses a rigorous and detailed assessment of each prospective customer before supplying goods up to a pre-determined credit level, and customers are regularly re-assessed to determine current levels of credit limits. In the opinion of the directors the provision made for bad debts, as shown below, is appropriate and that no further provision is required. In the opinion of the directors the fair value of the trade receivables are not materially different from the amounts disclosed. All financial assets that are neither past due nor impaired are considered to be fully recoverable. Trade receivables older than credit terms Aging of past due but not impaired receivables is as follows: 30 - 60 days past due 60 - 90 days past due 90+ days past due Total Group and Company 2012 £’000 384 35 55 2013 £’000 22 7 48 77 474 As at 30 June 2013 trade receivables of £235,000 (2012 £189,000) were impaired: the aging of these trade receivables was 30 - 60 days 60 - 90 days 90+ days Total Group and Company 2012 £’000 0 12 177 2013 £’000 0 68 167 235 189 Trade and other receivables allowance for doubtful debts Balance at beginning of period Amounts written off as uncollectable Potential impairment increase/(reduction) Balance at end of period Group and Company 2012 £’000 193 (88) 84 189 2013 £’000 189 (116) 162 235 The other classes within trade and other receivables do not contain impaired assets. The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable mentioned above. The group does not hold any collateral as security. 48 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 14. Cash and cash equivalents Bank balances and cash in hand Cash and cash equivalents in statement of cash flows Group 2013 £’000 6,136 2012 £’000 4,304 Company 2013 £’000 6,102 2012 £’000 4,285 6,136 4,304 6,102 4,285 15. Trade and other payables Trade payables Inter group payables Other payables VAT Other tax and social security Accruals and deferred income Corporation Tax Group 2013 £’000 6,145 - 156 447 88 288 7 7,131 2012 £’000 9,514 - 120 450 118 373 - 10,575 Company 2013 £’000 6,145 586 156 447 88 288 - 2012 £’000 9,514 - 117 452 118 373 - 7,710 10,574 The financial liabilities shown above are those which were outstanding at 30 June 2013. The average credit period taken for trade payables is 26 days (2012: 31days). The directors consider that the fair values of trade and other payables are not materially different from those disclosed above. Trade payables are not interest bearing. The liquidity in trade and other payables is managed by the company through the management of its cash resources as referred to in the Business and Financial Review, to ensure that for all practical purposes creditors are paid in accordance with the credit terms agreed with the suppliers. 49 Northamber RepoRt & Accounts FuLL YeAR enDeD 30 June 2013 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 16. Tax liabilities Corporation tax (payable) / receivable 17. Deferred tax liabilities Group and Company Group 2013 £’000 (6) 2012 £’000 (3) Company 2013 £’000 14 2012 £’000 14 The following are the major deferred tax liabilities and assets recognised and movements thereon during the current and prior reporting period. Capital Allowances in excess of depreciation At 1 July 2011 Charge to income At 1 July 2012 Released to income As 30 June 2013 No tax assets have been offset. 18. Share capital Group and Company Authorised At 30 June 2013 and 2012 Issued and fully paid shares of 1p each At 30 June 2012 and 30 June 2013 45 - 45 (45) - Number 80,000,000 £’000 2,000 28,158,735 281 At 30 June 2013 664,365 (2012: 664,365) shares were held by the entity in Treasury. The company has one class of ordinary shares which carry no right to fixed income. 19. Capital commitments There were no capital commitments at 30 June 2013 (2012: £Nil). 50 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 20. Operating lease arrangements The company as lessee Group 2013 £’000 2012 £’000 Company 2013 £’000 2012 £’000 Minimum lease payments under operating leases recognised in profit or loss for the year 6 - 607 601 At 30 June 2013 the group had no commitments for future minimum lease payments under non- cancellable operating leases, which fall due as follows: One year Between one and five years Group 2013 £’ 000 6 6 12 2012 £’000 - - - Company 2013 £’000 607 757 1,364 2012 £’000 601 751 1,352 The freehold of the warehouse was purchased on 23 April 2012 by Anitass Limited, a 100% subsidiary of Northamber Plc. 21. Related party transactions Mr D.M. Phillips is the ultimate controlling party of the company. During the year Mr D.M. Phillips made temporarily available to the company occasional use of part of his personal foreign currency funds which resulted in a total saving to the company of £1,694 (2012: £175). At the year end 1.40 million Canadian Dollars (2012: nil) were held by the Company on D.M.Phillips’ behalf. No interest has been charged and there are no terms or conditions attached to these transactions. During the year, the company paid £601,000 (2012: £111,967) rent to Anitass Limited, a wholly owned subsidiary. At the year end Northamber plc owed Anitass Ltd £586,000 (2012: Nil) 22. Post balance sheet events There were no material post balance sheet events, adjusting or non-adjusting. 23. Contingent liabilities During the year to 30 June 2007 the company granted a 175 year lease for an enterprise zone investment property in Arbroath. The company retains the freehold interest, which has a negligible value, and a contingent liability of £702,000 exists in respect of the clawback of enterprise zone tax allowances which will only occur if the retained freehold interest is disposed of before 2017. The directors believe that any realisation of this liability has an extremely low level of probability. 51 Northamber RepoRt & Accounts FuLL YeAR enDeD 30 June 2013 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 24. Financial instruments exposure The interest rate exposure of the financial assets and liabilities of the group and company as at 30 June 2013 is shown in the table below. The table includes trade receivables and payables as these do not attract interest and are therefore subject to fair value interest rate risk. Based on exposure at the reporting date, currency movements are not considered likely to have a material effect on profits. Note 13 above refers to further matters relating to credit risk as does the Business and Financial Review under the heading of Financial Risk Management. Group Financial assets – loans and receivables Cash and cash equivalents: Sterling US Dollars (Sterling equivalent) Euros (Sterling equivalent) Trade and other receivables Floating £’000 5,874 223 39 - Zero £’000 - - - 8,379 Total £’000 5,874 223 39 8,379 Total 6,136 8,379 14,515 Financial liabilities at amortised cost Trade payables: Sterling US Dollar (Sterling equivalent) Euros (Sterling equivalent) Other payables Total Company Financial assets – loans and receivables Cash and cash equivalents: Sterling US Dollars (Sterling equivalent) Euros (Sterling equivalent) Trade and other receivables Floating £’000 - - - - - Floating £’000 5,840 223 39 - Zero £’000 5616 403 126 156 6,301 Zero £’000 - - - 8,379 Total £’000 5,616 403 126 156 6,301 Total £’000 5,840 223 39 8,379 Total 6,102 8,379 14, 481 52 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 Financial liabilities at amortised cost Trade payables: Sterling US Dollar (Sterling equivalent) Euros (Sterling equivalent) Other payables Total Floating £’000 - - - - - Zero £’000 5,616 406 123 156 Total £’000 5,616 406 123 156 6,301 6,301 The directors estimate that an increase or decrease in annual average interest rates of 0.5% would increase/decrease profit before tax by approximately £30,000. Type of Financial Instrument All financial assets are classified as loans and receivables and all financial liabilities are held at amortised cost. Maturity of Financial Instruments All financial liabilities are classified as current and are therefore due within 60 days. 53 Northamber RepoRt & Accounts FuLL YeAR enDeD 30 June 2013 NOTICE OF MEETING Notice is hereby given that the Annual General Meeting of Northamber plc will be held at 23 Davis Road, Chessington, Surrey KT9 1HS on 6 December 2013 at 12 noon for the following purposes:- 1. To receive and adopt the company’s accounts for the year ended 30 June 2013 and the directors’ and auditors’ reports thereon. 2. To propose the following ordinary resolution: That the directors remuneration report for the year ended 30 June 2013 be received and approved. 3. To declare a dividend on the ordinary shares of the company. 4. Re-elect Mr R.F. Heath as a director. 5. Re-elect Mr D.M. Phillips as a director. 6. Re-elect Mr A.G.K. Hamilton as a director. 7. To re-appoint Grant Thornton UK as auditors and to authorise the directors to fix their remuneration. ORDINARY RESOLUTION 8 (1) THAT, the directors be generally and unconditionally authorised to allot equity securities (as defined by Section 560 of the Companies Act 2006 (“the Act”)), up to an aggregate nominal amount of £187,725 (such amount to be reduced by the nominal amount of any Relevant Securities allotted under paragraph 8.2 below) in connection with an offer by way of a rights issue: (a) to holders of ordinary shares in proportion (as nearly as may be practicable) to their respective holdings; and (b) to holders of other equity securities as required by the rights of those securities or as the directors otherwise consider necessary, but subject to such exclusions or other arrangements as the board may deem necessary or expedient in relation to treasury shares, fractional entitlements, record dates, legal or practical problems in or under the laws of any territory or the requirements of any regulatory body or stock exchange; SPECIAL RESOLUTIONS 8 (2) THAT, the directors be authorised to allot equity securities pursuant to Resolution 8 (1) above up to an aggregate nominal amount of £93,862 as if Section 561 of the Companies Act 2006 (existing shareholders’ rights of pre-emption) (a) did not apply to the allotment, or (b) applied to the allotment with such modifications as the directors may determine (c) provided that this authority shall, unless renewed, varied or revoked by the company, expire on the 4 March 2014 or, if earlier, the date of the next Annual General Meeting of the company save that the company may, before such expiry, make offers or agreements which would or might require equity securities to be allotted and the directors may allot equity securities in pursuance of such offer or agreement notwithstanding that the authority conferred by this resolution has expired. 8 (3) THAT the company be and is hereby unconditionally and generally authorised to make market purchases (within the meaning of Section 693(4) of the Companies Act 2006) of ordinary shares of 1p in the capital of the company, provided that: (a) the maximum number of shares hereby authorised to be acquired is 2,815,874 representing 10 per cent of the present issued share capital; (b) the minimum price which may be paid for such shares is 1p per share (exclusive of all expenses); (c) the maximum price which may be paid for such shares is, in respect of a share contracted to be purchased on any day, an amount (exclusive of expenses) equal to 105 per cent of the average middle market quotations of the ordinary shares of the company as derived from the Daily Official List of The London Stock Exchange on the 10 dealing days immediately preceding the day on which the shares are contracted to be purchased; 54 NOTICE OF MEETING (Continued) (d) the authority hereby conferred shall (subject to sub-clause (e) below) expire on the date of the next Annual General Meeting of the company after the passing of this resolution; and (e) the company may make a contract to purchase its own shares under the authority hereby conferred prior to the expiry of such authority which will, or may be, executed wholly or partly after the expiry of such authority, and may make a purchase of its own shares in pursuance of any such contracts. By Order of the Board S. Yoganathan ACMA, Company Secretary Registered office: 23 Davis Road, Chessington, Surrey, KT9 1HS Notes: (1) A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and, on a poll, vote instead of him or her. A proxy need not be a member of the company. Completion and return of a form of proxy will not prevent a member from attending and voting at the meeting. (2) The instrument appointing a proxy and the power of attorney (if any) under which it is signed must be deposited at the offices of the registrars of the company, not less than forty-eight hours before the time of the meeting. (3) There will be available for inspection at the registered office of the company during normal business hours from the date of this Notice until the date of the Annual General Meeting and, at the place of the Annual General Meeting, from at least fifteen minutes prior to and until the conclusion of the Annual General Meeting: (a) copies of the executive directors’ service agreements with the company; and (b) the Register of Directors’ Interests. 55 Northamber RepoRt & Accounts FuLL YeAR enDeD 30 June 2013 THIS PAGE IS INTENTIONALLY LEFT BLANK 56 THIS PAGE IS INTENTIONALLY LEFT BLANK 57 Northamber RepoRt & Accounts FuLL YeAR enDeD 30 June 2013 THIS PAGE IS INTENTIONALLY LEFT BLANK 58 170065 A D V E R T O R I A L It’s WIN WIN for your customers with Fujitsu from Northamber ScanSnap Gives You Time! Smarter working off ers greater control over your time allowing you to explore new ways of growing your business, get to grips with your paperwork, spend more time with the family or simply relax and enjoy your profi ts. The intuitive and user friendly ScanSnap range will help revolutionise your working life and realise your aspirations. By purchasing an award-winning Fujitsu ScanSnap scanner, not only can you get round to doing more of those things that you never fi nd the time for, but now every ScanSnap gives your customer’s business the chance to win an enterprise award of up to €200,000* as well as a host of other cash prizes and discount hotel stays. Resellers should call Northamber, the scanning experts on 020 8296 7066. End-users should visit www.scansnapsavestime.com Talk to the experts in Document Management solutions and fi nd out more about Northamber’s range of scanners from Fujitsu — call Alex on 020 8287 3000 northamber *Prizes of €1,000 or over awarded as an enterprise award Total Distribution™ ©Northamber 2013 E and O.E. 23/9/13 230913_ScanSnaps-CRNadv_170065.indd 1 18/09/2013 17:06:12 Win a Half Day Rally Experience With Fujitsu Exclusively at Northamber Order Fujitsu Scanners from Northamber during August & September and you could win a half day rally experience for up to six people. WINwith Northamber & Fujitsu Take advantage of our complete range of Fujitsu Document Management and Scanning Solutions Portable & Desktop ScanSnap S1300i ScanSnap ix500 Workgroup fi -6130z Departmental fi -6240z Production fi -5950 £Call now for our latest price £Call now for our latest price £Call now for our latest price £Call now for our latest price £Call now for our latest price For more details or to register for the chance to enter — call the scanning experts on 020 8296 7066 The new MC700 range has landed at Northamber at Northamber Combining print, copy, scan, fax and stapling, the OKI MC700 A4 Colour MFP series off ers you all the tools you need. • Up to 40ppm print speed in colour and mono • Scan to fi ling box, scan to shared folder, scan to email, scan to USB memory • Flexible paper supply options for a maximum paper capacity of up to 3,160 sheets ...prices from £1,116trade ex VAT EXCLUSIVELY AT NORTHAMBER All our printers include a free cable! Call our printer team today. 3 Year Warranty with all our OKI MC700 series ADD VALUE, ADD PROFIT with Geniune OKI Toner Cartridges from Northamber Cyan 6k toner Magenta 6k toner Yellow 6k toner Black 8k toner Cyan 11.5k toner Magenta 11.5k toner Yellow 11.5k toner Black 15k toner OKICON337 OKICON338 OKICON339 OKICON340 OKICON341 OKICON342 OKICON343 OKICON344 VARVARVARVARVARVAR Totalmarketing™ Totallogistics™ Totaltraining™ Totalfi nance™ Totalconfi g™ northamber VARVARVARVARVARVAR Totalmarketing™ Totallogistics™ Totaltraining™ Totalfi nance™ Totalconfi g™ northamber t: 020 8296 7066 w: northamber.com Total Distribution™ t: 020 8296 7066 w: northamber.com Total Distribution™ ©Northamber 2013 E and O.E. Prices appear as trade and exclude VAT & delivery. Prices stated as at 19th August ‘13. Terms & conditions apply. Call for details. ©Northamber 2013 E and O.E. Prices appear as trade and exclude VAT & delivery. Prices stated as at 19th August ‘13. PrintITresellerAd-RallyDay.indd 1 14/08/2013 14:53:58 OKImc7series-PrintITresellerAd.indd 3 14/08/2013 12:21:12 SUBJECT LINE: Hurry... Windows 8 Tablets with an Exclusive Free Gift!Call us today on 020 8296 7066The LatestWindows 8 TabletsView all eshotsSeptember 2013#05Desktops &ServersPrint &ScanStorage &MemoryAV & DigitalCamerasPortableComputingNetworkingMonitors &ProjectorsPC & Server ConfigSoftwareExclusive: Free 4GB Lexar JumpDrive with Acer Windows 8 Tabletsopen anaccountNorthambernewscentrehot offersclearanceproductsour brandsdelivery optionsconfiguration centreNorthambernewsToTal Tech TodayTotal Distribution™northambert: 020 8296 7066 w: northamber.comTotalfinance™Totaltraining™Totallogistics™Totalconfig™VARTotalmarketing™Totalrewards™@northamberplcESHOT FOR: AcerDATE: 04/09/13DATABASE: JOB NO: 170033PCD / Software• Intel Atom Z2760 / 1.8GHz• 2GB RAM • 64GB SSD• Detachable keyboardORDER: ACTAB030More detailsAcer ICONIA W510p10.1” Windows 8Acer ICONIA W3The World’s First 8” Windows 8 TabletAcer ICONIA W70011.6” Windows 8ORDER: ACTAB020 More detailsWe alsosTock...Digital camerasNetwork adaptersPrivacy screenscall 020 8296 7066carry cases & sleeves£198.00trade ex VAT£463.75trade ex VAT£479.74trade ex VAT£639.66trade ex VAT£240.00trade ex VATall including a Free 4GB lexar JumpDriveExclusively from Northamber. While stocks last. ORDER: ACTAB022More detailsORDER: ACTAB029More details£100END-USERCASHBACK• Intel® Core i3-2365M 1.4GHz• 4GB RAM • 64GB SSD• Integrated keyboard/case• Intel® Core i5-3337 1.8GHz• 4GB RAM • 128GB SSDALSOAVAILABLE:ALSO AVAILABLE:Was £220Super-fast in Full HD• Intel Atom Z2760 / 1.8GHz• 2GB RAM • 32GB SSDSuperior entertainment• 8.1” 16:9 display or HDMI output• Up to 8hrs HD playback• Full size productivity with full size keyboard (sold separately)• 8 Megapixel (back), 2 Megapixel (front)Seamless productivity• Highly mobile with Microsoft Office Home and Student 2013• with 64GB SSD£22OFFORDER: ACTAB031More detailsWas £258£18OFF£75END-USERCASHBACKSUBJECT LINE: Canon High Speed Network Scanner only £804 - Hurry!ESHOT FOR: CanonDATE: 13/09/13JOB NO: 170056Canon ScanFront 300High Speed Network Scanner• Compact, attractive design.• Scan and send documents to multiple destinations.• User-friendly operation, including an intuitive colour touch screen.• A range of advanced security features.• Easy remote management and network integration.£205OFFORDER: CASC300More detailsORDER: CASC300PMore detailsOffer price £804.86trade ex VATUsual trade £1,010.78Offer price £1,053.87trade ex VATUsual trade £1,247.76£193OFFOffer ends 30/9/13. Terms & conditions apply.Also available with Fingerprint SecurityCanon ScanFront 300p• Secure user authentication and fingerprint recognition (ScanFront 300P only) prevent unauthorised access to the corporate network. • For added protection, you can restrict access to certain scanner features for individual users.open anaccountNorthambernewscentrehot offersclearanceproductsour brandsdelivery optionsconfiguration centreOffers must end 30th September 2013Total Distribution™northambert: 020 8296 7066 w: northamber.comTotalfinance™Totaltraining™Totallogistics™Totalconfig™VARTotalmarketing™Totalrewards™@northamberplcLast Chance for:Extra Profiton Canon ScanFront Network ScannersCall 020 8296 7066 todayDesktops &ServersPrint &ScanStorage &MemoryAV & DigitalCamerasPortableComputingNetworkingMonitors &ProjectorsPC & Server ConfigSoftwareNorthambernewsToTal Tech TodayCall 020 8296 7066View all eshotsSeptember 2013#19SUBJECT LINE: Cashback for Resellers with Fujitsu Scanners from NorthamberCall us today on 020 8296 7066View all eshotsSeptember 2013#21Desktops &ServersPrint &ScanStorage &MemoryAV & DigitalCamerasPortableComputingNetworkingMonitors &ProjectorsPC & Server ConfigSoftwareUp to £50 Cashback for Resellers with Fujitsu Scannersopen anaccountNorthambernewscentrehot offersclearanceproductsour brandsdelivery optionsconfiguration centreNorthambernewsToTal Tech TodayTotal Distribution™northambert: 020 8296 7066 w: northamber.comTotalfinance™Totaltraining™Totallogistics™Totalconfig™VARTotalmarketing™Totalrewards™@northamberplcNetwork ANY scanner with this: - Silex SX-3000GB USB Server £55 SX3000GBESHOT FOR: Fujtisu PFUDATE: 17/09/13DATABASE: JOB NO: 170071Scanning / PrintWe alSoSTock...kofax VRS solutionsNetwork scanners with SilexData Storage & BackupGraphics Softwarecall 020 8296 7066ORDER: FUSCIX500 More details£calltrade ex VATAll claims must be accompanied by proof of sale for each claimed Qualifying Scanner. Visit www.imaging-channel-program.com. Excludes Project Supported Prices. Terms & conditions apply. Offer ends 30th September. Call for details.Fujitsu ScanSnap iX500Wireless Desktop Scannerfor Pc and MacORDER: FUSCIX500DMore detailsFujitsu iX500 DeluxeORDER: FUSCS6230ZMore detailsFujitsu fi-6230zORDER: FUSC6110More detailsFujitsu fi-6110ORDER: FUSCS6140ZMore detailsFujitsu fi-6140zORDER: FUSCS6240ZMore detailsFujitsu fi-6240zFujitsu fi-6130zWorkgroup Scanner£15CASHBACKfor resellersORDER: FUSCS6130Z More details£calltrade ex VAT£35CASHBACKfor resellers£15CASHBACKfor resellers£25CASHBACKfor resellers£35CASHBACKfor resellers£50CASHBACKfor resellers£50CASHBACKfor resellersUp to £50Reseller Cashbackwith Fujtisu Scannersfrom Northambernorthamber Northamber plc • Namber House • 23 Davis Road • Chessington • Surrey • Kt9 1hS UK Telephone: (+44) 020 8296 7000 • Fax: (+44) 020 8296 7060 | www.northamber.com 60 

Continue reading text version or see original annual report in PDF format above